As filed with the U.S. Securities and Exchange Commission on May 7, 2021.
Registration No. 333-254263
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AltC Acquisition Corp.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation or organization)
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6770
(Primary Standard Industrial
Classification Code Number)
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86-2292473
(I.R.S. Employer
Identification Number)
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640 Fifth Avenue, 12th Floor
New York, NY 10019
Telephone: (212) 380-7500
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Jay Taragin
Chief Financial Officer
c/o AltC Acquisition Corp.
640 Fifth Avenue, 12th Floor
New York, NY 10019
Telephone: (212) 380-7500 (Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
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Alexander D. Lynch, Esq.
Barbra J. Broudy, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Tel: (212) 310-8000
Fax: (212) 310-8007
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Joel L. Rubinstein, Esq.
Daniel E. Nussen, Esq.
White & Case LLP
1221 Avenue of the Americas
New York, NY 10020
(212) 819-8200
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Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☒
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Smaller reporting company ☐
Emerging growth company ☒
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Security
Being Registered
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Amount Being
Registered
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Proposed Maximum
Offering Price
per Security(1)
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Proposed Maximum
Aggregate Offering
Price(1)
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Amount of
Registration Fee
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Class A common stock, $0.0001 par value(2)
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46,000,000 Shares
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$ |
10.00 |
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$ |
460,000,000 |
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$ |
50,186(3) |
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(1)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended (the “Securities Act”).
(2)
Includes 16,000,000 shares of Class A common stock, which may be issued upon exercise of a 45-day option granted to the underwriters to cover over-allotments, if any.
(3)
The Registrant previously paid $125,465.
The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MAY 7, 2021
P R E L I M I N A R Y P R O S P E C T U S
$400,000,000
AltC Acquisition Corp.
40,000,000 Shares
AltC Acquisition Corp. is a newly incorporated blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination with us. We may pursue an initial business combination target in any business or industry.
This is an initial public offering of shares of our Class A common stock, which we refer to as our public shares, at an initial public offering price per share of $10.00. We have granted the underwriters a 45-day option to purchase up to an additional 6,000,000 shares to cover over- allotments, if any. Unlike other initial public offerings of special purpose acquisition companies, investors in this offering will not receive any warrants (which would typically become exercisable following completion of our initial business combination).
We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of our Class A common stock upon the completion of our initial business combination at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account described below calculated as of two business days prior to the consummation of our initial business combination, including interest (net of amounts withdrawn to fund our working capital requirements, subject to an annual limit of $1,000,000, and/or to pay our taxes (“permitted withdrawals”)), divided by the number of then outstanding public shares, subject to the limitations described herein. If we are unable to complete our initial business combination within 24 months from the closing of this offering (or 27 months from the closing of this offering if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months from the closing of this offering), we will redeem 100% of the public shares at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, subject to applicable law and certain conditions as further described herein.
Our sponsor, AltC Sponsor LLC, is an affiliate of M. Klein and Company, LLC. Our sponsor has subscribed to purchase an aggregate of 1,250,000 shares (or 1,370,000 shares if the underwriters’ option to purchase additional shares is exercised in full) at a price of $10.00 per share ($12,500,000 in the aggregate, or $13,700,000 in the aggregate if the underwriters’ option to purchase additional shares is exercised in full) in a private placement that will close simultaneously with the closing of this offering (the “Private Placement”).
Our sponsor currently holds 28,750,000 shares of Class B common stock. Prior to this offering, our sponsor expects to surrender 17,250,000 shares of Class B common stock for no consideration, and up to an additional 1,500,000 shares of Class B common stock are subject to forfeiture depending on the extent to which the underwriters’ option to purchase additional shares is exercised. The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment as provided herein. Holders of our Class B common stock will have the right to elect all of our directors prior to the consummation of our initial business combination. On any other matter submitted to a vote of our stockholders, holders of our Class B common stock and holders of our Class A common stock will vote together as a single class, except as required by applicable law or stock exchange rule.
Prior to this offering, there has been no public market for our Class A common stock. We intend to apply to list our public shares on the New York Stock Exchange (the “NYSE”), under the symbol “ALCC” on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for listing on the NYSE.
We are an “emerging growth company” under applicable federal securities laws and will be subject to reduced public company reporting requirements. Investing in our securities involves risks. Please see “Risk Factors” on page 31. Investors will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings.
Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
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Per Share
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Total
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Price to Public
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$ |
10.00 |
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400,000,000 |
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Underwriting Discounts and Commissions(1)
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$ |
0.55 |
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$ |
22,000,000 |
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Proceeds, before expenses, to us
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$ |
9.45 |
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$ |
378,000,000 |
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(1)
Includes $0.35 per share, or $14,000,000 (or up to $16,100,000 if the underwriters’ option to purchase additional shares is exercised in full) in the aggregate, payable to the underwriters for deferred underwriting commissions to be placed in a trust account located in the United States as described herein. The deferred commissions will be released to the underwriters only on completion of an initial business combination, in an amount equal to $0.35 multiplied by the number of shares of Class A common stock sold in this offering, as described in this prospectus. Does not include certain fees and expenses payable to the underwriters in connection with this offering. See also “Underwriting” for a description of compensation and other items of value payable to the underwriters.
Of the proceeds we receive from this offering and the sale of the private placement shares described in this prospectus, $400,000,000, or $460,000,000 if the underwriters’ option to purchase additional shares is exercised in full ($10.00 per share in either case), will be deposited into a U.S.- based trust account with Continental Stock Transfer & Trust Company acting as trustee.
The underwriters are offering the shares for sale on a firm commitment basis. The underwriters expect to deliver the shares to the purchasers on or about , 2021.
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Citigroup |
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J.P. Morgan
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Goldman Sachs & Co. LLC
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BofA Securities
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We are responsible for the information contained in this prospectus. We have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.
TABLE OF CONTENTS
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1 |
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31 |
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63 |
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64 |
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67 |
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68 |
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71 |
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72 |
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78 |
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109 |
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119 |
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121 |
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124 |
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134 |
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140 |
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147 |
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147 |
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147 |
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F-1
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Trademarks
This prospectus contains references to trademarks and service marks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
SUMMARY
This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under “Risk Factors” and our financial statements and the related notes included elsewhere in this prospectus, before investing.
Unless otherwise stated in this prospectus or the context otherwise requires, references to:
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“amended and restated certificate of incorporation” are to our certificate of incorporation to be in effect upon the completion of this offering;
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“common stock” are to our Class A common stock and our Class B common stock;
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“completion window” is the period following the completion of this offering at the end of which, if we have not completed our initial business combination, we will redeem 100% of the public shares at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, subject to applicable law and certain conditions and as further described herein. The completion window ends 24 months from the closing of this offering, or 27 months from the closing of this offering if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination within 24 months from the closing of this offering;
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“directors” are to our directors and director nominees;
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“equity-linked securities” are to any debt or equity securities that are convertible, exercisable or exchangeable for shares of our Class A common stock issued in a financing transaction in connection with our initial business combination, including but not limited to a private placement of such securities;
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“founder shares” are to shares of our Class B common stock and the shares of our Class A common stock issued upon the automatic conversion thereof at the time of our initial business combination as provided herein;
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“initial stockholders” are to our sponsor and any other holders of our founder shares immediately prior to this offering;
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“letter agreements” refers to the letter agreements, the form of which is filed as an exhibit to the registration statement of which this prospectus forms a part;
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“M. Klein and Company” are to M. Klein and Company, LLC, a Delaware limited liability company and its affiliates;
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“management” or our “management team” are to our officers and directors;
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“permitted withdrawals” means amounts withdrawn to fund our working capital requirements, subject to an annual limit of $1,000,000, and/or to pay our taxes and notwithstanding the annual limitation, such withdrawals can only be made from interest and not from the principal held in the trust account;
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“Private Placement” are to a subscription of 1,250,000 shares of Class A common stock (or 1,370,000 shares of Class A common stock in the aggregate if the underwriters’ option to purchase additional shares is exercised in full) at a price of $10.00 per share of Class A common stock ($12,500,000 in the aggregate, or $13,700,000 in the aggregate if the underwriters’ option to purchase additional shares is exercised in full) by our sponsor in a private placement that will close simultaneously with the closing of this offering;
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“private placement shares” are to the shares of Class A common stock issued to our sponsor in the Private Placement and upon conversion of working capital loans, if any (for the avoidance of doubt, such private placement shares will not be “public shares”);
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“public shares” are to shares of our Class A common stock sold in this offering (whether they are purchased in this offering or thereafter in the open market);
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“public stockholders” are to the holders of our public shares, including our sponsor, officers and directors to the extent our sponsor, officers or directors purchase public shares, provided that each of their status as a “public stockholder” shall only exist with respect to such public shares;
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“sponsor” are to AltC Sponsor LLC, a Delaware limited liability company and an affiliate of M. Klein and Company;
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“underwriters’ option to purchase additional shares” are to the underwriters’ 45-day option to purchase up to an additional 6,000,000 shares to cover over-allotments, if any; and
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“we,” “us,” “company” or “our company” are to AltC Acquisition Corp., a Delaware corporation.
Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their option to purchase additional shares.
General
We are a newly incorporated blank check company formed as a Delaware corporation for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination with us. We may pursue an initial business combination in any business or industry but expect to focus on a target in an industry where we believe our management team and co-founders’ expertise will provide us with a competitive advantage.
Our team will be led by our co-founder, Sam Altman, an entrepreneurial and thought leader with a proven track-record of growth investing within the technology industry. Mr. Altman is also the co-founder and CEO of OpenAI, a leading artificial intelligence (“AI”) research and deployment company, and the Chairman of Y Combinator. OpenAI’s mission is to ensure artificial general intelligence (“AGI”) benefits all of humanity. OpenAI began as a research lab in 2015, with a focus on building AGI. OpenAI’s primary, fiduciary duty is to humanity, with the commitment to safely deploy AGI for the benefit of all, and to avoid enabling uses of AI or AGI that harm humanity or unduly concentrate power. Prior to founding OpenAI, Mr. Altman served as President of Y Combinator, a leading Silicon Valley startup accelerator. During his tenure as President, Mr. Altman led the expansion of Y Combinator’s portfolio to approximately 400 companies per year. Under Mr. Altman’s leadership, Y Combinator successfully executed investments in premiere companies including Airbnb, Stripe, DoorDash, Instacart, and Coinbase. Mr. Altman is recognized as having been a major force in leading Y Combinator’s launch into deep or “hard” technology companies, directly working with founders on long-term strategies to develop their technology to build companies with massive impact. Mr. Altman also launched Y Combinator Continuity, a Y Combinator fund focused on growth-stage companies. Mr. Altman is regarded as an entrepreneurial leader and visionary due to his track record of identifying promising opportunities and nurturing their growth to become prominent and established players with massive impact.
Earlier in his career, Mr. Altman co-founded Loopt, Inc., a provider of mobile location-based services, and served as its Chief Executive Officer until it was acquired by Green Dot Corporation in March 2012, after which he held a number of senior executive positions at Green Dot through December 2013, and served as a member of its Board of Directors from March 2013 through December 2016. Mr. Altman has invested in several private companies, including Reddit, Inc., which operates a social sharing and aggregation website, and Helion Energy, Inc. and Oklo, Inc., two companies focused on clean energy solutions. He currently serves on the Board of Directors of Expedia Group and Reddit, Inc., and currently serves as Chairman of Helion and Oklo.
In addition to Mr. Altman, our team will include a consortium of individuals with deep expertise in the private technology company landscape, including Brad Lightcap and Scott Krisiloff. Mr. Lightcap currently serves as Chief Financial Officer of OpenAI. Prior to joining OpenAI, Mr. Lightcap was a core team member at Y Combinator Continuity, dedicated to supporting founders scale their companies, with the primary goal of supporting Y Combinator alumni companies through investments in subsequent funding rounds.
Mr. Krisiloff currently serves as the Chief Business Officer at Helion Energy, a company focused on transforming the fusion energy industry. Helion Energy focuses on electricity production, coupling a legacy of magneto-inertial fusion science and modern electronics to engineer a fusion generator and fuel cycle for commercial application. Mr. Krisiloff also serves as Chief Operating Officer of Hydrazine Capital Management, an early-stage venture capital firm based in San Francisco, California.
Mr. Altman and his team will work in partnership with M. Klein and Company. Drawing on the combined acumen of Mr. Altman and the team of M. Klein and Company, our team has the scale and expertise to source, diligence, and execute opportunities. M. Klein and Company, the Strategic Partners (as defined below) and their affiliated professionals will provide all the necessary resources to Mr. Altman and his team.
Our co-founder, Michael Klein, is also the founder and managing partner of M. Klein and Company, which he founded in 2012. M. Klein and Company is a global strategic advisory firm that provides its clients a variety of advice tailored to their objectives. Mr. Klein is a strategic advisor to global companies, boards of directors, senior executives, governments and institutional investors. Mr. Klein’s background in strategic advisory work was built during his 35 year career, including more than two decades at Citigroup Inc. (“Citi”) and its predecessors, during which he initiated and executed strategic advisory transactions. He began his career as an investment banker in the M&A Advisory Group at Salomon Brothers and subsequently became Chairman and Co-Chief Executive Officer of Citi Markets and Banking, with responsibilities for Global Corporate and Investment Banking and Global Transaction Services across Citi. In his role as Co- CEO, he was responsible for all relationship, advisory, underwriting, and capital markets issuance activity.
Mr. Klein was previously Chief Executive Officer of Global Banking at Citi, CEO of Citi Markets & Banking, Europe, and Co-Head of Global Investment Banking for Salomon Smith Barney for the decade prior. In early 1999, he was given responsibility for the expansion of the firm’s European investment banking business. A major step in that development was the merger, in May 2000, of Salomon Smith Barney’s European operation with Schroders, a leading UK and European Merchant Bank. Prior to becoming Co- Head of the Global Investment Bank, he had been responsible for the firm’s Global Financial Entrepreneurs and Private Equity Groups, a leading provider of acquisition ideas and financing for leading private equity sponsors. We will seek to capitalize on the experience and expertise of our co-founders.
Mr. Klein has significant experience running investment banking and advisory organizations with an overarching mission of providing high quality deal sourcing and transactional advice to a broad range of clients. For example, in 2018, Mr. Klein co-founded and became Chairman of the Board of Directors of Churchill Capital Corp (“CCC”), a special purpose acquisition company that completed a $690 million initial public offering in September 2018 and merged in May 2019 with Clarivate Analytics (“Clarivate”), a leading provider of comprehensive intellectual property and scientific information, analytical tools, and services. Subsequent to the merger, Jerre Stead, the co-founder of CCC, became the Chief Executive Officer of Clarivate and took over the role of Chairman of the Board of Directors of Clarivate. Today, Clarivate is an independent, publicly traded company.
The CCC board of directors believed that of the several transactions that CCC considered, the Clarivate merger provided CCC investors with an attractive investment opportunity that was characterized by an industry-leading, world-class management team with a history of creating significant shareholder value through superior operational performance, positive long-term trends in each of the Clarivate’s operating markets, significant organic and accretive growth opportunities, a clear path to meaningfully reduced balance sheet leverage, and a compelling valuation relative to its peers. In sourcing and executing a business combination transaction, we hope to find a target with similar characteristics.
In April 2019, Mr. Klein founded and became Chief Executive Officer and Chairman of the Board of Directors of Churchill Capital Corp II, a special purpose acquisition company that completed a $690 million initial public offering in July 2019. On October 13, 2020, Churchill Capital Corp II entered into a definitive agreement to merge with Software Luxembourg Holding S.A. (“Skillsoft”), a provider of digital learning and talent management solutions and entered into a definitive agreement to acquire Global Knowledge Training LLC, a provider of IT and professional skills development. In October 2019, Mr. Klein founded and became Chief Executive Officer, President and Chairman of the Board of Directors of Churchill Capital Corp III, a special purpose acquisition company that completed a $1,100 million initial public offering in
February 2020. On October 8, 2020, Churchill Capital Corp III merged with MultiPlan, Inc., a technology- enabled provider of end-to-end healthcare cost management solutions. In April 2020, Mr. Klein founded and became Chief Executive Officer, President and Chairman of the Board of Directors of Churchill Capital Corp IV, a special purpose acquisition company that completed a $2,070 million initial public offering in August 2020. In February 2021, Churchill Capital Corp IV entered into a definitive agreement to merge with Lucid Motors Inc., which is setting new standards for sustainable mobility with its advanced luxury electric vehicles. In May 2020, Mr. Klein founded and became Chief Executive Officer, President and Chairman of the Board of Directors of Churchill Capital Corp V, a special purpose acquisition company that completed a $500 million initial public offering in December 2020. In December 2020, Mr. Klein founded and became Chief Executive Officer, President and Chairman of the Board of Directors of Churchill Capital Corp VI, a special purpose acquisition company that completed a $552 million initial public offering in February 2021. In May 2020, Mr. Klein founded and became Chief Executive Officer, President and Chairman of the Board of Directors of Churchill Capital Corp VII, a special purpose acquisition company that completed a $1,380 million initial public offering in February 2021. Churchill Capital has announced four business combinations for prior vehicles, with an aggregate value of approximately $30 billion.
Our Chief Financial Officer, Jay Taragin, has held this position since February 2021 and is also the Chief Financial Officer of Churchill Capital Corp IV since April 2020, Churchill Capital Corp V since May 2020, Churchill Capital Corp VI since December 2020, Churchill Capital Corp VII since February 2021 and M. Klein and Company which he joined in May 2019. Prior to joining M. Klein and Company, Mr. Taragin served as the US Scotiabank Chief Financial Officer from 2013 to 2017. Prior to Scotiabank, Mr. Taragin held a Chief Operating and Financial Officer role from 2009 to 2012 at a mortgage hedge fund and held a variety of senior finance and audit roles at Merrill Lynch & Company from 1993 to 2009. In addition, Mr. Taragin worked at Credit Suisse and PricewaterhouseCoopers as a senior auditor and accountant. Mr. Taragin is a CPA and holds a master’s degree in business administration from New York University Stern School of Business and a bachelor’s degree from Yeshiva University.
We believe that our management team and M. Klein and Company, which is an affiliate of our sponsor, are well positioned to identify and execute attractive business combination opportunities. Our objectives are to generate attractive returns for shareholders and enhance value through selecting a high quality target at an attractive valuation, negotiating favorable acquisition terms for our stockholders and improving operational performance of the acquired company. We expect to favor potential target companies with certain industry and business characteristics. Key industry characteristics include compelling long-term growth prospects, opportunities to affect valuation improvements at the company, attractive competitive dynamics and consolidation opportunities. Key business characteristics include competitive advantages, significant streams of recurring revenue, opportunity for operational improvement, attractive steady-state margins, high incremental margins and attractive free cash flow characteristics.
M. Klein and Company has established strategic relationships with selected leading investors and financing providers (“Strategic Partners”). Such Strategic Partners may invest in our sponsor, thereby sharing in the appreciation of founder shares and private placement shares, and assist Mr. Altman and M. Klein and Company in evaluating potential acquisition targets.
With respect to the foregoing experiences of our management, M. Klein and Company, and our Strategic Partners, past performance is not a guarantee (i) that we will be able to identify a suitable candidate for our initial business combination or (ii) of success with respect to any business combination we may consummate. You should not rely on the historical record of our management’s, M. Klein and Company’s or our Strategic Partners’ performance as indicative of our future performance. For more information on the experience and background of our management team, see the sections entitled “Management,” and “Proposed Business.”
Business Strategy
Our strategy is to:
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leverage the strategic and transactional experience of our founder to bring advice and attention to potential business combination targets;
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deliver creative approaches to transaction sourcing; and
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utilize an understanding of global financial markets and events, financing, and overall corporate strategy options.
Our selection process will leverage our founder’s and our Strategic Partners’ network of industry, private equity sponsor, credit fund sponsor and lending community relationships as well as relationships with management teams of public and private companies, investment bankers, restructuring advisers, attorneys and accountants, which we believe should provide us with a number of business combination opportunities. We intend to deploy a proactive, thematic sourcing strategy and to focus on companies where we believe the combination of our operating experience, relationships, capital and capital markets expertise can be catalysts to transform a target company and can help accelerate the target’s growth and performance. Upon completion of this offering, members of our management team, M. Klein and Company, our Strategic Partners will communicate with their network of relationships to articulate our initial business combination criteria, including the parameters of our search for a target business, and will begin the disciplined process of pursuing and reviewing promising leads.
Our management team and M. Klein and Company have experience in:
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sourcing, structuring, acquiring and selling businesses;
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fostering relationships with sellers, capital providers and target management teams;
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negotiating transactions favorable to investors;
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executing transactions in multiple geographies and under varying economic and financial market conditions; and
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accessing the capital markets, including financing businesses and helping companies transition to public ownership.
Competitive Strengths
The sourcing, valuation, diligence and execution capabilities of our management team, M. Klein and Company and our Strategic Partners will provide us with a significant pipeline of opportunities from which to evaluate and select a business that will benefit from our expertise. We may also have the benefit of using M. Klein and Company, or another affiliate of our sponsor, as our lead financial advisor on our business combinations and other transactions. Our competitive strengths include the following:
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Proprietary Sourcing Channels and Leading Industry Relationships. We believe the capabilities and connections associated with our management team, in combination with those of M. Klein and Company and our Strategic Partners, will provide us with a differentiated pipeline of acquisition opportunities that would be difficult for other participants in the market to replicate. We expect these sourcing capabilities will be further bolstered by our management team’s, M. Klein and Company’s and our Strategic Partners’ reputation and deep industry relationships.
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Investing Experience. We believe that our management’s track record of identifying and sourcing transactions positions us well to appropriately evaluate potential business combinations and select one that will be well received by the public markets.
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Execution and Structuring Capability. Our management team and sponsor believe that our and our Strategic Partners’ combined expertise and reputation will allow us to source and complete transactions possessing structural attributes that create an attractive investment thesis. These types of transactions are typically complex and require creativity, industry knowledge and expertise, rigorous due diligence, and extensive negotiations and documentation. We believe that by focusing our investment activities on these types of transactions, we are able to generate investment opportunities that have attractive risk/reward profiles based on their valuations and structural characteristics.
Investment Criteria
We have developed the following high level, non-exclusive investment criteria that we will use to screen for and evaluate target businesses. We will seek to acquire a business that:
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Generates Stable Free Cash-Flow. We will seek to acquire a business that has historically generated, or has the near-term potential to generate, strong and sustainable free cash flow.
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Would Benefit Uniquely from our Capabilities. We will seek to acquire a business where the collective capabilities of our management and sponsor can be leveraged to tangibly improve the operations and market position of the target.
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Is Sourced Through our Proprietary Channels. We do not expect to participate in broadly marketed processes, but rather will aim to leverage our extensive network to source our business combination.
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Has a Committed and Capable Management Team. We will seek to acquire a business with a professional management team whose interests are aligned with those of our investors and complement the expertise of our co-founders. Where necessary, we may also look to complement and enhance the capabilities of the target business’s management team by recruiting additional talent through our network of contacts.
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Has the Potential to Grow Through Further Acquisition Opportunities. We will seek to acquire a business that has the potential to grow inorganically through additional acquisitions.
These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as on other considerations, factors and criteria that our management may deem relevant. In the event that we decide to enter into our initial business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our initial business combination, which, as discussed in this prospectus, would be in the form of tender offer documents or proxy solicitation materials that we would file with the SEC.
Our Acquisition Process
In evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information which will be made available to us.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, co-founders, officers or directors. In the event we seek to complete our initial business combination with a business that is affiliated with our sponsor, co-founders, officers or directors, we, or a committee of independent and disinterested directors, will obtain an opinion from an independent investment banking firm that is a member of the Financial Industry Regulatory Authority, or FINRA, or from an independent accounting firm, that such an initial business combination is fair to our company from a financial point of view.
Members of our management team may directly or indirectly own our securities following this offering, and accordingly, they may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination.
Our sponsor and its principals may from time to time become aware of potential business opportunities, one or more of which we may desire to pursue, for a business combination, but we have not (nor has anyone on our behalf) engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to a business combination transaction with us.
As described in “Proposed Business—Sourcing of Potential Business Combination Targets” and “Management—Conflicts of Interest,” each of our officers and directors presently has, and any of them in the future may have additional, fiduciary, contractual or other obligations or duties to one or more other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such entities. Our amended and restated certificate of incorporation will provide that we
renounce our interest in any corporate opportunity offered to any director or officer unless (i) such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company, (ii) such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue and (iii) the director or officer is permitted to refer the opportunity to us without violating another legal obligation. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for one or more entities to which he or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such business combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us.
In addition, none of the Strategic Partners or their personnel are officers or directors of our company and therefore owe us no fiduciary duties as such. While we expect that they will assist us in identifying business combination targets, they have no obligation to do so and may devote a substantial portion of their business time to activities unrelated to us. Our Strategic Partners may have fiduciary, contractual or other obligations or duties to other organizations to present business combination opportunities to such other organizations rather than to us. Accordingly, if any Strategic Partner becomes aware of a business combination opportunity which is suitable for one or more entities to which he, she or it has fiduciary, contractual or other obligations or duties, he, she or it will honor those obligations and duties to present such business combination opportunity to such entities first and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us. These conflicts may not be resolved in our favor and a potential business may be presented to another entity prior to its presentation to us.
While neither M. Klein and Company nor any of our Strategic Partners will have any duty to offer acquisition opportunities to us, they may become aware of a potential transaction that is an attractive opportunity for us, which they may decide to share with us. Conflicts may arise from their affiliation with our company, their provision of services both to us and to third-party clients, as well as from actions undertaken by them for their own account. In performing services for other clients and also when acting for their own account, they may take commercial steps which may have an adverse effect on us. Any of M. Klein and Company’s or our Strategic Partners’ other activities may, individually or in the aggregate, have an adverse effect on us, and the interests of M. Klein and Company and our Strategic Partners or their respective clients or counterparties may at times be averse to ours. Please see “Proposed Business—Certain Potential Conflicts of Interest Relating to M. Klein and Company” for additional information regarding certain potential conflicts of interest relating to M. Klein and Company and our Strategic Partners.
We do not believe, however, that the fiduciary, contractual or other obligations or duties of our officers or directors, or of M. Klein and Company and our Strategic Partners, or policies applicable to M. Klein and Company or any of our Strategic and Operating, will materially affect our ability to complete our initial business combination.
Our sponsor, officers, directors, M. Klein and Company and our Strategic Partners may participate in the formation of, or become an officer or director of, any other blank check company prior to completion of our initial business combination. As a result, our sponsor, officers, directors, M. Klein and Company and our Strategic Partners could have conflicts of interest in determining whether to present business combination opportunities to us or to any other blank check company with which they may become involved. In particular, M. Klein and Company and Mr. Klein as well as our board of directors, have formed and are actively engaged in Churchill Capital Corp II, Churchill Capital Corp IV, Churchill Capital Corp V, Churchill Capital Corp VI and Churchill Capital Corp VII, special purpose acquisition corporations that completed their initial public offerings in July 2019, August 2020, December 2020, February 2021 and February 2021, respectively. Churchill Capital Corp II, Churchill Capital Corp IV, Churchill Capital Corp V, Churchill Capital Corp VI and Churchill Capital Corp VII, like us, may pursue initial business combination targets in any businesses or industries and have until July 1, 2021, August 3, 2022, December 18, 2022, February 11, 2023 and February 11, 2023, respectively, to do so (absent an extension in accordance with their charters). Any such companies, including Churchill Capital Corp II, Churchill Capital Corp IV, Churchill Capital Corp V, Churchill Capital Corp VI and Churchill Capital Corp VII, may present additional conflicts of interest in pursuing an acquisition target.
Initial Business Combination
The NYSE rules require that an initial business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the trust account (net of amounts disbursed to management for working capital purposes, if applicable, and excluding the amount of any deferred underwriting discount). We refer to this as the 80% of net assets test. If our board of directors is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm, with respect to the satisfaction of such criteria. We do not currently intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination, although there is no assurance that will be the case.
We anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the outstanding equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to our initial business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in our initial business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If our initial business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses.
Our amended and restated certificate of incorporation will require the affirmative vote of a majority of our board of directors, which must include a majority of our independent directors, to approve our initial business combination (or such other vote as the applicable law or stock exchange rules then in effect may require).
We do not believe we will need to raise additional funds following this offering in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our initial business combination or because we become obligated to redeem a significant number of our public shares in connection with our initial business combination or a stockholder vote to make certain amendments to our charter, in which case we may issue additional securities or incur debt in connection with our initial business combination. In addition, we intend to target businesses with enterprise values that are greater than we could acquire with the net proceeds of this offering and the sale of the private placement shares, and, as a result, if the cash portion of the purchase price exceeds the amount available to us, including from the trust account, net of amounts needed to satisfy redemptions by public stockholders, we may be required to seek additional financing to complete such proposed initial business combination. We may also obtain financing prior to the closing of our initial business combination to fund our working capital needs and transaction costs in connection with our search for and completion of our initial business combination. There is no limitation on our ability to raise funds through the issuance of equity or equity-linked securities or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to forward purchase agreements or backstop arrangements we may
enter into following the consummation of this offering. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account upon expiration of the completion window. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Prior to the date of this prospectus, we will file a registration statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
Risk Factors Summary
Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this prospectus summary. These risks include, but are not limited to, risks associated with:
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being a newly incorporated company with no operating history and no revenues;
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our ability to complete our initial business combination, including risks arising from the uncertainty resulting from the COVID-19 pandemic;
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our public shareholders’ ability to exercise redemption rights;
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the requirement that we complete our initial business combination within the completion window;
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the possibility that NYSE may delist our securities from trading on its exchange;
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being declared an investment company under the Investment Company Act;
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complying with changing laws and regulations;
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the performance of the prospective target business or businesses;
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our ability to select an appropriate target business or businesses;
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the pool of prospective target businesses available to us and the ability of our officers and directors
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to generate a number of potential business combination opportunities;
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the issuance of additional Class A common stock in connection with a business combination that may dilute the interest of our shareholders;
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the incentives to our sponsor, officers and directors to complete a business combination to avoid losing their entire investment in us if our initial business combination is not completed;
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our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination;
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our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;
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our ability to obtain additional financing to complete our initial business combination;
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our public securities’ potential liquidity and trading; and
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provisions in our amended and restated certificate of incorporation and Delaware law that may have the effect of inhibiting a takeover of us, discouraging lawsuits against our directors and officers, and limiting our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees, agents or stockholders.
Corporate Information
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the
“JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.
We were incorporated as Churchill Capital Corp VIII on February 1, 2021 and changed our name to AltC Acquisition Corp. on February 24, 2021. Our executive offices are located at 640 Fifth Avenue, 12th Floor, New York, NY 10019 and our telephone number is (212) 380-7500. Upon completion of this offering, our corporate website address will be http://altcacquisitioncorp.com. Our website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this prospectus. You should not rely on any such information in making your decision whether to invest in our securities.
The Offering
In making your decision whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section below entitled “Risk Factors.”
40,000,000 shares of Class A common stock (or 46,000,000 shares of Class A common stock if the underwriters’ option to purchase additional shares is exercised in full), at $10.00 per share.
“ALCC”
Common Stock:
Number outstanding before this
offering:
11,500,000(2)(4)
Number outstanding after this offering:
51,250,000(1)(3)(4)
Election of directors; voting rights
Prior to the consummation of our initial business combination, only holders of our Class B common stock will have the right to vote on the election of directors; provided, however, that with respect to the election of directors in connection with a meeting of the stockholders of the Company in which a business combination is submitted to the stockholders of the Company for approval, holders of the Class A common stock and holders of the Class B common stock, voting together as a single class, shall have the exclusive right to vote for the election of directors. Other than pursuant to the provision in the preceding sentence, holders of the Class A common stock will not be entitled to vote on the election of directors prior to the consummation of the initial business combination. These provisions of our amended and restated certificate of incorporation may only be amended by a majority of the Class B common stock then outstanding. With respect to any other matter submitted to a vote of our stockholders, including any vote in connection with our initial business combination, except as required by applicable law or stock exchange rule, holders of our Class A common stock and holders of our Class B common stock will vote together as a single class, with each share entitling the holder to one vote. In connection with
(1)
Assumes the surrender of 17,250,000 founder shares at the time of this offering and no exercise ofthe underwriters’ option to purchase additional shares and the forfeiture by our sponsor of an additional 1,500,000 founder shares.
(2)
Consists solely of founder shares and assumes the surrender of 17,250,000 founder shares for no consideration by our sponsor at the time of this offering and the forfeiture of an additional 1,500,000 shares that are subject to forfeiture depending on the extent to which the underwriters’ option to purchase additional shares is exercised.
(3)
Includes 40,000,000 public shares, 10,000,000 founder shares and 1,250,000 private placement shares.
Founder shares are classified as shares of Class B common stock, which shares will automatically convert into shares of Class A common stock at the time of our initial business combination on a one- for-one basis, subject to adjustment as described below adjacent to the caption “Founder shares conversion and anti-dilution rights.
our initial business combination, we may enter into an agreement or other arrangement with the stockholders of the target with respect voting and other corporate governance matters following completion of the initial business combination, and such agreement or arrangement may provide for, or the target shareholders may require that such agreement provide for, nomination, designation or representation rights on the board of directors of the combined entity that may not be proportionate to our shareholders’ or such target shareholders’ ownership interest in the combined company.
In March 2021, our sponsor purchased an aggregate of 43,125,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.0006 per share. On March 9, 2021, the sponsor forfeited 14,375,000 founder shares for no consideration, resulting in an aggregate of 28,750,000 founder shares outstanding. In connection with this offering, our sponsor will surrender 17,250,000 founder shares plus up to an additional 1,500,000 founder shares depending on the extent to which the underwriters’ exercise their option to purchase additional shares. The number of founder shares to be held after this offering is determined based on the expectation that the founder shares would represent 20% of the outstanding shares of common stock upon the completion of this offering (excluding the private placement shares). Prior to the initial investment in the company of $25,000 by our sponsor, the company had no assets, tangible or intangible. The purchase price of the founder shares was determined by dividing the amount of cash contributed to us by the number of founder shares issued. If we increase or decrease the size of this offering, we will effect a share forfeiture, stock dividend or a share contribution back to capital or other appropriate mechanism, as applicable, with respect to our Class B common stock immediately prior to the consummation of this offering in such amount as to maintain the ownership of founder shares by our initial stockholders at 20% of our issued and outstanding shares of our common stock upon the consummation of this offering (excluding the private placement shares).
Following the surrender of 17,250,000 founder shares at the time of this offering, an additional 1,500,000 founder shares are subject to forfeiture by our sponsor depending on the extent to which the underwriters’ option to purchase additional shares is exercised.
The founder shares are identical to the shares of Class A common stock being sold in this offering, except that:
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only holders of the founder shares have the right to vote on the election and removal of directors prior to the consummation of our initial business combination; provided, however, that with respect to the election of directors in connection with a meeting of the stockholders of the Company in which a business combination is submitted to the stockholders of the Company for approval, holders of the Class A common stock and holders of the
Class B common stock, voting together as a single class, shall have the exclusive right to vote for the election of directors;
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the founder shares are subject to certain transfer restrictions, as described in more detail below;
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our sponsor, officers and directors have each entered into letter agreements with us, pursuant to which they have agreed: (1) to waive their redemption rights with respect to any founder shares and public shares held by them, as applicable, in connection with the completion of our initial business combination; (2) to waive their redemption rights with respect to any founder shares and public shares held by them in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we have not consummated our initial business combination within the completion window; and (3) to waive their rights to liquidating distributions from the trust account with respect to any founder shares they hold if we fail to complete our initial business combination within the Transfer restrictions on founder completion window (although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our initial business combination within the completion window). If we submit our initial business combination to our public stockholders for a vote, our initial stockholders, officers and directors have agreed to vote any founder shares, private placement shares and any public shares held by them in favor of our initial business combination. As a result, in addition to our initial stockholders’ founder shares, we would need 14,375,001, or 35.9%, of the 40,000,000 public shares sold in this offering to be voted in favor of an initial business combination (assuming all issued and outstanding shares are voted and the underwriters’ option to purchase additional shares is not exercised) in order to have such initial business combination approved;
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the founder shares are automatically convertible into shares of our Class A common stock at the time of our initial business combination, on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described in more detail below; and
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the holders of the founder shares are entitled to registration rights.
Transfer restrictions on founder shares
Our sponsor, co-founders, officers and directors have agreed not to transfer, assign or sell any founder shares held by them until the earlier to occur of: (1) one year after the completion of our initial business combination; or (2) the date on which we complete a liquidation, merger, stock exchange, reorganization or other similar transaction after our initial business combination
that results in all of our public stockholders having the right to exchange their shares of common stock for cash, securities or other property (except as described herein under “Principal Stockholders—Transfers of Founder Shares and Private Placement Shares”). Any permitted transferees would be subject to the same restrictions and other agreements of our sponsor with respect to any founder shares. We refer to such transfer restrictions throughout this prospectus as the lock-up.
Notwithstanding the foregoing, if the closing price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, the founder shares will be released from the lock-up.
Founder shares conversation and anti-dilution rights
The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts sold in this offering and related to the closing of our initial business combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such anti-dilution adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the total number of all shares of common stock outstanding upon completion of this offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with our initial business combination (net of the number of shares of Class A common stock redeemed in connection with our initial business combination), excluding any shares or equity- linked securities issued, or to be issued, to any seller in our initial business combination in consideration for such seller’s interest in the business combination target and any private placement shares issued upon the conversion of working capital loans made to us.
Our sponsor has subscribed to purchase an aggregate of 1,250,000 private placement shares (or 1,370,000 if the underwriters’ option to purchase additional shares is exercised in full) at a price of $10.00 per share ($12,500,000 in the aggregate or $13,700,000 in the aggregate if the underwriters’ option to purchase additional shares is exercised in full) in the Private Placement. The private placement shares will be identical to the shares of Class A common stock sold in this offering, subject to certain limited exceptions as described herein.
Proceeds to be held in trust account
The rules of the NYSE provide that at least 90% of the gross proceeds from this offering and the sale of the private placement
shares be deposited in a trust account. Of the net proceeds we will receive from this offering and the sale of the private placement shares described in this prospectus, $400,000,000 ($10.00 per share), or $460,000,000 ($10.00 per share) if the underwriters’ option to purchase additional shares is exercised in full, will be deposited into a segregated trust account located in the United States with Continental Stock Transfer & Trust Company acting as trustee and an aggregate of approximately $4.5 million will be used to pay expenses in connection with the closing of this offering and for working capital following this offering. The proceeds to be placed in the trust account include $14,000,000 (or up to $16,100,000 if the underwriters’ option to purchase additional shares is exercised in full) in deferred underwriting commissions. The funds in the trust account will be invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act and that invest only in direct U.S. government obligations.
Except with respect to interest earned on the funds held in the trust account that may be released to us as described below, the funds held in the trust account will not be released from the trust account until the earliest of: (1) the completion of our initial business combination; (2) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within the completion window or (ii) with respect to any other material provisions relating to the rights of holders of our Class A Common Stock prior to our initial business combination or pre-initial business combination business activity; and (3) the redemption of all of our public shares if we are unable to complete our initial business combination within the completion window, subject to applicable law.
Anticipated expenses and funding sources
Unless and until we complete our initial business combination, no proceeds held in the trust account will be available for our use, except permitted withdrawals. The funds in the trust account will be invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act and that invest only in direct U.S. government obligations. Based upon current interest rates, we expect the trust account to generate approximately $200,000 of interest annually (assuming an interest rate of 0.05% per year); however, we can provide no assurances regarding this amount. Unless and until we complete our initial business combination, we may pay our expenses only from such interest withdrawn from the trust account and any loans or additional investments from our sponsor, members of our management team or any of their respective affiliates or other third parties, although they are under no obligation or other duty to loan funds to, or invest in,
us, and provided that any such loans will not have any claim on the proceeds held in the trust account unless such proceeds are released to us upon completion of our initial business combination. If we complete our initial business combination, we expect to repay such loaned amounts out of the proceeds of the trust account released to us. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used to repay such loaned amounts. Up to $1,500,000 of all loans made to us by our sponsor, an affiliate of our sponsor or our officers and directors may be convertible into shares of the post-business combination entity at a price of $10.00 per share at the option of the lender at the time of the business combination. The shares would be identical to the private placement shares issued to our sponsor.
Conditions to completing our initial business combination
There is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination. The NYSE rules require that an initial business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the trust account (net of amounts disbursed to management for working capital purposes, if applicable, and excluding the amount of any deferred underwriting discount). We do not currently intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination, although there is no assurance that will be the case.
If our board of directors is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm. We will complete our initial business combination only if the post- transaction company in which our public stockholders own shares will own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to our initial business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in our initial business combination transaction. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test, provided that in the event that our initial business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses.
Permitted purchases of public shares by our affiliates
If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection
with our initial business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or any of their respective affiliates may purchase public shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination, although they are under no obligation or other duty to do so. Please see “Proposed Business—Permitted purchases of our securities” for a description of how such persons will determine from which stockholders to seek to acquire securities. There is no limit on the number of shares such persons may purchase, or any restriction on the price that they may pay. Any such price per share may be different than the amount per share a public stockholder would receive if it elected to redeem its shares in connection with our initial business combination. However, such persons have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. In the event our sponsor, directors, officers, advisors or any of their affiliates determine to make any such purchases at the time of a stockholder vote relating to our initial business combination, such purchases could have the effect of influencing the vote necessary to approve such transaction. None of the funds in the trust account will be used to purchase public shares in such transactions. If they engage in such transactions, they will be restricted from making any such purchases when they are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. Prior to the consummation of this offering, we will adopt an insider trading policy which will require insiders to:
(1)
refrain from purchasing securities when they are in possession of any material non-public information; and
(2)
to clear all trades with our compliance personnel or legal counsel prior to execution. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon several factors, including but not limited to, the timing and size of such purchases. Depending on such circumstances, our insiders may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary.
We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going- private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. Our sponsor, directors, officers, advisors or any of their respective affiliates will be restricted from making purchases if such purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.
We expect that any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent
such purchasers are subject to such reporting requirements. None of the funds held in the trust account will be used to purchase shares in such transactions prior to completion of our initial business combination. Please see “Proposed Business—Permitted purchases of our securities” for a description of how our sponsor, directors, officers, advisors or any of their respective affiliates will select which stockholders to purchase securities from in any private transaction.
The purpose of any such purchases of shares could be to vote such shares in favor of the initial business combination and thereby increase the likelihood of obtaining stockholder approval of the initial business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met.
Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible. In addition, if such purchases are made, the public “float” of our shares of Class A common stock may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
Redemption rights for public stockholders in connection with our initial business combination
We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares in connection with our initial business combination at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest (net of permitted withdrawals), divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.00 per public share. The per share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. The redemption right will include the requirement that any beneficial owner on whose behalf a redemption right is being exercised must identify itself in order to validly redeem its shares. Each public stockholder may elect to redeem its public shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction. Our sponsor, officers and directors have each entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares, private placement shares and any public shares held by them in connection with the completion of our initial business combination.
Manner of conducting redemptions
We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either: (1) in
connection with a stockholder meeting called to approve the business combination; or (2) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under applicable law or stock exchange listing requirement. Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would typically require stockholder approval. We currently intend to conduct redemptions pursuant to a stockholder vote unless stockholder approval is not required by applicable law or stock exchange listing requirement and we choose to conduct redemptions pursuant to the tender offer rules of the SEC for business or other reasons.
If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our amended and restated certificate of incorporation:
•
conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers; and
•
file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
Upon the public announcement of our initial business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we and our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common stock in the open market, in order to comply with Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than the number of public shares we are permitted to redeem. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete such initial business combination.
If, however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirement, or
we decide to obtain stockholder approval for business or other reasons, we will:
•
conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules; and
•
file proxy materials with the SEC.
We expect that a final proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft proxy statement would be made available to such stockholders well in advance of such time, providing additional notice of redemption if we conduct redemptions in conjunction with a proxy solicitation. Although we are not required to do so, we currently intend to comply with the substantive and procedural requirements of Regulation 14A in connection with any stockholder vote even if we are not able to maintain our NYSE listing or Exchange Act registration.
If we seek stockholder approval, unless otherwise required by applicable law, regulation or stock exchange rules, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting. Our initial stockholders, officers and directors will count towards this quorum and have agreed to vote any founder shares, private placement shares and any public shares held by them in favor of our initial business combination.
We expect that at the time of any stockholder vote relating to our initial business combination, our initial stockholders and their permitted transferees will own at least 20% of our outstanding shares of common stock entitled to vote thereon. As a result, in addition to our initial stockholders’ founder shares and private placement shares, we would need 14,375,001, or 35.9%, of the 40,000,000 public shares sold in this offering to be voted in favor of a transaction (assuming all issued and outstanding shares are voted and the option to purchase additional shares is not exercised) in order to have such initial business combination approved. These quorum and voting thresholds and agreements may make it more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares irrespective of whether they vote for or against the proposed transaction or whether they were a stockholder on the record date for the stockholder meeting held to approve the proposed transaction.
Our amended and restated certificate of incorporation will provide that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we do not then become subject to the
SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. Redemptions of our public shares may also be subject to a higher net tangible asset test or cash requirement pursuant to an agreement relating to our initial business combination. For example, the proposed business combination may require: (1) cash consideration to be paid to the target or its owners; (2) cash to be transferred to the target for working capital or other general corporate purposes; or (3) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares of common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares of common stock submitted for redemption will be returned to the holders thereof.
Tendering share certificates in connection with a tender offer or redemption rights
We may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal to approve our initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option, rather than simply voting against the initial business combination. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements, which will include the requirement that any beneficial owner on whose behalf a redemption right is being exercised must identify itself in order to validly redeem its shares.
Limitation on redemption rights of stockholders holding more than 15% of the shares sold in this offering if we hold a stockholder vote
Notwithstanding the foregoing redemption rights, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in this offering, without our prior consent. We believe the
restriction described above will discourage stockholders from accumulating large blocks of shares and subsequent attempts by such holders to use their ability to redeem their shares as a means to force us or our affiliates to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in this offering could threaten to exercise its redemption rights against a business combination if such holder’s shares are not purchased by us or our affiliates at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem to no more than 15% of the shares sold in this offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares (including all shares held by those stockholders that hold more than 15% of the shares sold in this offering) for or against our initial business combination.
Redemption rights in connection with proposed amendments to our certificate of incorporation
Our amended and restated certificate of incorporation will provide that any of its provisions related to pre-business combination activity (including the requirement to fund the trust account and not release such amounts except in specified circumstances and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of at least 65% of our common stock, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our common stock. In all other instances (other than the election of directors), our amended and restated certificate of incorporation will provide that it may be amended by holders of a majority of our common stock entitled to vote thereon, subject to applicable provisions of the Delaware General Corporation Law, or DGCL, or applicable stock exchange rules.
Prior to an initial business combination, we may not issue additional securities that can vote on amendments to our amended and restated certificate of incorporation or on our initial business combination or that would entitle holders thereof to receive funds from the trust account. Our initial stockholders, who will beneficially own 20% of our common stock upon the closing of this offering (assuming they do not purchase any shares in this offering), may participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they may choose. Our sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation to modify the substance or timing
of our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within the completion window, unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of permitted withdrawals), divided by the number of then outstanding public shares. Our sponsor, officers and directors have each entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares, private placement shares and any public shares held by them in connection with the completion of our initial business combination. Any permitted transferees would be subject to the same restrictions and other agreements of our initial stockholders with respect to any founder shares or private placement shares.
Release of funds in trust account on closing of our initial business combination
At the time of our initial business combination, the funds held in the trust account will be used to pay amounts due to any public stockholders who exercise their redemption rights as described above under “Proposed Business—Redemption rights for public stockholders in connection with our initial business combination,” to pay the underwriters their deferred underwriting commissions, to pay all or a portion of the consideration payable to the target or owners of the target of our initial business combination and to pay other expenses associated with our initial business combination. If our initial business combination is paid for using equity or debt securities or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination or used for redemption of our public shares, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital.
Redemption of public shares and distribution and liquidation if no initial business combination
Our amended and restated certificate of incorporation provides that we will have only the completion window to complete our initial business combination. If we are unable to complete our initial business combination within the completion window, we will:
(1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of permitted
withdrawals and up to $100,000 to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
Our initial stockholders, officers and directors have each entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to any founder shares or private placement shares held by them if we fail to complete our initial business combination within the completion window. However, if our sponsor or any of our officers, directors or any of their respective affiliates acquires public shares after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the completion window. The underwriters have agreed to waive their rights to their deferred underwriting commission held in the trust account in the event we do not complete our initial business combination and, in such event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of our public shares.
Our sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment
Limited payments to insiders
There will be no finder’s fees, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation paid by us to our sponsor, officers or directors or our or any of their respective affiliates, for services rendered to us prior to or in connection with the completion of our initial business combination (regardless of the type of transaction that it is). However, the following payments may be made to our sponsor, officers or directors, or our or their affiliates, and, if made prior to our initial business combination will be made from (i) funds held outside the trust account or (ii) permitted withdrawals:
•
repayment of an aggregate of up to $600,000 in loans made to us by our sponsor to cover offering-related and organizational expenses;
•
at the closing of our initial business combination, a customary financial advisory fee to M. Klein and Company, or another affiliate of our sponsor, in an amount that constitutes a market standard financial advisory fee for comparable transactions;
•
payment to an affiliate of our sponsor of a total of $30,000 per month, for up to 27 months, for office space, administrative and support services;
•
reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; and
•
repayment of loans which may be made by our sponsor, an affiliate of our sponsor or our officers and directors to finance transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto. Up to $1,500,000 of such loans may be convertible into shares of the post-business combination entity at a price of $10.00 per share at the option of the lender.
For an initial business combination with a valuation of $1.5 billion, the estimated aggregate amount of such payments would be between $5 million and $7 million or 0.3% – 0.5% of the transaction value. These payments, other than the repayment of sponsor loans and monthly fees for office space, administrative and support services, are not typical for blank check companies. The monthly fees for office space, administrative and support services are higher than what is typical for blank check companies. These payments may be funded using the net proceeds of this offering and the sale of the private placement shares not held in the trust account or, upon completion of the initial business combination, from any amounts remaining from the proceeds of the trust account released to us in connection therewith.
Our audit committee will review on a quarterly basis all payments that were made by us to our sponsor, officers or directors or our or any of their respective affiliates.
Prior to the effectiveness of this registration statement, we will have established and will maintain an audit committee to, among other things, monitor compliance with the terms described above and the other terms relating to this offering. If any noncompliance is identified, then the audit committee will be charged with the responsibility to immediately take all action necessary to rectify such noncompliance or otherwise to cause compliance with the terms of this offering. Please see “Management—Committees of the Board of Directors—Audit Committee” for additional information.
Mr. Klein is the founder and managing partner of M. Klein and Company and acts as a strategic advisor to its clients. M. Klein and Company is an affiliate of our sponsor. Mr. Klein has a fiduciary duty to M. Klein and Company. As a result, Mr. Klein may have a duty to offer acquisition opportunities to clients of M. Klein and Company. Mr. Klein will have no duty to offer acquisition opportunities to the Company unless presented to him solely in his capacity as an officer or director of the Company and after he has satisfied his contractual and fiduciary obligations to other parties.
As a result, M. Klein and Company’s clients may compete with us for acquisition opportunities in the same industries and sectors as we may target for our initial business combination. If any of them decide to pursue any such opportunity, we may be precluded from procuring such opportunities. In addition, investment ideas generated within M. Klein and Company, including by Mr. Klein and other persons who may make decisions for the company, may be suitable both for us and for M. Klein and Company or any of its clients, and will be directed initially to such persons rather than to us. None of Mr. Klein, M. Klein and Company or members of our management team who are also employed by M. Klein and Company have any obligation to present us with any opportunity for a potential business combination of which they become aware unless it is offered to them solely in their capacity as a director or officer of the Company and after they have satisfied their contractual and fiduciary obligations to other parties.
Our Strategic Partners and their personnel, if any, may have a duty to offer acquisition opportunities to clients or other parties. Such persons will have no duty to offer acquisition opportunities to the Company unless presented to them solely in their capacity as a director of the Company and after they have satisfied any contractual and fiduciary obligations to other parties.
As a result, such persons may compete with us for acquisition opportunities in the same industries and sectors as we may target for our initial business combination. Consequently, we may be precluded from procuring such opportunities. In addition, investment ideas may be suitable both for us and for the Strategic Partners or any of its clients, and will be directed initially to such persons rather than to us.
In addition, Mr. Klein, M. Klein and Company and any of our Strategic Partners or their personnel may sponsor or form other blank check companies similar to ours during the period in which we are seeking an initial business combination. In particular, Mr. Klein, M. Klein and Company, our Strategic Partners and our board of directors, actively engaged in Churchill Capital Corp II, Churchill Capital Corp IV, Churchill Capital Corp V, Churchill Capital Corp VI and Churchill Capital Corp VII, special purpose acquisition corporations that completed their initial public offerings in July 2019, August 2020, December 2020, February 2021 and February 2021, respectively. Churchill Capital Corp II, Churchill Capital Corp IV and Churchill Capital Corp V, like us, may pursue initial business combination targets in any businesses or industries and have until July 1, 2021, August 3, 2022, December 18, 2022, February 11, 2023 and February 11, 2023, respectively, to do so (absent an extension in accordance with their charters). Any such companies, including Churchill Capital Corp II, Churchill Capital Corp IV and Churchill Capital Corp V, may present additional conflicts of interest in pursuing an acquisition target.
Furthermore, our sponsor, officers and directors may participate in the formation of, or become an officer or director
of, any other blank check company prior to completion of our initial business combination. As a result, our sponsor, officers or directors could have conflicts of interest in determining whether to present business combination opportunities to us or to any other blank check company with which they may become involved.
We also may engage M. Klein and Company, or another affiliate of our sponsor, as our lead financial advisor in connection with our initial business combination and may pay such affiliate a customary financial advisory fee in an amount that constitutes a market standard financial advisory fee for comparable transactions. See “Risk Factors—We may engage M. Klein and Company, or another affiliate of our sponsor, as our lead financial advisor on our business combinations and other transactions. Any fee in connection with such engagement may be conditioned upon the completion of such transactions. This financial interest in the completion of such transactions may influence the advice such affiliate provides.”
As described in “Proposed Business—Sourcing of Potential Business Combination Targets” and “Management—Conflicts of Interest,” each of our officers and directors presently has, and any of them in the future may have additional, fiduciary, contractual or other obligations or duties to one or more other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such entities. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for one or more entities to which he or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such business combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us (including as described above). These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us.
The potential conflicts described above may limit our ability to enter into a business combination or other transactions. These circumstances could give rise to numerous situations where interests may conflict. There can be no assurance that these or other conflicts of interest with the potential for adverse effects on the Company and investors will not arise.
Our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent registered public accounting firm) for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below: (1) $10.00 per public share; or (2) the actual amount per public share held in the trust account, as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, in each case net of permitted
withdrawals, except as to any claims by a third party that executed a waiver of any and all rights to the monies held in the trust account (whether any such waiver is enforceable) and except as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company and, therefore, our sponsor may not be able to satisfy those obligations. We have not asked our sponsor to reserve for such obligations.
Risks
We are a newly incorporated company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. Please see “Proposed Business—Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419” for additional information concerning how Rule 419 blank check offerings differ from this offering. You should carefully consider these and the other risks set forth in the section entitled “Risk Factors” in this prospectus.
Summary Financial Data
The following table summarizes the relevant financial data for our business and should be read with our financial statements, which are included in this prospectus. We have not had any significant operations to date, so only balance sheet data is presented.
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|
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March 4, 2021
|
|
|
March 31, 2021
|
|
| |
|
|
Actual
|
|
|
Actual
|
|
|
As Adjusted
|
|
| |
|
|
(Audited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Balance Sheet Data:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital (deficit)(1) .
|
|
|
|
$ |
(16,707) |
|
|
|
|
$ |
(315,172) |
|
|
|
|
$ |
387,524,000 |
|
|
|
Total assets(2)
|
|
|
|
|
65,707 |
|
|
|
|
|
565,707 |
|
|
|
|
|
401,524,000 |
|
|
|
Total liabilities(3) .
|
|
|
|
|
41,707 |
|
|
|
|
|
541,707 |
|
|
|
|
|
14,000,000 |
|
|
|
Value of common stock subject to possible redemption(4)
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
382,523,990 |
|
|
|
Stockholders’ equity(5)
|
|
|
|
|
24,000 |
|
|
|
|
|
24,000 |
|
|
|
|
|
5,000,010 |
|
|
(1)
The “as adjusted” calculation includes $400,000,000 cash held in trust from the proceeds of this offering and the sale of the private placement shares, plus $24,000 of actual stockholders’ equity as of March 31, 2021, less $14,000,000 of deferred underwriting commission
(2)
The “as adjusted” calculation equals $400,000,000 cash held in trust from the proceeds of this offering and the sale of the private placement shares, plus $24,000 of actual stockholders’ equity as of March 31, 2021.
(3)
The “as adjusted” calculation includes $14,000,000 of deferred underwriting commissions.
(4)
The “as adjusted” calculation equals the “as adjusted” total assets, less the “as adjusted” total liabilities, less the “as adjusted” stockholders’ equity, which is set to approximate the minimum net tangible assets threshold of at least $5,000,001.
(5)
Excludes 38,252,399 public shares which are subject to redemption in connection with our initial business combination. The “as adjusted” calculation equals the “as adjusted” total assets, less the “as adjusted” total liabilities, less the value of Class A common stock that may be redeemed in connection with our initial business combination (initially $10.00 per share). The actual number of public shares that may be redeemed may exceed the aforementioned amount provided that we will not consummate an initial business combination unless we satisfy the $5,000,001 minimum net tangible assets threshold.
The “as adjusted” information gives effect to the sale of the shares in this offering, the sale of the private placement shares, and the payment of the estimated expenses of this offering and assumes no exercise of the underwriters’ over-allotment option. The “as adjusted” total assets amount includes the $400,000,000 held in the trust account (which would be $460,000,000 if the underwriters’ over-allotment option is exercised in full) for the benefit of our public stockholders, which amount, less deferred underwriting commissions, will be available to us only upon the completion of our initial business combination within the completion window. The “as adjusted” total assets include $14,000,000 being held in the trust account (which would be $16,100,000 if the underwriters’ over-allotment option is exercised in full) representing deferred underwriting commissions. The underwriters will not be entitled to any interest accrued on the deferred underwriting discounts and commissions.
RISK FACTORS
An investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained in this prospectus, before making a decision to invest in our public shares. If any of the following events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment.
Risks Relating to Our Search for, and Consummation of or Inability to Consummate, an Initial Business Combination
Our public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, and even if we hold a vote, holders of our founder shares will participate in such vote, which means we may complete our initial business combination even though a majority of our public stockholders do not support such a combination.
We may not hold a stockholder vote to approve our initial business combination unless the business combination would require stockholder approval under applicable law or stock exchange listing requirements or if we decide to hold a stockholder vote for business or other reasons. For instance, the NYSE rules currently allow us to engage in a tender offer in lieu of a stockholder meeting but would still require us to obtain stockholder approval if we were seeking to issue more than 20% of our outstanding shares to a target business as consideration in any business combination. Therefore, if we were structuring a business combination that required us to issue more than 20% of our outstanding shares, we would seek stockholder approval of such business combination. However, except as required by applicable law or stock exchange rules, the decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. Even if we seek stockholder approval, the holders of our founder shares will participate in the vote on such approval. Accordingly, we may consummate our initial business combination even if holders of a majority of our outstanding public shares do not approve of the business combination we consummate. Please see “Proposed Business—Stockholders may not have the ability to approve our initial business combination” for additional information.
If we seek stockholder approval of our initial business combination, our sponsor, officers and directors have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote.
Our initial stockholders, officers and directors have agreed (and their permitted transferees will agree) to vote any founder shares, private placement shares and any public shares held by them in favor of our initial business combination. As a result, in addition to our initial stockholders’ founder shares and private placement shares, we would need 14,375,001, or 35.9%, of the 40,000,000 public shares sold in this offering to be voted in favor of a transaction (assuming all issued and outstanding shares are voted and the option to purchase additional shares is not exercised) in order to have such initial business combination approved. We expect that our initial stockholders and their permitted transferees will own at least 20% of our outstanding shares of common stock at the time of any such stockholder vote. Accordingly, if we seek stockholder approval of our initial business combination, it is more likely that the necessary stockholder approval will be received than would be the case if our initial stockholders and their permitted transferees agreed to vote their founder shares in accordance with the majority of the votes cast by our public stockholders.
Your only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek stockholder approval of such business combination.
At the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of any target businesses. Additionally, since our board of directors may complete a business combination without seeking stockholder approval, public stockholders may not have the right or opportunity to vote on the business combination. Accordingly, if we do not seek stockholder approval, your only opportunity to affect the investment decision regarding a potential business combination may be
limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders in which we describe our initial business combination.
The ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination with a target.
We may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights, we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination. The amount of the deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are redeemed in connection with a business combination and such amount of deferred underwriting discount is not available for us to use as consideration in an initial business combination. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related business combination and may instead search for an alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us. If we are able to consummate an initial business combination, the per-share value of shares held by non-redeeming stockholders will reflect our obligation to pay the deferred underwriting commissions.
The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital structure.
At the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights and, therefore, we will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such requirements or arrange for third-party financing. In addition, if a larger number of shares is submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange for third party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. Furthermore, this dilution would increase to the extent that the anti-dilution provision of the Class B common stock results in the issuance of shares of Class A common stock on a greater than one-to-one basis upon conversion of the Class B common stock at the time of our initial business combination. In addition, the amount of deferred underwriting commissions payable to the underwriters is not required to be adjusted for any shares that are redeemed in connection with an initial business combination. The above considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital structure.
The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.
If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful increases. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open market; however, at such time our stock may trade at a discount to the pro rata amount per share
in the trust account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your stock in the open market.
The requirement that we complete our initial business combination within the completion window may give potential target businesses leverage over us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for our stockholders.
Any potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete our initial business combination within the completion window.
Consequently, such target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete our initial business combination with that particular target business, we may be unable to complete our initial business combination with any target business. This risk will increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
We may not be able to complete our initial business combination within the completion window, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public stockholders may receive only $10.00 per share, or less than such amount in certain circumstances.
Our sponsor, officers and directors have agreed that we must complete our initial business combination within the completion window. We may not be able to find a suitable target business and complete our initial business combination within such time period. Our ability to complete our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the other risks described herein.
If we have not completed our initial business combination within such time period, we will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such case, our public stockholders may receive only $10.00 per share, or less than $10.00 per share, on the redemption of their shares. Please see “—If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
If permitted withdrawals and other sources of working capital are insufficient, it could limit the amount available to fund our search for a target business or businesses and complete our initial business combination and we will depend on loans from our sponsor or management team to fund our search, to pay our taxes and to complete our initial business combination. If we are unable to obtain such loans, we may be unable to complete our initial business combination.
Of the net proceeds of this offering and the sale of the private placement shares, $1,500,000 will be available to us initially outside the trust account to fund our working capital requirements. In the event that our offering expenses exceed our estimate of $3,000,000, we may fund such excess with loans or additional investments from our sponsor, members of our management team or any of their respective affiliates or other third parties. Conversely, in the event that the offering expenses are less than our estimate of $3,000,000, the excess would be held outside of the trust account. If we are required to seek additional capital, we would
need to borrow funds from our sponsor, management team or other third parties to operate or may be forced to liquidate. Neither our sponsor, members of our management team nor any of their respective affiliates is under any obligation or other duty to loan funds to us in such circumstances. Any such loans would be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In such case, our public stockholders may receive only $10.00 per share, or less in certain circumstances. Please see “—If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
The securities in which we invest the funds held in the trust account could bear a negative rate of interest, which could reduce the aggregate value of the assets held in the trust account such that the per share redemption amount received by public stockholders may be less than your anticipated per share redemption amount.
The funds in the trust account will be invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act and that invest only in direct U.S. government obligations. While short-term U.S. government treasury bills currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States. In the event that we are unable to complete our initial business combination or make certain amendments to our amended and restated certificate of incorporation, our public stockholders are entitled to receive their pro-rata share of the proceeds held in the trust account, plus any interest income not released to us, net of taxes payable. Negative interest rates could impact the per share redemption amount that may be received by public stockholders.
If we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors or any of their respective affiliates may elect to purchase shares from the public, which may influence a vote on a proposed business combination and reduce the public “float” of our common stock.
If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or any of their respective affiliates may purchase public shares or a combination thereof in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination, although they are under no obligation or other duty to do so. Please see “Proposed Business—Permitted purchases of our securities” for a description of how such persons will determine from which stockholders to seek to acquire shares. Such a purchase may include a contractual acknowledgement that such public stockholder, although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights.
In the event that our sponsor, directors, officers, advisors or any of their respective affiliates purchase public shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling public stockholders would be required to revoke their prior elections to redeem their shares. The price per share paid in any such transaction may be different than the amount per share a public stockholder would receive if it elected to redeem its shares in connection with our initial business combination. The purpose of such purchases could be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of our initial business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. The purpose of such purchases could be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of our initial business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible. Any such purchases will be reported pursuant to Section 13 and Section 16
of the Exchange Act to the extent such purchasers are subject to such reporting requirements. Please see “Proposed Business—Permitted purchases of our securities” for a description of how our sponsor, directors, officers, advisors or any of their respective affiliates will select which stockholders to purchase securities from in any private transaction.
In addition, if such purchases are made, the public “float” of our Class A common stock and the number of beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
If a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares. For example, we may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer or proxy materials documents mailed to such holders, or up to two business days prior to the vote on the proposal to approve the initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically. In the event that a stockholder fails to comply with these procedures, its shares may not be redeemed. Please see “Proposed Business—Tendering stock certificates in connection with a tender offer or redemption rights.”
You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares, potentially at a loss.
Our public stockholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (1) the completion of our initial business combination, and then only in connection with those shares of Class A common stock that such stockholder properly elected to redeem, subject to the limitations described herein; (2) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within the completion window; and (3) the redemption of all of our public shares if we are unable to complete our initial business combination within the completion window, subject to applicable law and as further described herein. In addition, if we are unable to complete an initial business combination within the completion window for any reason, compliance with Delaware law may require that we submit a plan of dissolution to our then-existing stockholders for approval prior to the distribution of the proceeds held in our trust account. In that case, public stockholders may be forced to wait beyond the completion window before they receive funds from our trust account. In no other circumstances will a public stockholder have any right or interest of any kind in the trust account. Accordingly, to liquidate your investment, you may be forced to sell your public shares, potentially at a loss.
Because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on our redemption of their stock.
We expect to encounter intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, including, without limitation, M. Klein and Company and our Strategic Partners, competing for the types of businesses we intend to acquire. Many of
these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there will be numerous target businesses we could potentially acquire with the net proceeds of this offering and the sale of the private placement shares, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. Our sponsor, any of its affiliates or any of their respective clients may make additional investments in us, although our sponsor and its affiliates have no obligation or other duty to do so. Please see “Proposed Business—Certain Potential Conflicts of Interest Relating to M. Klein and Company” for a discussion on certain limitations related to other resources M. Klein and Company may, but is under no obligation or other duty to, provide us.
This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, in the event we seek stockholder approval of our initial business combination and we are obligated to pay cash for public shares that are redeemed, it will potentially reduce the resources available to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating and completing a business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account. Please see “—If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
If the funds available to us outside of the trust account are insufficient to allow us to operate for at least the completion window, we may be unable to complete our initial business combination.
The funds available to us outside of the trust account may not be sufficient to allow us to operate for at least the completion window, assuming that our initial business combination is not completed during that time. We expect to incur significant costs in pursuit of our acquisition plans. Management’s plans to address this need for capital through this offering and potential loans from certain of our affiliates are discussed in the section of this prospectus titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” However, our affiliates are not obligated to make loans to us in the future, and we may not be able to raise additional financing from unaffiliated parties necessary to fund our expenses. Any such event in the future may negatively impact the analysis regarding our ability to continue as a going concern at such time.
We believe that the funds available to us outside of the trust account, including permitted withdrawals and loans or additional investments from our sponsor, will be sufficient to allow us to operate for at least the completion window; however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no- shop” provision (a provision in letters of intent or merger agreements designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into a letter of intent or merger agreement where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account. Please see “—If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per- share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
We will depend on permitted withdrawals and loans from our sponsor or management team to fund our search, to pay our taxes and to complete our initial business combination. If we are unable to obtain such loans, we may be unable to complete our initial business combination.
Of the net proceeds of this offering and the sale of the private placement shares, $1,500,000 will be available to us initially outside the trust account to fund our working capital requirements. In the event that
our offering expenses exceed our estimate of $3,000,000, we may fund such excess with loans or additional investments from our sponsor, members of our management team or any of their respective affiliates or other third parties. Conversely, in the event that the offering expenses are less than our estimate of $3,000,000, the excess would be held outside of the trust account. We expect to fund our working capital requirements prior to the time of our initial business combination with permitted withdrawals from the interest earned on the trust account, subject to an annual limit of $1,000,000. In addition, our sponsor, an affiliate of our sponsor or our officers and directors may, but none of them is obligated to, loan us funds as may be required to fund our working capital requirements. Based upon current interest rates, we expect the trust account to generate approximately $200,000 of interest annually (assuming an interest rate of 0.05% per year); however, we can provide no assurances regarding this amount. If we are required to seek additional capital, we would need to borrow funds from our sponsor, management team or other third parties to operate or may be forced to liquidate. Neither our sponsor, members of our management team nor any of their respective affiliates is under any obligation or other duty to loan funds to us in such circumstances. Any such loans would be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In such case, our public stockholders may receive only $10.00 per share, or less in certain circumstances. Please see “—If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
Subsequent to our completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and the price of our securities, which could cause you to lose some or all of your investment.
Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will identify all material issues that may be present with a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing. Accordingly, any stockholders who choose to remain a stockholder following our initial business combination could suffer a reduction in the value of their securities. Such stockholders are unlikely to have a remedy for such reduction in value.
If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per share redemption amount received by stockholders may be less than $10.00 per share.
Our placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement
would be significantly more beneficial to us than any alternative. Making such a request of potential target businesses may make our acquisition proposal less attractive to them and, to the extent prospective target businesses refuse to execute such a waiver, it may limit the field of potential target businesses that we might pursue. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where we are unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we are unable to complete our initial business combination within the completion window, or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per share redemption amount received by public stockholders could be less than the per share amount initially held in the trust account, due to claims of such creditors.
Our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent registered public accounting firm) for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below: (1) $10.00 per public share; or (2) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, in each case net of permitted withdrawals, except as to any claims by a third party that executed a waiver of any and all rights to the monies held in the trust account (whether any such waiver is enforceable) and except as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and we have not asked our sponsor to reserve for such indemnification obligations. We have not asked our sponsor to reserve for such obligations. As a result, if any such claims were successfully made against the trust account, the funds available for our initial business combination and redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser amount per share in connection with any redemption of your public shares. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Our independent directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public stockholders.
In the event that the proceeds in the trust account are reduced below the lesser of: (1) $10.00 per public share; or (2) the actual amount per share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, in each case net of permitted withdrawals, and our sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in certain instances. For example, the cost of such legal action may be deemed by the independent directors to be too high relative to the amount recoverable or the independent directors may determine that a favorable outcome is not likely. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.00 per share.
If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages.
If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions
received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith by paying public stockholders from the trust account prior to addressing the claims of creditors, thereby exposing itself and us to claims of punitive damages.
If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per share amount that would otherwise be received by our public stockholders in connection with our liquidation would be reduced.
If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities;
each of which may make it difficult for us to complete our initial business combination. In addition, we may have imposed upon us burdensome requirements, including:
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registration as an investment company with the SEC;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure requirements and compliance with other rules and regulations that we are currently not subject to.
In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business will be to identify and complete a business combination and thereafter to operate the post-transaction business or assets for the long-term. We do not plan to buy businesses or assets with a view to resale or profit from their resale.
We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the trust account may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long-term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act. This offering is not intended for persons who are seeking a return on investments in government securities or investment securities. The trust account is intended as a
holding place for funds pending the earliest to occur of: (i) the completion of our primary business objective, which is a business combination; (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within the completion window; and (iii) absent a business combination, our return of the funds held in the trust account to our public stockholders as part of our redemption of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to consummate our initial business combination. If we are unable to complete our initial business combination within the completion window, our public stockholders may receive only approximately $10.00 per share on the liquidation of our trust account. In certain circumstances, our public stockholders may receive less than $10.00 per share on the redemption of their shares if we are unable to complete our initial business combination within the completion window. Please see “—If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business combination, and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our initial business combination, and results of operations.
Because we are neither limited to evaluating target businesses in a particular industry nor have we selected any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
We may seek to complete a business combination with an operating company in any industry or sector. However, we will not, under our amended and restated certificate of incorporation, be permitted to effectuate our initial business combination with another blank check company or similar company with nominal operations. Because we have not yet selected or approached any specific target business with respect to a business combination, there is no basis to evaluate the possible merits or risks of any particular target business’s operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete our initial business combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our shares will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination target.
Accordingly, any stockholders who choose to remain a stockholder following our initial business combination could suffer a reduction in the value of their securities. Such stockholders are unlikely to have a remedy for such reduction in value.
Although we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our initial business combination will not have all of these positive attributes. If we complete our initial business combination with a target that does not meet some or all of these criteria and guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by applicable law or stock exchange rules, or we decide to obtain stockholder approval for business or other reasons, it may be more difficult for us to attain stockholder approval of our initial business combination if the target business does not meet our general criteria and guidelines. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account.
We may seek acquisition opportunities in acquisition targets that may be outside of our management’s areas of expertise.
We will consider a business combination in sectors which may be outside of our management’s areas of expertise if such business combination candidate is presented to us and we determine that such candidate offers an attractive acquisition opportunity for our company. In the event we elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s expertise may not be directly applicable to its evaluation or operation, and the information contained in this prospectus regarding the areas of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire. As a result, our management may not be able to adequately ascertain or assess all of the significant risk factors relevant to such acquisition. Accordingly, any stockholders who choose to remain a stockholder following our initial business combination could suffer a reduction in the value of their securities. Such stockholders are unlikely to have a remedy for such reduction in value.
We may seek acquisition opportunities with an early stage company, a financially unstable business or an entity lacking an established record of revenue or earnings, which could subject us to volatile revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel.
To the extent we complete our initial business combination with an early stage company, a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include investing in a business without a proven business model and with limited historical financial data, volatile revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We are not required to obtain an opinion from an independent investment banking firm or from an independent accounting firm, and consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our stockholders from a financial point of view.
Unless we complete our initial business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm that the price we are paying is fair to our stockholders from a financial point of view.
In addition, if our board of directors is not able to determine the fair market value of the target business or businesses, in connection with the NYSE rules that require that an initial business combination
be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the trust account (net of amounts disbursed to management for working capital purposes, if applicable, and excluding the amount of any deferred underwriting discount), we will obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm with respect to the satisfaction of such criteria.
Other than the two circumstances described above, we are not required to obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial community.
Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to our initial business combination.
We may issue additional shares of Class A common stock or preferred stock to complete our initial business combination or under an employee incentive plan after completion of our initial business combination. We may also issue shares of Class A common stock upon the conversion of the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions described herein. Any such issuances would dilute the interest of our stockholders and likely present other risks.
Our amended and restated certificate of incorporation will authorize the issuance of up to 500,000,000 shares of Class A common stock, par value $0.0001 per share, and 100,000,000 shares of Class B common stock, par value $0.0001 per share and 1,000,000 shares of undesignated preferred stock, par value $0.0001 per share. Immediately after this offering, there will be 458,750,000 and 90,000,000 (assuming in each case, that the underwriters have not exercised their option to purchase additional shares) authorized but unissued shares of Class A and Class B common stock, respectively, available for issuance, which amount takes into account shares reserved for issuance upon the conversion of the Class B common stock and the private placement shares. Shares of Class B common stock are automatically convertible into shares of our Class A common stock at the time of our initial business combination, initially at a one-for-one ratio but subject to adjustment as set forth herein. Immediately after this offering, there will be no shares of preferred stock issued and outstanding.
We may issue a substantial number of additional shares of Class A common stock, and may issue shares of preferred stock, in order to complete our initial business combination or under an employee incentive plan after completion of our initial business combination (although our amended and restated certificate of incorporation will provide that we may not issue additional securities that can vote on amendments to our amended and restated certificate of incorporation or on our initial business combination or that would entitle holders thereof to receive funds from the trust account). We may also issue shares upon conversion of the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions described herein. However, our amended and restated certificate of incorporation will provide, among other things, that prior to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to (1) receive funds from the trust account or (2) vote on any initial business combination. The issuance of additional shares of common or preferred stock:
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may significantly dilute the equity interest of investors in this offering;
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may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock;
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could cause a change in control if a substantial number of shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and
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may adversely affect prevailing market prices for our common stock.
There has been and may in the future be diversity in the capital structure, financial accounting policies, and resultant financial reporting by SPACs, which may impact the market price for our Class A common stock and our ability to complete a business combination.
On April 12, 2021, the staff of the Securities and Exchange Commission (the “SEC”) issued a statement related to warrants issued by SPACs (the “SEC Statement”), which resulted in the warrants issued by many SPACs being classified as liabilities rather than equity as previously reported. While we are not issuing warrants, further SEC statements relating to accepted accounting of SPACs could result in the correction of accounting errors in previously issued financial statements, restatements of previously issued audited financial statements, the filing of notices that previously issued financial statements may not be relied upon, and findings of material weaknesses and significant deficiencies in internal controls over financial reporting.
The nominal purchase price paid by our sponsor for the founder shares may significantly dilute the implied value of your public shares in the event we consummate an initial business combination, and our sponsor is likely to make a substantial profit on its investment in us in the event we consummate an initial business combination, even if the business combination causes the trading price of our common stock to materially decline.
While we are offering our public shares at an offering price of $10.00 per share and the amount in our trust account is initially anticipated to be $10.00 per public share, implying an initial value of $10.00 per public share, our sponsor paid only a nominal aggregate purchase price of $25,000 for the founder shares, or approximately $0.0025 per share (after giving effect to the forfeitures expected at the time of this offering and assuming no exercise of the underwriters' over-allotment option), and will pay $10.00 per share for 1,250,000 private placement shares assuming no exercise of the underwriters' overallotment option. As a result, the value of your public shares may be significantly diluted in the event we consummate an initial business combination. For example, the following table shows the public stockholders’ and sponsor’s investment per share and how that compares to the implied value of one of our shares upon the consummation of our initial business combination if at that time we were valued at $400,000,000, which is the amount we would have for our initial business combination in the trust account assuming the underwriters’ over-allotment option is not exercised, no interest is earned on the funds held in the trust account, and no public shares are redeemed in connection with our initial business combination. At such valuation, each share of our common stock would have an implied value of $7.80 per share, which is a 22% decrease as compared to the initial implied value per public share of $10.00.
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Public shares
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|
|
|
|
40,000,000 |
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|
| |
Founder shares and private placement shares
|
|
|
|
|
11,250,000 |
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|
| |
Total shares
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|
|
|
|
51,250,000 |
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|
| |
Total funds in trust available for initial business combination (1)
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|
|
|
$ |
400,000,000 |
|
|
| |
Implied value per share
|
|
|
|
$ |
7.80 |
|
|
| |
Public stockholders’ investment per share
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|
|
|
$ |
10.00 |
|
|
| |
Sponsor’s investment per share (2)
|
|
|
|
$ |
0.0025 |
|
|
(1)
Does not take into account other potential impacts on our valuation at the time of the business combination, such as the value of our private placement shares, the trading price of our public shares, the business combination transaction costs (including payment of $14,000,000 of deferred underwriting commissions), any equity issued or cash paid to the target’s sellers or other third parties, or the target’s business itself, including its assets, liabilities, management and prospects.
(2)
The sponsor’s total investment in the equity of the company, inclusive of the founder shares and the sponsor’s $12,500,000 (or $13,700,000 if the underwriters’ option to purchase additional shares is exercised in full) investment in the private placement shares, is $12,525,000 (or $13,725,000 if the underwriters’ option to purchase additional shares is exercised in full.
While the implied value of our public shares may be diluted, the implied value of $7.80 per share would represent a significant implied profit for our sponsor relative to the initial purchase price of the founder shares. Our sponsor has invested or committed to invest an aggregate of $12,525,000 (or $13,725,000 if the underwriters’ option to purchase additional shares is exercised in full) in us in connection with this
offering, comprised of the $25,000 purchase price for the founder shares and the $12,500,000 (or $13,700,000 if the underwriters’ option to purchase additional shares is exercised in full) purchase price for the private placement shares. At $7.80 per share, the 11,250,000 founder shares and private placement shares would have an aggregate implied value of $87,750,000. As a result, even if the trading price of our common stock significantly declines, our sponsor will stand to make significant profit on its investment in us. In addition, our sponsor could potentially recoup its entire investment in us even if the trading price of our common stock were as low as $1.11 per share and even if the private placement shares are worthless. As a result, our sponsor is likely to make a substantial profit on its investment in us even if we select and consummate an initial business combination that causes the trading price of our common stock to decline, while our public stockholders who purchased their public shares in this offering could lose significant value in their public shares. Our sponsor may therefore be economically incentivized to consummate an initial business combination with a riskier, weaker-performing or less-established target business than would be the case if our sponsor had paid the same per share price for the founder shares as our public stockholders paid for their public shares.
Resources could be wasted in researching initial business combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less than such amount in certain circumstances, on the liquidation of our trust account.
We anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial business combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account. Please see “—If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
We may only be able to complete one business combination with the proceeds of this offering and the sale of the private placement shares, which will cause us to be solely dependent on a single business which may have a limited number of products or services. This lack of diversification may materially negatively impact our operations and profitability.
The net proceeds from this offering and the sale of the private placement shares will provide us with $400,000,000 (or $460,000,000 if the underwriters’ option to purchase additional shares is exercised in full) that we may use to complete our initial business combination (which includes $14,000,000, or up to $16,100,000 if the underwriters’ option to purchase additional shares is exercised in full, of deferred underwriting commissions being held in the trust account).
We may effectuate our initial business combination with a single target business or multiple target businesses simultaneously or within a short period of time. However, we may not be able to effectuate our initial business combination with more than one target business because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By completing our initial business combination with only a single entity our lack of diversification may subject us to numerous economic, competitive and regulatory risks. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may be:
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solely dependent upon the performance of a single business, property or asset; or
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dependent upon the development or market acceptance of a single or limited number of products, processes or services.
This lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.
We may attempt to complete our initial business combination with a private company about which little information is available, which may result in a business combination with a company that is not as profitable as we suspected, if at all.
In pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. Very little public information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business combination on the basis of limited information, which may result in a business combination with a company that is not as profitable as we suspected, if at all.
Our management may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure our initial business combination so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities of the target, our stockholders prior to our initial business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in our initial business combination. For example, we could pursue a transaction in which we issue a substantial number of new shares of common stock in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s stock than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain our control of the target business.
We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete our initial business combination with which a substantial majority of our stockholders do not agree.
Our amended and restated certificate of incorporation will not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares in an amount that would cause our net
tangible assets to be less than $5,000,001 (such that we do not then become subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. As a result, we may be able to complete our initial business combination even though a substantial majority of our public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our initial business combination and do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our sponsor, officers, directors, advisors or any of their respective affiliates. In the event the aggregate cash consideration we would be required to pay for all shares of common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, all shares of common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our initial business combination that some of our stockholders may not support.
In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments. For example, blank check companies have amended the definition of business combination and increased redemption thresholds extended the time to consummate an initial business combination. We cannot assure you that we will not seek to amend our charter or governing instruments or extend the time to consummate an initial business combination in order to effectuate our initial business combination.
Certain provisions of our amended and restated certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement governing the release of funds from our trust account) may be amended with the approval of holders of not less than 65% of our common stock, which is a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation and the trust agreement to facilitate the completion of an initial business combination that some of our stockholders may not support.
Our amended and restated certificate of incorporation will provide that any of its provisions (other than amendments relating to the appointment of directors, which require the approval by a majority of the Class B common stock then outstanding) related to pre-business combination activity (including the requirement to fund the trust account and not release such amounts except in specified circumstances and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of at least 65% of our common stock, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our common stock. In all other instances, our amended and restated certificate of incorporation will provide that it may be amended by holders of a majority of our common stock, subject to applicable provisions of the DGCL, or applicable stock exchange rules. We may not issue additional securities that can vote on amendments to our amended and restated certificate of incorporation or on our initial business combination. Our initial stockholders, who will beneficially own 20% of our common stock upon the closing of this offering (assuming they do not purchase any shares in this offering), may participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation which will govern our pre-business combination behavior more easily than some other blank check companies, and this may increase our ability to complete our initial business combination with which you do not agree. Our stockholders may pursue remedies against us for any breach of our amended and restated certificate of incorporation.
Our sponsor, officers and directors have agreed, pursuant to a written agreement, that they will not propose any amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial
business combination or to redeem 100% of our public shares if we do not complete our initial business combination within the completion window, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, divided by the number of then outstanding public shares. These agreements are contained in letter agreements that we have entered into with each of our sponsor, officers and directors. Our stockholders are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies against our sponsor, officers or directors for any breach of these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action, subject to applicable law.
We may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination.
Although we believe that the net proceeds of this offering and the sale of the private placement shares will be sufficient to allow us to complete our initial business combination, because we have not yet selected any prospective target business we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of this offering and the sale of the private placement shares prove to be insufficient, either because of the size of our initial business combination, the depletion of the available net proceeds in search of a target business, the obligation to redeem for cash a significant number of shares from stockholders who elect redemption in connection with our initial business combination or the terms of negotiated transactions to purchase shares in connection with our initial business combination, we may be required to seek additional financing (including from M. Klein and Company) or to abandon the proposed business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. M. Klein and Company is not obligated to provide, or seek, any such financing or, except as expressly set forth herein, to provide any other services to us. To the extent that additional financing proves to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. In addition, even if we do not need additional financing to complete our initial business combination, we may require such financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or stockholders is required to provide any financing to us in connection with or after our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account.
Our search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the recent novel coronavirus (“COVID-19”) outbreak.
On March 11, 2020, the World Health Organization officially declared the outbreak of the COVID-19 a “pandemic.” A significant outbreak of COVID-19 and other infectious diseases could result in a widespread health crisis that could adversely affect the economies and financial markets worldwide, and the business of any potential target business with which we consummate a business combination could be materially and adversely affected. Furthermore, we may be unable to complete a business combination if continued concerns relating to COVID-19 restrict travel, limit the ability to have meetings with potential investors or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time, our ability to consummate a business combination, or the operations of a target business with which we ultimately consummate a business combination, may be materially adversely affected.
Our initial business combination and our structure thereafter may not be tax-efficient to our stockholders. As a result of our business combination, our tax obligations may be more complex, burdensome and uncertain.
Although we will attempt to structure our initial business combination in a tax-efficient manner, tax structuring considerations are complex, the relevant facts and law are uncertain and may change, and we may
prioritize commercial and other considerations over tax considerations. For example, in connection with our initial business combination and subject to any requisite stockholder approval, we may structure our business combination in a manner that requires stockholders to recognize gain or income for tax purposes, effect a business combination with a target company in another jurisdiction, or reincorporate in a different jurisdiction (including, but not limited to, the jurisdiction in which the target company or business is located). We do not intend to make any cash distributions to stockholders to pay taxes in connection with our business combination or thereafter. Accordingly, a stockholder may need to satisfy any liability resulting from our initial business combination with cash from its own funds or by selling all or a portion of the shares received. In addition, stockholders may also be subject to additional income, withholding or other taxes with respect to their ownership of us after our initial business combination.
In addition, we may effect a business combination with a target company that has business operations outside of the United States, and possibly, business operations in multiple jurisdictions. If we effect such a business combination, we could be subject to significant income, withholding and other tax obligations in a number of jurisdictions with respect to income, operations and subsidiaries related to those jurisdictions.
Due to the complexity of tax obligations and filings in other jurisdictions, we may have a heightened risk related to audits or examinations by U.S. federal, state, local and non-U.S. taxing authorities. This additional complexity and risk could have an adverse effect on our after-tax profitability and financial condition.
As the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there may be more competition for attractive targets. This could increase the cost of our initial business combination and could even result in our inability to find a target or to consummate an initial business combination.
In recent years, the number of special purpose acquisition companies that have been formed has increased substantially. Many potential targets for special purpose acquisition companies have already entered into an initial business combination, and there are still many special purpose acquisition companies seeking targets for their initial business combination, as well as many such companies currently in registration. As a result, at times, fewer attractive targets may be available, and it may require more time, more effort and more resources to identify a suitable target and to consummate an initial business combination.
In addition, because there are more special purpose acquisition companies seeking to enter into an initial business combination with available targets, the competition for available targets with attractive fundamentals or business models may increase, which could cause target companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical tensions, or increases in the cost of additional capital needed to close business combinations or operate targets post-business combination. This could increase the cost of, delay or otherwise complicate or frustrate our ability to find and consummate an initial business combination, and may result in our inability to consummate an initial business combination on terms favorable to our investors altogether.
Risks Relating to Our Securities
The NYSE may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
We intend to apply to have our public shares listed on the NYSE on or promptly after the date of this prospectus. Although after giving effect to this offering we expect to meet the minimum initial listing standards set forth in the NYSE listing standards, we cannot assure you that our securities will be, or will continue to be, listed on the NYSE in the future or prior to our initial business combination. In order to continue listing our securities on the NYSE prior to our initial business combination, we must maintain certain financial, distribution and stock price levels. In general, we must maintain a minimum number of holders of our securities.
Additionally, in connection with our initial business combination, we will be required to demonstrate compliance with the NYSE’s initial listing requirements, which are more rigorous than the NYSE’s continued listing requirements, in order to continue to maintain the listing of our securities on the NYSE. For
instance, our stock price would generally be required to be at least $4 per share. We cannot assure you that we will be able to meet those initial listing requirements at that time.
If the NYSE delists any of our securities from trading on its exchange and we are not able to list such securities on another national securities exchange, we expect such securities could be quoted on an over-the- counter market. If this were to occur, we could face significant material adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
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a limited amount of news and analyst coverage; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because we expect that our public shares will be listed on the NYSE, our public shares will qualify as covered securities under such statute. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on the NYSE, our securities would not qualify as covered securities under such statute and we would be subject to regulation in each state in which we offer our securities.
You will not be entitled to protections normally afforded to investors of many other blank check companies.
Since the net proceeds of this offering and the sale of the private placement shares are intended to be used to complete an initial business combination with a target business that has not been selected, we may be deemed to be a “blank check” company under the U.S. securities laws. However, because we will have net tangible assets in excess of $5,000,000 upon the successful completion of this offering and the sale of the private placement shares and will file a Current Report on Form 8-K, including an audited balance sheet of our company demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means our shares will be immediately tradable and we will have a longer period of time to complete our initial business combination than do companies subject to Rule 419. Moreover, if this offering were subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust account to us unless and until the funds in the trust account were released to us in connection with our completion of our initial business combination. Please see “Proposed Business—Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419” for a more detailed comparison of our offering to offerings that comply with Rule 419.
If we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of stockholders are deemed to hold in excess of 15% of our Class A common stock, you will lose the ability to redeem all such shares in excess of 15% of our Class A common stock.
If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in this offering, without our prior consent, which we
refer to as the “Excess Shares.” However, our amended and restated certificate of incorporation does not restrict our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. And as a result, you will continue to hold the Excess Shares and, in order to dispose of such shares, would be required to sell your Excess Shares in open market transactions, potentially at a loss.
Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within the completion window may be considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible following the 24th month from the closing of this offering in the event we do not complete our initial business combination and, therefore, we do not intend to comply with the foregoing procedures.
Because we do not intend to comply with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, consultants, etc.) or prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within the completion window is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
We may not hold an annual meeting of stockholders until after we consummate our initial business combination and you will not be entitled to any of the corporate protections provided by such a meeting.
We may not hold an annual meeting of stockholders until after we consummate our initial business combination (unless required by the NYSE) and thus may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting of stockholders be held for the purposes of electing directors in accordance with a company’s bylaws unless such election is made by written consent in lieu of such a meeting. Therefore, if our stockholders want us to hold an annual meeting prior to our consummation of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL. Moreover, our Class B
stockholders will be entitled to elect all of our directors prior to the completion of our initial business combination and may elect to do so by written consent without a meeting.
The grant of registration rights to our initial stockholders and their permitted transferees may make it more difficult to complete our initial business combination, and the future exercise of such rights may adversely affect the market price of our Class A common stock.
Pursuant to an agreement to be entered into concurrently with the issuance and sale of the securities in this offering, our initial stockholders and their permitted transferees can demand that we register the resale of their founder shares after those shares convert to shares of our Class A common stock at the time of our initial business combination. In addition, our sponsor and its permitted transferees can demand that we register the resale of the private placement shares, and holders of shares that may be issued upon conversion of working capital loans may demand that we register the resale of such shares. We will bear the cost of registering these securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our Class A common stock. In addition, the existence of the registration rights may make our initial business combination more costly or difficult to complete. This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our Class A common stock that is expected when the common stock owned by our initial stockholders or their permitted transferees, the private placement shares owned by our sponsor or shares issued in connection with working capital loans are registered for resale.
We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although we have no commitments as of the date of this prospectus to issue any notes or other debt securities, or to otherwise incur outstanding debt following this offering, we may choose to incur substantial debt to complete our initial business combination. We have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust account. As such, no issuance of debt will affect the per share amount available for redemption from the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
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default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
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our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
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our inability to pay dividends on our common stock;
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
Our initial stockholders will control the election of our board of directors until consummation of our initial business combination and will hold a substantial interest in us. As a result, they will elect all of our directors prior to the consummation of our initial business combination and may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support. Similarly, following the consummation of our initial business combination, one or more shareholders of the target may have a substantial interest in the combined company and may require us to enter into agreements or other arrangements with respect to board composition and for designation rights.
Upon the closing of this offering, our initial stockholders will own 20% of our outstanding common stock (assuming they do not purchase any shares in this offering). In addition, the founder shares, all of which are held by our initial stockholders, will entitle the holders to elect all of our directors prior to the consummation of our initial business combination, provided, however, that with respect to the election of directors in connection with a meeting of the stockholders of the Company in which a business combination is submitted to the stockholders of the Company for approval, holders of the Class A common stock and holders of the Class B common stock, voting together as a single class, shall have the exclusive right to vote for the election of directors. Holders of our public shares will, other than as provided in the preceding sentence, have no right to vote on the election of directors prior to consummation of the initial business combination.
These provisions of our amended and restated certificate of incorporation may only be amended by a majority of the Class B common stock then outstanding. As a result, you will not have any influence over the election of directors prior to our initial business combination, other than at a stockholders’ meeting during which a business combination is submitted to the stockholders for approval, as described above.
Neither our initial stockholders nor, to our knowledge, any of our officers or directors, have any current intention to purchase additional securities, other than as disclosed in this prospectus. Factors that would be considered in making such additional purchases would include consideration of the current trading price of our Class A common stock. In addition, as a result of their substantial ownership in our company, our initial stockholders may exert a substantial influence on other actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate of incorporation and approval of major corporate transactions. If our initial stockholders purchase any additional shares of common stock in the aftermarket or in privately negotiated transactions, this would increase their influence over these actions. Accordingly, our initial stockholders will exert significant influence over actions requiring a stockholder vote. Please see “Proposed Business—Permitted purchases of our securities.”
Our sponsor contributed $25,000, or approximately $0.0006 per founder share, and, accordingly, you will experience immediate and substantial dilution from the purchase of our Class A common stock.
The difference between the public offering price per share and the pro forma net tangible book value per share of our Class A common stock after this offering constitutes the dilution to you and the other investors in this offering. Our sponsor acquired the founder shares at a nominal price, significantly contributing to this dilution. Upon the closing of this offering you and the other public stockholders will incur an immediate and substantial dilution of approximately 96.2% (or $9.62 per share, assuming no exercise of the underwriters’ over- allotment option), the difference between the pro forma net tangible book value per share of $0.38 and the initial offering price of $10.00 per share. In addition, because of the anti-dilution rights of the founder shares, any equity or equity-linked securities issued or deemed issued in connection with our initial business combination would be disproportionately dilutive to our Class A common stock.
The determination of the offering price of our shares and the size of this offering is more arbitrary than the pricing of securities and size of an offering of an operating company in a particular industry. You may have less assurance, therefore, that the offering price of our shares properly reflects the value of such shares than you would have in a typical offering of an operating company.
Prior to this offering there has been no public market for any of our securities. The public offering price of the share were negotiated between us and the underwriters. In determining the size of this offering, management held customary organizational meetings with representatives of the underwriters, both prior to our inception and thereafter, with respect to the state of capital markets, generally, and the amount the
underwriters believed they reasonably could raise on our behalf. Factors considered in determining the size of this offering, prices and terms of the Class A common stock, include:
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the history and prospects of companies whose principal business is the acquisition of other companies;
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prior offerings of those companies;
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our prospects for acquiring an operating business;
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a review of debt to equity ratios in leveraged transactions;
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our capital structure;
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an assessment of our management and their experience in identifying suitable acquisition opportunities;
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general conditions of the securities markets at the time of this offering; and
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other factors as were deemed relevant.
Although these factors were considered, the determination of our offering size, price and the terms of the shares of Class A common stock is more arbitrary than the pricing of securities of an operating company in a particular industry since we have no historical operations or financial results.
There is currently no market for our securities and a market for our securities may not develop, which would adversely affect the liquidity and price of our securities.
There is currently no market for our securities. Stockholders therefore have no access to information about prior market history on which to base their investment decision. Following this offering, the price of our securities may vary significantly due to one or more potential business combinations and general market or economic conditions, including as a result of the COVID-19 outbreak. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market can be established and sustained.
Because we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective target businesses.
The federal proxy rules require that a proxy statement with respect to a vote on a business combination include historical and/or pro forma financial statement disclosure. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America, or GAAP, or international financial reporting standards as issued by the International Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements in time for us to disclose such financial statements in accordance with federal proxy rules and complete our initial business combination within the completion window.
Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources, and increase the time and costs of completing an initial business combination.
Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending December 31, 2022. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. Further, for as long as we remain an emerging growth company, we will not be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that we
are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target business with which we seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes- Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such initial business combination.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees, agents or stockholders.
Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery lacks jurisdiction, a state court located within the State of Delaware or the federal district court for the District of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:
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any derivative action or proceeding brought on our behalf;
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any action asserting a claim of breach of a fiduciary duty owed by or other wrongdoing by any of our current or former directors, officers, employees, agents or stockholders to us;
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any action asserting a claim arising under any provision of the DGCL, our amended and restated certificate of incorporation or our bylaws (as either may be amended from time to time), or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; or
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any action asserting a claim governed by the internal affairs doctrine.
Any person or entity purchasing or otherwise acquiring any interest in our securities will be deemed to have notice of and to have consented to this exclusive forum provision of our amended and restated certificate of incorporation. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, employees, agents or stockholders, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find this choice of forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions. Additional costs associated with resolving an action in other jurisdictions could materially adversely affect our business, financial condition and results of operations.
Provisions in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class A common stock and could entrench management.
Our amended and restated certificate of incorporation will contain provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These provisions include three-year director terms and the ability of the board of directors to designate the terms of and issue new series of preferred shares, which may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Section 203 of the DGCL affects the ability of an “interested stockholder” to engage in certain business combinations, for a period of three years following the time that the stockholder becomes an “interested stockholder.” We will elect in our certificate of incorporation not to be subject to Section 203 of the DGCL. Nevertheless, our certificate of incorporation will contain provisions that have the same effect as Section 203 of the DGCL, except that it will provide that affiliates of our sponsor and their transferees will not be deemed to be “interested stockholders,” regardless of the percentage of our voting stock owned by them, and will therefore not be subject to such restrictions. These charter provisions may limit the ability of third parties to acquire control of our company.
Risks Relating to Our Management Team
Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our search for a business combination and their other responsibilities. We do not intend to have any full-time employees prior to the completion of our business combination. Each of our officers and directors is engaged in several other business endeavors for which he or she may be entitled to substantial compensation and our officers and directors are not obligated to contribute any specific number of hours per week to our affairs.
Mr. Klein is the founder and managing partner of M. Klein and Company and acts as a strategic advisor to its clients. Mr. Klein has a fiduciary duty to M. Klein and Company. As a result, Mr. Klein may have a duty to offer acquisition opportunities to clients of M. Klein and Company. Mr. Klein will have no duty to offer acquisition opportunities to the Company unless presented to him solely in his capacity as an officer or director of the Company.
If our officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business combination. Please see “Management—Directors, Director Nominees and Executive Officers” for a discussion of our officers’ and directors’ other business affairs.
We are dependent upon our officers and directors and their departure could adversely affect our ability to operate.
Our operations are dependent upon a relatively small group of individuals. We believe that our success depends on the continued service of our officers and directors, at least until we have completed our initial business combination. We do not have an employment agreement with, or key-man insurance on the life of any of our other directors or officers. The unexpected loss of the services of one or more of our directors or officers could have a detrimental effect on us.
Our ability to successfully effect our initial business combination and to be successful thereafter will be dependent upon the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability of our post- combination business.
Our ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management or advisory positions following our initial business combination, we do not currently expect that any of them will do so. While we intend to closely scrutinize any individuals we engage after our initial business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements.
In addition, the officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The departure of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business. The role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate following our initial business combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination, and a particular business combination may be conditioned on the retention or resignation of such key personnel. These agreements may cause our key personnel to have conflicts of interest in determining whether to proceed with a particular business combination. However, we do not expect that any of our key personnel will remain with us after the completion of our initial business combination.
Our key personnel may be able to remain with our company after the completion of our initial business combination only if they are able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination. Such negotiations also could make such key personnel’s retention or resignation a condition to any such agreement. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business. However, we believe the ability of such individuals to remain with us after the completion of our initial business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination, as we do not expect that any of our key personnel will remain with us after the completion of our initial business combination. The determination as to whether any of our key personnel will remain with us will be made at the time of our initial business combination.
We may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target business’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target business’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any stockholders who choose to remain a stockholder following our initial business combination could suffer a reduction in the value of their securities.
Such stockholders are unlikely to have a remedy for such reduction in value.
The officers and directors of an initial business combination candidate may resign upon completion of our initial business combination. The departure of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business. The role of an initial business combination candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated with the initial business combination candidate following our initial business combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place. As a result, we may need to reconstitute the management team of the post-transaction company in connection with our initial business combination, which may adversely impact our ability to complete an initial business combination in a timely manner or at all.
Certain of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity or other transaction should be presented.
Following the completion of this offering and until we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses. Our sponsor and officers and directors are, or may in the future become, affiliated with entities (such as operating companies or investment vehicles) that are engaged in a similar business. We do not have employment contracts with our officers and directors that will limit their ability to work at other businesses. In addition, our sponsor, officers and directors may participate in the formation of, or become an officer or director of, any other blank check company prior to completion of our initial business combination. As a result, our
sponsor, officers or directors could have conflicts of interest in determining whether to present business combination opportunities to us or to any other blank check company with which they may become involved. In particular, M. Klein and Company and Mr. Klein, as well as our board of directors, have formed and are actively engaged in Churchill Capital Corp II, Churchill Capital Corp IV, Churchill Capital Corp V, Churchill Capital Corp VI and Churchill Capital Corp VII, special purpose acquisition corporations that completed their initial public offerings in July 2019, August 2020, December 2020, February 2021 and February 2021, respectively. Churchill Capital Corp II, Churchill Capital Corp IV and Churchill Capital Corp V, like us, may pursue initial business combination targets in any businesses or industries and have until July 1, 2021, August 3, 2022, December 18, 2022 , February 11, 2023 and February 11, 2023, respectively, to do so (absent an extension in accordance with their charters). Any such companies, including Churchill Capital Corp II, Churchill Capital Corp IV and Churchill Capital Corp V, may present additional conflicts of interest in pursuing an acquisition target.
As described in “Proposed Business—Sourcing of Potential Business Combination Targets” and “Management—Conflicts of Interest,” each of our officers and directors presently has, and any of them in the future may have additional, fiduciary, contractual or other obligations or duties to one or more other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such entities. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for one or more entities to which he or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such business combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us (including as described in “Proposed Business—Sourcing of Potential Business Combination Targets”). These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless (i) such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company, (ii) such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue and (iii) the director or officer is permitted to refer the opportunity to us without violating another legal obligation.
Please see “Management—Directors, Director Nominees and Executive Officers,” “Management—Conflicts of Interest” and “Certain Relationships and Related Party Transactions” for a discussion of our officers’ and directors’ business affiliations and potential conflicts of interest.
Our officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into a business combination with a target business that is affiliated with M. Klein and Company, our sponsor or our directors or officers. We do not have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.
In particular, affiliates of our sponsor, our directors and our officers have invested, and may in the future invest, in a broad array of sectors, including those in which our company may invest. As a result, there may be substantial overlap between companies that would be a suitable business combination for us and companies that would make an attractive target for such other affiliates. Please see “Proposed Business—Certain Potential Conflicts of Interest Relating to M. Klein and Company” for additional information.
We may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated with M. Klein and Company, our sponsor, officers or directors which may raise potential conflicts of interest.
In light of the involvement of our sponsor, officers and directors with other businesses, we may decide to acquire one or more businesses affiliated with or competitive with M. Klein and Company, our sponsor, officers and directors, and their respective affiliates. Our directors also serve as officers and board members
for other entities, including, without limitation, those described under “Management—Conflicts of Interest.” Such entities may compete with us for business combination opportunities. Our sponsor, officers and directors are not currently aware of any specific opportunities for us to complete our initial business combination with any entities with which they are affiliated, and there have been no substantive discussions concerning a business combination with any such entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for a business combination as set forth in “Proposed Business—Effecting our Initial Business Combination” and “—Selection of a target business and structuring of our initial business combination” and such transaction was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm, regarding the fairness to our stockholders from a financial point of view of a business combination with one or more domestic or international businesses affiliated with M. Klein and Company, our sponsor, officers or directors, potential conflicts of interest still may exist and, as a result, the terms of the business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
We may engage M. Klein and Company, or another affiliate of our sponsor, as our lead financial advisor on our business combinations and other transactions. Any fee in connection with such engagement may be conditioned upon the completion of such transactions. This financial interest in the completion of such transactions may influence the advice such affiliate provides.
We may engage M. Klein and Company, or another affiliate of our sponsor, as a financial advisor in connection with our initial business combination and pay such affiliate a customary financial advisory fee in an amount that constitutes a market standard financial advisory fee for comparable transactions. Pursuant to any such engagement, the affiliate may earn its fee upon closing of the initial business combination. The payment of such fee would likely be conditioned upon the completion of the initial business combination. Therefore, our sponsor may have additional financial interests in the completion of the initial business combination. These financial interests may influence the advice any such affiliate provides us as our financial advisor, which advice would contribute to our decision on whether to pursue a business combination with any particular target.
Since our initial stockholders will lose their entire investment in us if our initial business combination is not completed (other than with respect to any public shares they may hold), a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination.
In March 2021, our sponsor purchased an aggregate of 43,125,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.0006 per share. On March 9, 2021, the sponsor forfeited 14,375,000 founder shares for no consideration, resulting in an aggregate of 28,750,000 founder shares outstanding. In connection with this offering, our sponsor will surrender 17,250,000 founder shares plus up to an additional 1,500,000 founder shares depending on the extent to which the underwriters' exercise their option to purchase additional shares. The number of founder shares to be held after this offering is determined based on the expectation that the founder shares would represent 20% of the outstanding shares of common stock upon the completion of this offering. The founder shares will be worthless if we do not complete an initial business combination.
In addition, our sponsor has subscribed to purchase an aggregate of 1,250,000 (or 1,370,000 if the underwriters’ option to purchase additional shares is exercised in full) private placement shares for a purchase price of $12,500,000 (or $13,700,000) if the underwriters’ option to purchase additional shares is exercised in full), or $10.00 per share.
The founder shares are identical to the shares of Class A common stock being sold in this offering, except that: (1) only holders of the founder shares have the right to vote on the election and removal of directors prior to our initial business combination; provided, however, that with respect to the election of directors in connection with a meeting of the stockholders of the Company in which a business combination is submitted to the stockholders of the Company for approval, holders of the Class A common stock and holders of the Class B common stock, voting together as a single class, shall have the exclusive right to vote for the election of directors; (2) the founder shares are subject to certain transfer restrictions, as described in more detail below; (3) our sponsor, officers and directors have each entered into a letter agreement with us,
pursuant to which they have agreed to: (a) waive their redemption rights with respect to any founder shares, private placement shares and any public shares held by them in connection with the completion of our initial business combination, (b) waive their redemption rights with respect to any founder shares, private placement shares and any public shares held by them in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we have not consummated our initial business combination within the completion window; and (c) waive their rights to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to complete our initial business combination within the completion window (although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our initial business combination within the completion window); (4) the founder shares are automatically convertible into shares of our Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described herein; and (5) the holders of founder shares are entitled to registration rights.
The personal and financial interests of our sponsor, officers and directors may influence their motivation in identifying and selecting a target business combination, completing an initial business combination and influencing the operation of the business following the initial business combination. This risk may become more acute as the deadline for completing our initial business combination nears.
Changes in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination.
In recent months, the market for directors and officers liability insurance for special purpose acquisition companies has changed in ways adverse to us and our management team. Fewer insurance companies are offering quotes for directors and officers liability coverage, the premiums charged for such policies have generally increased and the terms of such policies have generally become less favorable. These trends may continue into the future.
The increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more expensive for us to negotiate an initial business combination. In order to obtain directors and officers liability insurance or modify its coverage as a result of becoming a public company, the postbusiness combination entity might need to incur greater expense, accept less favorable terms or both. However, any failure to obtain adequate directors and officers liability insurance could have an adverse impact on the postbusiness combination’s ability to attract and retain qualified officers and directors.
In addition, even after we were to complete an initial business combination, our directors and officers could still be subject to potential liability from claims arising from conduct alleged to have occurred prior to the initial business combination. As a result, in order to protect our directors and officers, the post- business combination entity may need to purchase additional insurance with respect to any such claims (“run- off insurance”). The need for run-off insurance would be an added expense for the post-business combination entity, and could interfere with or frustrate our ability to consummate an initial business combination on terms favorable to our investors.
Risks Associated with Acquiring and Operating a Business in Foreign Countries
If our management team pursues a company with operations or opportunities outside of the United States for our initial business combination, we may face additional burdens in connection with investigating, agreeing to and completing such combination, and if we effect such initial business combination, we would be subject to a variety of additional risks that may negatively impact our operations.
If our management team pursues a company with operations or opportunities outside of the United States for our initial business combination, we would be subject to risks associated with cross-border business combinations, including in connection with investigating, agreeing to and completing our initial business combination, conducting due diligence in a foreign jurisdiction, having such transaction approved by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If we effect our initial business combination with such a company, we would be subject to any special considerations or risks associated with companies operating in an international setting, including any of the following:
•
costs and difficulties inherent in managing cross-border business operations and complying with commercial and legal requirements of overseas markets;
•
rules and regulations regarding currency redemption;
•
complex corporate withholding taxes on individuals;
•
laws governing the manner in which future business combinations may be effected;
•
tariffs and trade barriers;
•
regulations related to customs and import/export matters;
•
longer payment cycles;
•
tax consequences;
•
currency fluctuations and exchange controls;
•
rates of inflation;
•
challenges in collecting accounts receivable;
•
cultural and language differences;
•
employment regulations;
•
crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;
•
deterioration of political relations with the United States;
•
obligatory military service by personnel; and
•
government appropriation of assets.
We may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such initial business combination or, if we complete such initial business combination, our operations might suffer, either of which may adversely impact our business, results of operations and financial condition.
If our management following our initial business combination is unfamiliar with U.S. securities laws, they may have to expend time and resources becoming familiar with such laws, which could lead to various regulatory issues.
Following our initial business combination, any or all of our management could resign from their positions as officers of the Company, and the management of the target business at the time of the business combination could remain in place. Management of the target business may not be familiar with U.S. securities laws. If new management is unfamiliar with U.S. securities laws, they may have to expend time and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.”
As of March 31, 2021, we had $226,535 in cash and a working capital deficit of $315,172. Further, we have incurred and expect to continue to incur significant costs in pursuit of our acquisition plans. Management’s plans to address this need for capital through this offering are discussed in the section of this prospectus titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We cannot assure you that our plans to raise capital or to consummate an initial business combination will be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements contained elsewhere in this prospectus do not include any adjustments that might result from our inability to consummate this offering or our inability to continue as a going concern.
General Risk Factors
We are a newly incorporated company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a newly incorporated company with no operating results, and we will not commence operations until obtaining funding through this offering. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our initial business combination with one or more target businesses. We have no plans, arrangements or understandings with any prospective target business concerning a business combination and may be unable to complete our initial business combination. If we fail to complete our initial business combination, we will never generate any operating revenues.
Past performance by M. Klein and Company and members of our management team or our Strategic Partners may not be indicative of future performance of an investment in us.
Information regarding performance by, or businesses associated with, M. Klein and Company and other members of our management team or our Strategic Partners is presented for informational purposes only. Any past experience and performance, including related to acquisitions, of M. Klein and Company and members of our management team or our Strategic Partners is not a guarantee either: (1) that we will be able to successfully identify a suitable candidate for our initial business combination; or (2) of any results with respect to any initial business combination we may consummate. You should not rely on the historical record and performance of M. Klein and Company and members of our management team or our Strategic Partners as indicative of the future performance of an investment in us or the returns we will, or are likely to, generate going forward. An investment in us is not an investment in M. Klein and Company or our Strategic Partners.
Certain agreements related to this offering may be amended without stockholder approval.
Certain agreements, including the underwriting agreement relating to this offering, the letter agreements among us and each of our sponsor, officers and directors, and the registration rights agreement among us and our initial stockholders, may be amended without stockholder approval. These agreements contain various provisions that our public stockholders might deem to be material. While we do not expect our board to approve any amendment to any of these agreements prior to our initial business combination, it may be possible that our board, in exercising its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments to any such agreement in connection with the consummation of our initial business combination. Any such amendments would not require approval from our stockholders, may result in the completion of our initial business combination that may not otherwise have been possible, and may have an adverse effect on the value of an investment in our securities.
We are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes- Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our common stock held by non-affiliates exceeds $700 million as of the end of any second quarter of a fiscal year, in which case we would no longer be an emerging growth company as of the end of such fiscal year. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a
result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Provisions in our amended and restated certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
Our amended and restated certificate of incorporation will require, to the fullest extent permitted by law, that derivative actions brought in our name, actions against directors, officers and employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel. This provision may have the effect of discouraging lawsuits against our directors and officers.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some statements contained in this prospectus, and certain oral statements made from time to time by our representatives in connection with this offering, are forward-looking in nature. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this prospectus may include, for example, statements about:
•
our ability to select an appropriate target business or businesses;
•
our ability to complete our initial business combination;
•
our expectations around the performance of a prospective target business or businesses;
•
our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;
•
our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination;
•
actual and potential conflicts of interest relating to M. Klein and Company and our directors, officers and other affiliates;
•
our ability to draw from the support and expertise of the M. Klein and Company and our directors, officers and other affiliates;
•
our potential ability to obtain additional financing to complete our initial business combination;
•
our pool of prospective target businesses, including the location and industry of such target businesses;
•
the ability of our officers and directors to generate a number of potential business combination opportunities;
•
our public securities’ potential liquidity and trading;
•
the lack of a market for our securities;
•
the availability to us of funds from interest income on the trust account balance;
•
the trust account not being subject to claims of third parties; or
•
our financial performance following this offering.
The forward-looking statements contained in this prospectus are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward- looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
USE OF PROCEEDS
We are offering 40,000,000 shares at an offering price of $10.00 per share. We estimate that the net proceeds of this offering together with the funds we will receive from the sale of the private placement shares will be used as set forth in the following table.
| |
|
|
Without Option
to Purchase
Additional Shares
|
|
|
Option to Purchase
Additional Shares
Exercised in Full
|
|
|
Gross Proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross proceeds from shares offered to public(1)
|
|
|
|
$ |
400,000,000 |
|
|
|
|
$ |
460,000,000 |
|
|
|
Gross proceeds from private placement shares offered in the private placement .
|
|
|
|
|
12,500,000 |
|
|
|
|
|
13,700,000 |
|
|
|
Total gross proceeds
|
|
|
|
$ |
412,500,000 |
|
|
|
|
$ |
473,700,000 |
|
|
|
Estimated offering expenses(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting commissions (2.0% of gross proceeds from shares offered
to public, excluding deferred portion)
|
|
|
|
$ |
8,000,000 |
|
|
|
|
$ |
9,200,000 |
|
|
|
Legal fees and expenses
|
|
|
|
|
300,000 |
|
|
|
|
|
300,000 |
|
|
|
Printing and engraving expenses
|
|
|
|
|
200,000 |
|
|
|
|
|
200,000 |
|
|
|
Accounting fees and expenses .
|
|
|
|
|
180,000 |
|
|
|
|
|
180,000 |
|
|
|
SEC/FINRA Expenses
|
|
|
|
|
120,000 |
|
|
|
|
|
120,000 |
|
|
|
Travel and road show .
|
|
|
|
|
50,000 |
|
|
|
|
|
50,000 |
|
|
|
Directors and officers insurance premiums
|
|
|
|
|
1,500,000 |
|
|
|
|
|
1,500,000 |
|
|
|
NYSE listing and filing fees .
|
|
|
|
|
85,000 |
|
|
|
|
|
85,000 |
|
|
|
Miscellaneous expenses(4)
|
|
|
|
|
565,000 |
|
|
|
|
|
565,000 |
|
|
|
Total estimated offering expenses (other than underwriting commissions)
|
|
|
|
$ |
3,000,000 |
|
|
|
|
$ |
3,000,000 |
|
|
|
Proceeds after estimated offering expenses
|
|
|
|
$ |
1,002,000,000 |
|
|
|
|
$ |
1,152,000,000 |
|
|
|
Held in trust account(3)
|
|
|
|
$ |
1,000,000,000 |
|
|
|
|
$ |
1,150,000,000 |
|
|
|
Percent of public offering size .
|
|
|
|
|
100% |
|
|
|
|
|
100% |
|
|
|
Not held in trust account
|
|
|
|
$ |
2,000,000 |
|
|
|
|
$ |
2,000,000 |
|
|
The following table shows the use of the approximately $1,500,000 of net proceeds not held in the trust account.
| |
|
|
Amount
|
|
|
% of Total
|
|
|
Legal, accounting, due diligence, travel and other expenses in connection with any
business combination
|
|
|
|
|
290,000 |
|
|
|
|
|
19.3% |
|
|
|
Legal and accounting fees related to regulatory reporting obligations
|
|
|
|
|
75,000 |
|
|
|
|
|
5.0% |
|
|
|
NYSE and other regulatory fees .
|
|
|
|
|
85,000 |
|
|
|
|
|
5.7% |
|
|
|
Payment for office space, utilities, administrative and support services
|
|
|
|
|
720,000 |
|
|
|
|
|
48.0% |
|
|
|
Working capital to cover miscellaneous expenses
|
|
|
|
|
330,000 |
|
|
|
|
|
22.0% |
|
|
|
Total
|
|
|
|
$ |
1,500,000 |
|
|
|
|
|
100.0% |
|
|
(1)
Includes amounts payable to public stockholders who properly redeem their shares in connection with our successful completion of our initial business combination.
(2)
Our sponsor has agreed to loan us up to $600,000 as described in this prospectus. As of March 31, 2021, there was $500,000 outstanding under such promissory note. These loans will be repaid upon completion of this offering out of the $3,000,000 of offering proceeds that has been allocated for the
payment of offering expenses (other than underwriting commissions) not held in the trust account. In the event that offering expenses are less than as set forth in this table, any such amounts will be used for post-closing working capital expenses. In the event that the offering expenses are more than as set forth in this table, we may fund such excess with loans or additional investments from our sponsor.
(3)
The underwriters have agreed to defer underwriting commissions equal to 3.5% of the gross proceeds of this offering. Upon completion of our initial business combination, $14,000,000, which constitutes the underwriters’ deferred commissions (or up to $16,100,000 if the underwriters’ option to purchase additional shares is exercised in full) will be paid to the underwriters from the funds held in the trust account and the remaining funds, less amounts released to the trustee to pay redeeming stockholders, will be released to us and can be used to pay all or a portion of the purchase price of the business or businesses with which our initial business combination occurs or for general corporate purposes, including payment of principal or interest on indebtedness incurred in connection with our initial business combination, to fund the purchases of other companies or for working capital. The underwriters will not be entitled to any interest accrued on the deferred underwriting discounts and commissions.
(4)
Includes organizational and administrative expenses and may include amounts related to above-listed expenses in the event actual amounts exceed estimates
The rules of NYSE provide that at least 90% of the gross proceeds from this offering and the sale of the private placement shares be deposited in a trust account. Of the net proceeds of this offering and the sale of the private placement shares, $400,000,000 (or $460,000,000 if the underwriters’ over- allotment option is exercised in full), including $14,000,000 (or up to $16,100,000 if the underwriters’ over- allotment option is exercised in full) of deferred underwriting commissions, will, upon the consummation of this offering, be placed in a U.S.-based trust account with Continental Stock Transfer & Trust Company acting as trustee. The funds in the trust account will be invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act and that invest only in direct U.S. government obligations. Based on current interest rates, we estimate that the interest earned on the trust account will be approximately $200,000 per year, assuming an interest rate of 0.05% per year. We will not be permitted to withdraw any of the principal or interest held in the trust account, except with respect to permitted withdrawals. The funds held in the trust account will not be released from the trust account until the earliest of: (1) the completion of our initial business combination; (2) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance and timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within the completion window; and (3) the redemption of all of our public shares if we are unable to complete our initial business combination within the completion window, subject to applicable law. Based on current interest rates, we expect that interest earned on the trust account will be sufficient to pay taxes.
The net proceeds held in the trust account may be used as consideration to pay the sellers of a target business with which we ultimately complete our initial business combination. If our initial business combination is paid for using equity or debt securities or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination or used for redemption of our public shares, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital. There is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination.
Following this offering and prior to the completion of our initial business combination, our principal use of working capital will be to fund our activities to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a business combination. During that period, we expect our other principal expenses to include franchise and income taxes; regulatory reporting requirements; NYSE continued listing fees; and office space, administrative and support services. We will enter into the Administrative Services Agreement, pursuant to which we will pay an affiliate of our sponsor a total of $30,000 per month for office space, administrative and support services. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
We expect to fund our working capital requirements prior to the time of our initial business combination with permitted withdrawals from the interest earned on the trust account, subject to an annual limit of $1,000,000, and permitted withdrawals to pay taxes. In addition, our sponsor, an affiliate of our sponsor or our officers and directors may, but none of them is obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used to repay such loaned amounts. Up to $1,500,000 of such loans may be convertible into shares of the post-business combination entity at a price of $10.00 per share at the option of the lender. The share would be identical to the private placement shares issued to our sponsor. The terms of such loans by our sponsor, an affiliate of our sponsor or our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsor, an affiliate of our sponsor or our officers and directors, if any, as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
DIVIDEND POLICY
We have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial business combination. The payment of any cash dividends subsequent to our initial business combination will be within the discretion of our board of directors at such time. In addition, our board of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future, except if we increase the size of this offering, in which case we will effect a stock dividend or other appropriate mechanism immediately prior to the consummation of this offering in an amount as to maintain the ownership of our initial stockholders prior to this offering at 20% of our issued and outstanding shares of common stock upon the consummation of this offering. Further, if we incur any indebtedness in connection with our initial business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
DILUTION
The difference between the public offering price per share of Class A common stock and the pro forma net tangible book value per share of our Class A common stock after this offering constitutes the dilution to investors in this offering. Net tangible book value per share is determined by dividing our net tangible book value, which is our total tangible assets less total liabilities (including the value of Class A common stock which may be redeemed for cash), by the number of outstanding shares of our Class A common stock.
At March 31, 2021, our net tangible book value deficit was $315,172, or approximately $(0.03) per share of Class B common stock. After giving effect to the sale of 40,000,000 shares of Class A common stock we are offering by this prospectus, the sale of the private placement shares and the deduction of underwriting commissions and estimated expenses of this offering, our pro forma net tangible book value at March 31, 2021 would have been $5,000,010 or $0.38 per share, representing an immediate increase in net tangible book value (as decreased by the value of the 38,252,399 shares of Class A common stock that may be redeemed for cash in connection with our initial business combination and assuming no exercise of the underwriters’ option to purchase additional shares) of $0.41 per share to our initial stockholders as of the date of this prospectus and an immediate dilution of $9.62 per share or 96.2% to our public stockholders not exercising their redemption rights. The dilution to new investors if the underwriters exercise their option to purchase additional shares in full would be an immediate dilution of $9.66 per share or 96.6%.
The following table illustrates the dilution to the public stockholders on a per share basis, assuming no value is attributed to the private placement shares:
| |
Public offering price
|
|
|
|
$ |
10.00 |
|
|
| |
Net tangible book value before this offering
|
|
|
|
$ |
(0.03) |
|
|
| |
Increase attributable to public stockholders
|
|
|
|
$ |
0.41 |
|
|
| |
Pro forma net tangible book value after this offering and the sale of the private placement shares
|
|
|
|
$ |
0.38 |
|
|
| |
Dilution to public stockholders
|
|
|
|
$ |
9.62 |
|
|
| |
Percentage of dilution to new investors
|
|
|
|
|
96.2% |
|
|
For purposes of presentation, we have reduced our pro forma net tangible book value after this offering (assuming no exercise of the underwriters’ option to purchase additional shares) by $382,523,990 because holders of up to approximately 95.6% of our public shares may redeem their shares for a pro rata share of the aggregate amount then on deposit in the trust account at a per share redemption price equal to the amount in the trust account as set forth in our tender offer or proxy materials (initially anticipated to be the aggregate amount held in trust two business days prior to the commencement of our tender offer or stockholders meeting, including interest (net of permitted withdrawals) divided by the number of shares of Class A common stock sold in this offering).
The following table sets forth information with respect to our initial stockholders and the public stockholders:
| |
|
|
Shares Purchased
|
|
|
Total Consideration
|
|
|
Average Price
per Share
|
|
| |
|
|
Number
|
|
|
Percentage
|
|
|
Amount
|
|
|
Percentage
|
|
|
Initial Stockholders(1)(2)
|
|
|
|
|
10,000,000 |
|
|
|
|
|
19.51% |
|
|
|
|
$ |
25,000 |
|
|
|
|
|
0.01% |
|
|
|
|
$ |
0.0025 |
|
|
|
Private Placement Stockholders
|
|
|
|
|
1,250,000 |
|
|
|
|
|
2.44% |
|
|
|
|
$ |
12,500,000 |
|
|
|
|
|
3.03% |
|
|
|
|
$ |
10.00 |
|
|
|
Public Stockholders
|
|
|
|
|
40,000,000 |
|
|
|
|
|
78.05 |
|
|
|
|
$ |
400,000,000 |
|
|
|
|
|
96.96% |
|
|
|
|
$ |
10.00 |
|
|
| |
|
|
|
|
51,250,000 |
|
|
|
|
|
100.00% |
|
|
|
|
$ |
412,525,000 |
|
|
|
|
|
100.00% |
|
|
|
|
|
|
|
|
(1)
Assumes the surrender of 17,250,000 founder shares for no consideration by our sponsor at the time of this offering and the forfeiture of an additional 1,500,000 shares that are subject to forfeiture depending on the extent to which the underwriters’ option to purchase additional shares is exercised.
(2)
Assumes conversion of Class B common stock into Class A common stock on a one-for-one basis. The dilution to public stockholders would increase to the extent that the anti-dilution provisions of the Class B common stock result in the issuance of shares of Class A common stock on a greater than one- to-one basis upon such conversion.
The pro forma net tangible book value per share as of March 31, 2021 giving effect to the offering is calculated as follows:
| |
Numerator:
|
|
|
|
|
|
|
|
| |
Net tangible book value before this offering
|
|
|
|
$ |
(315,172) |
|
|
| |
Proceeds from this offering and sale of the private placement shares, net of expenses
|
|
|
|
|
401,500,000 |
|
|
| |
Plus: offering costs paid for in advance
|
|
|
|
|
339,172 |
|
|
| |
Less: deferred underwriters’ commissions payable
|
|
|
|
|
(14,000,000) |
|
|
| |
Less: amount of Class A common stock subject to redemption to maintain net tangible assets of $5,000,001
|
|
|
|
|
(382,523,990) |
|
|
| |
|
|
|
|
$ |
5,000,010 |
|
|
| |
Denominator:
|
|
|
|
|
|
|
|
| |
Shares of Class B common stock outstanding prior to this offering
|
|
|
|
|
11,500,000 |
|
|
| |
Shares forfeited if option to purchase additional shares is not exercised
|
|
|
|
|
(1,500,000) |
|
|
| |
Shares of Class A common stock offered in this offering
|
|
|
|
|
40,000,000 |
|
|
| |
Shares of Class A common stock offered in the Private Placement
|
|
|
|
|
1,250,000 |
|
|
| |
Less: shares subject to redemption to maintain net tangible assets of $5,000,001 .
|
|
|
|
|
(38,252,399) |
|
|
| |
|
|
|
|
|
12,997,601 |
|
|
In addition, while we are offering our public shares at an offering price of $10.00 per share and the amount in our trust account is initially anticipated to be $10.00 per public share, implying an initial value of $10.00 per public share, our sponsor paid only a nominal aggregate purchase price of $25,000 for the founder shares, or approximately $0.0025 per share (after giving effect to the forfeitures expected at the time of this offering and assuming no exercise of the underwriters' over-allotment option), and will pay $10.00 per share for 1,250,000 private placement shares assuming no exercise of the underwriters' overallotment option. As a result, the value of your public shares may be significantly diluted in the event we consummate an initial business combination. For example, the following table shows the public stockholders’ and sponsor’s investment per share and how that compares to the implied value of one of our shares upon the consummation of our initial business combination if at that time we were valued at $400,000,000, which is the amount we would have for our initial business combination in the trust account assuming the underwriters’ over-allotment option is not exercised, no interest is earned on the funds held in the trust account, and no public shares are redeemed in connection with our initial business combination. At such valuation, each share of our common stock would have an implied value of $7.80 per share, which is a 22% decrease as compared to the initial implied value per public share of $10.00.
| |
Public shares
|
|
|
|
|
40,000,000 |
|
|
| |
Founder shares and private placement shares
|
|
|
|
|
11,250,000 |
|
|
| |
Total shares
|
|
|
|
|
51,250,000 |
|
|
| |
Total funds in trust available for initial business combination(1)
|
|
|
|
$ |
400,000,000 |
|
|
| |
Implied value per share
|
|
|
|
$ |
7.80 |
|
|
| |
Public stockholders’ investment per share
|
|
|
|
$ |
10.00 |
|
|
| |
Sponsor’s investment per share(2)
|
|
|
|
$ |
0.0025 |
|
|
(1)
Does not take into account other potential impacts on our valuation at the time of the businesscombination, such as the value of our public and private shares, the trading price of our public shares,the business combination transaction costs (including payment of $17,500,000 of deferred underwritingcommissions), any equity issued or cash paid to the target’s sellers or other third parties, or the target’sbusiness itself, including its assets, liabilities, management and prospects.
(2)
The sponsor’s total investment in the equity of the company, inclusive of the founder shares and thesponsor’s $12,500,000 (or $13,700,000 if the underwriters’ option to purchase additional shares isexercised in full) investment in the private placement shares, is $12,525,000 (or $13,725,000 if the underwriters’ option to purchase additional shares is exercised in full).
While the implied value of our public shares may be diluted, the implied value of $7.80 per share would represent a significant implied profit for our sponsor relative to the initial purchase price of the founder shares. Our sponsor has invested or committed to invest an aggregate of $12,525,000 (or $13,725,000 if the underwriters’ option to purchase additional shares is exercised in full) in us in connection with this offering, comprised of the $25,000 purchase price for the founder shares and the $12,500,000 (or $13,700,000 if the underwriters’ option to purchase additional shares is exercised in full) purchase price for the private placement shares. At $7.80 per share, the 11,250,000 founder shares and private placement shares would have an aggregate implied value of $87,750,000. As a result, even if the trading price of our common stock significantly declines, our sponsor will stand to make significant profit on its investment in us. In addition, our sponsor could potentially recoup its entire investment in us even if the trading price of our common stock were as low as $1.11 per share and even if the private placement shares are worthless. As a result, our sponsor is likely to make a substantial profit on its investment in us even if we select and consummate an initial business combination that causes the trading price of our common stock to decline, while our public stockholders who purchased their public shares in this offering could lose significant value in their public shares. Our sponsor may therefore be economically incentivized to consummate an initial business combination with a riskier, weaker-performing or lessestablished target business than would be the case if our sponsor had paid the same per share price for the founder shares as our public stockholders paid for their public shares.
CAPITALIZATION
The following table sets forth our capitalization at March 31, 2021 and as adjusted to give effect to the sale of our 40,000,000 shares in this offering for $400,000,000 (or $10.00 per share) and the sale of 1,250,000 private placement shares for $12,500,000 (or $10.00 per share) and the application of the estimated net proceeds derived from the sale of such securities:
| |
|
|
March 31, 2021
|
|
| |
|
|
Actual
|
|
|
As Adjusted(1)
|
|
|
Promissory note payable
|
|
|
|
$ |
500,000 |
|
|
|
|
$ |
— |
|
|
|
Deferred underwriting commissions
|
|
|
|
|
— |
|
|
|
|
|
14,000,000 |
|
|
|
Class A common stock, subject to redemption(2)
|
|
|
|
|
— |
|
|
|
|
|
382,523,990 |
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 1,000,000 shares authorized; no shares issued or outstanding
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock, $0.0001 par value, 500,000,000 shares authorized
(actual and as adjusted); no shares issued or outstanding (actual); 2,997,601(3)
shares issued and outstanding (excluding 382,523,990 shares subject to
redemption) (as adjusted)
|
|
|
|
|
— |
|
|
|
|
|
300 |
|
|
|
Class B common stock, $0.0001 par value, 100,000,000 shares authorized
(actual and as adjusted); 28,750,000(3) shares issued and outstanding (actual);
10,000,000(3) shares issued and outstanding (as adjusted)
|
|
|
|
|
2,875 |
|
|
|
|
|
1,000 |
|
|
|
Additional capital(4) .
|
|
|
|
|
22,125 |
|
|
|
|
|
4,999,710 |
|
|
|
Accumulated deficit .
|
|
|
|
|
(1,000) |
|
|
|
|
|
(1,000) |
|
|
|
Total stockholders’ equity .
|
|
|
|
|
24,000 |
|
|
|
|
|
5,000,010 |
|
|
|
Total capitalization
|
|
|
|
$ |
524,000 |
|
|
|
|
$ |
401,524,000 |
|
|
(1)
Assumes the surrender of 17,250,000 founder shares for no consideration by our sponsor at the time of this offering and the forfeiture of an additional 1,500,000 shares that are subject to forfeiture depending on the extent to which the underwriters’ option to purchase additional shares is exercised. The proceeds of the sale of such shares will not be deposited into the trust account, the shares will not be eligible for redemption from the trust account nor will they be eligible to vote upon the initial business combination.
(2)
In connection with our initial business combination, we will provide our public stock holders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business combination, including interest (which interest shall be net of permitted withdrawals), subject to the limitations described herein whereby our net tangible assets will be maintained at a minimum of $5,000,001 and any limitations (including, but not limited to, cash requirements) created by the terms of the proposed business combination. The “as adjusted” amount of Class A common stock, subject to redemption equals the “as adjusted” total assets of $401,524,000 less the “as adjusted” total liabilities of $14,000,000 less “as adjusted” total stockholder’s equity. The value of Class A common stock that may be redeemed is equal to $10.00 per share (which is the assumed redemption price) multiplied by 38,252,399 shares of Class A common stock, which is the maximum number of shares of Class A common stock that may be redeemed for a $10.00 purchase price per share and still maintain at least $5,000,001 of net tangible assets.
(3)
Actual share amount is prior to any forfeiture of founder shares by our sponsor and the “as adjusted” share amount assumes the surrender of 17,250,000 founder shares for no consideration by our sponsor at the time of this offering and the forfeiture of an additional 1,500,000 shares that are subject to forfeiture depending on the extent to which the underwriters’ option to purchase additional shares is exercised.
(4)
The “as adjusted” additional paid-in capital calculation is equal to the “as adjusted” total stockholders’ equity of $5,000,010, less common stock (par value) of $1,300 plus the accumulated deficit of $1,000.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a newly incorporated blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination with us. We intend to effectuate our initial business combination using cash from the proceeds of this offering and the sale of the private placement shares, our capital stock, debt or a combination of cash, stock and debt.
The issuance of additional shares of our stock in a business combination:
•
may significantly dilute the equity interest of investors in this offering, which dilution would increase if the anti-dilution provisions in the Class B common stock resulted in the issuance of Class A shares on a greater than one-to-one basis upon conversion of the Class B common stock;
•
may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock;
•
could cause a change of control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;
•
may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and
•
may adversely affect prevailing market price for our Class A common stock.
Similarly, if we issue debt securities or otherwise incur significant indebtedness, it could result in:
•
default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
•
acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
•
our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
•
our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;
•
our inability to pay dividends on our common stock;
•
using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
•
limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
•
increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
•
limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
As of March 31, 2021, we had cash of $226,535 and a working capital deficit of $315,172. Further, we expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful.
Results of Operations and Known Trends or Future Events
We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities and those necessary to prepare for this offering. Following this offering, we will not generate any operating revenues until after completion of our initial business combination. We will generate non-operating income in the form of interest income on cash and cash equivalents after this offering. There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements. After this offering, we expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. We expect our expenses to increase substantially after the closing of this offering.
Liquidity and Capital Resources
Our liquidity needs have been satisfied prior to the completion of this offering through receipt of $25,000 from the sale of the founder shares and up to $600,000 in loans from our sponsor under an unsecured promissory note. We estimate that the net proceeds from: (1) the sale of the shares in this offering, after deducting offering expenses of approximately $3,000,000 and underwriting commissions of $8,000,000 ($9,200,000 if the underwriters’ option to purchase additional shares is exercised in full), excluding deferred underwriting commissions of $14,000,000 (or up to $16,100,000 if the underwriters’ option to purchase additional shares is exercised in full); and (2) the sale of the private placement shares for a purchase price of $12,500,000 (or $13,700,000 if the underwriters’ option to purchase additional shares is exercised in full), will be $401,500,000 (or $461,500,000 if the underwriters’ option to purchase additional shares is exercised in full). Of this amount, $400,000,000 (or $460,000,000 if the underwriters’ option to purchase additional shares is exercised in full), which includes $14,000,000 (or up to $16,100,000 if the underwriters’ option to purchase additional shares is exercised in full) of deferred underwriting commissions, will be deposited into the trust account. The funds in the trust account will be invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act of 1940 and that invest only in direct U.S. government obligations. In the event that our offering expenses exceed our estimate of $3,000,000, we may fund such excess with loans or additional investments from our sponsor, members of our management team or any of their respective affiliates or other third parties. Conversely, in the event that the offering expenses are less than our estimate of $3,000,000, the excess would be held outside of the trust account.
We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (which interest shall be net of permitted withdrawals) to complete our initial business combination. We will make permitted withdrawals from the trust account to pay our taxes, including franchise taxes and income taxes. Delaware franchise tax is based on our authorized shares or on our assumed par and non-par capital, whichever yields a lower result. Under the authorized shares method, each share is taxed at a graduated rate based on the number of authorized shares with a maximum aggregate tax of $200,000 per year. Under the assumed par value capital method, Delaware taxes each $1,000,000 of assumed par value capital at the rate of $400; where assumed par value would be (1) our total gross assets following this offering, divided by (2) our total issued shares of common stock following this offering, multiplied by (3) the number of our authorized shares following this offering. Based on the number of shares of our common stock authorized and outstanding and our estimated total gross proceeds after the completion of this offering, our annual franchise tax obligation is expected to be capped at the maximum amount of annual franchise taxes payable by us as a Delaware corporation of $200,000. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the trust account. We expect the only taxes payable by us out of the funds in the trust account will be income and franchise taxes. We expect the interest earned on the amount in the trust account will be sufficient to pay our taxes. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
Prior to the completion of our initial business combination, our principal use of working capital will be to fund our activities to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices or similar locations of prospective target
businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a business combination, and to pay taxes to the extent the interest earned on the trust account is not sufficient to pay our taxes.
We expect our primary liquidity requirements during that period to include legal, accounting, due diligence, travel and other expenses in connection with any business combinations; regulatory reporting requirements; NYSE continued listing fees; office space, administrative and support services, including under the Administrative Services Agreement; reserve for liquidation expenses; and other miscellaneous expenses.
In addition, we may pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a “no-shop” provision (a provision designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a “no-shop” provision would be determined based on the terms of the specific business combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.
As indicated in the accompanying financial statements, at March 31, 2021, we had $226,535 in cash and a working capital deficit of $315,172. Further, we have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. Management’s plans to address this uncertainty through this offering are discussed below. We cannot assure you that our plans to raise capital or to consummate an initial business combination will be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern.
We expect to fund our working capital requirements prior to the time of our initial business combination with permitted withdrawals from the interest earned on the trust account, subject to an annual limit of $1,000,000. In addition, our sponsor, an affiliate of our sponsor or our officers and directors may, but none of them is obligated to, loan us funds as may be required to fund our working capital requirements. If we complete our initial business combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into shares of the post-business combination entity at a price of $10.00 per share at the option of the lender. Such shares would be identical to the private placement shares issued to our sponsor. The terms of such loans by our sponsor, an affiliate of our sponsor or our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsor, an affiliate of our sponsor or our officers and directors, if any, as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
We do not believe we will need to raise additional funds following this offering in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our initial business combination or because we become obligated to redeem a significant number of our public shares in connection with our initial business combination or a stockholder vote to make certain amendments to our charter, in which case we may issue additional securities or incur debt in connection with such business combination. In addition, we intend to target businesses with enterprise values that are greater than we could acquire with the net proceeds of this offering and the sale of the private placement shares, and, as a result, if the cash portion of the purchase price exceeds the amount available to us, including from the trust account, net of amounts needed to satisfy redemptions by public stockholders, we may be required to seek additional financing to complete such proposed initial business combination. We may also obtain financing prior to the closing of our initial business combination to fund our working capital needs and transaction costs in connection with our search for and completion of our initial business
combination. There is no limitation on our ability to raise funds through the issuance of equity or equity-linked securities or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to forward purchase agreements or backstop arrangements we may enter into following the consummation of this offering. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account upon expiration of the completion window. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Controls and Procedures
We are not currently required to maintain an effective system of internal controls as defined by Section 404 of the Sarbanes-Oxley Act. We will be required to comply with the internal control requirements of the Sarbanes-Oxley Act for the fiscal year ending December 31, 2022. Only in the event that we are deemed to be a large accelerated filer or an accelerated filer and no longer an emerging growth company would we be required to comply with the independent registered public accounting firm attestation requirement.
Further, for as long as we remain an emerging growth company as defined in the JOBS Act, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirement.
Prior to the closing of this offering, we have not completed an assessment, nor has our independent registered public accounting firm tested our systems, of internal controls. We expect to assess the internal controls of our target business or businesses prior to the completion of our initial business combination and, if necessary, to implement and test additional controls as we may determine are necessary in order to state that we maintain an effective system of internal controls. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of internal controls. Many small and mid- sized target businesses we may consider for our initial business combination may have internal controls that need improvement in areas such as:
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staffing for financial, accounting and external reporting areas, including segregation of duties;
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reconciliation of accounts;
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proper recording of expenses and liabilities in the period to which they relate;
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evidence of internal review and approval of accounting transactions;
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documentation of processes, assumptions and conclusions underlying significant estimates; and
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documentation of accounting policies and procedures.
Because it will take time, management involvement and perhaps outside resources to determine what internal control improvements are necessary for us to meet regulatory requirements and market expectations for our operation of a target business, we may incur significant expenses in meeting our public reporting responsibilities, particularly in the areas of designing, enhancing, or remediating internal and disclosure controls. Doing so effectively may also take longer than we expect, thus increasing our exposure to financial fraud or erroneous financing reporting. Once our management’s report on internal controls is complete, we will retain our independent auditors to audit and render an opinion on such report when required by Section 404 of the Sarbanes-Oxley Act. The independent auditors may identify additional issues concerning a target business’s internal controls while performing their audit of internal control over financial reporting.
Quantitative and Qualitative Disclosures about Market Risk
The net proceeds of this offering and the sale of the private placement shares held in the trust account will be invested in U.S. government treasury bills with a maturity of 185 days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act of 1940 and that
invest only in direct U.S. government obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations
As of March 31, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations.
Related Party Transactions
In March 2021, our sponsor purchased an aggregate of 43,125,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.0006 per share. On March 9, 2021, the sponsor forfeited 14,375,000 founder shares for no consideration, resulting in an aggregate of 28,750,000 founder shares outstanding. In connection with this offering, our sponsor will surrender 17,250,000 founder shares plus up to an additional 1,500,000 founder shares depending on the extent to which the underwriters' exercise their option to purchase additional shares. The number of founder shares to be held after this offering is determined based on the expectation that the founder shares would represent 20% of the outstanding shares of common stock upon the completion of this offering. The purchase price of the founder shares was determined by dividing the amount of cash contributed to us by the number of founder shares issued.
We will enter into an Administrative Services Agreement pursuant to which we will also pay an affiliate of our sponsor a total of $30,000 per month for office space, administrative and support services. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
Our sponsor, officers and directors or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made by us to our sponsor, officers, directors or our or any of their respective affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
Our sponsor has agreed to loan us up to $600,000 under an unsecured promissory note to be used for a portion of the expenses of this offering. As of March 31, 2021, there was $500,000 outstanding under such promissory note. These loans are non-interest bearing, unsecured and are due at the earlier of December 31, 2021 and the closing of this offering. These loans will be repaid upon completion of this offering out of the $3,000,000 of offering proceeds that has been allocated for the payment of offering expenses (other than underwriting commissions) not held in the trust account.
We may engage M. Klein and Company, or another affiliate of our sponsor, as our lead financial advisor in connection with our initial business combination and may pay such affiliate a customary financial advisory fee in an amount that constitutes a market standard financial advisory fee for comparable transactions.
In addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsor, an affiliate of our sponsor or our officers and directors may, but is not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into shares of the post-business combination entity at a price of $10.00 per share at the option of the lender. Such shares would be identical to the private placement shares issued to our sponsor. The terms of such loans by our sponsor, an affiliate of our sponsor or our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsor, an affiliate of our sponsor or our officers and directors, if any, as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
Our sponsor has subscribed to purchase an aggregate of 1,250,000 (or 1,370,000 if the underwriters’ option to purchase additional shares is exercised in full) private placement shares at a price of $10.00 per share ($12,500,000 in the aggregate or 13,700,000 in the aggregate if the underwriters’ option to purchase additional shares is exercised in full) in the Private Placement. Our sponsor will be permitted to transfer the private placement shares held by it to certain permitted transferees, including our officers and directors and other persons or entities affiliated with or related to them, but the transferees receiving such securities will be subject to the same agreements with respect to such securities as our sponsor. Otherwise, these shares will not, subject to certain limited exceptions, be transferable or salable until 30 days after the completion of our initial business combination. The private placement shares will be non-redeemable so long as they are held by our sponsor or its permitted transferees (except as described below under “Principal Stockholders—Transfers of Founder Shares and Private Placement Shares”). The private placement shares are identical to those of the shares being sold in this offering, subject to certain limited exceptions as described in this prospectus.
Pursuant to a registration rights agreement we will enter into with our initial stockholders on or prior to the closing of this offering, we may be required to register certain securities for sale under the Securities Act. Our initial stockholders, and holders of shares issued upon conversion of working capital loans, if any, are entitled under the registration rights agreement to make up to three demands that we register certain of our securities held by them for sale under the Securities Act and to have the securities covered thereby registered for resale pursuant to Rule 415 under the Securities Act. In addition, these holders have the right to include their securities in other registration statements filed by us. We will bear the costs and expenses of filing any such registration statements. Please see “Certain Relationships and Related Party Transactions.”
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company”, we choose to rely on such exemptions we may not be required to, among other things: (1) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act; (2) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act; (3) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis); and (4) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our initial public offering or until we are no longer an “emerging growth company,” whichever is earlier.
PROPOSED BUSINESS
General
We are a newly incorporated blank check company formed as a Delaware corporation for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination with us. We may pursue an initial business combination in any business or industry but expect to focus on a target in an industry where we believe our management team and co-founders’ expertise will provide us with a competitive advantage.
Our team will be led by our co-founder, Sam Altman, an entrepreneurial and thought leader with a proven track-record of growth investing within the technology industry. Mr. Altman is also the co-founder and CEO of OpenAI, a leading AI research and deployment company, and the Chairman of Y Combinator. OpenAI’s mission is to ensure AGI benefits all of humanity. OpenAI began as a research lab in 2015, with a focus on building AGI. OpenAI’s primary, fiduciary duty is to humanity, with the commitment to safely deploy AGI for the benefit of all, and to avoid enabling uses of AI or AGI that harm humanity or unduly concentrate power. Prior to founding OpenAI, Mr. Altman served as President of Y Combinator, a leading Silicon Valley startup accelerator. During his tenure as President, Mr. Altman led the expansion of Y Combinator’s portfolio to approximately 400 companies per year. Under Mr. Altman’s leadership, Y Combinator successfully executed investments in premiere companies including Airbnb, Stripe, DoorDash, Instacart, and Coinbase. Mr. Altman is recognized as having been a major force in leading Y Combinator’s launch into deep or “hard” technology companies, directly working with founders on long-term strategies to develop their technology to build companies with massive impact. Mr. Altman also launched Y Combinator Continuity, a Y Combinator fund focused on growth-stage companies. Mr. Altman is regarded as an entrepreneurial leader and visionary due to his track record of identifying promising opportunities and nurturing their growth to become prominent and established players with massive impact.
Earlier in his career, Mr. Altman co-founded Loopt, Inc., a provider of mobile location-based services, and served as its Chief Executive Officer until it was acquired by Green Dot Corporation in March 2012, after which he held a number of senior executive positions at Green Dot through December 2013, and served as a member of its Board of Directors from March 2013 through December 2016. Mr. Altman has invested in several private companies, including Reddit, Inc., which operates a social sharing and aggregation website, and Helion Energy, Inc. and Oklo, Inc., two companies focused on clean energy solutions. He currently serves on the Board of Directors of Expedia Group and Reddit, Inc., and currently serves as Chairman of Helion and Oklo.
In addition to Mr. Altman, our team will include a consortium of individuals with deep expertise in the private technology company landscape, including Brad Lightcap and Scott Krisiloff. Mr. Lightcap currently serves as Chief Financial Officer of OpenAI. Prior to joining OpenAI, Mr. Lightcap was a core team member at Y Combinator Continuity, dedicated to supporting founders scale their companies, with the primary goal of supporting Y Combinator alumni companies through investments in subsequent funding rounds.
Mr. Krisiloff currently serves as the Chief Business Officer at Helion Energy, a company focused on transforming the fusion energy industry. Helion Energy focuses on electricity production, coupling a legacy of magneto-inertial fusion science and modern electronics to engineer a fusion generator and fuel cycle for commercial application. Mr. Krisiloff also serves as Chief Operating Officer of Hydrazine Capital Management, an early-stage venture capital firm based in San Francisco, California.
Mr. Altman and his team will work in partnership with M. Klein and Company. Drawing on the combined acumen of Mr. Altman and the team of M. Klein and Company, our team has the scale and expertise to source, diligence, and execute opportunities M. Klein and Company, the Strategic Partners and their affiliated professionals will provide all the necessary resources to Mr. Altman and his team.
Our co-founder, Michael Klein, is also the founder and managing partner of M. Klein and Company, which he founded in 2012. M. Klein and Company is a global strategic advisory firm that provides its clients
a variety of advice tailored to their objectives. Mr. Klein is a strategic advisor to global companies, boards of directors, senior executives, governments and institutional investors. Mr. Klein’s background in strategic advisory work was built during his 35-year career, including more than two decades at Citi and its predecessors, during which he initiated and executed strategic advisory transactions. He began his career as an investment banker in the M&A Advisory Group at Salomon Brothers and subsequently became Chairman and Co-Chief Executive Officer of Citi Markets and Banking, with responsibilities for Global Corporate and Investment Banking and Global Transaction Services across Citi. In his role as Co-CEO, he was responsible for all relationship, advisory, underwriting, and capital markets issuance activity.
Mr. Klein was previously Chief Executive Officer of Global Banking at Citi, CEO of Citi Markets & Banking, Europe, and Co-Head of Global Investment Banking for Salomon Smith Barney for the decade prior. In early 1999, he was given responsibility for the expansion of the firm’s European investment banking business. A major step in that development was the merger, in May 2000, of Salomon Smith Barney’s European operation with Schroders, a leading UK and European Merchant Bank. Prior to becoming Co-Head of the Global Investment Bank, he had been responsible for the firm’s Global Financial Entrepreneurs and Private Equity Groups, a leading provider of acquisition ideas and financing for leading private equity sponsors. We will seek to capitalize on the experience and expertise of our co-founders.
Mr. Klein has significant experience running investment banking and advisory organizations with an overarching mission of providing high quality deal sourcing and transactional advice to a broad range of clients. For example, in 2018, Mr. Klein co-founded and became Chairman of the Board of Directors of CCC, a special purpose acquisition company that completed a $690 million initial public offering in September 2018 and merged in May 2019 with Clarivate, a leading provider of comprehensive intellectual property and scientific information, analytical tools, and services. Subsequent to the merger, Jerre Stead, the co-founder of CCC, became the Chief Executive Officer of Clarivate and took over the role of Chairman of the Board of Directors of Clarivate. Today, Clarivate is an independent, publicly traded company.
The CCC board of directors believed that of the several transactions that CCC considered, the Clarivate merger provided CCC investors with an attractive investment opportunity that was characterized by an industry-leading, world-class management team with a history of creating significant shareholder value through superior operational performance, positive long-term trends in each of the Clarivate’s operating markets, significant organic and accretive growth opportunities, a clear path to meaningfully reduced balance sheet leverage, and a compelling valuation relative to its peers. In sourcing and executing a business combination transaction, we hope to find a target with similar characteristics.
In April 2019, Mr. Klein founded and became Chief Executive Officer and Chairman of the Board of Directors of Churchill Capital Corp II, a special purpose acquisition company that completed a $690 million initial public offering in July 2019. On October 13, 2020, Churchill Capital Corp II entered into a definitive agreement to merge with Skillsoft, a provider of digital learning and talent management solutions and entered into a definitive agreement to acquire Global Knowledge Training LLC, a provider of IT and professional skills development. In October 2019, Mr. Klein founded and became Chief Executive Officer, President and Chairman of the Board of Directors of Churchill Capital Corp III, a special purpose acquisition company that completed a $1,100 million initial public offering in February 2020. On October 8, 2020, Churchill Capital Corp III merged with MultiPlan, Inc., a technology- enabled provider of end-to-end healthcare cost management solutions. In April 2020, Mr. Klein founded and became Chief Executive Officer, President and Chairman of the Board of Directors of Churchill Capital Corp IV, a special purpose acquisition company that completed a $2,070 million initial public offering in August 2020. In February 2021, Churchill Capital Corp IV entered into a definitive agreement to merge with Lucid Motors Inc., which is setting new standards for sustainable mobility with its advanced luxury electric vehicles. In May 2020, Mr. Klein founded and became Chief Executive Officer, President and Chairman of the Board of Directors of Churchill Capital Corp V, a special purpose acquisition company that completed a $500 million initial public offering in December 2020. In December 2020, Mr. Klein founded and became Chief Executive Officer, President and Chairman of the Board of Directors of Churchill Capital Corp VI, a special purpose acquisition company that completed a $552 million initial public offering in February 2021. In May 2020, Mr. Klein founded and became Chief Executive Officer, President and Chairman of the Board of Directors of Churchill Capital Corp VII, a special purpose acquisition company that completed a $1,380 million initial public offering in February 2021. Churchill Capital has announced four business combinations for prior vehicles, with an aggregate value of approximately $30 billion.
Our Chief Financial Officer, Jay Taragin, has held this position since February 2021 and is also the Chief Financial Officer of Churchill Capital Corp IV since April 2020, Churchill Capital Corp V since May 2020, Churchill Capital Corp VI since December 2020, Churchill Capital Corp VII since February 2021 and M. Klein and Company which he joined in May 2019. Prior to joining M. Klein and Company, Mr. Taragin served as the US Scotiabank Chief Financial Officer from 2013 to 2017. Prior to Scotiabank, Mr. Taragin held a Chief Operating and Financial Officer role from 2009 to 2012 at a mortgage hedge fund and held a variety of senior finance and audit roles at Merrill Lynch & Company from 1993 to 2009. In addition, Mr. Taragin worked at Credit Suisse and PricewaterhouseCoopers as a senior auditor and accountant. Mr. Taragin is a CPA and holds a master’s degree in business administration from New York University Stern School of Business and a bachelor’s degree from Yeshiva University.
We believe that our management team and M. Klein and Company, which is an affiliate of our sponsor, are well positioned to identify and execute attractive business combination opportunities. Our objectives are to generate attractive returns for shareholders and enhance value through selecting a high quality target at an attractive valuation, negotiating favorable acquisition terms for our stockholders and improving operational performance of the acquired company. We expect to favor potential target companies with certain industry and business characteristics. Key industry characteristics include compelling long-term growth prospects, opportunities to affect valuation improvements at the company, attractive competitive dynamics and consolidation opportunities. Key business characteristics include competitive advantages, significant streams of recurring revenue, opportunity for operational improvement, attractive steady-state margins, high incremental margins and attractive free cash flow characteristics.
M. Klein and Company has established strategic relationships with selected leading investors and financing providers. Such Strategic Partners may invest in our sponsor, thereby sharing in the appreciation of founder shares and private placement shares, and assist Mr. Altman and M. Klein and Company in evaluating potential acquisition targets.
With respect to the foregoing experiences of our management, M. Klein and Company and our Strategic Partners, past performance is not a guarantee (i) that we will be able to identify a suitable candidate for our initial business combination or (ii) of success with respect to any business combination we may consummate. You should not rely on the historical record of our management’s, M. Klein and Company’s or our Strategic Partners’ performance as indicative of our future performance. For more information on the experience and background of our management team, see the sections entitled “Management” and “Proposed Business.”
Business Strategy
Our strategy is to:
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leverage the strategic and transactional experience of our founder to bring advice and attention to potential business combination targets;
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deliver creative approaches to transaction sourcing; and
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utilize an understanding of global financial markets and events, financing, and overall corporate strategy options.
Our selection process will leverage our founder’s and our Strategic Partners’ network of industry, private equity sponsor, credit fund sponsor and lending community relationships as well as relationships with management teams of public and private companies, investment bankers, restructuring advisers, attorneys and accountants, which we believe should provide us with a number of business combination opportunities. We intend to deploy a proactive, thematic sourcing strategy and to focus on companies where we believe the combination of our operating experience, relationships, capital and capital markets expertise can be catalysts to transform a target company and can help accelerate the target’s growth and performance. Upon completion of this offering, members of our management team, M. Klein and Company, our Strategic Partners will communicate with their network of relationships to articulate our initial business combination criteria, including the parameters of our search for a target business, and will begin the disciplined process of pursuing and reviewing promising leads.
Our management team and M. Klein and Company have experience in:
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sourcing, structuring, acquiring and selling businesses;
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fostering relationships with sellers, capital providers and target management teams;
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negotiating transactions favorable to investors;
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executing transactions in multiple geographies and under varying economic and financial market conditions; and
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accessing the capital markets, including financing businesses and helping companies transition to public ownership.
Competitive Strengths
The sourcing, valuation, diligence and execution capabilities of our management team, M. Klein and Company and our Strategic Partners will provide us with a significant pipeline of opportunities from which to evaluate and select a business that will benefit from our expertise. We may also have the benefit of using M. Klein and Company, or another affiliate of our sponsor, as our lead financial advisor on our business combinations and other transactions. Our competitive strengths include the following:
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Proprietary Sourcing Channels and Leading Industry Relationships. We believe the capabilities and connections associated with our management team, in combination with those of M. Klein and Company and our Strategic Partners, will provide us with a differentiated pipeline of acquisition opportunities that would be difficult for other participants in the market to replicate. We expect these sourcing capabilities will be further bolstered by our management team’s, M. Klein and Company’s and our Strategic Partners’ reputation and deep industry relationships.
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Investing Experience. We believe that our management’s track record of identifying and sourcing transactions positions us well to appropriately evaluate potential business combinations and select one that will be well received by the public markets.
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Execution and Structuring Capability. Our management team and sponsor believe that our and our Strategic Partners’ combined expertise and reputation will allow us to source and complete transactions possessing structural attributes that create an attractive investment thesis. These types of transactions are typically complex and require creativity, industry knowledge and expertise, rigorous due diligence, and extensive negotiations and documentation. We believe that by focusing our investment activities on these types of transactions, we are able to generate investment opportunities that have attractive risk/reward profiles based on their valuations and structural characteristics.
Investment Criteria
We have developed the following high level, non-exclusive investment criteria that we will use to screen for and evaluate target businesses. We will seek to acquire a business that:
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Generates Stable Free Cash-Flow. We will seek to acquire a business that has historically generated, or has the near-term potential to generate, strong and sustainable free cash flow.
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Would Benefit Uniquely from our Capabilities. We will seek to acquire a business where the collective capabilities of our management and sponsor can be leveraged to tangibly improve the operations and market position of the target.
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Is Sourced Through our Proprietary Channels. We do not expect to participate in broadly marketed processes, but rather will aim to leverage our extensive network to source our business combination.
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Has a Committed and Capable Management Team. We will seek to acquire a business with a professional management team whose interests are aligned with those of our investors and complement the expertise of our co-founders. Where necessary, we may also look to complement and enhance the capabilities of the target business’s management team by recruiting additional talent through our network of contacts.
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Has the Potential to Grow Through Further Acquisition Opportunities. We will seek to acquire a business that has the potential to grow inorganically through additional acquisitions.
These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as on other considerations, factors and criteria that our management may deem relevant. In the event that we decide to enter into our initial business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our initial business combination, which, as discussed in this prospectus, would be in the form of tender offer documents or proxy solicitation materials that we would file with the SEC.
Our Acquisition Process
In evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information which will be made available to us.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, co-founders, officers or directors. In the event we seek to complete our initial business combination with a business that is affiliated with our sponsor, co-founders, officers or directors, we, or a committee of independent and disinterested directors, will obtain an opinion from an independent investment banking firm that is a member of the Financial Industry Regulatory Authority, or FINRA, or from an independent accounting firm, that such an initial business combination is fair to our company from a financial point of view.
Members of our management team may directly or indirectly own our securities following this offering, and accordingly, they may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination.
Our sponsor and its principals may from time to time become aware of potential business opportunities, one or more of which we may desire to pursue, for a business combination, but we have not (nor has anyone on our behalf) engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to a business combination transaction with us.
As described in “Proposed Business—Sourcing of Potential Business Combination Targets” and “Management—Conflicts of Interest,” each of our officers and directors presently has, and any of them in the future may have additional, fiduciary, contractual or other obligations or duties to one or more other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such entities. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless (i) such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company, (ii) such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue and (iii) the director or officer is permitted to refer the opportunity to us without violating another legal obligation. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for one or more entities to which he or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such business combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us.
In addition, none of the Strategic Partners or their personnel are officers or directors of our company and therefore owe us no fiduciary duties as such. While we expect that they will assist us in identifying business combination targets, they have no obligation to do so and may devote a substantial portion of their business time to activities unrelated to us. Our Strategic Partners may have fiduciary, contractual or other obligations or duties to other organizations to present business combination opportunities to such other
organizations rather than to us. Accordingly, if any Strategic Partner becomes aware of a business combination opportunity which is suitable for one or more entities to which he, she or it has fiduciary, contractual or other obligations or duties, he, she or it will honor those obligations and duties to present such business combination opportunity to such entities first and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us. These conflicts may not be resolved in our favor and a potential business may be presented to another entity prior to its presentation to us.
While neither M. Klein and Company nor any of our Strategic Partners will have any duty to offer acquisition opportunities to us, they may become aware of a potential transaction that is an attractive opportunity for us, which they may decide to share with us. Conflicts may arise from their affiliation with our company, their provision of services both to us and to third-party clients, as well as from actions undertaken by them for their own account. In performing services for other clients and also when acting for their own account, they may take commercial steps which may have an adverse effect on us. Any of M. Klein and Company’s or our Strategic Partners’ other activities may, individually or in the aggregate, have an adverse effect on us, and the interests of M. Klein and Company and our Strategic Partners or their respective clients or counterparties may at times be averse to ours. Please see “Proposed Business—Certain Potential Conflicts of Interest Relating to M. Klein and Company” for additional information regarding certain potential conflicts of interest relating to M. Klein and Company and our Strategic Partners.
We do not believe, however, that the fiduciary, contractual or other obligations or duties of our officers or directors, or of M. Klein and Company and our Strategic Partners, or policies applicable to M. Klein and Company or any of our Strategic and Operating, will materially affect our ability to complete our initial business combination.
Our sponsor, officers, directors, M. Klein and Company and our Strategic Partners may participate in the formation of, or become an officer or director of, any other blank check company prior to completion of our initial business combination. As a result, our sponsor, officers, directors, M. Klein and Company and our Strategic Partners could have conflicts of interest in determining whether to present business combination opportunities to us or to any other blank check company with which they may become involved. In particular, M. Klein and Company and Mr. Klein, as well as our board of directors, have formed and are actively engaged in Churchill Capital Corp II, Churchill Capital Corp IV, Churchill Capital Corp V, Churchill Capital Corp VI and Churchill Capital Corp VII, special purpose acquisition corporations that completed their initial public offerings in July 2019, August 2020, December 2020, February 2021 and February 2021, respectively. Churchill Capital Corp II, Churchill Capital Corp IV, Churchill Capital Corp V, Churchill Capital Corp VI and Churchill Capital Corp VII, like us, may pursue initial business combination targets in any businesses or industries and have until July 1, 2021, August 3, 2022, December 18, 2022, February 11, 2023 and February 11, 2023, respectively, to do so (absent an extension in accordance with their charters). Any such companies, including Churchill Capital Corp II, Churchill Capital Corp IV, Churchill Capital Corp V, Churchill Capital Corp VI and Churchill Capital Corp VII, may present additional conflicts of interest in pursuing an acquisition target.
Initial Business Combination
The NYSE rules require that an initial business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the trust account (net of amounts disbursed to management for working capital purposes, if applicable, and excluding the amount of any deferred underwriting discount). We refer to this as the 80% of net assets test. If our board of directors is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm, with respect to the satisfaction of such criteria. We do not currently intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination, although there is no assurance that will be the case.
We anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the outstanding equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for
other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to our initial business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in our initial business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If our initial business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses.
Our amended and restated certificate of incorporation will require the affirmative vote of a majority of our board of directors, which must include a majority of our independent directors to approve our initial business combination (or such other vote as the applicable law or stock exchange rules then in effect may require).
We do not believe we will need to raise additional funds following this offering in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our initial business combination or because we become obligated to redeem a significant number of our public shares in connection with our initial business combination or a stockholder vote to make certain amendments to our charter, in which case we may issue additional securities or incur debt in connection with our initial business combination. In addition, we intend to target businesses with enterprise values that are greater than we could acquire with the net proceeds of this offering and the sale of the private placement shares, and, as a result, if the cash portion of the purchase price exceeds the amount available to us, including from the trust account, net of amounts needed to satisfy redemptions by public stockholders, we may be required to seek additional financing to complete such proposed initial business combination. We may also obtain financing prior to the closing of our initial business combination to fund our working capital needs and transaction costs in connection with our search for and completion of our initial business combination. There is no limitation on our ability to raise funds through the issuance of equity or equity-linked securities or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to forward purchase agreements or backstop arrangements we may enter into following the consummation of this offering. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account upon expiration of the completion window. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Prior to the date of this prospectus, we will file a registration statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
Corporate Information
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non- binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.
Our executive offices are located at 640 Fifth Avenue, 12th Floor, New York, NY 10019 and our telephone number is (212) 380-7500. Upon completion of this offering, our corporate website address will be www.altcacquisitioncorp.com. Our website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this prospectus. You should not rely on any such information in making your decision whether to invest in our securities.
Sourcing of Potential Business Combination Targets
M. Klein and Company or any of our Strategic Partners may compete with us for acquisition opportunities that we may target for our initial business combination. If M. Klein and Company or any of our Strategic Partners decides to pursue any such opportunity or determines in its sole discretion not to offer such opportunity to us, we may be precluded from procuring such opportunities. In addition, investment ideas generated within M. Klein and Company or any of our Strategic Partners or by persons who may make decisions for us or any of our Strategic Partners may be suitable for both us and for M. Klein and Company or the relevant Strategic Partner and may be directed to M. Klein and Company, the relevant Strategic Partner or other third parties rather than to us. Neither M. Klein and Company nor any of our Strategic Partners has any fiduciary, contractual or other obligations or duties to our company, including, without limitation, to present us with any opportunity for a potential business combination of which they become aware.
Our management team, in their other endeavors (including any affiliation they may have with M. Klein and Company or any of our Strategic Partners), may choose or be required to present potential business combinations or other transactions to M. Klein and Company, the relevant Strategic Partner or third parties, before they present such opportunities to us. Please see “Risk Factors—Certain of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity or other transaction should be presented.”
We are not prohibited from pursuing an initial business combination with a company that is affiliated with M. Klein and Company, any of our Strategic Partners, our sponsor, officers or directors, nor are we prohibited from doing so with a business that is affiliated with any M. Klein and Company or any of our Strategic Partners. In the event we seek to complete our initial business combination with a business that is affiliated with M. Klein and Company, any of our Strategic Partners, our sponsor, officers or directors, we, or a committee of independent and disinterested directors, will obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm, that such
initial business combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
We may engage M. Klein and Company, or another affiliate of our sponsor, as our lead financial advisor in connection with our initial business combination and may pay such affiliate a customary financial advisory fee in an amount that constitutes a market standard financial advisory fee for comparable transactions.
As discussed above and in “Management—Conflicts of Interest,” if any of our officers or directors becomes aware of a business combination opportunity that is suitable for one or more entities to which he or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such business combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us (including as described above).
Status as a Public Company
We believe our structure will make us an attractive business combination partner to target businesses. As an existing public company, we offer target businesses an alternative to the traditional initial public offering through a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination. In this situation, the owners of the target business would exchange their shares of stock in the target business for shares of our stock or for a combination of shares of our stock and cash, allowing us to tailor the consideration to the specific needs of the sellers. Although there are various costs and obligations associated with being a public company, we believe target businesses will find this method a more certain and cost effective method to becoming a public company than the typical initial public offering. In a typical initial public offering, there are additional expenses incurred in marketing, road show and public reporting efforts that may not be present to the same extent in connection with a business combination with us.
Furthermore, once a proposed business combination is completed, the target business will have effectively become public, whereas an initial public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could delay or prevent the offering from occurring. Once public, we believe the target business would then have greater access to capital and an additional means of providing management incentives consistent with stockholders’ interests. It can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt during the prior three-year period.
Financial Position
With funds available for a business combination initially in the amount of $387,500,000 assuming no redemptions and after payment of $14,000,000 of deferred underwriting fees (or $445,400,000 assuming no redemptions and after payment of up to $16,100,000 of deferred underwriting fees if the underwriters’ option to purchase additional shares is exercised in full), we offer a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to complete our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we have not taken any steps to secure third party financing and there can be no assurance it will be available to us.
Effecting our Initial Business Combination
We are not presently engaged in, and we will not engage in, any operations for an indefinite period of time following this offering. We intend to effectuate our initial business combination using cash from the proceeds of this offering and the sale of the private placement shares, our capital stock, debt or a combination of these as the consideration to be paid in our initial business combination. We may seek to complete our initial business combination with a company or business that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
If our initial business combination is paid for using equity or debt securities or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination or used for redemption of our public shares, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital.
Members of our management team, M. Klein and Company and our Strategic Partners are from time to time made aware of potential business opportunities, one or more of which we may desire to pursue, for a business combination, but we have not (nor has anyone on our behalf) engaged in any substantive discussions with a business combination target, with respect to a business combination transaction with us. Please see “—Sourcing of Potential Business Combination Targets” for additional information regarding limitations on our access to investment opportunities sourced by M. Klein and Company and our Strategic Partners.
We may seek to raise additional funds in connection with the completion of our initial business combination through a private offering of equity securities or debt securities or loans, and we may effectuate our initial business combination using the proceeds of such offerings or loans rather than using the amounts held in the trust account.
In the case of an initial business combination funded with assets other than the trust account assets, our tender offer documents or proxy materials disclosing the business combination would disclose the terms of the financing and, only if required by applicable law, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial business combination. At this time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities or otherwise.
Selection of a target business and structuring of our initial business combination
The NYSE rules require that an initial business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the trust account (net of amounts disbursed to management for working capital purposes, if applicable, and excluding the amount of any deferred underwriting discount). The fair market value of the target or targets will be determined by our board of directors based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation or value of comparable businesses. If our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm, with respect to the satisfaction of such criteria. We do not currently intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination, although there is no assurance that will be the case. Subject to this requirement, our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will not be permitted to effectuate our initial business combination with another blank check company or a similar company with nominal operations.
In any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquire a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction
company is what will be valued for purposes of the 80% of net assets test. There is no basis for investors in this offering to evaluate the possible merits or risks of any target business with which we may ultimately complete our initial business combination.
To the extent we effect our initial business combination with a company or business that may be financially unstable or in its early stages of development or growth, we may be affected by numerous risks inherent in such company or business. Although our management will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
In evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information which will be made available to us. We may engage M. Klein and Company, or another affiliate of our sponsor, as our lead financial advisor in connection with our initial business combination and may pay such affiliate a customary financial advisory fee in an amount that constitutes a market standard financial advisory fee for comparable transactions.
The time required to select and evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which our initial business combination is not ultimately completed will result in our incurring losses and will reduce the funds we can use to complete another business combination.
Lack of business diversification
For an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business.
Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business. By completing our initial business combination with only a single entity, our lack of diversification may:
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subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination; and
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cause us to depend on the marketing and sale of a single product or limited number of products or services.
Limited ability to evaluate the target’s management team
Although we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial business combination with that business, our assessment of the target business’s management may not prove to be correct. In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of our management team, if any, in the target business cannot presently be stated with any certainty. While it is possible that one or more of our directors will remain associated in some capacity with us following our initial business combination, it is highly unlikely that any of them will devote their full efforts to our affairs subsequent to our initial business combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge relating to the operations of the particular target business.
We cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following our initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to recruit
additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders may not have the ability to approve our initial business combination
We may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required by applicable law or stock exchange rule, or we may decide to seek stockholder approval for business or other reasons. Presented in the table below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder approval is currently required under Delaware law for each such transaction.
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Type of Transactions
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Whether
Stockholder
Approval is
Required
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Purchase of assets
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No
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Purchase of stock of target not involving a merger with the company
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No
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Merger of target into a subsidiary of the company
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No
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Merger of the company with a target
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Yes
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Under the NYSE’s listing rules, stockholder approval would be required for our initial business combination if, for example:
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we issue (other than in a public offering for cash) shares of common stock that will either (a) be equal to or in excess of 20% of the number of shares of common stock then outstanding or (b) have voting power equal to or in excess of 20% of the voting power then outstanding;
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any of our directors, officers or substantial security holders (as defined by the NYSE rules) has a 5% or greater interest, directly or indirectly, in the target business or assets to be acquired and if the number of shares of common stock to be issued, or if the number of shares of common stock into which the securities may be convertible or exercisable, exceeds either (a) 1% of the number of shares of common stock or 1% of the voting power outstanding before the issuance in the case of any of our directors and officers or (b) 5% of the number of shares of common stock or 5% of the voting power outstanding before the issuance in the case of any substantial security holders; or
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the issuance or potential issuance will result in our undergoing a change of control.
The decision as to whether we will seek stockholder approval of a proposed business combination in those instances in which stockholder approval is not required by law will be made by us, solely in our discretion, and will be based on business and legal reasons, which include a variety of factors, including, but not limited to:
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the timing of the transaction, including in the event we determine stockholder approval would require additional time and there is either not enough time to seek stockholder approval or doing so would place the company at a disadvantage in the transaction or result in other additional burdens on the company;
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the expected cost of holding a stockholder vote;
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the risk that the stockholders would fail to approve the proposed business combination;
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other time and budget constraints of the company; and
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additional legal complexities of a proposed business combination that would be time-consuming and burdensome to present to stockholders.
Permitted purchases of our securities
In the event we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or any of their respective affiliates may purchase public shares in privately
negotiated transactions or in the open market either prior to or following the completion of our initial business combination. There is no limit on the number of shares such persons may purchase. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. In the event our initial stockholders, directors, officers, advisors or any of their respective affiliates determine to make any such purchases at the time of a stockholder vote relating to our initial business combination, such purchases could have the effect of influencing the vote necessary to approve such transaction. None of the funds in the trust account will be used to purchase public shares in such transactions. If they engage in such transactions, they will be restricted from making any such purchases when they are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. Such a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. Prior to the consummation of this offering, we will adopt an insider trading policy which will require insiders to (1) refrain from purchasing securities when they are in possession of any material non-public information and (2) to clear all trades with our compliance personnel or legal counsel prior to execution. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon several factors, including but not limited to, the timing and size of such purchases. Depending on such circumstances, our insiders may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary.
In the event that our sponsor, directors, officers, advisors or any of their respective affiliates purchase public shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights or submitted a proxy to vote against our initial business combination, such selling stockholders would be required to revoke their prior elections to redeem their shares and any proxy to vote against our initial business combination. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules.
The purpose of such purchases could be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of our initial business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. This may result in the completion of our initial business combination that may not otherwise have been possible.
In addition, if such purchases are made, the public “float” of our common stock may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
Our sponsor, officers, directors, advisors and/or any of their respective affiliates anticipate that they may identify the stockholders with whom our sponsor, officers, directors, advisors or any of their respective affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials in connection with our initial business combination. To the extent that our sponsor, officers, directors, advisors or any of their respective affiliates enter into a private purchase, they would identify and contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share of the trust account or vote against our initial business combination. Such persons would select the stockholders from whom to acquire shares based on the number of shares available, the negotiated price per share and such other factors as any such person may deem relevant at the time of purchase. The price per share paid in any such transaction may be different than the amount per share a public stockholder would receive if it elected to redeem its shares in connection with our initial business combination. Our sponsor, officers, directors, advisors or any of their respective affiliates will purchase shares only if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any purchases by our sponsor, officers, directors and/or any of their respective affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only be made to the extent such
purchases are made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or any of their respective affiliates will be restricted from making purchases of common stock if such purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.
Redemption rights for public stockholders in connection with our initial business combination
We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest (net of permitted withdrawals), divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.00 per public share. The per share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. The redemption right will include the requirement that any beneficial owner on whose behalf a redemption right is being exercised must identify itself in order to validly redeem its shares. Each public stockholder may elect to redeem its public shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction. Our sponsor, officers and directors have each entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares, private placement shares and any public shares held by them in connection with the completion of our initial business combination.
Manner of conducting redemptions
We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock either: (1) in connection with a stockholder meeting called to approve the business combination; or (2) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under applicable law or stock exchange listing requirement. Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would typically require stockholder approval. If we structure a business combination transaction with a target company in a manner that requires stockholder approval, we will not have discretion as to whether to seek a stockholder vote to approve the proposed business combination. We currently intend to conduct redemptions pursuant to a stockholder vote unless stockholder approval is not required by applicable law or stock exchange listing requirement and we choose to conduct redemptions pursuant to the tender offer rules of the SEC for business or other reasons.
If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers; and
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file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
Upon the public announcement of our initial business combination, we and our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common stock in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will
not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public shares, which number will be based on the requirement that we may not redeem public shares in an amount that would cause our net tangible assets be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete such initial business combination.
If, however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or other reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules; and
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file proxy materials with the SEC.
We expect that a final proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft proxy statement would be made available to such stockholders well in advance of such time, providing additional notice of redemption if we conduct redemptions in conjunction with a proxy solicitation. Although we are not required to do so, we currently intend to comply with the substantive and procedural requirements of Regulation 14A in connection with any stockholder vote even if we are not able to maintain our NYSE listing or Exchange Act registration.
In the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders with the redemption rights described above.
If we seek stockholder approval, unless otherwise required by applicable law, regulation or stock exchange rules, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting. Our initial stockholders, officers and directors will count towards this quorum and have agreed to vote any founder shares, private placement shares and any public shares held by them in favor of our initial business combination. These quorum and voting thresholds and agreements, may make it more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction. In addition, our sponsor, officers and directors have each entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares, private placement shares and any public shares held by them in connection with the completion of a business combination.
Our amended and restated certificate of incorporation will provide that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. Redemptions of our public shares may also be subject to a higher net tangible asset test or cash requirement pursuant to an agreement relating to our initial business combination. For example, the proposed business combination may require: (1) cash consideration to be paid to the target or its owners; (2) cash to be transferred to the target for working capital or other general corporate purposes; or (3) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares of Class A common stock submitted for redemption will be returned to the holders thereof.
Limitation on redemption in connection with our initial business combination if we seek stockholder approval
Notwithstanding the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in this offering, without our prior consent, which we refer to as the “Excess Shares.” We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed business combination as a means to force us or our affiliates to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in this offering could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our affiliates at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem no more than 15% of the shares sold in this offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Tendering stock certificates in connection with a tender offer or redemption rights
We may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, rather than simply voting against the initial business combination at the holder’s option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements, which will include the requirement that any beneficial owner on whose behalf a redemption right is being exercised must identify itself in order to validly redeem its shares. Accordingly, a public stockholder would have from the time we send out our tender offer materials until the close of the tender offer period, or up to two business days prior to the vote on the business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Pursuant to the tender offer rules, the tender offer period will be not less than 20 business days and, in the case of a stockholder vote, a final proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft proxy statement would be made available to such stockholders well in advance of such time, providing additional notice of redemption if we conduct redemptions in conjunction with a proxy solicitation. Given the relatively short exercise period, it is advisable for stockholders to use electronic delivery of their public shares.
There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through The Depository Trust Company’s DWAC (Deposit/ Withdrawal At Custodian) System. The transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
The foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise his or her redemption rights. After the business combination was approved,
the company would contact such stockholder to arrange for him or her to deliver his or her certificate to verify ownership. As a result, the stockholder then had an “option window” after the completion of the business combination during which he or she could monitor the price of the company’s stock in the market. If the price rose above the redemption price, he or she could sell his or her shares in the open market before actually delivering his or her shares to the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder meeting, would become “option” rights surviving past the completion of the business combination until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once the business combination is approved.
Any request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the stockholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of our initial business combination.
If our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If our initial proposed business combination is not completed, we may continue to try to complete a business combination with a different target until the end of the completion window.
Redemption of public shares and liquidation if no initial business combination
Our amended and restated certificate of incorporation provides that we will have only the time of the completion window to complete our initial business combination. If we are unable to complete our initial business combination within such period, we will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
Our initial stockholders, officers and directors have each entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to complete our initial business combination within the completion window. However, if our sponsor or any of our officers and directors acquires public shares after this offering, it will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the completion window.
Our sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within the completion window, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of permitted withdrawals), divided by the number of then outstanding public shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets to be less
than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination.
We expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts held outside the trust account, although we cannot assure you that there will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not required to pay taxes or make other permitted withdrawals, we may request the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds of this offering and the sale of the private placement shares, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account and any permitted withdrawals or expenses for the dissolution of the trust, the per share redemption amount received by stockholders upon our dissolution would be $10.00. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders. We cannot assure you that the actual per share redemption amount received by stockholders will not be substantially less than $10.00. Please see “Risk Factors—If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors described above. Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although we will seek to have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where we are unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. In order to protect the amounts held in the trust account, our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent registered public accounting firm) for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (1) $10.00 per public share in the aggregate or (2) the actual amount per public share held in the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, in each case net of permitted withdrawals, except as to any claims by a third party that executed a waiver of any and all rights to the monies held in the trust account (whether any such waiver is enforceable) and except as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company and, therefore, our sponsor may not be able to satisfy those obligations. We have not asked our sponsor to reserve for such
obligations. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the trust account, the funds available for our initial business combination and redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser amount per share in connection with any redemption of your public shares. None of our officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses. None of our other officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
In the event that the proceeds in the trust account are reduced below: (1) $10.00 per public share in the aggregate; or (2) the actual amount per public share held in the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, in each case net of permitted withdrawals, and our sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in certain instances. For example, the cost of such legal action may be deemed by the independent directors to be too high relative to the amount recoverable or the independent directors may determine that a favorable outcome is not likely. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per share redemption price will not be substantially less than $10.00 per share. Please see “Risk Factors—If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors described above.
We will seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims made by creditors.
Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within the completion window may be considered a liquidating distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within the completion window, is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution. If we are unable to complete our initial business combination within the completion window, we will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of permitted withdrawals and up to $100,000 of interest
to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following the expiration of the completion window and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent ten years. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in our underwriting agreement, we will seek to have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account. As a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim that would result in any liability extending to the trust account is remote.
Further, our sponsor may be liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below: (1) $10.00 per public share; or (2) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in value of the trust assets, in each case net of permitted withdrawals and will not be liable as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act.
If we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore, our board may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. Please see “Risk Factors—If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages.”
Our public stockholders will be entitled to receive funds from the trust account only in the event of the redemption of our public shares if we do not complete our initial business combination within the completion window, if they redeem their respective shares for cash in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance and timing of our obligation to redeem 100% of our public shares, or if we do not complete our initial business combination within the completion window or if they redeem their respective shares for cash in connection with our initial business combination. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account. In the event we seek stockholder approval in connection with our initial business
combination, a stockholder’s voting in connection with our initial business combination alone will not result in a stockholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights described above.
Comparison of redemption or purchase prices in connection with our initial business combination and if we fail to complete our initial business combination
The following table compares the redemptions and other permitted purchases of public shares that may take place in connection with the completion of our initial business combination and if we are unable to complete our initial business combination within the completion window.
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Redemptions in Connection
with our Initial Business
Combination
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Other Permitted Purchases of
Public Shares by our Affiliates
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Redemptions if we fail to
Complete an Initial Business
Combination
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Calculation of redemption price
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Redemptions at the time of our initial business combination may be made pursuant to a tender offer or in connection with a stockholder vote. The redemption price will be the same whether we conduct redemptions pursuant to a tender offer or in connection with a stockholder vote. In either case, our public stockholders may redeem their public shares for cash equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business combination (which is initially anticipated to be $10.00 per share), including interest (net of permitted withdrawals), divided by the number of then outstanding public shares, subject to the limitation that no redemptions will take place if all of the redemptions would cause our net tangible assets to be less than $5,000,001 or any greater net tangible asset or cash requirement which may be contained in the agreement relating
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If we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors or any of their respective affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. Such purchases will only be made to the extent such purchases are made in compliance with Rule 10b- 18, which is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. None of the funds in the trust account will be used to purchase shares in such transactions.
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If we are unable to complete our initial business combination within the completion window, we will redeem all public shares at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares.
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Redemptions in Connection
with our Initial Business
Combination
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Other Permitted Purchases of
Public Shares by our Affiliates
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Redemptions if we fail to
Complete an Initial Business
Combination
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to our initial business combination and any limitations.
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Impact to remaining stockholders
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The redemptions in connection with our initial business combination will reduce the book value per share for our remaining stockholders, who will bear the burden of the deferred underwriting commissions and permitted withdrawals (to the extent not paid from amounts accrued as interest on the funds held in the trust account).
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If the permitted purchases described above are made, there will be no impact to our remaining stockholders because the purchase price would not be paid by us.
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The redemption of our public shares if we fail to complete our initial business combination will reduce the book value per share for the shares held by our initial stockholders, who will be our only remaining stockholders after such redemptions.
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Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419
The following table compares the terms of this offering to the terms of an offering by a blank check company subject to the provisions of Rule 419. This comparison assumes that the gross proceeds, underwriting commissions and underwriting expenses of our offering would be identical to those of an offering undertaken by a company subject to Rule 419, and that the underwriters will not exercise their option to purchase additional shares. None of the provisions of Rule 419 apply to our offering.
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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Escrow of offering proceeds
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The rules of the NYSE provide that at least 90% of the gross proceeds from this offering and the sale of the private placement shares be deposited in a trust account.
$400,000,000 of the net proceeds of this offering will be deposited into a trust account located in the United States with Continental Stock Transfer & Trust Company acting as trustee.
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Approximately $340,200,000 of the offering proceeds, representing the gross proceeds of this offering less allowable underwriting commissions, expenses and company deductions under Rule 419, would be required to be deposited into either an escrow account with an insured depositary institution or in a separate bank account established by a broker-dealer in which the broker-dealer acts as trustee for persons having the beneficial interests in the account.
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Investment of net proceeds
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The proceeds of this offering held in the trust account will be invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds that meet certain conditions under Rule 2a-7 under
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Proceeds could be invested only in specified securities such as a money market fund meeting conditions of the Investment Company Act or in securities that are direct obligations of, or obligations guaranteed as to
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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the Investment Company Act and that invest only in direct U.S. government obligations.
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principal or interest by, the United States.
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Receipt of interest on escrowed funds
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Interest on proceeds from the trust account to be paid to stockholders is reduced by:
(1) permitted withdrawals; and (2) in the event of our liquidation for failure to complete our initial business combination within the allotted time, up to $100,000 of net interest that may be released to us should we have no or insufficient working capital to fund the costs and expenses of our dissolution and liquidation.
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Interest on funds in escrow account would be held for the sole benefit of investors, unless and only after the funds held in escrow were released to us in connection with our completion of a business combination.
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Limitation on fair value or net assets of target business
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The NYSE rules require that an initial business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the trust account (net of amounts disbursed to management for working capital purposes, if applicable, and excluding the amount of any deferred underwriting discount).
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The fair value or net assets of a target business must represent at least 80% of the maximum offering proceeds.
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Trading of securities issued
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The shares will begin trading on or promptly after the date of this prospectus. We will file the Current Report on Form 8-K promptly after the closing of this offering. If the underwriters’ option to purchase additional shares is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters’ option to purchase additional shares.
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No trading of the shares of Class A common stock would be permitted until the completion of a business combination.
During this period, the securities would be held in the escrow or trust account.
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Election to remain an investor
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We will provide our public stockholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account as of two business days prior to the
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A prospectus containing information pertaining to the business combination required by the SEC would be sent to each investor. Each investor would be given the opportunity to notify the company in writing, within a period of no less than 20 business
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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consummation of our initial business combination, including interest, net of permitted withdrawals, in connection with our initial business combination, subject to the limitations described herein. We may not be required by applicable law or stock exchange rules to hold a stockholder vote. If we are not required by applicable law or stock exchange rules and do not otherwise decide to hold a stockholder vote, we will, pursuant to our amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under the SEC’s proxy rules. If, however, we hold a stockholder vote, we will, like many blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Pursuant to the tender offer rules, the tender offer period will be not less than 20 business days and, in the case of a stockholder vote, a final proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft proxy statement would be made available to such stockholders well in advance of such time, providing additional notice of redemption if we conduct redemptions in conjunction with a proxy solicitation. If we seek stockholder approval, we will complete our initial business combination only if a majority of
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days and no more than 45 business days from the effective date of a post-effective amendment to the company’s registration statement, to decide if he, she or it elects to remain a stockholder of the company or require the return of his, her or its investment. If the company has not received the notification by the end of the 45th business day, funds and interest or dividends, if any, held in the trust or escrow account are automatically returned to the stockholder. Unless a sufficient number of investors elect to remain investors, all funds on deposit in the escrow account must be returned to all of the investors and none of the securities are issued.
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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the outstanding shares of common stock voted (or any greater vote required by law or stock exchange rule) are voted in favor of the business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting. Additionally, each public stockholder may elect to redeem its public shares without voting and, if they do vote, irrespective of whether they vote for or against the proposed transaction.
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Business combination deadline
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If we are unable to complete an initial business combination within the completion window, we will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of
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If an acquisition has not been completed within 18 months after the effective date of the company’s registration statement, funds held in the trust or escrow account are returned to investors.
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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creditors and the requirements of other applicable law.
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Release of funds
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Except with respect to permitted withdrawals, the funds held in the trust account will not be released from the trust account until the earliest of:
(1) the completion of our initial business combination; (2) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within the completion window; and (3) the redemption of all of our public shares if we are unable to complete our initial business combination within the completion window, subject to applicable law.
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The proceeds held in the escrow account are not released until the earlier of the completion of a business combination and the failure to effect a business combination within the allotted time.
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Limitation on redemption rights of stockholders holding more than 15% of the shares sold in this offering if we hold a stockholder vote
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If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect Excess Shares (more than an aggregate of 15% of the shares sold in this offering). Our public stockholders’ inability to redeem Excess Shares will reduce their
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Most blank check companies provide no restrictions on the ability of stockholders to redeem shares based on the number of shares held by such stockholders in connection with an initial business combination.
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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influence over our ability to complete our initial business combination and they could suffer a material loss on their investment in us if they sell Excess Shares in open market transactions.
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Tendering stock certificates in connection with a tender offer or redemption rights
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We may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials mailed to such holders or up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements, which will include the requirement that any beneficial owner on whose behalf a redemption right is being exercised must identify itself in order to validly redeem its shares. Accordingly, a public stockholder would have from the time we send out our tender offer materials until the close of the tender offer period, or up to two business days prior to the vote on the business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights.
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In order to perfect redemption rights in connection with their business combinations, holders could vote against a proposed business combination and check a box on the proxy card indicating such holders were seeking to exercise their redemption rights. After the business combination was approved, the company would contact such stockholders to arrange for them to deliver their certificate to verify ownership.
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Competition
In identifying, evaluating and selecting a target business for our initial business combination, we may encounter intense competition from other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, public companies and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than us. Our ability to acquire larger target businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their redemption rights may reduce the resources available to us for our initial business combination. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.
Certain Potential Conflicts of Interest Relating to M. Klein and Company
Our sponsor is an affiliate of M. Klein and Company. Mr. Klein is the founder and managing partner of M. Klein and Company and acts as a strategic advisor to its clients. Mr. Klein has a fiduciary duty to M. Klein and Company. As a result, Mr. Klein may have a duty to offer acquisition opportunities to clients of M. Klein and Company. Mr. Klein will have no duty to offer acquisition opportunities to the Company unless presented to him solely in his capacity as an officer or director of the Company and after he has satisfied his contractual and fiduciary obligations to other parties.
As a result, M. Klein and Company’s clients may compete with us for acquisition opportunities in the same industries and sectors as we may target for our initial business combination. If any of them decide to pursue any such opportunity, we may be precluded from procuring such opportunities. In addition, investment ideas generated within M. Klein and Company, including by Mr. Klein and other persons who may make decisions for the company, may be suitable both for us and for M. Klein and Company or any of its clients, and will be directed initially to such persons rather than to us. None of Mr. Klein, M. Klein and Company or members of our management team who are also employed by M. Klein and Company have any obligation to present us with any opportunity for a potential business combination of which they become aware unless it is offered to them solely in their capacity as a director or officer of the Company and after they have satisfied their contractual and fiduciary obligations to other parties.
In addition, Mr. Klein and M. Klein and Company may sponsor or form other blank check companies similar to ours during the period in which we are seeking an initial business combination. In particular, M. Klein and Company and Mr. Klein, as well as our board of directors, have formed and are actively engaged in Churchill Capital Corp II, Churchill Capital Corp IV, Churchill Capital Corp V, Churchill Capital Corp VI and Churchill Capital Corp VII, special purpose acquisition corporations that completed their initial public offerings in July 2019, August 2020, December 2020, February 2021 and February 2021, respectively. Churchill Capital Corp II, Churchill Capital Corp IV, Churchill Capital Corp V, Churchill Capital Corp VI and Churchill Capital Corp VII, like us, may pursue initial business combination targets in any businesses or industries and have until July 1, 2021, August 3, 2022, December 18, 2022, February 11, 2023 and February 11, 2023, respectively, to do so (absent an extension in accordance with their charters). Any such companies, including Churchill Capital Corp II, Churchill Capital Corp IV, Churchill Capital Corp V, Churchill Capital Corp VI and Churchill Capital Corp VII may present additional conflicts of interest in pursuing an acquisition target.
The potential conflicts described above may limit our ability to enter into a business combination or other transactions. These circumstances could give rise to numerous situations where interests may conflict.
Additionally, the engagement of M. Klein and Company, or another affiliate of our sponsor, as our lead financial advisor in connection with our initial business combination may present certain conflicts of interest. See “Risk Factors—We may engage M. Klein and Company, or another affiliate of our sponsor, as our lead financial advisor on our business combinations and other transactions. Any fee in connection with such engagement may be conditioned upon the completion of such transactions. This financial interest in the completion of such transactions may influence the advice such affiliate provides.”
There can be no assurance that these or other conflicts of interest with the potential for adverse effects on the Company and investors will not arise.
Limitations on Our Access to Investment Opportunities Sourced by M. Klein and Company
M. Klein and Company may compete with us for acquisition opportunities that we may target for our initial business combination. If M. Klein and Company decides to pursue any such opportunity or determines in its sole discretion not to offer such opportunity to us, we may be precluded from procuring such opportunities. In addition, investment ideas generated within M. Klein and Company or by persons who may make decisions for us may be suitable for both us and for M. Klein and Company may be directed to M. Klein and Company or other third parties rather than to us. M. Klein and Company does not have any fiduciary, contractual or other obligations or duties to our company, including, without limitation, to present us with any opportunity for a potential business combination of which they become aware.
Our management team, in their other endeavors (including any affiliation they may have with M. Klein and Company), may choose or be required to present potential business combinations or other transactions to M. Klein and Company or third parties, before they present such opportunities to us. Please see “Risk Factors—Certain of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity or other transaction should be presented.”
Not all Members of Our Management Team are Independent of M. Klein and Company
Our management team is responsible for the management of our affairs. Mr. Klein is the founder and managing partner of M. Klein and Company and acts as a strategic advisor to its clients. Mr. Klein has a fiduciary duty to M. Klein and Company. As a result, Mr. Klein may have a duty to offer acquisition opportunities to clients of M. Klein and Company. Mr. Klein will have no duty to offer acquisition opportunities to the Company unless presented to him in his capacity as an officer or director of the Company. Please see “Management—Conflicts of Interest” for additional information regarding conflicts of interest relating to our management team.
Sponsor Indemnity
Our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent registered public accounting firm) for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below: (1) $10.00 per public share; or (2) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, in each case, net of permitted withdrawals, except as to any claims by a third party that executed a waiver of any and all rights to the monies held in the trust account (whether any such waiver is enforceable) and except as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company and, therefore, our sponsor may not be able to satisfy those obligations. We have not asked our sponsor to reserve for such obligations. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. We believe the likelihood of our sponsor having to indemnify the trust account is limited because we will endeavor to have all vendors and prospective target businesses as well as other entities execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account.
Facilities
We currently maintain our executive offices at 640 Fifth Avenue, 12th Floor, New York, NY 10019. The cost for this space is included in the $30,000 per month fee that we will pay an affiliate of our sponsor for office space, administrative and support services. We consider our current office space adequate for our current operations.
Employees
We currently have two officers and do not intend to have any full-time employees prior to the completion of our initial business combination. Members of our management team are not obligated to devote any specific number of hours to our matters but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time that any such person will devote in any time period to our company will vary based on whether a target business has been selected for our initial business combination and the current stage of the business combination process.
Periodic Reporting and Financial Information
We will register our Class A common stock under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain financial statements audited and reported on by our independent registered public accounting firm.
We will provide stockholders with audited financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials sent to stockholders to assist them in assessing the target business. These financial statements may be required to be prepared in accordance with, or be reconciled to, GAAP or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements in time for us to disclose such financial statements in accordance with federal proxy rules and complete our initial business combination within the completion window. We cannot assure you that any particular target business selected by us as a potential business combination candidate will have financial statements prepared in accordance with GAAP or that the potential target business will be able to prepare its financial statements in accordance with the requirements outlined above. To the extent that these requirements cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential business combination candidates, we do not believe that this limitation will be material.
We will be required to evaluate our internal control procedures for the fiscal year ending December 31, 2022 as required by the Sarbanes-Oxley Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer and no longer an emerging growth company will we be required to have our internal control procedures audited. A target business may not be in compliance with the provisions of the Sarbanes- Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
Prior to the date of this prospectus, we will file a registration statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the
adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.
Legal Proceedings
There is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such, and we and the members of our management team have not been subject to any such proceeding in the 12 months preceding the date of this prospectus.
MANAGEMENT
Directors, Director Nominees and Executive Officers
Our directors, director nominees and officers are as follows:
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Age
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Title
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Michael Klein
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Chief Executive Officer, President and Chairman of the Board of Directors
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Jay Taragin
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Chief Financial Officer
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Sam Altman
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Executive Officer and Director Nominee
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Michael Klein is our Chief Executive Officer, President and the Chairman of our Board of Directors. Mr. Klein is also the Chief Executive Officer and Chairman of the Board of Directors of Churchill Capital Corp II, a blank check company whose sponsor is an affiliate of M. Klein and Company, LLC, Chief Executive Officer, President and Chairman of the Board of Directors of Churchill Capital Corp IV, a blank check company whose sponsor is an affiliate of M. Klein and Company, LLC, Chief Executive Officer, President and Chairman of the Board of Directors of Churchill Capital Corp V, a blank check company whose sponsor is an affiliate of M. Klein and Company, LLC, Chief Executive Officer, President and Chairman of the Board of Directors of Churchill Capital Corp VI, a blank check company whose sponsor is an affiliate of M. Klein and Company, LLC, and Chief Executive Officer, President and Chairman of the Board of Directors of Churchill Capital Corp VII, a blank check company whose sponsor is an affiliate of M. Klein and Company, LLC. Mr. Klein is currently a Director of Credit Suisse Group AG and Credit Suisse AG. Mr. Klein was the co-founder and Chairman of Churchill Capital Corp, a blank check company formed in 2018. Churchill Capital Corp merged with Clarivate Analytics in May 2019. Mr. Klein was also the founder, Chief Executive Officer, President and Chairman of the Board of Directors of Churchill Capital Corp III, a blank check company formed in 2019. Churchill Capital Corp III merged with MultiPlan, Inc. in October 2020, and Mr. Klein currently serves on the board of directors of MultiPlan, Inc. Mr. Klein is the founder and managing partner of M. Klein and Company, which he founded in 2012.
M. Klein and Company is a global strategic advisory firm that provides its clients a variety of advice tailored to their objectives. Mr. Klein is a strategic advisor to global companies, boards of directors, senior executives, governments and institutional investors. Mr. Klein’s background in strategic advisory work was built during his 30-year career, including more than two decades at Citi and its predecessors, during which he initiated and executed strategic advisory transactions. He began his career as an investment banker in the M&A Advisory Group at Salomon Smith Barney and subsequently became Chairman and Co-Chief Executive Officer of Citi Markets and Banking, with responsibilities for global corporate and investment banking and Global Transaction Services across Citi. Mr. Klein is a graduate of The Wharton School of the University of Pennsylvania, where he earned his Bachelors of Science in Economics with concentrations in finance and accounting. Mr. Klein was selected to serve on the board of directors due to his significant investment banking and advisory experience.
Jay Taragin is our Chief Financial Officer since February 2021. Mr. Taragin is also the Chief Financial Officer of Churchill Capital Corp IV since April 2020, Chief Financial Officer of Churchill Capital Corp V since May 2020, Chief Financial Officer of Churchill Capital Corp VI since December 2020, Chief Financial Officer of Churchill Capital Corp VII since May 2020 and Chief Financial Officer of M. Klein and Company which he joined in May 2019. Prior to joining M. Klein and Company, Mr. Taragin served as the US Scotiabank Chief Financial Officer from 2013 to 2017. Prior to Scotiabank, Mr. Taragin held a Chief Operating and Financial Officer role from 2009 to 2012 at Fundcore Finance Group LLC and held a variety of senior finance and audit roles at Merrill Lynch & Company from 1993 to 2009. In addition, Mr. Taragin worked at Credit Suisse and PricewaterhouseCoopers as a senior auditor and accountant. Mr. Taragin is a CPA and holds a master’s degree in business administration from New York University Stern School of Business and a bachelor’s degree from Yeshiva University.
Sam Altman will serve as Executive Officer and as a director on our Board of Directors upon effectiveness of the registration statement of which this prospectus forms a part. Mr. Altman is also the co-founder and Chief Executive Officer of OpenAI since March 2019. Prior to joining OpenAI, Mr. Altman served as President of Y Combinator from February 2014 until March 2019. Mr. Altman currently serves
as the Chairman of the board of directors of Y Combinator, Helion Energy, Inc. and Oklo, Inc., and he serves on the board of directors of Expedia Group, Inc., Reddit, Inc., Bridgetown Holdings Ltd. and Bridgetown 2 Holdings Ltd.
Number and Terms of Office of Officers and Directors
Upon the effectiveness of the registration statement of which this prospectus forms a part, we expect that our board of directors will consist of members. Holders of our founder shares will have the right to elect all of our directors prior to consummation of our initial business combination and holders of our public shares will not have the right to vote on the election of directors during such time; provided, however, that with respect to the election of directors in connection with a meeting of the stockholders of the Company in which a business combination is submitted to the stockholders of the Company for approval, holders of the Class A common stock and holders of the Class B common stock, voting together as a single class, shall have the exclusive right to vote for the election of directors. These provisions of our amended and restated certificate of incorporation may only be amended if approved by a majority of the Class B common stock then outstanding. Our board of directors will be divided into three classes with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a three-year term. The term of office of the first class of directors, consisting of and , will expire at our first annual meeting of stockholders. The term of office of the second class of directors, consisting of and , will expire at the second annual meeting of stockholders. The term of office of the third class of directors, consisting of and , will expire at the third annual meeting of stockholders. We may not hold an annual meeting of stockholders until after we consummate our initial business combination. Subject to any other special rights applicable to the stockholders, any vacancies on our board of directors may be filled by the affirmative vote of a majority of the directors present and voting at the meeting of our board that includes any directors representing our sponsor then on our board, or by a majority of the holders of our founder shares.
Our officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our bylaws will provide that our officers may consist of a Chief Executive Officer, a President, a Chief Financial Officer, Vice Presidents, a Secretary, Assistant Secretaries, a Treasurer, Assistant Treasurers and such other offices as may be determined by the board of directors.
Director Independence
The rules of the NYSE require that a majority of our board of directors be independent within one year of our initial public offering. An “independent director” is defined generally as a person that, in the opinion of the company’s board of directors, has no material relationship with the listed company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company). We expect to have “independent directors” as defined in the NYSE rules and applicable SEC rules prior to completion of this offering. Our board has determined that each of , , and is an independent director under applicable SEC and NYSE rules. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Executive Officer and Director Compensation
None of our officers or directors have received any compensation for services rendered to us. Our sponsor, officers, directors and their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made by us to our sponsor, officers, directors or our or any of their respective affiliates. We may engage M. Klein and Company, or another affiliate of our sponsor, as our lead financial advisor in connection with our initial business combination and may pay such affiliate a customary financial advisory fee in an amount that constitutes a market standard financial advisory fee for comparable transactions.
After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting, management or other compensation from the combined company. All compensation will be fully disclosed to stockholders, to the extent then known, in the tender offer materials or proxy solicitation materials furnished to our stockholders in connection with a proposed business combination. It is unlikely the amount of such compensation will be known at the time, because the directors of the post-combination business will be responsible for determining executive officer and director compensation. Any compensation to be paid to our officers after the completion of our initial business combination will be determined by a compensation committee constituted solely by independent directors.
We are not party to any agreements with our executive officers and directors that provide for benefits upon termination of employment. The existence or terms of any such employment or consulting arrangements may influence our management’s motivation in identifying or selecting a target business, and we do not believe that the ability of our management to remain with us after the consummation of our initial business combination should be a determining factor in our decision to proceed with any potential business combination.
Committees of the Board of Directors
Upon the effective date of the registration statement of which this prospectus forms a part, our board of directors will have three standing committees: an audit committee, a compensation committee and a nominating and corporate governance committee. Both our audit committee and our compensation committee will be composed solely of independent directors. Subject to phase-in rules, the rules of NYSE and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors, and the rules of NYSE require that the compensation committee and the nominating and corporate governance committee of a listed company be comprised solely of independent directors.
Each committee will operate under a charter that will be approved by our board and will have the composition and responsibilities described below. The charter of each committee will be available on our website following the closing of this offering.
Audit Committee
Upon the effectiveness of the registration statement of which this prospectus forms a part, we will establish an audit committee of the board of directors. The audit committee will initially be comprised of . We are utilizing the phase-in provisions of Rule 303A of the NYSE rules, which allows us to have one independent member on our audit committee at the time of listing.
Each member of the audit committee is financially literate and our board of directors has determined that qualifies as an “audit committee financial expert” as defined in applicable SEC rules and has accounting or related financial management expertise.
We will adopt an audit committee charter, which will detail the purpose and principal functions of the audit committee, including:
•
assisting board oversight of (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) our independent auditor’s qualifications and independence, and (4) the performance of our internal audit function and independent auditors;
•
the appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other independent registered public accounting firm engaged by us;
•
pre-approving all audit and non-audit services to be provided by the independent auditors or any other registered public accounting firm engaged by us, and establishing pre-approval policies and procedures;
•
reviewing and discussing with the independent auditors all relationships the auditors have with us in order to evaluate their continued independence;
•
setting clear hiring policies for employees or former employees of the independent auditors;
•
setting clear policies for audit partner rotation in compliance with applicable laws and regulations;
•
obtaining and reviewing a report, at least annually, from the independent auditors describing (1) the independent auditor’s internal quality-control procedures and (2) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues;
•
meeting to review and discuss our annual audited financial statements and quarterly financial statements with management and the independent auditor, including reviewing our specific disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;
•
reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and
•
reviewing with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.
Compensation Committee
Upon the effectiveness of the registration statement of which this prospectus forms a part, we will establish a compensation committee of the board of directors. The members of our compensation committee will be and , who will serve as chair of the compensation committee. We are utilizing the phase-in provisions of Rule 303A of the NYSE rules, which allows us to have one independent member on the committee at the time of listing.
We will adopt a compensation committee charter, which will detail the purpose and responsibility of the compensation committee, including:
•
reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;
•
reviewing and making recommendations to our board of directors with respect to (or approving, if such authority is so delegated by our board of directors) the compensation, and any incentive- compensation and equity-based plans that are subject to board approval of all of our other officers;
•
reviewing our executive compensation policies and plans;
•
implementing and administering our incentive compensation equity-based remuneration plans;
•
assisting management in complying with our proxy statement and annual report disclosure requirements;
•
approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;
•
producing a report on executive compensation to be included in our annual proxy statement; and
•
reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
The charter will also provide that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, independent legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser.
However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by the NYSE and the SEC.
Nominating and Corporate Governance Committee
Upon the effectiveness of the registration statement of which this prospectus forms a part, we will establish a nominating and corporate governance committee of the board of directors. The members of our nominating and corporate governance will be and , who will serve as chair of the nominating and corporate governance committee. We are utilizing the phase-in provisions of Rule 303A of the NYSE rules, which allows us to have one independent member on the committee at the time of listing.
We will adopt a nominating and corporate governance committee charter, which will detail the purpose and responsibilities of the nominating and corporate governance committee, including:
•
identifying, screening and reviewing individuals qualified to serve as directors, consistent with criteria approved by the board, and recommending to the board of directors candidates for nomination for election at the annual meeting of stockholders or to fill vacancies on the board of directors;
•
developing and recommending to the board of directors and overseeing implementation of our corporate governance guidelines;
•
coordinating and overseeing the annual self-evaluation of the board of directors, its committees, individual directors and management in the governance of the company; and
•
reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary.
The charter will also provide that the nominating and corporate governance committee may, in its sole discretion, retain or obtain the advice of, and terminate, any search firm to be used to identify director candidates, and will be directly responsible for approving the search firm’s fees and other retention terms.
We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating nominees for director, the board of directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders. Prior to our initial business combination, holders of our public shares will not have the right to recommend director candidates for nomination to our board of directors.
Compensation Committee Interlocks and Insider Participation
None of our officers currently serves, and in the past year has not served, as a member of the board of directors or compensation committee of any entity that has one or more officers serving on our board of directors.
Code of Ethics
Prior to the effectiveness of the registration statement of which this prospectus is a part, we will have adopted a Code of Ethics applicable to our directors, officers and employees. We will file a copy of our form of Code of Ethics and our audit committee charter as exhibits to the registration statement.
You will be able to review these documents by accessing our public filings at the SEC’s website at www.sec.gov. In addition, a copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K. Please see “Where You Can Find Additional Information.”
Conflicts of Interest
Our management team is responsible for the management of our affairs. As described above and below, each of our officers and directors presently has, and any of them in the future may have additional,
fiduciary, contractual or other obligations or duties to one or more other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such entities. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for one or more entities to which he or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such business combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us (including as described in “Proposed Business—Sourcing of Potential Business Combination Targets”). These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us.
Our Strategic Partners and their personnel, if any, may have a duty to offer acquisition opportunities to clients or other parties. Such persons will have no duty to offer acquisition opportunities to the Company unless presented to them solely in their capacity as a director of the Company and after they have satisfied any contractual and fiduciary obligations to other parties.
As a result, such persons may compete with us for acquisition opportunities in the same industries and sectors as we may target for our initial business combination. Consequently, we may be precluded from procuring such opportunities. In addition, investment ideas may be suitable both for us and for the Strategic Partners or any of their clients, and will be directed initially to such persons rather than to us.
In addition, any of our Strategic Partners or their personnel may sponsor or form other blank check companies similar to ours during the period in which we are seeking an initial business combination. In particular, M. Klein and Company, Mr. Klein and our board of directors, are actively engaged in Churchill Capital Corp II, Churchill Capital Corp IV and Churchill Capital Corp V, special purpose acquisition corporations that completed their initial public offerings in July 2019, August 2020 and December 2020, respectively. Churchill Capital Corp II, Churchill Capital Corp IV and Churchill Capital Corp V, like us, may pursue initial business combination targets in any businesses or industries and have until July 1, 2021, August 3, 2022, December 18, 2022, February 11, 2023 and February 11, 2023, respectively, to do so (absent an extension in accordance with their charters). Any such companies, including Churchill Capital Corp II, Churchill Capital Corp IV, Churchill Capital Corp V, Churchill Capital Corp VI and Churchill Capital Corp VII, may present additional conflicts of interest in pursuing an acquisition target.
We do not believe, however, that the fiduciary, contractual or other obligations or duties of our officers or directors, M. Klein and Company, or policies applicable to M. Klein and Company, will materially affect our ability to complete our initial business combination. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless (i) such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company, (ii) such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue and (iii) the director or officer is permitted to refer the opportunity to us without violating another legal obligation.
Our sponsor, officers and directors may participate in the formation of, or become an officer or director of, any other blank check company prior to completion of our initial business combination. In particular, M. Klein and Company and Mr. Klein, as well as our board of directors, have formed and are actively engaged in Churchill Capital Corp II, Churchill Capital Corp IV and Churchill Capital Corp V, special purpose acquisition corporations that completed their initial public offerings in July 2019, August 2020 and December 2020, respectively. including Churchill Capital Corp II, Churchill Capital Corp IV, Churchill Capital Corp V, Churchill Capital Corp VI and Churchill Capital Corp VII, like us, may pursue initial business combination targets in any businesses or industries and have until July 1, 2021, August 3, 2022, December 18, 2022, February 11, 2023 and February 11, 2023 respectively, to do so (absent an extension in accordance with their charters). Any such companies, including Churchill Capital Corp II, Churchill Capital Corp IV, Churchill Capital Corp V, Churchill Capital Corp VI and Churchill Capital Corp VII, may present additional conflicts of interest in pursuing an acquisition target.
Potential investors should also be aware of the following other potential conflicts of interest:
•
None of our officers or directors is required to commit his or her full time to our affairs and, accordingly, may have conflicts of interest in allocating his or her time among various business activities.
•
In the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to us as well as the other entities with which they are affiliated. Our management may have conflicts of interest in determining to which entity a particular business opportunity should be presented. Please see “— Directors, Director Nominees and Executive Officers” for a description of our management’s other affiliations,
•
Our sponsor, officers and directors have agreed to waive their redemption rights with respect to any founder shares, private placement shares and any public shares held by them in connection with the consummation of our initial business combination. Additionally, our initial stockholders, officers and directors have agreed to waive their rights to liquidating distributions from the trust account with respect to any founder shares and private placement shares held by them if we fail to consummate our initial business combination within the completion window. However, if our initial stockholders or any of our officers, directors or affiliates acquire public shares in or after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to consummate our initial business combination within the completion window. If we do not complete our initial business combination within such applicable time period, the proceeds of the sale of the private placement shares held in the trust account will be used to fund the redemption of our public shares. With certain limited exceptions, the founder shares will not be transferable, assignable or salable by our initial stockholders until the earlier of: (1) one year after the completion of our initial business combination; and (2) the date on which we consummate a liquidation, merger, stock exchange, reorganization or other similar transaction after our initial business combination that results in all of our public stockholders having the right to exchange their shares of common stock for cash, securities or other property. Notwithstanding the foregoing, if the closing price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, the founder shares will be released from the lock-up. With certain limited exceptions, the private placement shares will not be transferable, assignable or salable by our sponsor until 30 days after the completion of our initial business combination. Since our sponsor, officers and directors may directly or indirectly own common stock following this offering, our officers and directors may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination.
•
Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether to proceed with a particular business combination.
•
Our key personnel may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such key personnel was included by a target business as a condition to any agreement with respect to our initial business combination.
•
We may engage M. Klein and Company, or another affiliate of our sponsor, as our lead financial advisor in connection with our initial business combination and may pay such affiliate a customary financial advisory fee in an amount that constitutes a market standard financial advisory fee for comparable transactions. See “Risk Factors—We may engage M. Klein and Company, or another affiliate of our sponsor, as our lead financial advisor on our business combinations and other transactions. Any fee in connection with such engagement may be conditioned upon the completion of such transactions. This financial interest in the completion of such transactions may influence the advice such affiliate provides.”
The conflicts described above may not be resolved in our favor.
In general, officers and directors of a corporation incorporated under the laws of the State of Delaware are required to present business opportunities to a corporation if:
•
the corporation could financially undertake the opportunity;
•
the opportunity is within the corporation’s line of business; and
•
it would not be fair to the corporation and its stockholders for the opportunity not to be brought to the attention of the corporation.
Accordingly, as a result of multiple business affiliations, our officers and directors have similar legal obligations and duties relating to presenting business opportunities meeting the above-listed criteria to multiple entities. Furthermore, our amended and restated certificate of incorporation will provide that the doctrine of corporate opportunity will not apply with respect to any of our officers or directors in circumstances where the application of the doctrine would conflict with any fiduciary duties or contractual obligations they may have, and there will not be any expectancy that any of our directors or officers will offer any such corporate opportunity of which he or she may become aware to us. Below is a table summarizing the entities to which our officers, directors and director nominees currently have fiduciary duties or contractual obligations that may present a conflict of interest:
|
Name of Individual
|
|
|
Entity Name
|
|
|
Entity’s Business
|
|
|
Affiliation
|
|
|
Michael Klein
|
|
|
M. Klein and Company
|
|
|
Strategic Advice
|
|
|
Founder and Managing
Partner
|
|
| |
|
|
Suisse Group AG
|
|
|
Financial Services
|
|
|
Director
|
|
| |
|
|
Credit Suisse AG
|
|
|
Financial Services
|
|
|
Director
|
|
| |
|
|
Churchill Capital Corp II
|
|
|
Blank Check Company
|
|
|
Chief Executive Officer and Chairman of the Board of Directors
|
|
| |
|
|
Churchill Capital Corp IV
|
|
|
Blank Check Company
|
|
|
Chief Executive Officer and Chairman of the Board of Directors
|
|
| |
|
|
Churchill Capital Corp V
|
|
|
Blank Check Company
|
|
|
Chief Executive Officer and Chairman of the Board of Directors
|
|
| |
|
|
Churchill Capital Corp VI
|
|
|
Blank Check Company
|
|
|
Chief Executive Officer and Chairman of the Board of Directors
|
|
| |
|
|
Churchill Capital Corp VII
|
|
|
Blank Check Company
|
|
|
Chief Executive Officer and Chairman of the Board of Directors
|
|
| |
|
|
MultiPlan, Inc.
|
|
|
Healthcare Cost Management Solutions
|
|
|
Director
|
|
|
Jay Taragin
|
|
|
M. Klein and Company
|
|
|
Strategic Advice
|
|
|
Chief Financial Officer
|
|
| |
|
|
Churchill Capital Corp IV
|
|
|
Blank Check Company
|
|
|
Chief Financial Officer
|
|
| |
|
|
Churchill Capital Corp V
|
|
|
Blank Check Company
|
|
|
Chief Financial Officer
|
|
| |
|
|
Churchill Capital Corp VI
|
|
|
Blank Check Company
|
|
|
Chief Financial Officer
|
|
| |
|
|
Churchill Capital Corp VII
|
|
|
Blank Check Company
|
|
|
Chief Financial Officer
|
|
|
Sam Altman
|
|
|
OpenAI
|
|
|
Artificial Intelligence
|
|
|
Chief Executive Officer
|
|
| |
|
|
Y Combinator
|
|
|
Venture Capital
|
|
|
Chairman
|
|
| |
|
|
Helion Energy, Inc.
|
|
|
Technology
|
|
|
Chairman
|
|
| |
|
|
Oklo, Inc.
|
|
|
Energy
|
|
|
Chairman
|
|
| |
|
|
Expedia Group, Inc.
|
|
|
Travel
|
|
|
Director
|
|
|
Name of Individual
|
|
|
Entity Name
|
|
|
Entity’s Business
|
|
|
Affiliation
|
|
| |
|
|
Bridgetown Holdings Ltd.
|
|
|
Blank Check Company
|
|
|
Director
|
|
| |
|
|
Bridgetown 2 Holdings Ltd.
|
|
|
Blank Check Company
|
|
|
Director
|
|
| |
|
|
Reddit, Inc.
|
|
|
Media
|
|
|
Director
|
|
Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for one or more entities to which he or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such business combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us (including as described in “Proposed Business—Sourcing of Potential Business Combination Targets”). These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us.
We do not believe, however, that the fiduciary, contractual or other obligations or duties of our officers or directors, M. Klein and Company, or policies applicable to M. Klein and Company, will materially affect our ability to complete our initial business combination. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless (i) such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company, (ii) such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue and (iii) the director or officer is permitted to refer the opportunity to us without violating another legal obligation.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with M. Klein and Company, one of our Strategic Partners, our sponsor, officers or directors. In the event we seek to complete our initial business combination with a business that is affiliated with M. Klein and Company, one of our Strategic Partners, our sponsor, officers or directors, we, or a committee of independent and disinterested directors, will obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm, that such initial business combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
In addition, our sponsor or any of its affiliates, or any of their respective clients, may make additional investments in the company in connection with the initial business combination, although our sponsor and its affiliates have no obligation or current intention to do so. If our sponsor or any of its affiliates elects to make additional investments, such proposed investments could influence our sponsor’s motivation to complete an initial business combination.
In the event that we submit our initial business combination to our public stockholders for a vote, our initial stockholders, officers and directors have agreed to vote any founder shares, private placement shares and any public shares held by them in favor of our initial business combination, and our officers and directors have also agreed to vote public shares purchased by them (if any) during or after this offering in favor of our initial business combination.
Limitation on Liability and Indemnification of Officers and Directors
Our amended and restated certificate of incorporation will provide that our officers and directors will be indemnified by us to the fullest extent authorized by Delaware law, as it now exists or may in the future be amended. In addition, our amended and restated certificate of incorporation will provide that our directors will not be personally liable for monetary damages to us or stockholders for breaches of their fiduciary duty as directors, except to the extent such exemption from liability or limitation thereof is not permitted by the DGCL.
We will enter into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification provided for in our amended and restated certificate of incorporation. Our bylaws also permit us to maintain insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would permit such indemnification.
We will obtain a policy of directors’ and officers’ liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our officers and directors.
These provisions may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against officers and directors pursuant to these indemnification provisions.
We believe that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.
In connection with this registration statement, we have undertaken that insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial ownership of our common stock as of the date of this prospectus and assuming no purchase of shares in this offering, by:
•
each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;
•
each of our executive officers, directors and director nominees; and
•
all our executive officers, directors and director nominees as a group.
Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them.
On March 9, 2021, we effected a reverse stock split with respect to our Class B common stock resulting in our sponsor holding an aggregate of 28,750,000 founder shares. Prior to this offering, our sponsor expects to surrender 17,250,000 founder shares for no consideration. The post-offering ownership percentage column below assumes the surrender of 17,250,000 founder shares for no consideration by our sponsor at the time of this offering and the forfeiture of an additional 1,500,000 shares that are subject to forfeiture depending on the extent to which the underwriters’ option to purchase additional shares is exercised and that there are 51,250,000 shares of our common stock issued and outstanding after this offering.
| |
|
|
Number of
Shares
Beneficially
Owned(2)
|
|
|
Approximate Percentage of
Outstanding Common Stock
|
|
|
Name and Address of Beneficial Owner(1)
|
|
|
Before
Offering
|
|
|
After
Offering(2)
|
|
|
AltC Sponsor LLC(3).
|
|
|
|
|
11,250,000 |
|
|
|
|
|
100.0% |
|
|
|
|
|
22.0% |
|
|
|
Michael Klein(3) .
|
|
|
|
|
11,250,000 |
|
|
|
|
|
100.0% |
|
|
|
|
|
22.0% |
|
|
|
Jay Taragin.
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Sam Altman(4) .
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All directors, executive officers and director nominees as a group (individuals)
|
|
|
|
|
11,250,000 |
|
|
|
|
|
100.0% |
|
|
|
|
|
22.0% |
|
|
(1)
Unless otherwise noted, the business address of each of the following entities or individuals is c/o AltC Acquisition Corp., 640 Fifth Avenue, 12th Floor, New York, NY 10019.
(2)
Interests shown consist solely of shares of Class B common stock which are referred to herein as founder shares. Such shares will automatically convert into shares of Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment, as described in the section entitled “Description of Securities.”
(3)
Michael Klein is the controlling stockholder of M. Klein Associates, Inc., which is the managing member of AltC Sponsor LLC. The shares beneficially owned by AltC Sponsor LLC may also be deemed to be beneficially owned by Mr. Klein.
(4)
Sam Altman has an economic interest in shares of our common stock through his ownership of a membership interest in our sponsor, but does not beneficially own any of our common stock.
Upon the completion of this offering, our initial stockholders will beneficially own 20.0% of the then issued and outstanding shares of our common stock. Our initial stockholders will have the right to elect all of our directors prior to the consummation of our initial business combination as a result of holding all of the founder shares. In addition, because of this ownership block, our initial stockholders may be able to effectively influence the outcome of all matters requiring approval by our stockholders, including amendments to our amended and restated certificate of incorporation and approval of significant corporate transactions.
Our sponsor has subscribed to purchase an aggregate of 1,250,000 (or 1,370,000 if the underwriters’ option to purchase additional shares is exercised in full) private placement shares at a price of $10.00 per share ($12,500,000 in the aggregate or $13,700,000 in the aggregate if the underwriters’ option to purchase additional shares is exercised in full) in the Private Placement. Each private placement share entitles the holder
thereof to purchase one share of our Class A common stock at $10.00 per share, subject to adjustment as provided herein. Proceeds from the private placement shares will be added to the proceeds from this offering to be held in the trust account. If we do not complete our initial business combination within the completion window, the proceeds of the sale of the private placement shares held in the trust account will be used to fund the redemption of our public shares. The private placement shares are subject to the transfer restrictions described below. The private placement shares are identical to the shares being sold in this offering, subject to limited exceptions described in this prospectus.
Our sponsor is deemed to be our “promoter” as such term is defined under the federal securities laws. Please see “Certain Relationships and Related Party Transactions” for additional information regarding our relationships with our promoters.
Transfers of Founder Shares and Private Placement Shares
The founder shares, private placement shares and any shares of Class A common stock issued upon conversion or exercise thereof are each subject to transfer restrictions pursuant to lock-up provisions in the letter agreements with us to be entered into by each of our initial stockholders. Those lock-up provisions provide that such securities are not transferable or salable (1) in the case of the founder shares, until the earlier of (A) one year after the completion of our initial business combination and (B) subsequent to our initial business combination, (x) if the closing price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (y) the date following the completion of our initial business combination on which we complete a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of our public stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property, and (2) in the case of the private placement shares, until 30 days after the completion of our initial business combination, except in each case (a) to our officers or directors, any affiliates or family members of any of our officers or directors, any members of our sponsor, or any affiliates of our sponsor, (b) in the case of an individual, by gift to a member of the individual’s immediate family or to a trust, the beneficiary of which is a member of the individual’s immediate family or an affiliate of such person, or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) transfers by private sales or transfers made in connection with consummation of a business combination at prices no greater than the price at which the securities were originally purchased; (f) in the event of our liquidation prior to our completion of our initial business combination; (g) by virtue of the laws of Delaware or our sponsor’s limited liability company agreement, as amended, upon dissolution of our sponsor; or (h) in the event of our completion of a liquidation, merger, stock exchange, reorganization or other similar transaction which results in all of our public stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property subsequent to our completion of our initial business combination; or (i) to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under clauses (a) through (h) above, provided, however, that in the case of clauses (a) through (e) and (i) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions and the other restrictions contained in the letter agreements.
Registration Rights
The holders of the founder shares, private placement shares and any shares that may be issued upon conversion of working capital loans will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of this offering requiring us to register such securities for resale (in the case of the founder shares, only after conversion to shares of Class A common stock). The holders of these securities will be entitled to make up to three demands, excluding short form registration demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our initial business combination and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. We will bear the expenses incurred in connection with the filing of any such registration statements.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In March 2021, our sponsor purchased an aggregate of 43,125,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.0006 per share. On March 9, 2021, the sponsor forfeited 14,375,000 founder shares for no consideration, resulting in an aggregate of 28,750,000 founder shares outstanding. In connection with this offering, our sponsor will surrender 17,250,000 founder shares plus up to an additional 1,500,000 founder shares depending on the extent to which the underwriters' exercise their option to purchase additional shares. The number of founder shares to be held after this offering is determined based on the expectation that the founder shares would represent 20% of the outstanding shares of common stock upon completion of this offering (excluding the private placement shares). If we increase or decrease the size of this offering, we will effect a share forfeiture, stock dividend or a share contribution back to capital or other appropriate mechanism, as applicable, with respect to our Class B common stock immediately prior to the consummation of this offering in such amount as to maintain the ownership of founder shares by our initial stockholders prior to this offering at 20% of our issued and outstanding shares of our common stock upon the consummation of this offering (excluding the private placement shares).
Our sponsor has subscribed to purchase an aggregate of 1,250,000 (or 1,370,000 if the underwriters’ option to purchase additional shares is exercised in full) private placement shares for a purchase price of $10.00 per share in the Private Placement. As such, our sponsor’s interest in this transaction is valued at between $12,500,000 and $13,700,000, depending on the number of private placement shares purchased. The private placement shares may not, subject to certain limited exceptions, be transferred, assigned or sold by our sponsor until 30 days after the completion of our initial business combination.
As described in “Proposed Business—Sourcing of Potential Business Combination Targets” and “Management—Conflicts of Interest,” if any of our officers or directors becomes aware of a business combination opportunity which is suitable for one or more entities to which he or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such business combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us. Our officers and directors currently have other relevant fiduciary, contractual or other obligations or duties that may take priority over their duties to us.
We will enter into an Administrative Services Agreement pursuant to which we will also pay an affiliate of our sponsor a total of $30,000 per month for office space, administrative and support services. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees. Accordingly, in the event the consummation of our initial business combination takes the maximum 27 months, an affiliate of our sponsor will be paid a total of $810,000 ($30,000 per month) for office space, administrative and support services and will be entitled to be reimbursed for any out-of-pocket expenses.
We may engage M. Klein and Company, or another affiliate of our sponsor, as our lead financial advisor in connection with our initial business combination and may pay such affiliate a customary financial advisory fee in an amount that constitutes a market standard financial advisory fee for comparable transactions.
Our sponsor, officers and directors or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made by us to our sponsor, officers, directors or our or any of their respective affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
Our sponsor has agreed to loan us up to $600,000 under an unsecured promissory note to be used for a portion of the expenses of this offering. As of March 31, 2021, there was $500,000 outstanding under such promissory note. These loans are non-interest bearing, unsecured and are due at the earlier of December 31, 2021 and the closing of this offering. These loans will be repaid upon completion of this offering out of the $3,000,000 of offering proceeds that has been allocated for the payment of offering expenses (other than underwriting commissions) not held in the trust account. The value of our sponsor’s interest in this loan transaction corresponds to the principal amount outstanding under any such loan.
In addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsor, an affiliate of our sponsor or our officers and directors may, but none of them is obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into shares of the post-business combination entity at a price of $10.00 per share at the option of the lender. The shares would be identical to the private placement shares issued to our sponsor. The terms of such loans by our sponsor, an affiliate of our sponsor or our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsor, an affiliate of our sponsor or our officers and directors, if any, as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
After our initial business combination, members of our management team who remain with us, if any, may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to our stockholders, to the extent then known, in the tender offer or proxy solicitation materials, as applicable, furnished to our stockholders. It is unlikely the amount of such compensation will be known at the time of distribution of such tender offer materials or at the time of a stockholder meeting held to consider our initial business combination, as applicable, as it will be up to the directors of the post- combination business to determine executive officer and director compensation.
We have entered into a registration rights agreement with respect to the founder shares, private placement shares and shares issued upon conversion of working capital loans (if any), which is described under the heading “Principal Stockholders—Registration Rights.”
Related Party Policy
We have not yet adopted a formal policy for the review, approval or ratification of related party transactions. Accordingly, the transactions discussed above were not reviewed, approved or ratified in accordance with any such policy.
Prior to the consummation of this offering, we will adopt a Code of Ethics requiring us to avoid, wherever possible, all conflicts of interests, except under guidelines or resolutions approved by our board of directors (or the appropriate committee of our board) or as disclosed in our public filings with the SEC. Under our Code of Ethics, conflict of interest situations will include any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) involving the company.
In addition, our audit committee, pursuant to a written charter that we will adopt prior to the consummation of this offering, will be responsible for reviewing and approving related party transactions to the extent that we enter into such transactions. An affirmative vote of a majority of the members of the audit committee present at a meeting at which a quorum is present will be required in order to approve a related party transaction. A majority of the members of the entire audit committee will constitute a quorum. Without a meeting, the unanimous written consent of all of the members of the audit committee will be required to approve a related party transaction. Our audit committee will review on a quarterly basis all payments that were made by us to our sponsor, officers or directors, or our or any of their affiliates.
These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer.
To further minimize conflicts of interest, we have agreed not to consummate an initial business combination with an entity that is affiliated with any of our sponsor, officers or directors unless we, or a committee of independent and disinterested directors, have obtained an opinion from an independent investment banking firm which is a member of FINRA or an independent accounting firm that our initial business combination is fair to our company from a financial point of view. There will be no finder’s fees, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation paid by us to our sponsor, officers or directors or our or any of their respective affiliates, for services rendered to us prior to or in connection with the completion of our initial business combination (regardless of the type
of transaction that it is). However, the following payments may be made to our sponsor, officers or directors, or our or their affiliates, and, if made prior to our initial business combination will be made from (i) funds held outside the trust account or (ii) permitted withdrawals:
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repayment of an aggregate of up to $600,000 in loans made to us by our sponsor to cover offering- related and organizational expenses;
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at the closing of our initial business combination, a customary financial advisory fee to M. Klein and Company, or another affiliate of our sponsor, in an amount that constitutes a market standard financial advisory fee for comparable transactions;
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payment to an affiliate of our sponsor of a total of $30,000 per month, for up to 27 months, for office space, administrative and support services;
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reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; and
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repayment of loans which may be made by our sponsor, an affiliate of our sponsor or our officers and directors to finance transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto. Up to $1,500,000 of such loans may be convertible into shares of the post-business combination entity at a price of $10.00 per share at the option of the lender.
These payments may be made using funds that are not held in the trust account or, upon completion of the initial business combination, from any amounts remaining from the proceeds of the trust account released to us in connection therewith.
DESCRIPTION OF SECURITIES
Pursuant to our amended and restated certificate of incorporation, our authorized capital stock will consist of 500,000,000 shares of Class A common stock, $0.0001 par value, 100,000,000 shares of Class B common stock, $0.0001 par value, and 1,000,000 shares of undesignated preferred stock, $0.0001 par value. The following description summarizes the material terms of our capital stock. Because it is only a summary, it may not contain all the information that is important to you.
Common Stock
Upon the closing of this offering, 51,250,000 shares of our common stock will be outstanding (assuming no exercise of the underwriters’ option to purchase additional shares and the corresponding forfeiture of 1,500,000 founder shares by our sponsor), including:
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40,000,000 shares of our Class A common stock;
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10,000,000 shares of Class B common stock held by our initial stockholders; and
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1,250,000 shares of Class A common stock issued to our sponsor in the Private Placement.
If we increase or decrease the size of this offering, we will effect a share forfeiture, stock dividend or a share contribution back to capital or other appropriate mechanism, as applicable, with respect to our Class B common stock immediately prior to the consummation of this offering in such amount as to maintain the ownership of founder shares by our initial stockholders prior to this offering at 20% of our issued and outstanding shares of our common stock (excluding private placement shares) upon the consummation of this offering.
Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Holders of our Class B common stock will have the right to elect all of our directors prior to the consummation of our initial business combination; provided, however, that with respect to the election of directors in connection with a meeting of the stockholders of the Company in which a business combination is submitted to the stockholders of the Company for approval, holders of the Class A common stock and holders of the Class B common stock, voting together as a single class, shall have the exclusive right to vote for the election of directors. On any other matter submitted to a vote of our stockholders, holders of our Class B common stock and holders of our Class A common stock will vote together as a single class, except as required by applicable law or stock exchange rule. These provisions of our amended and restated certificate of incorporation may only be amended by a majority of the Class B common stock then outstanding. Unless specified in our amended and restated certificate of incorporation or bylaws, or as required by applicable law or stock exchange rules, the affirmative vote of a majority of our shares of common stock that are voted is required to approve any such matter voted on by our stockholders (other than the election of directors). Directors will be divided into three classes, each of which will generally serve for a term of three years with only one class elected in each year. There is no cumulative voting with respect to the election of directors. In connection with our initial business combination, we may enter into an agreement or other arrangement with the stockholders of the target with respect voting and other corporate governance matters following completion of the initial business combination, and such agreement or arrangement may provide for, or the target shareholders may require that such agreement provide for, nomination, designation or representation rights on the board of directors of the combined entity that may not be proportionate to our shareholders’ or such target shareholders’ ownership interest in the combined company. Our stockholders are entitled to receive ratable dividends when, as and if declared by the board of directors out of funds legally available therefor.
Because our amended and restated certificate of incorporation will authorize the issuance of up to 500,000,000 shares of Class A common stock, if we were to enter into a business combination, we may (depending on the terms of such a business combination) be required to increase the number of shares of common stock which we are authorized to issue at the same time as our stockholders vote on the business combination to the extent we seek stockholder approval in connection with our initial business combination.
In accordance with the NYSE corporate governance requirements, we are not required to hold an annual meeting until not later than one year after our first fiscal year end following our listing on the NYSE. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of
stockholders for the purposes of electing directors in accordance with our bylaws unless such election is made by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
We will provide our public stockholders with the opportunity to redeem all or a portion of their shares in connection with our initial business combination at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest (net of permitted withdrawals), divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.00 per public share.
The per share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. The redemption right will include the requirement that any beneficial owner on whose behalf a redemption right is being exercised must identify itself in order to validly redeem its shares. Each public stockholder may elect to redeem its public shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction. Our sponsor, officers and directors have each entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares, private placement shares and any public shares held by them in connection with the completion of our initial business combination. Permitted transferees of our sponsor, officers or directors will be subject to the same obligations. Unlike many blank check companies that hold stockholder votes and conduct proxy solicitations in connection with their initial business combinations and provide for related redemptions of public shares for cash in connection with such initial business combinations even when a vote is not required by applicable law or stock exchange listing requirements, if a stockholder vote is not required by applicable law or stock exchange listing requirements and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC, and file tender offer documents with the SEC prior to completing our initial business combination. Our amended and restated certificate of incorporation will require these tender offer documents to contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under the SEC’s proxy rules. If, however, a stockholder approval of the transaction is required by applicable law or stock exchange rules, or we decide to obtain stockholder approval for business or other reasons, we will, like many blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If we seek stockholder approval, unless a different vote is required by applicable law or stock exchange rules, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. Unless otherwise required by applicable law or stock exchange rules, a quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting. However, the participation of our sponsor, officers, directors, advisors or any of their respective affiliates in privately-negotiated transactions (as described in this prospectus), if any, could result in the approval of our initial business combination even if a majority of our public stockholders vote, or indicate their intention to vote, against such business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained. We intend to give approximately 30 days (but not less than 10 days nor more than 60 days) prior written notice of any such meeting, if required, at which a vote shall be taken to approve our initial business combination. These quorum and voting thresholds and agreements may make it more likely that we will consummate our initial business combination.
If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as
defined under Section 13 of the Exchange Act), will be restricted from redeeming more than an aggregate of 15% of the shares sold in this offering, without our prior consent, which we refer to as the “Excess Shares.” However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination. Our stockholders’ inability to redeem the Excess Shares will reduce their influence over our ability to complete our initial business combination, and such stockholders could suffer a material loss in their investment if they sell such Excess Shares on the open market. Additionally, such stockholders will not receive redemption distributions with respect to the Excess Shares if we complete the business combination. And, as a result, such stockholders will continue to hold that number of shares exceeding 15% and, in order to dispose such shares would be required to sell their stock in open market transactions, potentially at a loss.
If we seek stockholder approval in connection with our initial business combination, our initial stockholders, officers and directors have (and their permitted transferees, as applicable, will agree) agreed to vote any founder shares and any public shares held by them in favor of our initial business combination. As a result, in addition to our initial stockholders’ founder shares, we would need 14,375,001, or 35.9%, of the 40,000,000 public shares sold in this offering to be voted in favor of our initial business combination (assuming all issued and outstanding shares are voted and the option to purchase additional shares is not exercised) in order to have such initial business combination approved. Additionally, each public stockholder may elect to redeem its public shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.
Pursuant to our amended and restated certificate of incorporation, if we are unable to complete our initial business combination within the completion window, we will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but no more than ten business days thereafter, subject to lawfully available funds therefor, redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Our initial stockholders, officers and directors have each entered into a letter agreement with us, pursuant to which they have agreed to waive their rights to liquidating distributions from the trust account with respect to any founder shares and private placement shares held by them if we fail to complete our initial business combination within the completion window. However, if our sponsor or any of our officers or directors acquires public shares after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the completion window.
In the event of a liquidation, dissolution or winding up of the company after a business combination, our stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. Our stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock, except that in connection with our initial business combination we will provide our stockholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest (net of permitted withdrawals), subject to the limitations described herein.
Founder Shares
The founder shares are identical to the shares of Class A common stock being sold in this offering, except that: (1) only holders of the founder shares have the right to vote on the election and removal of directors prior to our initial business combination; provided, however, that with respect to the election of directors in connection with a meeting of the stockholders of the Company in which a business combination is submitted to the stockholders of the Company for approval, holders of the Class A common stock and
holders of the Class B common stock, voting together as a single class, shall have the exclusive right to vote for the election of directors; (2) the founder shares are subject to certain transfer restrictions, as described in more detail below; (3) our sponsor, officers and directors have each entered into a letter agreement with us, pursuant to which they have agreed to: (a) waive their redemption rights with respect to any founder shares, private placement shares and any public shares held by them in connection with the completion of our initial business combination, (b) waive their redemption rights with respect to any founder shares, private placement shares and public shares held by them in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we have not consummated our initial business combination within the completion window; and (c) waive their rights to liquidating distributions from the trust account with respect to any founder shares or private placement shares held by them if we fail to complete our initial business combination within the completion window (although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our initial business combination within the completion window); (4) the founder shares are automatically convertible into shares of our Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described herein; and (5) the holders of founder shares and private placement shares are entitled to registration rights. If we submit our initial business combination to our public stockholders for a vote, our initial stockholders, officers and directors have agreed (and their permitted transferees, as applicable, will agree) to vote any founder shares and any public shares held by them in favor of our initial business combination.
The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts sold in this offering and related to the closing of our initial business combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such anti-dilution adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the total number of all shares of common stock (excluding private placement shares) outstanding upon completion of this offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with our initial business combination (net of the number of shares of Class A common stock redeemed in connection with our initial business combination), excluding any shares or equity-linked securities issued, or to be issued, to any seller in our initial business combination in consideration for such seller’s interest in the business combination target and any private placement shares issued upon the conversion of working capital loans made to us.
With certain limited exceptions, the founder shares are not transferable, assignable or salable (except to our officers and directors and other persons or entities affiliated with our sponsor and other permitted transferees, each of whom will be subject to the same transfer restrictions) until the earlier of (A) one year after the completion of our initial business combination, (B) subsequent to our initial business combination, if the closing price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, and (C) following the completion of our initial business combination, such future date on which we complete a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of our public stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Private Placement Shares
The private placement shares will not be transferable, assignable or salable pursuant to lock-up provisions in the letter agreement entered into by our sponsor, officers and directors (limited exceptions are described under “Principal Shareholders—Transfers of Founder Shares and Private Placement Shares,” with respect to our officers and directors and other persons or entities affiliated with our sponsor). Holders of our private placement shares are entitled to certain registration rights. If we do not consummate an
initial business combination within 24 months from the closing of this offering, the proceeds from the sale of the private placement shares held in the trust account will be used to fund the redemption of our public shares (subject to the requirements of applicable law). Further, if we seek shareholder approval, we will complete our initial business combination only if a majority of the outstanding shares, represented in person or by proxy and entitled to vote thereon, voted at a shareholder meeting are voted in favor of the business combination. In such case, our sponsor, directors and officers have agreed to vote any founder shares, public shares and private placement shares held by them in favor of our initial business combination. Otherwise, the private placement shares are identical to the shares of Class A common stock sold in this offering. Our sponsor has agreed not to transfer, assign or sell any of their private placement shares until 180 days after the effective date of the underwriting agreement, except, among other limited exceptions as described under the section of this prospectus entitled “Principal Shareholders—Transfers of Founder Shares and Private Placement Shares,” to our officers and directors and other persons or entities affiliated with our sponsor.
In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. Up to $1,500,000 of such loans may be convertible into shares of the post business combination entity at a price of $10.00 per share at the option of the lender. Such shares would be identical to the private placement shares.
Preferred Stock
Our amended and restated certificate of incorporation will authorize 1,000,000 shares of preferred stock and will provide that shares of preferred stock may be issued from time to time in one or more series. Our board of directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. Our board of directors will be able to, without stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects. The ability of our board of directors to issue preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control of us or the removal of existing management. We have no preferred stock outstanding at the date hereof. Although we do not currently intend to issue any shares of preferred stock, we cannot assure you that we will not do so in the future. No shares of preferred stock are being issued or registered in this offering.
Dividends
We have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial business combination. The payment of any cash dividends subsequent to a business combination will be within the discretion of our board of directors at such time. In addition, our board of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future, except if we increase the size of this offering, in which case we will effect a stock dividend with respect to our Class B common stock immediately prior to the consummation of this offering in such amount as to maintain the ownership of founder shares by our initial stockholders prior to this offering at 20% of our issued and outstanding shares of our common stock upon the consummation of this offering (excluding the private placement shares). Further, if we incur any indebtedness, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
Our Transfer Agent
The transfer agent for our common stock is Continental Stock Transfer & Trust Company. We have agreed to indemnify Continental Stock Transfer & Trust Company in its roles as transfer agent, its agents and each of its stockholders, directors, officers and employees against all liabilities, including judgments, costs and reasonable counsel fees that may arise out of acts performed or omitted for its activities in that capacity, except for any liability due to any gross negligence, willful misconduct or bad faith of the indemnified person or entity.
Our Amended and Restated Certificate of Incorporation
Our amended and restated certificate of incorporation will contain certain requirements and restrictions relating to this offering that will apply to us until the completion of our initial business combination. These provisions (other than amendments relating to the election and removal of directors, which require the approval of a majority of the Class B common stock then outstanding) cannot be amended without the approval of the holders of at least 65% of our common stock. Our initial stockholders, who collectively will beneficially own 20% of our common stock upon the closing of this offering, may participate in any vote to amend our amended and restated certificate of incorporation and will have the discretion to vote in any manner they choose. Prior to an initial business combination, we may not issue additional securities that can vote on amendments to our amended and restated certificate of incorporation. Specifically, our amended and restated certificate of incorporation will provide, among other things, that:
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if we are unable to complete our initial business combination within the completion window, we will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than ten business days thereafter, subject to lawfully available funds therefor, redeem 100% of the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law;
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prior to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to: (1) receive funds from the trust account; or (2) vote on any initial business combination;
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although we do not intend to enter into a business combination with a target business that is affiliated with M. Klein and Company, one of our Strategic Partners, our sponsor, our directors or our officers, we are not prohibited from doing so. In the event we seek to complete our initial business combination with a company that is affiliated with M. Klein and Company, one of our Strategic Partners, our sponsor, officers or directors, we, or a committee of independent and disinterested directors, will obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm that such a business combination is fair to our company from a financial point of view;
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if a stockholder vote on our initial business combination is not required by applicable law or stock exchange rules and we do not decide to hold a stockholder vote for business or other reasons, we will offer to redeem our public shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, and will file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about our initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act;
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if required by applicable stock-exchange rules, our initial business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the trust account (excluding the amount of any deferred underwriting discount).
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if our stockholders approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within the completion window, we will provide our public stockholders with the opportunity to redeem all or a portion of their shares of common stock upon such approval at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of permitted withdrawals), divided by the number of then outstanding public shares; and
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we will not effectuate our initial business combination with another blank check company or a similar company with nominal operations.
In addition, our amended and restated certificate of incorporation will provide that under no circumstances will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination.
Certain Anti-Takeover Provisions of Delaware Law and our Amended and Restated Certificate of Incorporation and Bylaws
We have elected to be exempt from the restrictions imposed under Section 203 of the DGCL. However, our certificate of incorporation will contain similar provisions providing that we may not engage in certain “business combinations” with any “interested stockholder” for a three-year period following the time that such stockholder becomes an interested stockholder unless:
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prior to such time, our board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
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upon consummation of the transaction which resulted in the stockholder becoming an “interested stockholder,” the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced (excluding certain shares); or
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on or subsequent to such time, the business combination is approved by the Board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.
Generally, a “business combination” includes a merger, asset or stock sale to the interested stockholder. Subject to certain exceptions, an “interested stockholder” is a person who, together with that person’s affiliates and associates, owns, or within the previous three years owned, 15% or more of our voting stock.
Under some circumstances, this provision will make it more difficult for a person who is an interested stockholder to effect various business combinations with us for a three-year period.
Our certificate of incorporation will provide that our sponsor and its various affiliates, successors and transferees will not be deemed to be “interested stockholders” regardless of the percentage of our voting stock owned by them, and accordingly will not be subject to this provision.
Our authorized but unissued common stock and preferred stock are available for future issuances without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
Exclusive Forum for Certain Lawsuits
Our amended and restated certificate of incorporation will require, to the fullest extent permitted by law, that any (i) derivative action or proceeding brought on our behalf, (ii) action asserting a claim of breach of a fiduciary duty owed by or other wrongdoing by any current or former director, officer, employee, agent or stockholder to us, (iii) action asserting a claim arising under any provision of the DGCL or our amended and restated certificate of incorporation or bylaws (as either may be amended from time to time), or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) action asserting a claim governed by the internal affairs doctrine may be brought only in the Court of Chancery in the State of Delaware (or, if the Court lacks jurisdiction, a state court located within Chancery of the State of Delaware or the federal district court for the District of Delaware).
The federal district courts of the United States of America shall be the sole and exclusive forum for the resolution of any action asserting a claim arising under the Securities Act or the rules and regulations promulgated thereunder. The provisions of Section 13.1 of our amended and restated certificate of
incorporation shall not preclude or contract the scope of exclusive federal jurisdiction for suits brought under the Exchange Act or the rules and regulations promulgated thereunder.
If any provision or provisions of Section 13.1 of our amended and restated certificate of incorporation shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of Section 13.1 of our amended and restated certificate of incorporation (including, without limitation, each portion of any sentence of Section 13.1 of our amended and restated certificate of incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby. Any person or entity purchasing or otherwise acquiring or holding any interest in our securities shall be deemed to have notice of and consented to the provisions of Section 13.1 of our amended and restated certificate of incorporation.
If an action is brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, a court may determine that this provision is unenforceable, and to the extent it is enforceable, the provision may have the effect of discouraging lawsuits against our directors and officers, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.
Our amended and restated certificate of incorporation will provide that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As noted above, our amended and restated certificate of incorporation will provide that the Court of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction over any action arising under the Securities Act. Accordingly, there is uncertainty as to whether a court would enforce such provision, and our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.
Special Meeting of Stockholders
Our bylaws provide that special meetings of our stockholders may be called only by a majority vote of our board of directors, by our chief executive officer or by our chairman, if any.
Advance Notice Requirements for Stockholder Proposals and Director Nominations
Our bylaws will provide for advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of our board of directors or a committee of our board of directors. In order for any matter to be “properly brought” before a meeting, a stockholder will have to comply with advance notice requirements and provide us with certain information. Generally, to be timely, a stockholder’s notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of stockholders. Pursuant to Rule 14a-8 of the Exchange Act, proposals seeking inclusion in our annual proxy statement must comply with the notice periods contained therein. Our bylaws will also specify requirements as to the form and content of a stockholder’s notice. Our bylaws will allow the chairman of the meeting at a meeting of the stockholders to adopt rules and regulations for the conduct of meetings which may have the effect of precluding the conduct of certain business at a meeting if the rules and regulations are not followed. These provisions may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to influence or obtain control of us.
Action by Written Consent
Subsequent to the consummation of this offering, any action required or permitted to be taken by our stockholders must be effected by a duly called annual or special meeting of such stockholders and may not be effected by written consent of the stockholders other than with respect to our Class B common stock.
Classified Board of Directors
Our board of directors will initially be divided into three classes, Class I, Class II and Class III, with members of each class serving staggered three-year terms. Our amended and restated certificate of incorporation will provide that the authorized number of directors may be changed only by resolution of the board of directors. Subject to the terms of any preferred stock, any or all of the directors may be removed from office at any time, with or without cause by the affirmative vote of holders of a majority of the voting power of all then outstanding shares of the Class B common stock entitled to vote generally in the election of directors, voting together as a single class. Any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office.
Class B Common Stock Consent Right
For so long as any shares of Class B common stock remain outstanding, we may not, without the prior vote or written consent of the holders of a majority of the shares of Class B common stock then outstanding, voting separately as a single class, amend, alter or repeal any provision of our certificate of incorporation, whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences or relative, participating, optional or other or special rights of the Class B common stock. Any action required or permitted to be taken at any meeting of the holders of Class B common stock may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of the outstanding Class B common stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of Class B common stock were present and voted.
Securities Eligible for Future Sale
Immediately after this offering we will have 40,000,000 (or 46,000,000 if the underwriters’ option to purchase additional shares is exercised in full) shares of Class A common stock outstanding. All of these shares will have been sold in this offering and will be freely tradable without restriction or further registration under the Securities Act, except for any shares purchased by one of our affiliates within the meaning of Rule 144 under the Securities Act. All of the 10,000,000 (or 11,500,000 if the underwriters’ over-allotment option is exercised in full) Class B founder shares and all 1,250,000 (or 1,370,000 if the underwriters’ option to purchase additional shares is exercised in full) private placement shares are restricted securities under Rule 144, in that they were issued in private transactions not involving a public offering, and are subject to transfer restrictions as set forth elsewhere in this prospectus.
Rule 144
Pursuant to Rule 144, a person who has beneficially owned restricted shares of our common for at least six months would be entitled to sell their securities provided that: (1) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale; and (2) we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale and have filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as we were required to file reports) preceding the sale. Persons who have beneficially owned restricted shares of our common stock for at least six months but who are our affiliates at the time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of:
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1% of the total number of shares of Class A common stock then outstanding, which will equal 400,000 shares immediately after this offering (or 460,000 if the underwriters exercise their option to purchase additional shares in full); or
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the average weekly reported trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.
Sales by our affiliates under Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information about us.
Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies
Rule 144 is not available for the resale of securities initially issued by shell companies (other than a business combination related shell companies) or issuers that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the following conditions are met:
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the issuer of the securities that was formerly a shell company has ceased to be a shell company;
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the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
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the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Current Reports on Form 8-K; and
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at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
As a result, our initial stockholders will be able to sell their founder shares and our sponsor will be able to sell its private placement shares, as applicable, pursuant to Rule 144 without registration one year after we have completed our initial business combination.
Registration Rights
The holders of the founder shares, private placement shares and shares that may be issued upon conversion of working capital loans will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of this offering requiring us to register such securities for resale (in the case of the founder shares, only after conversion into shares of Class A common stock). The holders of these securities will be entitled to make up to three demands, excluding short form registration demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our initial business combination and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. We will bear the expenses incurred in connection with the filing of any such registration statement.
Listing of Securities
We intend to apply to list our Class A common stock on the NYSE under the symbols “ALCC”. We expect that our Class A common stock will be listed on the NYSE on or promptly after the effective date of the registration statement. We cannot guarantee that our securities will be approved for listing on the NYSE.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of the U.S. federal income tax considerations generally applicable to the acquisition, ownership and disposition of our Class A common stock.
This summary is based upon U.S. federal income tax law as of the date of this prospectus, which is subject to change or differing interpretations, possibly with retroactive effect. This summary does not discuss all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances, including investors subject to special tax rules (e.g., financial institutions, insurance companies, broker-dealers, governments or agencies or instrumentalities thereof, expatriates or former long-term residents of the United States, persons that actually or constructively own five percent or more (by vote or value) of our stock, our sponsor, founders, officers or directors, persons that acquired our Class A common stock pursuant to an exercise of employee share options, in connection with employee share incentive plans or otherwise as compensation, tax-exempt organizations (including private foundations), taxpayers that have elected mark-to-market accounting, S corporations, regulated investment companies, real estate investment trusts, controlled foreign corporations, passive foreign investment companies, investors that will hold Class A common stock as part of a straddle, hedge, conversion, or other integrated transaction for U.S. federal income tax purposes, or investors that have a functional currency other than the U.S. dollar), all of whom may be subject to tax rules that differ materially from those summarized below.
In addition, this summary does not discuss other U.S. federal tax consequences (e.g., estate or gift tax), any state, local, or non-U.S. tax considerations, or the additional tax on net investment income or alternative minimum tax. This summary is limited to investors that will hold our Class A common stock as “capital assets” (generally, property held for investment) under the Internal Revenue Code of 1986, as amended (the “Code”), and that acquired the Class A common stock pursuant to this offering. No ruling from the Internal Revenue Service (the “IRS”) has been or will be sought regarding any matter discussed herein. No assurance can be given that the IRS would not assert, or that a court would not sustain a position contrary to any of the tax aspects set forth below. Moreover, there can be no assurance that future legislation, regulations, administrative rulings or court decisions will not adversely affect the accuracy of the statements in this discussion.
For purposes of this summary, a “U.S. Holder” is a beneficial holder of shares of Class A common stock who or that is:
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an individual who is a U.S. citizen or resident of the United States as determined for U.S. federal income tax purposes;
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a corporation or other entity treated as a corporation for U.S. federal income tax purposes created in, or organized under the law of, the United States or any state or political subdivision thereof;
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an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or
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a trust (A) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons (within the meaning of the Code) who have the authority to control all substantial decisions of the trust or (B) that has in effect a valid election under applicable Treasury regulations to be treated as a U.S. person.
A “non-U.S. Holder” is a beneficial holder of shares of Class A common stock who or that is neither a U.S. Holder nor a partnership for U.S. federal income tax purposes.
If a partnership (including an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our Class A common stock, the tax treatment of a partner, member or other beneficial owner in such partnership will generally depend upon the status of the partner, member or other beneficial owner, the activities of the partnership and certain determinations made at the partner, member or other beneficial owner level. If you are a partner, member or other beneficial owner of a partnership holding our Class A common stock, you are urged to consult your tax advisor regarding the tax consequences of the ownership and disposition of our Class A common stock.
THIS DISCUSSION OF U.S. FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT TAX ADVICE. WE URGE PROSPECTIVE
HOLDERS TO CONSULT THEIR TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO THEM OF ACQUIRING, OWNING AND DISPOSING OF OUR CLASS A COMMON STOCK, AS WELL AS THE APPLICATION OF ANY STATE, LOCAL AND NON-U.S. INCOME, ESTATE AND OTHER TAX CONSIDERATIONS.
Personal Holding Company Status
We would be subject to a second level of U.S. federal income tax on a portion of our income if we are determined to be a personal holding company, or PHC, for U.S. federal income tax purposes. A U.S. corporation will generally be classified as a PHC for U.S. federal income tax purposes in a given taxable year if (1) at any time during the last half of such taxable year, five or fewer individuals (without regard to their citizenship or residency and including as individuals for this purpose certain entities such as certain tax-exempt organizations, pension funds, and charitable trusts) own or are deemed to own (pursuant to certain constructive ownership rules), directly or indirectly, more than 50% of the stock of the corporation by value and (2) at least 60% of the corporation’s adjusted ordinary gross income, as determined for U.S. federal income tax purposes, for such taxable year consists of PHC income (which includes, among other things, dividends, interest, certain royalties, annuities and, under certain circumstances, rents).
Depending on the date and size of our initial business combination, it is possible that at least 60% of our adjusted ordinary gross income may consist of PHC income as discussed above. In addition, depending on the concentration of our stock in the hands of individuals, including the members of our sponsor and certain tax-exempt organizations, pension funds, and charitable trusts, it is possible that more than 50% of our stock will be owned or deemed owned (pursuant to the constructive ownership rules) by five or fewer such persons during the last half of a taxable year. Thus, no assurance can be given that we will not become a PHC following this offering or in the future. If we are or were to become a PHC in a given taxable year, we would be subject to an additional PHC tax, currently 20%, on our undistributed PHC income, which generally includes our taxable income, subject to certain adjustments.
U.S. Holders
Taxation of Distributions
If we pay cash distributions to U.S. Holders of shares of our Class A common stock, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not below zero) the U.S. Holder’s adjusted tax basis in our Class A common stock. Any remaining excess will be treated as gain realized on the sale or other disposition of the Class A common stock and will be treated as described under “U.S. Holders—Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock” below.
Dividends we pay to a U.S. Holder that is a taxable corporation generally will qualify for the dividends received deduction if the requisite holding period is satisfied. With certain exceptions (including, but not limited to, dividends treated as investment income for purposes of investment interest deduction limitations), and provided certain holding period requirements are met, dividends we pay to a non-corporate U.S. Holder will generally constitute “qualified dividend income” that will be subject to tax at the maximum tax rate accorded to long-term capital gains. It is unclear whether the redemption rights with respect to the Class A common stock described in this prospectus may prevent a U.S. Holder from satisfying the applicable holding period requirements with respect to the dividends received deduction or the preferential tax rate on qualified dividend income, as the case may be.
Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock
A U.S. Holder will recognize gain or loss on the sale, taxable exchange or other taxable disposition of our Class A common stock (which would include a dissolution and liquidation in the event we do not complete an initial business combination within the completion window). Any such gain or loss will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder’s holding period for the Class A common stock so disposed of exceeds one year. It is unclear, however, whether the redemption rights with
respect to the Class A common stock described in this prospectus may prevent a U.S. Holder from satisfying the holding period for this purpose. The amount of gain or loss recognized will generally be equal to the difference between (1) the sum of the amount of cash and the fair market value of any property received in such disposition and (2) the U.S. Holder’s adjusted tax basis in its Class A common stock so disposed of. A U.S. Holder’s adjusted tax basis in its Class A common stock will generally equal the U.S. Holder’s acquisition cost less any prior distributions treated as a return of capital. Long-term capital gains recognized by non-corporate U.S. Holders may be taxed at reduced rates. The deductibility of capital losses is subject to limitations.
Redemption of Class A Common Stock
In the event that a U.S. Holder’s Class A common stock is redeemed pursuant to the redemption provisions described in this prospectus under “Description of Securities—Common Stock,” the treatment of the transaction for U.S. federal income tax purposes will depend on whether the redemption qualifies as a sale of the Class A common stock under Section 302 of the Code. If the redemption qualifies as a sale of Class A common stock under the tests described below, the tax consequences to the U.S. Holder will be the same as described under “U.S. Holders—Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock” above. If the redemption does not qualify as a sale of Class A common stock, the U.S. Holder will be treated as receiving a corporate distribution, the tax consequences of which are described above under “U.S. Holders—Taxation of Distributions.” Any such distribution to a corporate U.S Holder that is entitled to a dividends received deduction might be subject to the “extraordinary dividend” provisions of the Code (which could cause a reduction in the tax basis of such U.S Holder’s Class A common stock and cause such U.S Holder to recognize capital gain). Whether the redemption qualifies for sale treatment will depend primarily on the total number of shares of our stock treated as held by the U.S. Holder (including any stock constructively owned by the U.S. Holder as described in the following paragraph) relative to all of our shares outstanding both before and after the redemption. For a given U.S. Holder, the redemption of Class A common stock will generally be treated as a sale of the Class A common stock (rather than as a corporate distribution) if the redemption (1) is “substantially disproportionate” with respect to the U.S. Holder, (2) results in a “complete termination” of the U.S. Holder’s interest in us or (3) is “not essentially equivalent to a dividend” with respect to the U.S. Holder. These tests are explained more fully below.
In determining whether any of the foregoing tests are satisfied, a U.S. Holder takes into account not only stock actually owned by the U.S. Holder, but also shares of our stock that are constructively owned by it. A U.S. Holder may constructively own, in addition to stock owned directly, stock owned by certain related individuals and entities in which the U.S. Holder has an interest or that have an interest in such U.S. Holder, as well as any stock the U.S. Holder has a right to acquire by exercise of an option. A redemption of a U.S. Holder’s stock will be substantially disproportionate with respect to the U.S. Holder if the percentage of our outstanding voting stock actually and constructively owned by the U.S. Holder immediately following the redemption of common stock is, among other requirements, less than 80% of the percentage of our outstanding voting stock actually and constructively owned by the U.S. Holder immediately before the redemption. Prior to our initial business combination, our Class A common stock may not be treated as voting stock for this purpose and, consequently, this substantially disproportionate test may not be applicable. There will be a complete termination of a U.S. Holder’s interest if either (1) all of the shares of our stock actually and constructively owned by the U.S. Holder are redeemed or (2) all of the shares of our stock actually owned by the U.S. Holder are redeemed and the U.S. Holder is eligible to waive, and effectively waives in accordance with specific rules, the attribution of stock owned by certain family members and the U.S. Holder does not constructively own any other stock. The redemption of the Class A common stock will not be essentially equivalent to a dividend if the redemption results in a “meaningful reduction” of the U.S. Holder’s proportionate interest in us. Whether the redemption will result in a meaningful reduction in a U.S. Holder’s proportionate interest in us will depend on the particular facts and circumstances. The IRS has indicated in a published ruling that even a small reduction in the proportionate interest of a small minority stockholder in a publicly held corporation who exercises no control over corporate affairs may constitute such a “meaningful reduction.” Each U.S. Holder is urged to consult its tax advisor as to the tax consequences of a redemption, including the application of the constructive ownership rules described above.
If none of the foregoing tests is satisfied, the redemption will be treated as a corporate distribution, the tax consequences of which are described under “U.S. Holders—Taxation of Distributions,” above. After the
application of those rules, any remaining tax basis of the U.S. Holder in the redeemed Class A common stock should be added to the U.S. Holder’s adjusted tax basis in its remaining stock, or, if it has none, possibly in other stock constructively owned by it.
Information Reporting and Backup Withholding.
In general, information reporting requirements may apply to dividends paid to a U.S. Holder and to the proceeds of the sale or other disposition of our shares of Class A common stock, unless the U.S. Holder is an exempt recipient and certifies to such exempt status. Backup withholding may apply to such payments if the U.S. Holder fails to provide a taxpayer identification number, a certification of exempt status or has been notified by the IRS that it is subject to backup withholding (and such notification has not been withdrawn).
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a U.S. Holder’s U.S. federal income tax liability provided the required information is timely furnished to the IRS.
Non-U.S. Holders
Taxation of Distributions
In general, any distributions we make to a non-U.S. Holder of shares of our Class A common stock, to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles), will constitute dividends for U.S. federal income tax purposes and, provided such dividends are not effectively connected with the non-U.S. Holder’s conduct of a trade or business within the United States, we will be required to withhold tax from the gross amount of the dividend at a rate of 30%, unless such non-U.S. Holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification of its eligibility for such reduced rate (usually on an IRS Form W-8BEN or W-8BEN-E, as applicable). Any distribution not constituting a dividend will be treated first as reducing (but not below zero) the non-U.S. Holder’s adjusted tax basis in its shares of our Class A common stock and, to the extent such distribution exceeds the non-U.S. Holder’s adjusted tax basis, as gain realized from the sale or other disposition of the Class A common stock, which will be treated as described under “Non-U.S. Holders—Gain on Sale, Exchange or Other Taxable Disposition of Class A Common Stock” below. In addition, if we determine that we are classified as a “United States real property holding corporation” (see “Non-U.S. Holders—Gain on Sale, Exchange or Other Taxable Disposition of Class A Common Stock” below), the applicable withholding agent will withhold 15% of any distribution that exceeds our current and accumulated earnings and profits.
Dividends we pay to a non-U.S. Holder that are effectively connected with such non-U.S. Holder’s conduct of a trade or business within the United States (or, if a tax treaty applies, are attributable to a U.S. permanent establishment or fixed base maintained by the non-U.S. Holder) will generally not be subject to U.S. withholding tax, provided such non-U.S. Holder complies with certain certification and disclosure requirements (usually by providing an IRS Form W-8ECI). Instead, such dividends will generally be subject to U.S. federal income tax, net of certain deductions, at the same graduated individual or corporate rates applicable to U.S. Holders. If the non-U.S. Holder is a corporation, dividends that are effectively connected income may also be subject to a “branch profits tax” at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty).
Gain on Sale, Exchange or Other Taxable Disposition of Class A Common Stock
A non-U.S. Holder will generally not be subject to U.S. federal income or withholding tax in respect of gain recognized on a sale, taxable exchange or other taxable disposition of our Class A common stock, which would include a dissolution and liquidation in the event we do not complete an initial business combination within the completion window, unless:
•
the gain is effectively connected with the conduct of a trade or business by the non-U.S. Holder within the United States (and, if an applicable tax treaty so requires, is attributable to a U.S. permanent establishment or fixed base maintained by the non-U.S. Holder);
•
the non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met; or
•
we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the non-U.S. Holder held our Class A common stock, and, in the case where shares of our Class A common stock are regularly traded on an established securities market, the non-U.S. Holder has owned, directly or constructively, more than 5% of our Class A common stock at any time within the shorter of the five-year period preceding the disposition or such non-U.S. Holder’s holding period for the shares of our Class A common stock. There can be no assurance that our Class A common stock will be treated as regularly traded on an established securities market for this purpose.
Gain described in the first bullet point above will be subject to tax at generally applicable U.S. federal income tax rates. Any gains described in the first bullet point above of a non-U.S. Holder that is a foreign corporation may also be subject to an additional “branch profits tax” at a 30% rate (or lower applicable treaty rate). Gain described in the second bullet point above will generally be subject to a flat 30% U.S. federal income tax. Non-U.S. Holders are urged to consult their tax advisors regarding possible eligibility for benefits under income tax treaties.
If the third bullet point above applies to a non-U.S. Holder, gain recognized by such holder on the sale, exchange or other disposition of our Class A common stock will be subject to tax at generally applicable U.S. federal income tax rates. In addition, a buyer of our Class A common stock from such holder may be required to withhold U.S. income tax at a rate of 15% of the amount realized upon such disposition. We cannot determine whether we will be a United States real property holding corporation in the future until we complete an initial business combination. We will be classified as a United States real property holding corporation if the fair market value of our “United States real property interests” equals or exceeds 50% of the sum of the fair market value of our worldwide real property interests plus our other assets used or held for use in a trade or business, as determined for U.S. federal income tax purposes. If we are or have been a “United States real property holding corporation” you are urged to consult your own tax advisors regarding the application of these rules.
Redemption of Class A Common Stock
The characterization for U.S. federal income tax purposes of the redemption of a non-U.S. Holder’s Class A common stock pursuant to the redemption provisions described in this prospectus under “Description of Securities—Common Stock” will generally correspond to the U.S. federal income tax characterization of such a redemption of a U.S. Holder’s Class A common stock, as described under “U.S. Holders—Redemption of Class A Common Stock” above, and the consequences of the redemption to the non-U.S. Holder will be as described above under “Non-U.S. Holders—Taxation of Distributions” and “Non-U.S. Holders—Gain on Sale, Exchange or Other Taxable Disposition of Class A Common Stock,” as applicable. It is possible that because the applicable withholding agent may not be able to determine the proper characterization of a redemption of a Non-U.S. holder’s Class A common stock, the withholding agent might treat the redemption as a distribution subject to withholding tax.
Foreign Account Tax Compliance Act
Sections 1471 through 1474 of the Code and the Treasury Regulations and administrative guidance promulgated thereunder (commonly referred to as the “Foreign Account Tax Compliance Act” or “FATCA”) generally impose withholding at a rate of 30% in certain circumstances on dividends) in respect of our Class A common stock which are held by or through certain foreign financial institutions (including investment funds), unless any such institution (1) enters into, and complies with, an agreement with the IRS to report, on an annual basis, information with respect to interests in, and accounts maintained by, the institution that are owned by certain U.S. persons and by certain non-U.S. entities that are wholly or partially owned by U.S. persons and to withhold on certain payments, or (2) if required under an intergovernmental agreement between the United States and an applicable foreign country, reports such information to its local tax authority, which will exchange such information with the U.S. authorities. An intergovernmental agreement between the United States and an applicable foreign country may modify these requirements.
Accordingly, the entity through which our Class A common stock are held will affect the determination of whether such withholding is required. Similarly, dividends in respect of our Class A common stock held by an investor that is a non-financial non-U.S. entity that does not qualify under certain exceptions will generally be subject to withholding at a rate of 30%, unless such entity either (1) certifies to us or the applicable withholding agent that such entity does not have any “substantial United States owners” or (2) provides certain information regarding the entity’s “substantial United States owners,” which will in turn be provided to the U.S. Department of Treasury. Prospective investors should consult their tax advisors regarding the possible implications of FATCA on their investment in our Class A common stock.
Information Reporting and Backup Withholding
In general, information reporting requirements will apply to payments of dividends and proceeds from the sale of our Class A common stock to non-U.S. Holders that are not exempt recipients. We must report annually to the IRS and to each such holder the amount of dividends or other distributions we pay to such non-U.S. Holder on our shares of Class A common stock and the amount of tax withheld with respect to those distributions, regardless of whether withholding is required. The IRS may make copies of the information returns reporting those dividends and amounts withheld available to the tax authorities in the country in which the non-U.S. Holder resides pursuant to the provisions of an applicable income tax treaty or exchange of information treaty.
The gross amount of dividends and proceeds from the disposition of our Class A common stock paid to a holder that fails to provide the appropriate certification in accordance with applicable U.S. Treasury regulations generally will be subject to backup withholding at the applicable rate.
Information reporting and backup withholding are generally not required with respect to the amount of any proceeds from the sale by a non-U.S. Holder of Class A common stock outside the United States through a foreign office of a foreign broker that does not have certain specified connections to the United States. However, if a non-U.S. Holder sells Class A common stock through a U.S. broker or the U.S. office of a foreign broker, the broker will generally be required to report to the IRS the amount of proceeds paid to such holder, unless the non-U.S. Holder provides appropriate certification (usually on an IRS Form W-8BEN or W-8BEN-E, as applicable) to the broker of its status as a non-U.S. Holder or such non-U.S. Holder is an exempt recipient. In addition, for information reporting purposes, certain non-U.S. brokers with certain relationships with the United States will be treated in a manner similar to U.S. brokers.
Backup withholding is not an additional tax. Any amounts we withhold under the backup withholding rules may be refunded or credited against a holder’s U.S. federal income tax liability, if any, by the IRS if the required information is furnished in a timely manner to the IRS.
UNDERWRITING
Citigroup Global Markets Inc. is acting as joint bookrunner and representative of the underwriters and each of J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC and BofA Securities, Inc. are acting as joint bookrunners of the offering. Subject to the terms and conditions stated in the underwriting agreement dated the date of this prospectus, each underwriter named below has severally agreed to purchase, and we have agreed to sell to that underwriter, the number of shares set forth opposite the underwriter’s name.
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Underwriter
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Number of
Shares
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Citigroup Global Markets Inc.
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J.P. Morgan Securities LLC
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Goldman Sachs & Co. LLC
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BofA Securities, Inc.
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Total
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40,000,000 |
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The underwriting agreement provides that the obligations of the underwriters to purchase the shares included in this offering are subject to approval of legal matters by counsel and to other conditions. The underwriters are obligated to purchase all of the shares (other than those covered by the over-allotment option described below) if they purchase any of the shares.
Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. If all of the shares are not sold at the initial offering price, the underwriters may change the offering price and the other selling terms. The representative has advised us that the underwriters do not intend to make sales to discretionary accounts. Sales of any shares made outside of the United States may be made by affiliates of the underwriters. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.
If the underwriters sell more shares than the total number set forth in the table above, we have granted to the underwriters an option, exercisable for 45 days from the date of this prospectus, to purchase up to 6,000,000 additional shares at the public offering price less the underwriting discount. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, in connection with this offering. To the extent the option is exercised, each underwriter must purchase a number of additional shares approximately proportionate to that underwriter’s initial purchase commitment. Any shares issued or sold under the option will be issued and sold on the same terms and conditions as the other shares that are the subject of this offering.
We, our sponsor and our officers and directors have agreed that, for a period of 180 days from the date of this prospectus, we and they will not, without the prior written consent of the representative, offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of common stock or any other securities convertible into, or exercisable, or exchangeable for, shares of common stock, subject to certain exceptions. The representative in its sole discretion may release any of the securities subject to these lock-up agreements at any time without notice. Our sponsor, officers and directors are also subject to separate transfer restrictions on their founder shares and private placement shares pursuant to the insider letters as described herein.
Our sponsor, founder, officers and directors have agreed not to transfer, assign or sell any founder shares held by them until the earlier to occur of: (1) one year after the completion of our initial business combination; or (2) the date on which we complete a liquidation, merger, stock exchange, reorganization or other similar transaction after our initial business combination that results in all of our public stockholders having the right to exchange their shares of common stock for cash, securities or other property (except as described herein under “Principal Stockholders—Transfers of Founder Shares and Private Placement Shares”). Any permitted transferees would be subject to the same restrictions and other agreements of our sponsor with respect to any founder shares. We refer to such transfer restrictions throughout this prospectus as the lock-up. Notwithstanding the foregoing, if the closing price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like)
for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, the founder shares will be released from the lock-up. The private placement shares will not be transferable, assignable or saleable until 30 days after the completion of our initial business combination (except with respect to permitted transferees as described herein under the section of this prospectus entitled “Principal Stockholders—Transfers of Founder Shares and Private Placement Shares”).
Prior to this offering, there has been no public market for our securities. Consequently, the initial public offering price for the shares was determined by negotiations between us and the representative.
Among the factors considered in determining the initial public offering price were the history and prospects of companies whose principal business is the acquisition of other companies, prior offerings of those companies, our management, our capital structure, and currently prevailing general conditions in the equity securities markets, including current market valuations of publicly traded companies considered comparable to our company. We cannot assure you, however, that the price at which the Class A common stock will sell in the public market after this offering will not be lower than the initial public offering price or that an active trading market in our Class A common stock will develop and continue after this offering.
We have applied to list our Class A common stock on the NYSE under the symbol “ALCC.” We cannot guarantee that our securities will be approved for listing on the NYSE.
We have not entered into any understanding or arrangement to engage, and are under no contractual obligation to engage, the underwriters to provide any services for us after this offering, but we may do so at our discretion. However, the firms acting as underwriters for this offering (or their affiliates) may introduce us to potential target businesses, provide financial advisory services to us in connection with a business combination or assist us in raising additional capital in the future, including by acting as a placement agent in a private offering or underwriting or arranging debt financing. We may also pay the firms acting as underwriters for this offering (or their affiliates) a finder’s fee or other compensation for services rendered to us in connection with the completion of the business combination contemplated in this prospectus. Any compensation paid to the firms acting as underwriters for this offering (or their affiliates) for services provided to us after this offering will be fair and reasonable and determined at that time in an arm’s length negotiation. Any such compensation that is paid to, or any arrangement with respect to the payment of such compensation that is entered into with, such firms (or their affiliates) within 60 days from the date of this prospectus, may be considered by FINRA to be compensation with respect to this offering unless otherwise excluded from such characterization under applicable FINRA rules. Because the underwriters for this offering are entitled to the deferred portion of their underwriting compensation only if an initial business combination is completed within the specified timeframe, and any additional compensation to such firms (or their affiliates) for the other services described above may also be conditioned on closing of a business combination transaction, these firms (and their affiliates) may have a potential conflict of interest in connection with the provision of such services.
The following table shows the underwriting discounts and commissions that we are to pay to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters’ over-allotment option.
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Payable by AltC Acquisition Corp.
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No Exercise
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Full Exercise
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Per Share(1)
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$ |
0.55 |
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$ |
0.55 |
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Total(1)
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$ |
22,000,000 |
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$ |
25,300,000 |
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(1)
Includes $0.35 per share, or $14,000,000 (or $16,100,000 if the over-allotment option is exercised in full) in the aggregate payable to the underwriters for deferred underwriting commissions to be placed in a trust account located in the United States as described herein. The deferred commissions will be released to the underwriters only on completion of an initial business combination, in an amount equal to $0.35 multiplied by the number of shares of Class A common stock in this offering, as described in this prospectus.
If we do not complete our initial business combination and subsequently liquidate, the trustee and the underwriters have agreed that they will forfeit any rights or claims to their deferred underwriting discounts and commissions, including any accrued interest thereon, then in the trust account upon liquidation.
In connection with the offering, the underwriters may purchase and sell shares in the open market. Purchases and sales in the open market may include short sales, purchases to cover short positions, which may include purchases pursuant to the over-allotment option and stabilizing purchases, in accordance with Regulation M under the Exchange Act.
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Short sales involve secondary market sales by the underwriters of a greater number of shares than they are required to purchase in the offering.
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“Covered” short sales are sales of shares in an amount up to the number of shares represented by the underwriters’ over-allotment option.
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“Naked” short sales are sales of shares in an amount in excess of the number of shares represented by the underwriters’ over-allotment option.
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Covering transactions involve purchases of shares either pursuant to the over-allotment option or in the open market after the distribution has been completed in order to cover short positions.
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To close a naked short position, the underwriters must purchase shares in the open market after the distribution has been completed. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.
•
To close a covered short position, the underwriters must purchase shares in the open market after the distribution has been completed or must exercise the over-allotment option. In determining the source of shares to close the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option.
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Stabilizing transactions involve bids to purchase shares so long as the stabilizing bids do not exceed a specified maximum.
Purchases to cover short positions and stabilizing purchases, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of the shares. They may also cause the price of the shares to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The underwriters may conduct these transactions in the over-the-counter market or otherwise. If the underwriters commence any of these transactions, they may discontinue them at any time.
We estimate that our portion of the total expenses of this offering payable by us will be $3,000,000, excluding underwriting discounts and commissions. We have also agreed to pay the FINRA-related fees and expenses of the underwriters’ legal counsel, not to exceed $20,000.
The underwriters have agreed to reimburse certain of our expenses.
We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make because of any of those liabilities.
We are not under any contractual obligation to engage any of the underwriters to provide any services for us after this offering, but we may do so at our discretion. However, any of the underwriters may introduce us to potential target businesses, provide financial advisory services to us in connection with a business combination or assist us in raising additional capital in the future, including by acting as a placement agent in a private offering or underwriting or arranging debt financing. If any of the underwriters provide services to us after this offering, we may pay such underwriter fair and reasonable fees that would be determined at that time in an arm’s length negotiation; provided that no agreement will be entered into with any of the underwriters and no fees for such services will be paid to any of the underwriters prior to the date that is 60 days from the date of this prospectus, unless FINRA determines that such payment would not be deemed
underwriters’ compensation in connection with this offering, and we may pay the underwriters of this offering or any entity with which they are affiliated, a finder’s fee or other compensation for services rendered to us in connection with the completion of a business combination. Any fees we may pay the underwriters or their affiliates for services rendered to us after this offering may be contingent on the completion of a business combination and may include non-cash compensation. The underwriters or their affiliates that provide these services to us may have a potential conflict of interest given that the underwriters are entitled to the deferred portion of their underwriting compensation for this offering only if an initial business combination is completed within the specified timeframe.
Some of the underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us or our affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.
In addition, in the ordinary course of their business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Notice to Prospective Investors in the United Kingdom
Each underwriter has severally, but not jointly, represented and agreed, and each further underwriter will be required to represent and agree, with us that: (a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of any shares in circumstances in which Section 21(1) of the FSMA does not apply to us; and (b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to any shares in, from or otherwise involving the United Kingdom.
Each underwriter has represented and agreed, and each further underwriter appointed by us will be required to represent and agree, that it has not made and will not make an offer of the shares which are the subject of this offering contemplated by this prospectus to the public that Relevant State other than: (a) to any legal entity which is a qualified investor, as defined in the Prospectus Regulation; (b) to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Regulation), as permitted under the Prospectus Regulation; or (c) in any other circumstances falling within Article 1(4) of the Prospectus Regulation, provided that no such offer of the shares shall require us, the selling shareholders or the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Regulation. For the purposes of this provision, the expression an “offer of shares” means the communication in any form and by any means of sufficient information on the terms of this offering and the shares to be offered so as to enable an investor to decide to purchase or subscribe for the shares and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129.
Notice to Prospective Investors in the European Economic Area
In relation to each Member State, each underwriter has represented and agreed, and each further underwriter appointed by us will be required to represent and agree, that it has not made and will not make an offer of the shares which are the subject of this offering contemplated by this prospectus to the public that Member State other than: (a) to any legal entity which is a qualified investor, as defined in the Prospectus Regulation; (b) to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Regulation), as permitted under the Prospectus Regulation; or (c) in any other circumstances falling within Article 1(4) of the Prospectus Regulation, provided that no such offer of the shares shall require us, the selling shareholders or the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Regulation. For the purposes of this provision, the expression an “offer of shares” means the communication in any form and by any means of sufficient information on the terms of this offering and
the shares to be offered so as to enable an investor to decide to purchase or subscribe for the shares and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129.
Notice to Prospective Investors in France
Neither this prospectus nor any other offering material relating to the shares described in this prospectus has been submitted to the clearance procedures of the Autorité des Marchés Financiers or of the competent authority of another member state of the European Economic Area and notified to the Autorité des Marchés Financiers. The shares have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France. Neither this prospectus nor any other offering material relating to the shares has been or will be:
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released, issued, distributed or caused to be released, issued or distributed to the public in France; or
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used in connection with any offer for subscription or sale of the shares to the public in France. Such offers, sales and distributions will be made in France only:
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To qualified investors (investisseurs qualifiés) and/or to a restricted circle of investors (cercle restreint d’investisseurs), in each case investing for their own account, all as defined in, and in accordance with, articles L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code monétaire et financier;
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to investment services providers authorized to engage in portfolio management on behalf of third parties; or
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in a transaction that, in accordance with article L.411-2-II-1° -or-2° -or 3° of the French Code monétaire et financier and article 211-2 of the General Regulations (Règlement Général) of the Autorité des Marchés Financiers, does not constitute a public offer (appel public à l’épargne).
The shares may be resold directly or indirectly, only in compliance with articles L.411-1, L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French Code monétaire et financier.
Notice to Prospective Investors in Hong Kong
The shares may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
Notice to Prospective Investors in Japan
The shares offered in this prospectus have not been and will not be registered under the Financial Instruments and Exchange Law of Japan. The shares have not been offered or sold and will not be offered or sold, directly or indirectly, in Japan or to or for the account of any resident of Japan (including any corporation or other entity organized under the laws of Japan), except (i) pursuant to an exemption from the registration requirements of the Financial Instruments and Exchange Law and (ii) in compliance with any other applicable requirements of Japanese law.
Notice to Prospective Investors in Singapore
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or
invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA.
Where the shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is
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a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
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a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares pursuant to an offer made under Section 275 of the SFA except:
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to an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions specified in Section 275 of the SFA;
•
where no consideration is or will be given for the transfer; or
•
where the transfer is by operation of law.
Notice to Prospective Investors in Canada
The shares may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the shares must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.
Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.
Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
Notice to Prospective Investors in the Dubai International Financial Centre
This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (“DFSA”). This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The securities to which this prospectus relates
may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the securities offered should conduct their own due diligence on the securities. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.
Notice to Prospective Investors in Australia
No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission (“ASIC”), in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001 (the “Corporations Act”), and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.
Any offer in Australia of the securities may only be made to persons (the “Exempt Investors”) who are “sophisticated investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the securities without disclosure to investors under Chapter 6D of the Corporations Act.
The securities applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring securities must observe such Australian on-sale restrictions. This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.
Notice to Prospective Investors in Switzerland
The securities may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the securities or the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither this document nor any other offering or marketing material relating to the offering, the company, the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of securities will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA (FINMA), and the offer of securities has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (“CISA”). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of securities.
LEGAL MATTERS
Weil, Gotshal & Manges LLP, New York, New York, has passed upon the validity of the securities offered in this prospectus on behalf of us. White & Case LLP, New York, New York, advised the underwriters in connection with the offering of the securities.
EXPERTS
The financial statements of AltC Acquisition Corp. as of March 4, 2021 and for the period from February 1, 2021 (inception) through March 4, 2021 included in this prospectus have been audited by Marcum LLP, independent registered public accounting firm, as set forth in their report, thereon (which contains an explanatory paragraph relating to substantial doubt about the ability of AltC Acquisition Corp. to continue as a going concern as described in Note 1 to the financial statements), appearing elsewhere in this prospectus, are included in reliance on the report of such firm given their authority as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the securities we are offering by this prospectus. This prospectus does not contain all of the information included in the registration statement. For further information about us and our securities, you should refer to the registration statement and the exhibits and schedules filed with the registration statement. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents, the references are materially complete but may not include a description of all aspects of such contracts, agreements or other documents, and you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement or other document.
Upon completion of this offering, we will be subject to the information requirements of the Exchange Act and will file annual, quarterly and current event reports, proxy statements and other information with the SEC. You can read our SEC filings, including the registration statement, over the Internet at the SEC’s website at http://www.sec.gov.
INDEX TO FINANCIAL STATEMENTS
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F-2 |
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F-3 |
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F-4 |
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F-5 |
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F-6 |
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F-7
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholder and Board of Directors of
AltC Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of AltC Acquisition Corp. (the “Company”) as of March 4, 2021, the related statements of operations, changes in stockholder’s equity and cash flows for the period from February 1, 2021 (inception) through March 4, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 4, 2021, and the results of its operations and its cash flows for the period from February 1, 2021 (inception) through March 4, 2021, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1 to the financial statements, the Company’s business plan is dependent upon its completion of the proposed initial public offering described in Note 3 to the financial statements. The Company lacks the financial resources it needs to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans with regard to these matters are also described in Notes 1 and 3. The financial statements do not include any adjustments that might become necessary should the Company be unable to continue as a going concern.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2021.
New York, NY
March 15, 2021
ALTC ACQUISITION CORP.
BALANCE SHEETS
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March 31,
2021
|
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March 4,
2021
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|
| |
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(Unaudited)
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(Audited)
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|
|
ASSETS
|
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Current asset – cash .
|
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$ |
226,535 |
|
|
|
|
$ |
25,000 |
|
|
|
Deferred offering costs .
|
|
|
|
|
339,172 |
|
|
|
|
|
40,707 |
|
|
|
Total Assets .
|
|
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|
$ |
565,707 |
|
|
|
|
$ |
65,707 |
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|
|
LIABILITIES AND STOCKHOLDER’S EQUITY
|
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Current liabilities
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Accrued expenses .
|
|
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|
$ |
1,000 |
|
|
|
|
$ |
1,000 |
|
|
|
Accrued offering costs
|
|
|
|
|
40,707 |
|
|
|
|
|
40,707 |
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Promissory note – related party
|
|
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|
|
500,000 |
|
|
|
|
|
— |
|
|
|
Total Current Liabilities
|
|
|
|
$ |
541,707 |
|
|
|
|
$ |
41,707 |
|
|
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Commitments
|
|
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Stockholder’s Equity
|
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Preferred stock, $0.0001 par value; 1,000,000 shares authorized;
none issued and outstanding
|
|
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|
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— |
|
|
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|
|
— |
|
|
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Class A common stock, $0.0001 par value; 500,000,000 shares authorized;
none issued and outstanding .
|
|
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|
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— |
|
|
|
|
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— |
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Class B common stock, $0.0001 par value; 100,000,000 shares authorized;
28,750,000 shares issued and outstanding(1)(2)
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2,875 |
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|
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2,575 |
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Additional paid-in capital
|
|
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22,125 |
|
|
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22,125 |
|
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Accumulated deficit .
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|
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|
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(1,000) |
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|
|
|
|
(1,000) |
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Total Stockholder’s Equity
|
|
|
|
$ |
24,000 |
|
|
|
|
$ |
24,000 |
|
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TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY .
|
|
|
|
$ |
565,707 |
|
|
|
|
$ |
65,707 |
|
|
(1)
Includes an aggregate of 3,750,000 shares that are subject to forfeiture to the extent that the underwriters’ over-allotment is not exercised in full (see Note 5).
(2)
On March 9, 2021, the Sponsor forfeited 14,375,000 shares of Class B common stock for no consideration, resulting in an aggregate of 28,750,000 shares of Class B common stock outstanding. All shares and associated amounts have been retroactively restated to reflect the share forfeiture (see Notes 5 and 7).
The accompanying notes are an integral part of the financial statements.
ALTC ACQUISITION CORP.
STATEMENTS OF OPERATIONS
| |
|
|
For the Period From
February 1, 2021
(Inception) Through
March 31, 2021
|
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For the Period From
February 1, 2021
(Inception) Through
March 4, 2021
|
|
| |
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
Formation costs
|
|
|
|
$ |
1,000 |
|
|
|
|
$ |
1,000 |
|
|
|
Net Loss
|
|
|
|
$ |
(1,000) |
|
|
|
|
$ |
(1,000) |
|
|
|
Weighted average shares outstanding, basic and diluted(1)(2)
|
|
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25,000,000 |
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|
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25,000,000 |
|
|
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Basic and diluted net loss per common share
|
|
|
|
$ |
(0.00) |
|
|
|
|
$ |
(0.00) |
|
|
(1)
Excludes an aggregate of 3,750,000 shares that are subject to forfeiture to the extent that the underwriters’ over-allotment is not exercised in full (see Note 5).
(2)
On March 9, 2021, the Sponsor forfeited 14,375,000 shares of Class B common stock for no consideration, resulting in an aggregate of 28,750,000 shares of Class B common stock outstanding. All shares and associated amounts have been retroactively restated to reflect the share forfeiture (see Notes 5 and 7).
The accompanying notes are an integral part of the financial statements.
ALTC ACQUISITION CORP.
STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY
| |
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Common Stock(1)
|
|
|
Additional
Paid-in
Capital
|
|
|
Accumulated
Deficit
|
|
|
Total
Stockholder’s
Equity
|
|
| |
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Shares
|
|
|
Amount
|
|
|
Balance – February 1, 2021 (inception)
|
|
|
|
|
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
Issuance of Class B common stock to Sponsor(1)(2)
|
|
|
|
|
28,750,000 |
|
|
|
|
|
2,875 |
|
|
|
|
|
22,125 |
|
|
|
|
|
— |
|
|
|
|
|
25,000 |
|
|
|
Net loss
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
(1,000) |
|
|
|
|
|
(1,000) |
|
|
|
Balance – March 4, 2021 (Audited)
|
|
|
|
|
28,750,000 |
|
|
|
|
$ |
2,875 |
|
|
|
|
$ |
22,125 |
|
|
|
|
$ |
(1,000) |
|
|
|
|
$ |
24,000 |
|
|
|
Net Loss
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
Balance – March 31, 2021 (Unaudited)
|
|
|
|
|
28,750,000 |
|
|
|
|
$ |
2,875 |
|
|
|
|
$ |
22,125 |
|
|
|
|
$ |
(1,000) |
|
|
|
|
$ |
24,000 |
|
|
(1)
Includes an aggregate of 3,750,000 shares that are subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full (see Note 5).
(2)
On March 9, 2021, the Sponsor forfeited 14,375,000 shares of Class B common stock for no consideration, resulting in an aggregate of 28,750,000 shares of Class B common stock outstanding. All shares and associated amounts have been retroactively restated to reflect the share forfeiture (see Notes 5 and 7).
The accompanying notes are an integral part of the financial statements.
ALTC ACQUISITION CORP.
STATEMENTS OF CASH FLOWS
| |
|
|
For the Period From
February 1, 2021
(Inception) Through
March 31, 2021
|
|
|
For the Period From
February 1, 2021
(Inception) Through
March 4, 2021
|
|
| |
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
$ |
(1,000) |
|
|
|
|
$ |
(1,000) |
|
|
|
Adjustment to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
|
|
1,000 |
|
|
|
|
|
1,000 |
|
|
|
Net cash used in operating activities
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock to Sponsor .
|
|
|
|
|
25,000 |
|
|
|
|
|
25,000 |
|
|
|
Proceeds from promissory note – related party
|
|
|
|
|
500,000 |
|
|
|
|
|
— |
|
|
|
Payment of offering costs
|
|
|
|
|
(298,465) |
|
|
|
|
|
— |
|
|
|
Net cash provided by financing activities
|
|
|
|
|
226,535 |
|
|
|
|
|
25,000 |
|
|
|
Net Change in Cash .
|
|
|
|
$ |
226,535 |
|
|
|
|
$ |
25,000 |
|
|
|
Cash – Beginning
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Cash – Ending .
|
|
|
|
$ |
226,535 |
|
|
|
|
$ |
25,000 |
|
|
|
Non-cash financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred offering costs included in accrued offering costs
|
|
|
|
$ |
40,707 |
|
|
|
|
$ |
40,707 |
|
|
The accompanying notes are an integral part of the financial statements.
ALTC ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Note 1—Description of Organization, Business Operations and Going Concern
AltC Acquisition Corp. (the “Company”) was incorporated in Delaware on February 1, 2021. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).
The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of March 31, 2021, the Company had not commenced any operations. All activity for the period from February 1, 2021 (inception) through March 31, 2021 relates to the Company’s formation and the proposed initial public offering (“Proposed Public Offering”), which is described below. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Proposed Public Offering. The Company has selected December 31 as its fiscal year end.
The Company’s ability to commence operations is contingent upon obtaining adequate financial resources through a Proposed Public Offering of 40,000,000 shares of Class A common stock (the “Public Shares”) at $10.00 per Public Share (or 46,000,000 shares of Class A common stock if the underwriters’ over-allotment option is exercised in full), which is discussed in Note 3, and the sale of 1,250,000 shares of Class A common stock (or 1,370,000 shares of Class A common stock if the underwriters’ over-allotment option is exercised in full) (each, a “Private Placement Share” and, collectively, the “Private Placement Shares”) at a price of $10.00 per Private Placement Share in a private placement to AltC Sponsor LLC (the “Sponsor”), an affiliate of M. Klein and Company, LLC, that will close simultaneously with the Proposed Public Offering.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Proposed Public Offering and the sale of the Private Placement Shares, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company’s initial Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (as defined below) (excluding net of amounts disbursed to management for working capital purposes, if applicable, taxes payable on interest income earned from the Trust Account and the deferred underwriting commissions) at the time of the agreement to enter into the initial Business Combination. The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Upon the closing of the Proposed Public Offering, management has agreed that an amount equal to at least $10.00 per Public Share sold in the Proposed Public Offering will be held in a trust account (the “Trust Account”), located in the United States. Proceeds of the Proposed Public Offering and Private Placement Shares held in the Trust Account will be invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination or (ii) the distribution of the Trust Account, as described below, except that interest earned on the Trust Account can be released to the Company to fund working capital requirements, subject to an annual limit of $1,000,000, and to pay its tax obligations (“Permitted Withdrawals”).
The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares in connection with a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval
ALTC ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Note 1—Description of Organization, Business Operations and Going Concern (continued)
of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest, net of permitted withdrawals). The per-share amount to be distributed to public stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 6). The Public Shares subject to redemption will be recorded at redemption value and classified as temporary equity upon the completion of the Proposed Public Offering in accordance with the Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”
The Company will not redeem Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001 (so that it does not then become subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our Business Combination. If the Company seeks stockholder approval of the Business Combination, the Company will proceed with a Business Combination if a majority of the outstanding shares voted are voted in favor of the Business Combination, or such other vote as required by law or stock exchange rule. If a stockholder vote is not required by law or stock exchange requirements and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor and its permitted transferees will agree to vote their Founder Shares (as defined in Note 5), Private Placement Shares and any Public Shares purchased during or after the Proposed Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
If the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.
The Sponsor has agreed (a) to waive its redemption rights with respect to its Founder Shares, Private Placement Shares and Public Shares held by it in connection with the completion of a Business Combination, (b) to waive its rights to liquidating distributions from the Trust Account with respect to its Founder Shares if the Company fails to consummate a Business Combination within the Combination Window (as defined below) and (c) not to propose an amendment to the Company’s Amended and Restated Certificate of Incorporation that would affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the public stockholders with the opportunity to redeem their shares in conjunction with any such amendment.
If the Company is unable to complete a Business Combination within 24 months from the closing of the Proposed Public Offering (or 27 months from the closing of the Proposed Public Offering if the Company has an executed letter of intent, agreement in principle or definitive agreement for a Business Combination within 24 months from the closing of the Proposed Public Offering) (the “Combination Window”), the
ALTC ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Note 1—Description of Organization, Business Operations and Going Concern (continued)
Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest (net of permitted withdrawals and up to $100,000 to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
The Sponsor has agreed to waive its right to liquidating distributions from the Trust Account with respect to the Founder Shares and Private Placement Shares if the Company fails to complete a Business Combination within the Combination Window. However, if the Sponsor acquires Public Shares in or after the Proposed Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Window. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Window and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Proposed Public Offering price per Public Share ($10.00).
In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per Public Share or (ii) the amount per Public Share held in the Trust Account as of the liquidation of the Trust Account, if less than $10.00 per Public Share due to reductions in the value of the trust assets, in each case net of permitted withdrawals. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account or to any claims under the Company’s indemnity of the underwriters of the Proposed Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Company due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Going Concern Consideration
At March 31, 2021, the Company had $226,535 in cash and a working capital deficit of $315,172. The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management plans to address this uncertainty through a Proposed Public Offering as discussed in Note 3. There is no assurance that the Company’s plans to raise capital or to consummate a Business Combination will be successful within the Combination Window. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
ALTC ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Note 1—Description of Organization, Business Operations and Going Concern (continued)
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, close of the Proposed Public Offering, and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 2—Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements are presented in in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes- Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
ALTC ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Note 2—Summary of Significant Accounting Policies (continued)
Deferred Offering Costs
Deferred offering costs consist of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related to the Proposed Public Offering and that will be charged to stockholder’s equity upon the completion of the Proposed Public Offering. Should the Proposed Public Offering prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be charged to operations.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2021 and March 4, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The provision for income taxes was deemed to be immaterial for the period from February 1, 2021 (inception) through March 31, 2021. The deferred tax assets were deemed to be de minimis as of March 31, 2021 and March 4, 2021.
Net Loss Per Common Share
Net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period, excluding shares of common stock subject to forfeiture. Weighted average shares were reduced for the effect of an aggregate of 3,750,000 shares of common stock that are subject to forfeiture if the over-allotment option is not exercised by the underwriters (see Note 5). As of March 31, 2021 and March 4, 2021, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into shares of common stock and then share in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the period presented.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurement,” approximates the carrying amounts represented in the balance sheet, primarily due to their short-term nature.
ALTC ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Note 2—Summary of Significant Accounting Policies (continued)
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
Note 3—Public Offering
Pursuant to the Proposed Public Offering, the Company intends to offer for sale 40,000,000 Public Shares (or 46,000,000 Public Shares if the underwriters’ over-allotment option is exercised in full) at a price of $10.00 per Public Share.
Note 4—Private Placement
The Sponsor will agree to purchase an aggregate of 1,250,000 Private Placement Shares (or 1,370,000 Private Placement Shares if the over-allotment option is exercised in full) at a price of $10.00 per Private Placement Share, for an aggregate purchase price of $12,500,000, or $13,700,000 if the over-allotment option is exercised in full, in a private placement that will occur simultaneously with the closing of the Proposed Public Offering. The proceeds from the Private Placement Shares will be added to the proceeds from the Proposed Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination within the Combination Window, the proceeds of the sale of the Private Placement Shares will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law).
Note 5—Related Party Transactions
Founder Shares
In March 2021, the Sponsor purchased 43,125,000 shares of the Company’s Class B common stock for an aggregate price of $25,000 (the “Founder Shares”). On March 9, 2021, the Sponsor forfeited 14,375,000 Founder Shares for no consideration, resulting in an aggregate of 28,750,000 Founder Shares outstanding (see Note 8). All shares and associated amounts have been retroactively restated to reflect the share forfeiture. All share and per share amounts have been retroactively restated to reflect the reverse stock split. The Founder Shares include an aggregate of up to 17,250,000 shares the Sponsor will surrender in connection with this offering, plus up to an additional 1,500,000 shares subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part, so that the Sponsor will own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the Proposed Public Offering (excluding the Private Placement Shares and assuming the Sponsor does not purchase any Public Shares in the Proposed Public Offering).
The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination or (B) the date on which the Company completes a liquidation, merger, stock exchange, reorganization or similar transaction after a Business Combination that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property. Notwithstanding the foregoing, if the closing price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, the Founder Shares will be released from the lock-up.
Administrative Support Agreement
The Company will agree, commencing on the effective date of the Proposed Public Offering through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay an affiliate of the Sponsor a total of $30,000 per month for office space, administrative and support services.
ALTC ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Note 5—Related Party Transactions (continued)
Advisory Fee
The Company may engage M. Klein and Company, LLC, an affiliate of the Sponsor, or another affiliate of the Sponsor, as its lead financial advisor in connection with a Business Combination and may pay such affiliate a customary financial advisory fee in an amount that constitutes a market standard financial advisory fee for comparable transactions.
Promissory Note—Related Party
On March 4, 2021, the Sponsor agreed to loan the Company an aggregate of up to $600,000 to cover expenses related to the Proposed Public Offering pursuant to a promissory note (the “Promissory Note”). The Promissory Note is non-interest bearing and payable on the earlier of December 31, 2021 or the completion of the Proposed Public Offering. As of March 31, 2021, the Company borrowed $500,000 under the Promissory Note. As of March 4, 2021, there was no outstanding borrowings under the Promissory Note.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor, or the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into shares of the post-business combination entity at a price of $10.00 per share. These shares would be identical to the Private Placement Shares.
Note 6—Commitments
Registration Rights
The holders of the Founder Shares, Private Placement Shares and shares of Class A common stock that may be issued upon conversion of Working Capital Loans will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of the Proposed Public offering requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion into shares of Class A common stock). The holders of these securities will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The registration rights agreement does not contain liquidated damages or other cash settlement provisions resulting from delays in registering our securities. The Company will bear the expenses incurred in connection with the filing of any such registration statement.
Underwriting Agreement
The Company will grant the underwriters a 45-day option from the date of Proposed Public Offering to purchase up to 6,000,000 additional Public Shares to cover over-allotments, if any, at the Proposed Public Offering price less the underwriting discounts and commissions.
ALTC ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Note 6—Commitments (continued)
The underwriters will be entitled to a cash underwriting discount of $0.20 per Public Share, or $8,000,000 in the aggregate (or $9,200,000 in the aggregate if the underwriters’ over-allotment option is exercised in full), payable upon the closing of the Proposed Public Offering. In addition, the underwriters will be entitled to a deferred fee of $0.35 per Public Share, or $14,000,000 in the aggregate (or $16,100,000 in the aggregate if the underwriters’ over-allotment option is exercised in full). The deferred fee will be waived by the underwriters in the event that the Company does not complete a Business Combination, subject to the terms of the underwriting agreement.
Note 7—Stockholder’s Equity
Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At March 31, 2021 and March 4, 2021, there were no shares of preferred stock issued or outstanding.
Class A Common Stock — The Company is authorized to issue 500,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At March 31, 2021 and March 4, 2021, there were no shares of Class A common stock issued or outstanding.
Class B Common Stock — The Company is authorized to issue 100,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. On March 9, 2021, the Sponsor forfeited 14,375,000 Founder Shares for no consideration, resulting in an aggregate of 28,750,000 Founder Shares outstanding (see Note 8). All shares and associated amounts have been retroactively restated to reflect the share forfeiture. The Founder Shares include an aggregate of up to 17,250,000 shares the Sponsor will surrender in connection with this offering, plus up to an additional 1,500,000 shares subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part, so that the Sponsor will collectively own 20% of the Company’s issued and outstanding common stock after the Proposed Public Offering (excluding the Private Placement Shares and assuming the Sponsor does not purchase any Public Shares in the Proposed Public Offering).
Holders of Class B common stock will have the right to elect all of the Company’s directors prior to a Business Combination. Holders of Class A common stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders except as required by law.
The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of a Business Combination on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts sold in the Proposed Public Offering and related to the closing of a Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such anti-dilution adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the total number of all shares of common stock outstanding upon completion of the Proposed Public Offering (excluding the Private Placement Shares) plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with a Business Combination (net of the number of shares of Class A common stock redeemed in connection with a Business Combination), excluding any shares or equity-linked securities issued, or to be issued, to any seller in a Business Combination in consideration for such seller’s interest in the business combination target and any Private Placement Shares issued upon the conversion of Working Capital Loans made to the Company.
ALTC ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
Note 8—Subsequent Events
The Company evaluated subsequent events and transactions that occurred after March 4, 2021, the audited balance sheet date through March 15, 2021, the date that the financial statements were issued. Based upon this review, other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
On March 8, 2021, the Company borrowed $500,000 under the Promissory Note.
On March 9, 2021, the Sponsor forfeited 14,375,000 Founder Shares for no consideration, resulting in an aggregate of 28,750,000 Founder Shares outstanding.
40,000,000 Shares
AltC Acquisition Corp.
PRELIMINARY PROSPECTUS
, 2021
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Citigroup |
|
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J.P. Morgan
|
|
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Goldman Sachs & Co. LLC
|
|
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BofA Securities, Inc.
|
|
Until , 2021 (25 days after the date of this prospectus), all dealers that buy, sell or trade shares of our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
so PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The estimated expenses payable by us in connection with the offering described in this registration statement (other than the underwriting discount and commissions) will be as follows:
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Legal fees and expenses .
|
|
|
|
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300,000 |
|
|
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Printing and engraving expenses .
|
|
|
|
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200,000 |
|
|
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Accounting fees and expenses
|
|
|
|
|
180,000 |
|
|
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SEC/FINRA Expenses .
|
|
|
|
|
120,000 |
|
|
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Travel and road show
|
|
|
|
|
50,000 |
|
|
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Directors and officers insurance premiums .
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|
|
|
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1,500,000 |
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|
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NYSE listing and filing fees
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|
|
|
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85,000 |
|
|
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Miscellaneous expenses .
|
|
|
|
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565,000 |
|
|
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Total
|
|
|
|
$ |
3,000,000 |
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(1)
This amount represents the approximate amount of annual director and officer liability insurance premiums the registrant anticipates paying following the completion of its initial public offering and until it completes a business combination.
Item 14. Indemnification of Directors and officers.
Our amended and restated certificate of incorporation will provide that all of our directors, officers, employees and agents shall be entitled to be indemnified by us to the fullest extent permitted by Section 145 of the Delaware General Corporation Law (“DGCL”). Section 145 of the Delaware General Corporation Law concerning indemnification of officers, directors, employees and agents is set forth below.
Section 145. Indemnification of officers, directors, employees and agents; insurance.
(a)
A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful.
(b)
A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed
to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
(c)
To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.
(d)
Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders.
(e)
Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys’ fees) incurred by former officers and directors or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate.
(f)
The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office. A right to indemnification or to advancement of expenses arising under a provision of the certificate of incorporation or a bylaw shall not be eliminated or impaired by an amendment to such provision after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.
(g)
A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under this section.
(h)
For purposes of this section, references to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any
person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.
(i)
For purposes of this section, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the corporation” shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this section.
(j)
The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
(k)
The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under any by law, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a corporation’s obligation to advance expenses (including attorneys’ fees).
In connection with this registration statement, we have undertaken that insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid by a director, officer or controlling person in a successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. See Item 17 “Undertakings”.
In accordance with Section 102(b)(7) of the DGCL, our amended and restated certificate of incorporation, will provide that no director shall be personally liable to us or any of our stockholders for monetary damages resulting from breaches of their fiduciary duty as directors, except to the extent such limitation on or exemption from liability is not permitted under the DGCL. The effect of this provision of our amended and restated certificate of incorporation is to eliminate our rights and those of our stockholders (through stockholders’ derivative suits on our behalf) to recover monetary damages against a director for breach of the fiduciary duty of care as a director, including breaches resulting from negligent or grossly negligent behavior, except, as restricted by Section 102(b)(7) of the DGCL. However, this provision does not limit or eliminate our rights or the rights of any stockholder to seek non-monetary relief, such as an injunction or rescission, in the event of a breach of a director’s duty of care.
Our amended and restated certificate of incorporation will also provide that we will, to the fullest extent authorized or permitted by applicable law, indemnify our current and former officers and directors, as well as those persons who, while directors or officers of our corporation, are or were serving as directors, officers, employees or agents of another entity, trust or other enterprise, including service with respect to an employee benefit plan, in connection with any threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative, against all expense, liability and loss (including, without limitation, attorney’s fees, judgments, fines, ERISA excise taxes and penalties and amounts paid in settlement)
reasonably incurred or suffered by any such person in connection with any such proceeding. Notwithstanding the foregoing, a person eligible for indemnification pursuant to our amended and restated certificate of incorporation will be indemnified by us in connection with a proceeding initiated by such person only if such proceeding was authorized by our board of directors, except for proceedings to enforce rights to indemnification.
The right to indemnification which will be conferred by our amended and restated certificate of incorporation is a contract right that includes the right to be paid by us the expenses incurred in defending or otherwise participating in any proceeding referenced above in advance of its final disposition, provided, however, that if the DGCL requires, an advancement of expenses incurred by our officer or director (solely in the capacity as an officer or director of our corporation) will be made only upon delivery to us of II-3 an undertaking, by or on behalf of such officer or director, to repay all amounts so advanced if it is ultimately determined that such person is not entitled to be indemnified for such expenses under our amended and restated certificate of incorporation or otherwise.
The rights to indemnification and advancement of expenses will not be deemed exclusive of any other rights which any person covered by our amended and restated certificate of incorporation may have or hereafter acquire under law, our amended and restated certificate of incorporation, our bylaws, an agreement, vote of stockholders or disinterested directors, or otherwise.
If the DGCL is amended to authorize corporate action further eliminating or limiting the liability of directors, then, in accordance with our amended and restated certificate of incorporation, the liability of our directors to us or our stockholders will be eliminated or limited to the fullest extent authorized by the DGCL, as so amended. Any repeal or amendment of provisions of our amended and restated certificate of incorporation affecting indemnification rights, whether by our stockholders or by changes in law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise required by applicable law) be prospective only, except to the extent such amendment or change in law permits us to provide broader indemnification rights on a retroactive basis, and will not in any way diminish or adversely affect any right or protection existing at the time of such repeal or amendment or adoption of such inconsistent provision with respect to any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision. Our amended and restated certificate of incorporation will also permit us, to the extent and in the manner authorized or permitted by law, to indemnify and to advance expenses to persons other that those specifically covered by our amended and restated certificate of incorporation.
Our bylaws, which we intend to adopt immediately prior to the closing of this offering, include the provisions relating to advancement of expenses and indemnification rights consistent with those which will be set forth in our amended and restated certificate of incorporation. In addition, our bylaws provide for a right of indemnity to bring a suit in the event a claim for indemnification or advancement of expenses is not paid in full by us within a specified period of time. Our bylaws also permit us to purchase and maintain insurance, at our expense, to protect us and/or any director, officer, employee or agent of our corporation or another entity, trust or other enterprise against any expense, liability or loss, whether or not we would have the power to indemnify such person against such expense, liability or loss under the DGCL.
Any repeal or amendment of provisions of our bylaws affecting indemnification rights, whether by our board of directors, stockholders or by changes in applicable law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise required by applicable law) be prospective only, except to the extent such amendment or change in law permits us to provide broader indemnification rights on a retroactive basis, and will not in any way diminish or adversely affect any right or protection existing thereunder with respect to any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision.
We will enter into indemnification agreements with each of our officers and directors a form of which is to be filed as an exhibit to this registration statement. These agreements will require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.
Pursuant to the Underwriting Agreement to be filed as Exhibit 1.1 to this registration statement, we have agreed to indemnify the underwriters and the underwriters have agreed to indemnify us against certain civil liabilities that may be incurred in connection with this offering, including certain liabilities under the Securities Act.
Item 15. Recent Sales of Unregistered Securities.
In March 2021, AltC Sponsor LLC, purchased an aggregate of 43,125,000 founder shares, for an aggregate offering price of $25,000 at an average purchase price of approximately $0.0006 per share. On March 9, 2021, the sponsor forfeited 14,375,000 founder shares for no consideration, resulting in an aggregate of 28,750,000 founder shares outstanding. In connection with this offering, our sponsor will surrender 17,250,000 founder shares plus up to an additional 1,500,000 founder shares depending on the extent to which the underwriters’ exercise their option to purchase additional shares. The number of founder shares to be held after this offering is determined based on the expectation that the founder shares would represent 20% of the outstanding shares of common stock upon completion of this offering. Such securities were issued in connection with our organization pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. AltC Sponsor LLC is an accredited investor for purposes of Rule 501 of Regulation D.
In addition, AltC Sponsor LLC has subscribed to purchase from us an aggregate of 1,250,000 private placement shares (or 1,370,000 shares if the underwriters’ option to purchase additional shares is exercised in full) at $10.00 per share (for an aggregate purchase price of $12,500,000 or $13,700,000 if the underwriters’ option to purchase additional shares is exercised in full). This purchase will take place on a private placement basis simultaneously with the completion of our initial public offering. Any such issuances will be made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
No underwriting discounts or commissions were paid with respect to such sales.
Item 16. Exhibits and Financial Statement Schedules.
(a)
Exhibits. The following exhibits are being filed herewith:
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Exhibit
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Description
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1.1 |
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3.1** |
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3.2** |
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3.3 |
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3.4** |
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4.1** |
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Form of Specimen Class A Common Stock Certificate
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5.1* |
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Opinion of Weil, Gotshal & Manges LLP
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10.1** |
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10.2 |
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10.3 |
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10.4 |
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10.5** |
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10.6** |
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10.7 |
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10.8** |
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10.9** |
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10.10 |
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23.1 |
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23.2* |
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Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5.1)
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99.1 |
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*
To be filed by amendment.
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Previously filed.
(b) Financial Statements. See page F-1 for an index to the financial statements and schedules included in the registration statement.
Item 17. Undertakings.
(a)
The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
(b)
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
(c)
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(1)
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The undersigned registrant hereby undertakes that:
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For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2)
For the purpose of determining any liability under the Securities Act of 1933, each post- effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3)
For the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(4)
For the purpose of determining liability of a registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of an undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by an undersigned registrant;
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York on the 7th day of May, 2021.
ALTC ACQUISITION CORP.
By:
/s/ Jay Taragin
Name: Jay Taragin
Title: Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/ Michael Klein
Michael Klein
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Chief Executive Officer, Chairman of the Board of Directors and Director (Principal Executive Officer)
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May 7, 2021
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/s/ Jay Taragin
Jay Taragin
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Chief Financial Officer (Principal Accounting Officer and Financial Officer)
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May 7, 2021
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Exhibit
1.1
AltC Acquisition Corp.
40,000,000 Shares of Class A Common
Stock1
UNDERWRITING AGREEMENT
New York, New York
[●], 2021
Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013
As Representative of the several underwriters listed
in Schedule I hereto (the “Underwriters”)
Ladies and Gentlemen:
AltC Acquisition Corp., a
Delaware corporation (the “Company”), proposes to issue and sell to the several underwriters named in Schedule I hereto
(the “Underwriters”), for whom Citigroup Global Markets Inc. is acting as Representative (the “Representative”),
an aggregate of 40,000,000 shares (the “Firm Shares”) of the Company’s Class A common stock, par value $0.0001
per share (the “Common Stock”) (the “Offering”). The Company also proposes to grant to the Underwriters
an option to purchase up to 6,000,000 additional shares of Common Stock to cover over-allotments (the “Option Shares”;
the Option Shares, together with the Firm Shares, being hereinafter called the “Shares”). To the extent there are no
additional Underwriters listed on Schedule I other than you, the term Representative as used herein shall mean you, as Underwriter, and
the term Underwriter shall mean either the singular or plural as the context requires. Certain capitalized terms used in this Agreement
and not otherwise defined are defined in Section 22 hereof. The term “Initial Business Combination” (as described more
fully in the Registration Statement (as defined herein)) shall mean any merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or other similar business combination with one or more businesses or entities (collectively, a “Target Business”).
Pursuant to the Securities
Subscription Agreement, dated March 4, 2021 (the “Securities Subscription Agreement”), the Company issued to AltC Sponsor
LLC (the “Sponsor”) an aggregate of 43,125,000 shares of Class B common stock, par value $0.0001 per share (such shares,
as well as the shares of Common Stock issuable upon conversion thereof, where applicable, the “Founder Shares”) in
a private placement for an aggregate purchase price of $25,000 in cash. Pursuant to the Surrender of Shares and Amendment No. 1 to the
Securities Subscription Agreement, dated March 9, 2021, the Sponsor forfeited 14,375,000 Founder Shares for no consideration, resulting
in an aggregate of 28,750,000 Founder Shares outstanding. Prior to this Offering, our Sponsor expects to surrender 17,250,000 shares of
Founder Shares for no consideration, and up to an additional 1,500,000 Founder Shares held by the Sponsor are subject to forfeiture depending
on the extent to which the underwriters’ option to purchase additional shares is exercised.
The Company has entered into
a Private Placement Shares Purchase Agreement, dated as of the date hereof (the “Private Placement Shares Purchase Agreement”),
with the Sponsor, a form of which is filed as an exhibit to the Registration Statement, pursuant to which the Sponsor has agreed to purchase
from the Company an aggregate of 1,250,000 shares (or up to 1,370,000 shares depending on the extent to which the Underwriters exercise
their right to purchase Option Shares), each entitling the holder to purchase one share of Common Stock (the “Private Placement
Shares”) at a price of $10.00 per share ($125,000,000 in the aggregate, or $13,700,000 in the aggregate if the Underwriters
exercise their right to purchase Option Shares in full) in a private placement that will occur simultaneously with the consummation of
the Offering. The Private Placement Shares are substantially similar to the Shares, except as described in the Statutory Prospectus, Registration
Statement and Prospectus.
The Company has entered into
an Investment Management Trust Agreement, dated as of the date hereof, with Continental Stock Transfer & Trust Company, as trustee
(the “Trustee”), in substantially the form filed as an exhibit to the Registration Statement (the “Trust Agreement”),
pursuant to which the proceeds from the sale of the Private Placement Shares and certain proceeds of the Offering will be deposited and
held in a trust account (the “Trust Account”) for the benefit of the Company, the Underwriters and holders of the Shares.
1 Plus an option
to purchase from the Company up to 6,000,000 additional Shares to cover over-allotments, if any.
The Company has issued a non-interest
bearing, unsecured promissory note for an aggregate amount of $600,000 to the Sponsor in substantially the form filed as an exhibit to
the Registration Statement (the “Promissory Note”), in exchange for the payment of the equivalent amount by the Sponsor
to the Company. These monies have been used to cover expenses relating to the Offering. The Promissory Note will be payable on the earlier
to occur of December 31, 2021, the date of the consummation of the Offering or the abandonment of the Offering.
The Company has entered into
a Registration Rights Agreement, dated as of the date hereof, in substantially the form filed as an exhibit to the Registration Statement
(the “Registration Rights Agreement”), pursuant to which the Company has granted certain registration rights in respect
of the Founder Shares, the Private Placement Shares and the Working Capital Shares.
The Company has caused the
Sponsor and each of the Company’s directors, director nominees, and executive officers to enter into letter agreements, in substantially
the form filed as an exhibit to the Registration Statement (the “Insider Letters”).
The Company has entered into
an Administrative Services Agreement, dated as of the date hereof, with an affiliate of the Sponsor, in substantially the form filed as
an exhibit to the Registration Statement (the “Administrative Services Agreement”), pursuant to which the Company will
pay to such affiliate of the Sponsor an aggregate monthly fee of $30,000 for certain office space, utilities and secretarial and administrative
support from the date that the Shares are first listed on the NYSE until the earlier of the consummation of an initial Business Combination
and the Company’s liquidation.
1.
Representations and Warranties.
(a)
The Company represents and warrants to, and agrees with, each Underwriter as set forth below in this Section 1(a).
(1)
Effectiveness of Registration Statement. The Company has prepared and filed with the U.S. Securities and Exchange Commission
(the “Commission”)
the Registration Statement (file number 333-254263) on Form S-1 (the “Registration
Statement”), including the related Preliminary Prospectus, for
registration under the Act of the offering and sale of the Shares. Such Registration Statement, including any amendments thereto filed
prior to the Execution Time, has become effective. The Company may have filed one or more amendments thereto, including the related Preliminary
Prospectus, each of which has previously been furnished to the Representative. The Company will file with the Commission the Prospectus
in accordance with Rule 424(b). As filed, such Prospectus shall contain all information required by the Act and, except to the extent
the Representative shall agree in writing to a modification, shall be in all substantive respects in the form furnished to the Representative
prior to the Execution Time or, to the extent not completed at the Execution Time, shall contain only such specific additional information
and other changes (beyond that contained in the Statutory Prospectus) as the Company has advised the Representative, prior to the Execution
Time, will be included or made therein. The Company has complied to the Commission’s
satisfaction with all requests of the Commission for additional or supplemental information.
(2)
Effective Date. On the Effective Date, the Registration Statement did, and when the Prospectus is first filed in accordance
with Rule 424(b) and on the Closing Date (as defined herein) and on any date on which Option Shares are purchased, if such date is not
the Closing Date (a “settlement date”),
the Prospectus (and any supplements thereto) will, comply in all material respects with the applicable requirements of the Act; on the
Effective Date and at the Execution Time, the Registration Statement did not and will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading;
and on the date of any filing pursuant to Rule 424(b) and on the Closing Date and any settlement date, the Prospectus (together with any
supplement thereto) will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however,
that the Company makes no representations or warranties as to the information contained in or omitted from the Registration Statement,
or the Prospectus (or any supplement thereto) in reliance upon and in conformity with information furnished in writing to the Company
by or on behalf of any Underwriter through the Representative specifically for inclusion in the Registration Statement or the Prospectus
(or any supplement thereto), it being understood and agreed that the only such information furnished by any Underwriter consists of the
information described as such in Section 8 hereof.
(3)
Execution Time. At the Execution Time, the Statutory Prospectus, each road show when taken together as a whole with the
Statutory Prospectus, and any individual Written Testing-the-Waters Communication (as defined below), when taken together as a whole with
the Statutory Prospectus, does not contain any untrue statement of a material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however,
that the Company makes no representations or warranties as to the information contained in or omitted from the Statutory Prospectus in
reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Underwriter through the Representative
specifically for inclusion in the Statutory Prospectus, it being understood and agreed that the only such information furnished by or
on behalf of any Underwriter consists of the information described as such in Section 8(b) hereof.
(4)
Compliance with Exchange Act. The Company has filed with the Commission a Form 8-A (file number 001-[●]) providing
for the registration under the Exchange Act of the Shares. The registration of such securities under the Exchange Act has been declared
effective by the Commission on or prior to the date of this Agreement. The Shares have been authorized for listing, subject to official
notice of issuance and evidence of satisfactory distribution, on the New York Stock Exchange, and the Company knows of no reason or set
of facts that is likely to adversely affect such authorization.
(5)
No Stop Orders, Etc. Neither the Commission nor, to the Company’s
knowledge, any state regulatory authority has issued any order or threatened to issue any order preventing or suspending the effectiveness
of the Registration Statement or the use of any Preliminary Prospectus, the Prospectus or any part thereof, or has instituted or, to the
Company’s knowledge, threatened to institute any proceedings with
respect to such an order including, without limitation, pursuant to Section 8A of the Act.
(6)
Disclosure of Agreements. The agreements and documents described in the Statutory Prospectus, the Registration Statement
and the Prospectus conform in all material respects to the descriptions thereof contained therein. There is no franchise, contract or
other document of a character required to be described in the Registration Statement, the Statutory Prospectus or the Prospectus, or to
be filed as an exhibit to the Registration Statement, which is not described or filed as required (and the Statutory Prospectus contains
in all material respects the same description of the foregoing matters contained in the Prospectus); and the statements in the Statutory
Prospectus and the Prospectus under the headings “Principal Stockholders,”
“Certain Relationships and Related Party Transactions,”
and “Description of Securities,”
insofar as such statements summarize legal matters, agreements, documents or proceedings discussed therein, are in all material respects
accurate and fair summaries of such legal matters, agreements, documents or proceedings. There are no business relationships or related
party transactions involving the Company or any other person required by the Act to be described in the Registration Statement or Prospectus
that have not been described as required.
(7)
Capitalization. The Company’s authorized equity capitalization
is as set forth in the Statutory Prospectus, the Registration Statement and the Prospectus. The share capital of the Company conforms
in all material respects to the description thereof contained in the Statutory Prospectus, the Registration Statement and the Prospectus.
(8)
Outstanding Securities. All issued and outstanding securities of the Company have been duly and validly authorized and issued
and are fully paid and non-assessable; and none of such securities were issued in violation of the preemptive rights of any holders of
any security of the Company or similar contractual rights granted by the Company. The offers and sales of the outstanding shares of Common
Stock were at all relevant times either registered under the Act, the applicable state securities and blue sky laws or, based in part
on the representations and warranties of the purchasers of such shares of Common Stock, exempt from such registration requirements. The
holders of outstanding securities of the Company are not entitled to preemptive or other rights to subscribe for the Shares arising by
operation of law or under the Company’s Amended and Restated Certificate
of Incorporation (as amended from time to time, the “Amended
and Restated Certificate of Incorporation”); and, except as
set forth in the Registration Statement, the Statutory Prospectus and the Prospectus, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any obligations into or exchange any securities for, shares or other ownership
interests in the Company are outstanding.
(9)
Securities Sold Pursuant to this Agreement.
(i)
The Shares have been duly authorized and, when issued and delivered against payment therefor by the Underwriters pursuant to this
Agreement, will be validly issued, fully paid and non-assessable. The holders of such Shares are not and will not be subject to personal
liability by reason of being such holders; such Shares are not and will not be subject to any preemptive or other similar contractual
rights granted by the Company.
(10)
Registration Rights of Third Parties. Except as set forth in the Registration Statement, Statutory Prospectus and the Prospectus,
no holders of any securities of the Company or any rights exercisable for or convertible or exchangeable into securities of the Company
have the right to require the Company to register any such securities of the Company under the Act or to include any such securities in
a registration statement to be filed by the Company.
(11)
Prior Securities Transactions.
(i)
No securities of the Company have been sold by the Company or by or on behalf of, or for the benefit of, any person or persons
controlling, controlled by, or under common control with the Company from its inception through and including the date hereof, except
as disclosed in the Registration Statement, the Statutory Prospectus or the Prospectus.
(ii)
Neither the Company nor any of its affiliates has, prior to the date hereof, made any offer or sale of any securities that are
required to be “integrated”
pursuant to the Act with the offer and sale of the Shares pursuant to the Registration Statement.
(12)
Securities Sold to Founders, Sponsor and Insiders. The Founder Shares have been duly authorized and are validly issued,
fully paid and, except with respect to the forfeiture of certain Founder Shares as described in the Registration Statement upon the failure
by the Underwriters to purchase any or all of the Option Shares, non-assessable. The Private Placement Shares have been duly authorized
and, when delivered will be duly issued and delivered, and will constitute valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, or similar
laws affecting creditors’ rights generally from time to time in
effect and by equitable principles of general applicability.
Each of the Sponsor
and the Company’s executive officers and directors have agreed to: (a) waive their redemption rights with respect to any Founder
Shares, Private Placement Shares and shares of Common Stock sold in the Offering (the “Public Shares”) held by them
in connection with the completion of an Initial Business Combination, (b) waive their redemption rights with respect to any Founder Shares,
Private Placement Shares and Public Shares held by them in connection with a stockholder vote to approve an amendment to the Amended and
Restated Certificate of Incorporation to modify the substance or timing of the Company’s obligation to provide for the redemption
of the Public Shares in connection with an Initial Business Combination or to redeem 100% of its Public Shares if the Company has not
consummated an Initial Business Combination within the time period set forth in the Amended and Restated Certificate of Incorporation;
(c) waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares and Private Placement Shares
held by them if the Company fails to complete an Initial Business Combination within the time period set forth in the Amended and Restated
Certificate of Incorporation (although they will be entitled to liquidating distributions from the Trust Account with respect to any Public
Shares and Private Placement Shares held by them if the Company fails to complete an Initial Business Combination within the time period
set forth in the Amended and Restated Certificate of Incorporation); and (d) vote any Founder Shares, any Private Placement Shares and
any Public Shares held by them in favor of an initial Business Combination if the Company submits an Initial Business Combination to its
public stockholders for a vote.
(13)
Due Incorporation; Power and Authority. The Company has been duly incorporated and is validly existing as a corporation
in good standing under the laws of Delaware with full corporate power and authority to own or lease, as the case may be, and to operate
its properties and conduct its business as described in the Statutory Prospectus and the Prospectus.
(14)
Validity and Binding Effect of Agreements.
(i) This
Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except as the enforceability thereof may be limited by bankruptcy,
insolvency, or similar laws affecting creditors’ rights
generally from time to time in effect and by equitable principles of general applicability.
(ii)
The Trust Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms except as the enforceability thereof may be limited by bankruptcy,
insolvency, or similar laws affecting creditors’ rights generally
from time to time in effect and by equitable principles of general applicability.
(iii)
[Reserved].
(iv)
The Private Placement Shares Purchase Agreement has been duly authorized, executed and delivered by the Company and, to the Company’s
knowledge, the Sponsor, and is a valid and binding agreement of the Company and, to the Company’s
knowledge, the Sponsor, enforceable against the Company and, to the Company’s
knowledge, the Sponsor in accordance with its terms except as the enforceability thereof may be limited by bankruptcy, insolvency, or
similar laws affecting creditors’ rights generally from time to
time in effect and by equitable principles of general applicability.
(v)
The Registration Rights Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding agreement
of the Company, enforceable against the Company in accordance with its terms except as the enforceability thereof may be limited by bankruptcy,
insolvency, or similar laws affecting creditors’ rights generally
from time to time in effect and by equitable principles of general applicability and except that the indemnification and contribution
provisions of the Registration Rights Agreement may be unenforceable.
(vi)
The Administrative Services Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding
agreement of the Company, enforceable against the Company in accordance with its terms except as the enforceability thereof may be limited
by bankruptcy, insolvency, or similar laws affecting creditors’
rights generally from time to time in effect and by equitable principles of general applicability.
(vii)
To the knowledge of the Company, the Insider Letters have been duly authorized, executed and delivered by the Sponsor and each
of the Company’s directors and executive officers, respectively,
and is a valid and binding agreement of the Sponsor and each of the Company’s
directors and executive officers respectively, enforceable against the Sponsor and each of the Company’s
directors and executive officers, respectively, in accordance with its terms except as the enforceability thereof may be limited by bankruptcy,
insolvency, or similar laws affecting creditors’ rights generally
from time to time in effect and by equitable principles of general applicability.
(viii)
The Securities Subscription Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding
agreement of the Company, enforceable against the Company in accordance with its terms except as the enforceability thereof may be limited
by bankruptcy, insolvency, or similar laws affecting creditors’
rights generally from time to time in effect and by equitable principles of general applicability.
(15)
Consents, Approvals, Etc. No consent, approval, authorization, filing with or order of any court or governmental agency
or body is required in connection with the transactions contemplated herein or in the Trust Agreement, the Securities Subscription Agreement,
the Private Placement Shares Purchase Agreement, the Registration Rights Agreement, or the Insider Letters, except for the registration
under the Act and the Exchange Act of the Shares, and such as may be required under the state securities or blue sky laws of any jurisdiction
in connection with the purchase and distribution of the Shares by the Underwriters in the manner contemplated herein and in the Registration
Statement, Statutory Prospectus and the Prospectus.
(16) No
Breach or Violation. Neither the issue and sale of the Shares nor the consummation of any other of the transactions
herein contemplated nor the fulfillment of the terms hereof or of the Trust Agreement, the Securities Subscription Agreement, the
Private Placement Shares Purchase Agreement, the Registration Rights Agreement, Administrative Services Agreement, or the Insider
Letters will conflict with, result in a breach or violation of, or imposition of any lien, charge or encumbrance upon any property
or assets of the Company pursuant to (i) the Amended and Restated Certificate of Incorporation, (ii) the Company’s
bylaws (the “Bylaws”)
(iii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which the Company is a party or bound or to which its property is subject, or (iv)
any statute, law, rule, regulation, judgment, order or decree applicable to the Company of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or any of its
properties; except in the case of clauses (iii) and (iv) above for any such conflict, breach or violation that would not,
individually or in the aggregate, be reasonably expected to have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company, taken as a whole, whether or not arising from transactions
in the ordinary course of business (a “Material Adverse
Effect”) and that would not, individually or in the
aggregate, have a material adverse effect on the ability of the Underwriters to consummate the transactions contemplated by this
Agreement.
(17)
No Conflicts, Etc. The Company is not in violation or default of (i) any provision of its Amended and Restated Certificate
of Incorporation, (ii) any provision of its Bylaws, (iii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement,
loan agreement or other agreement, obligation, condition, covenant or instrument to which it is a party or bound or to which its property
is subject, or (iv) any statute, law, rule, regulation, or judgment, order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over the Company; except in the case of clauses (iii) and (iv) above
for any such conflict, breach or violation that would not, individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect.
(18)
Investment Company Act. The Company is not and, after giving effect to the Offering and the application of the proceeds
thereof as described in the Statutory Prospectus and the Prospectus, will not be required to register as an “investment
company” as defined in the Investment Company Act of 1940, as amended
(the “Investment Company Act”)
and the rules and regulations of the Commission thereunder.
(19)
Financial Statements. The financial statements, including the notes thereto and the supporting schedules, if any, of the
Company included in the Statutory Prospectus, the Prospectus and the Registration Statement present fairly the financial condition, results
of operations and cash flows of the Company as of the dates and for the periods indicated, comply as to form with the applicable accounting
requirements of the Act and have been prepared in conformity with generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein). There are no pro forma or as adjusted financial statements that are
required to be included in the Statutory Prospectus, the Prospectus and the Registration Statement in accordance with Regulation S-X that
have not been included as so required.
(20)
Off-Balance Sheet Arrangements. The Company is not party to any off-balance sheet transactions, arrangements, obligations
(including contingent obligations), or other relationships with unconsolidated entities or other persons that may have a material current
or future effect on the Company’s financial condition, changes in
financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenues
or expenses.
(21)
Other Data. The statistical, industry-related and market-related data included in the Registration Statement, the Statutory
Prospectus and the Prospectus, if any, are based on or derived from sources that the Company reasonably and in good faith believes are
reliable and accurate, and such data agree with the sources from which they are derived.
(22)
Independent Accountants. Marcum LLP (“Marcum”)
are independent public accountants with respect to the Company within the meaning of the Act and the applicable published rules and regulations
thereunder and the Public Company Accounting Oversight Board (including the rules and regulations promulgated by such entity). Marcum
has not, during the periods covered by the financial statements included in the Statutory Prospectus, the Prospectus and the Registration
Statement, provided to the Company any non-audit services, as such term is used in Section 10A(g) of the Exchange Act.
(23)
Disclosure Controls and Procedures. The Company maintains effective “disclosure
controls and procedures” (as defined under Rule 13a-15(e) under
the Exchange Act) to the extent required by such rule.
(24)
Sarbanes-Oxley. Solely to the extent that the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated
by the Commission thereunder (the “Sarbanes-Oxley Act”)
have been applicable to the Company, there is and has been no failure on the part of the Company to comply with any applicable provision
of the Sarbanes-Oxley Act. The Company has taken all necessary actions to ensure that it is in compliance with all provisions of the Sarbanes-Oxley
Act that are in effect and with which the Company is required to comply and is making commercially reasonable efforts to ensure that it
will be in compliance with other provisions of the Sarbanes-Oxley Act not currently in effect or which will become applicable to the Company.
(25)
Transfer Taxes. There are no transfer, stamp, issue, registration, documentary or other similar taxes, duties, fees or charges
under U.S. federal law or the laws of any state, or any political subdivision thereof, or under the laws of any non-U.S. jurisdiction,
required to be paid in connection with the execution and delivery of this Agreement or the issuance or sale by the Company of the Shares.
(26)
Ownership. The Company owns or leases all such properties as are necessary to the conduct of its operations as presently
conducted.
(27)
Litigation; Government Proceedings. No action, suit or proceeding by or before any court or governmental agency, authority
or body or any arbitrator involving the Company, or to the Company’s
knowledge, the Sponsor, or any executive officer or director of the Company, or its or their property is pending or, to the knowledge
of the Company, threatened that (i) would reasonably be expected to have a material adverse effect on the performance of this Agreement
or the consummation of any of the transactions contemplated hereby or (ii) would reasonably be expected to have a Material Adverse Effect,
except as set forth in or contemplated in the Statutory Prospectus and the Prospectus (exclusive of any supplement thereto).
(28)
Tax Returns. The Company has filed all U.S. federal, state, local and non-U.S. tax returns required to be filed through
the date hereof and has paid all taxes required to be paid thereon, and no tax deficiency has been determined adversely to the Company
(nor does the Company have any notice or knowledge of any tax deficiency which could reasonably be expected to be determined adversely
to the Company), except in each case as would not reasonably be expected to have a Material Adverse Effect.
(29)
Licenses and Permits. The Company possesses all licenses, certificates, permits and other authorizations issued by the appropriate
U.S. federal, state or foreign regulatory authorities necessary to conduct its business, and the Company has not received any notice of
proceedings relating to the revocation or modification of any such license, certificate, authorization or permit which, singly or in the
aggregate, would reasonably be expected to have a Material Adverse Effect, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Statutory Prospectus and the Prospectus (exclusive of any supplement thereto).
(30)
Stabilization. The Company has not taken, directly or indirectly, any action designed to or that would constitute or that
might reasonably be expected to cause or result in, under the Exchange Act or otherwise, stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Shares.
(31)
Certain Regulatory Matters.
(i) Foreign
Corrupt Practices Act. Neither the Company, the Sponsor, nor, to the knowledge of the Company, any director, director nominee,
executive officer, agent, employee, affiliate or other person acting on behalf of the Company or the Sponsor is aware of or has
taken any action, directly or indirectly, that could result in a violation or a sanction for violation by such persons of the
Foreign Corrupt Practices Act of 1977 or the U.K. Bribery Act 2010, each as may be amended, or similar law of any other relevant
jurisdiction, or the rules or regulations thereunder; and the Company has instituted and maintains policies and procedures to ensure
compliance therewith. No part of the proceeds of the Offering will be used, directly or indirectly, in violation of the Foreign
Corrupt Practices Act of 1977 or the U.K. Bribery Act 2010, each as may be amended, or similar law of any other relevant
jurisdiction, or the rules or regulations thereunder.
(ii)
Money Laundering Laws. The operations of the Company are and have been conducted at all times in compliance with applicable
financial recordkeeping and reporting requirements and the money laundering statutes and the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money
Laundering Laws”) and no action, suit or proceeding by or before
any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to
the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.
(iii)
OFAC. Neither the Company nor, to the knowledge of the Company, any Sponsor, any director, director nominee, executive officer,
agent, employee or affiliate of the Company or any director, officer, agent, employee or affiliate of the Sponsor (i) is, or is controlled
or 50% or more owned in the aggregate by or is acting on behalf of, one or more individuals or entities that are currently the subject
of any sanctions administered or enforced by the United States (including any administered or enforced by the Office of Foreign Assets
Control of the U.S. Department of the Treasury, the U.S. Department of State or the Bureau of Industry and Security of the U.S. Department
of Commerce), the United Nations Security Council, the European Union, a member state of the European Union (including sanctions administered
or enforced by Her Majesty’s Treasury of the United Kingdom) or
other relevant sanctions authority (collectively, “Sanctions”
and such persons, “Sanctioned Persons”
and each such person, a “Sanctioned Person”),
(ii) is located, organized or resident in a country or territory that is, or whose government is, the subject of Sanctions that broadly
prohibit dealings with that country or territory (collectively, “Sanctioned
Countries” and each, a “Sanctioned
Country”) or (iii) will (either directly or through the Trust
Account), directly or indirectly, use the proceeds of the Offering, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other individual or entity in any manner that would result in a violation of any Sanctions by, or
could result in the imposition of Sanctions against, any individual or entity (including any individual or entity participating in the
Offering, whether as underwriter, advisor, investor or otherwise).
(iv)
Sanctions. None of the Company or, to the knowledge of the Company, any Sponsor or any director, director nominee, executive
officer, agent, employee or affiliate of the Company is a person that is, or is 50% or more owned or otherwise controlled by a person
that is: (i) a Sanctioned Person; or (ii) located in, organized under the laws of or resident in a country or territory that is, or whose
government is, the subject of Sanctions that broadly prohibit dealings with that country or territory (including, without limitation,
the Crimea region, Cuba, Iran, North Korea, Sudan, and Syria). In the preceding three years, except as has been disclosed to the Underwriters
or is not material to the analysis under any Sanctions, neither the Company nor any Sponsor has engaged in any dealings or transactions
with or for the benefit of a Sanctioned Person, or with or in a Sanctioned Country, in the preceding 3 years, nor does the Company or
any Sponsor have any plans to engage in dealings or transactions with or for the benefit of a Sanctioned Person, or with or in a Sanctioned
Country.
(v)
Bank Secrecy Act; Money Laundering; Patriot Act. None of the Company, the Sponsor or any executive officer, director or
director nominee of the Company has violated: (a) the Bank Secrecy Act, as amended, (b) the Money Laundering Laws, or (c) the Uniting
and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001,
and/or the rules and regulations promulgated under any such law, or any successor law.
(32)
D&O Questionnaires. To the Company’s knowledge,
all information contained in the questionnaires (the “Questionnaires”)
completed by each of the Company’s executive officers, director
nominees and directors and provided to the Underwriters is true and correct in all material respects and the Company has not become aware
of any information which would cause the information disclosed in the Questionnaires completed by the Company’s
executive officers, director nominees or directors to become inaccurate and incorrect in any material respect.
(33)
Initial Business Combination. Except as disclosed in the Registration Statement, the Statutory Prospectus and the Prospectus,
prior to the date hereof, the Company has not identified any business combination target and it has not, nor has anyone on its behalf,
initiated any substantive discussions, directly or indirectly, with any business combination target.
(34)
FINRA Matters.
(i)
Except as described in the Statutory Prospectus and the Prospectus, there are no claims, payments, arrangements, contracts, agreements
or understandings relating to the payment of a brokerage commission or finder’s,
consulting, origination or similar fee by the Company, the Sponsor or any executive officer, director nominee or director of the Company,
or their respective affiliates, with respect to the sale of the Shares hereunder or any other arrangements, agreements or understandings
of the Company or, to the knowledge of the Company, the Sponsor or any executive officer, director nominee or director of the Company,
or their respective affiliates, that may affect the Underwriters’
compensation, as determined by the Financial Industry Regulatory Authority (“FINRA”).
(ii)
The Company has not made any direct or indirect payments (in cash, securities or any other “type
of underwriting compensation” as defined in FINRA Rule 5110(j)(22)
of FINRA’s Conduct Rules and
Supplementary Material .01 thereunder) to: (i) any person, as a finder’s
fee, consulting fee or otherwise, in consideration of such person raising capital for the Company or introducing to the Company persons
who raised or provided capital to the Company; (ii) to any person
that, to the Company’s knowledge, has been accepted by FINRA as
a member of FINRA (a “Member”);
or (iii) to any person or entity that, to the Company’s
knowledge, has any direct or indirect affiliation or association with any Member, within the 180- day
period prior to the initial filing date of the Registration Statement, other than payments to the Underwriters pursuant to this Agreement.
(iii)
Except as described in the Statutory Prospectus and the Prospectus, during the period beginning 180 days
prior to the initial filing date and ending on the Effective Date, no Member and/or any person associated or affiliated with a Member
has provided any investment banking, financial advisory and/or consulting services to the Company. No Participating Member (as defined
in FINRA Rule 5110(j)(15)) in the Offering has received any underwriting
compensation in connection with a public offering that has not been completed according to the terms of an agreement entered into by the
Company and a Participating Member in the Offering.
(iv)
Except as disclosed in the FINRA questionnaires provided to the Representative, to the Company’s
knowledge, no executive officer, director, or beneficial owner of any class of the Company’s
securities (whether debt or equity, registered or unregistered, regardless of the time acquired or the source from which derived) (any
such individual or entity, a “Company Affiliate”)
is a Member or a person associated or affiliated with a Member.
(v)
Except as disclosed in the FINRA questionnaires provided to the Representative, to the Company’s
knowledge, no Company Affiliate is an owner of stock or other securities of any Member (other than securities purchased on the open market).
(vi)
To the knowledge of the Company after due inquiry, no Company Affiliate has made a subordinated loan to any Member.
(vii)
Except as described in the Registration Statement, the Statutory Prospectus and the Prospectus, no proceeds from the sale of the
Shares (excluding underwriting compensation as disclosed in the Registration Statement, Statutory Prospectus and the Prospectus) will
be paid by the Company to any Member, or any persons associated or affiliated with a Member.
(viii) The
Company has not issued any warrants or other securities, or granted any options, directly or indirectly to anyone who is a potential
underwriter in the Offering or a related person (as defined by FINRA rules) of such an underwriter within the 180-day
period prior to the initial filing date of the Registration Statement.
(ix)
No person to whom securities of the Company have been privately issued within the 180-day
period prior to the initial filing date of the Registration Statement has, to the Company’s
knowledge, any relationship or affiliation or association with any Member intending to participate in the Offering.
(x)
To the Company’s knowledge, no Member intending to participate
in the Offering has a conflict of interest with the Company. For this purpose, a “conflict
of interest” means, if at the time of the Member’s
participation in the Offering, any of the following applies: (A) the
securities are to be issued by the Member; (B) the Company controls,
is controlled by or is under common control with the Member or the Member’s
associated persons; (C) at least 5%
of the net offering proceeds, not including underwriting compensation, are intended to be: (i) used
to reduce or retire the balance of a loan or credit facility extended by the Member, its affiliates and its associated persons, in the
aggregate; or (ii) otherwise directed to the Member, its affiliates
and associated persons, in the aggregate; or (D) as a result of the
Offering and any transactions contemplated at the time of the Offering: (i) the
Member will be an affiliate of the Company; (ii) the Member will
become publicly owned; or (iii) the Company will become a Member
or form a broker-dealer subsidiary. “Member intending to participate
in the Offering” includes any associated person of a Member
that is participating in the Offering, any members of such associated person’s
immediate family, and any affiliate of a Member that is participating in the Offering.
(35)
Non-Competition Agreements. Except as described in the Statutory Prospectus and the Prospectus, to the Company’s
knowledge, none of the Sponsor, directors or executive officers of the Company is subject to a non-competition agreement or non-solicitation
agreement with any employer or prior employer which could materially affect his, her or its ability to be and act in the capacity of stockholder,
executive officer or director of the Company, as applicable.
(36)
Subsidiaries. The Company does not own an interest in any corporation, partnership, limited liability company, joint venture,
trust or other entity.
(37)
Related Party Transactions. No relationship, direct or indirect, exists between or among any of the Company or any affiliate
of the Company, on the one hand, and the Sponsor or any director, director nominee, executive officer, stockholder, special advisor, customer
or supplier of the Company or any affiliate of the Company, on the other hand, which is required by the Act or the Exchange Act to be
described in the Registration Statement, Statutory Prospectus or the Prospectus which is not described as required. There are no outstanding
loans, advances (except normal advances for business expenses in the ordinary course of business) or guarantees of indebtedness by the
Company to or for the benefit of any of the executive officers, director nominees or directors of the Company or any of their respective
family members, except as disclosed in the Registration Statement, Statutory Prospectus and the Prospectus. The Company has not extended
or maintained credit, arranged for the extension of credit, or renewed an extension of credit, in the form of a personal loan to or for
any director or officer of the Company.
(38)
Free Writing Prospectus. The Company has not prepared or used a Free Writing Prospectus.
(39)
Rule 419. Upon delivery and payment for the Firm Shares on the Closing Date and the filing by the Company of an audited
balance sheet with the Commission on a Current Report on Form 8-K (the “Closing
Form 8-K”), the Company will not be subject to Rule 419 under
the Act and none of the Company’s outstanding securities will be
deemed to be a “penny stock”
as defined in Rule 3a51-1 under the Exchange Act.
(40) New
York Stock Exchange’s Listing Standards. There is and has been no failure on the part of the Company or, to the
knowledge of the Company, any of the Company’s executive
officers or directors, in their capacities as such, to comply with (as and when applicable), and immediately following the Effective
Date the Company will be in compliance with, the requirements of Section 303A of the New York Stock Exchange Listed Company Manual.
Further, there is and has been no failure on the part of the Company or, to the knowledge of the Company, any of the Company’s
executive officers or directors, in their capacities as such, to comply with (as and when applicable), and immediately following the
Effective Date the Company will be in compliance with, the phase-in requirements and all other provisions of the New York Stock
Exchange corporate governance requirements set forth in the New York Stock Exchange’s
Listing Standards.
(41)
Emerging Growth Company. From the time of the initial filing of the Registration Statement to the Commission (or, if earlier,
the first date on which the Company engaged directly or through any person authorized to act on its behalf in any Testing-the-Waters Communication)
through the Execution Time, the Company has been and is an “emerging
growth company,” as defined in Section 2(a) of the Act (an “Emerging
Growth Company”). “Testing-the-Waters
Communication” means any oral or written communication with potential
investors undertaken in reliance on Section 5(d) or Rule 163B of the Act.
(42)
Testing-the-Waters. The Company (i) has not alone engaged in any Testing-the-Waters Communication other than Testing-the-Waters
Communications with the consent of the Representative with entities that are qualified institutional buyers within the meaning of Rule
144A under the Act or institutions that are accredited investors within the meaning of Rule 501 under the Act and (ii) has not authorized
anyone other than the Representative to engage in Testing-the-Waters Communications. The Company reconfirms that the Representative has
been authorized to act on its behalf in undertaking Testing-the-Waters Communications. The Company has not distributed any Written Testing-the-Waters
Communications other than those listed on Schedule III hereto. “Written
Testing-the-Waters Communication” means any Testing-the-Waters Communication
that is a written communication within the meaning of Rule 405 under the Act.
Any certificate signed by
any officer of the Company and delivered to the Representative or counsel for the Underwriters in connection with the Offering shall be
deemed a representation and warranty by the Company, as to matters covered thereby, to each Underwriter.
2.
Purchase and Sale.
(a)
Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Company agrees
to sell to each Underwriter, and each Underwriter agrees, severally and not jointly, to purchase from the Company, at a purchase price
of $9.80 per Share, the amount of the Firm Shares set forth opposite such Underwriter’s
name in Schedule I hereto.
(b)
Subject to the terms and conditions and in reliance upon the representations and warranties set forth herein, the Company hereby
grants an option to the several Underwriters to purchase, severally and not jointly, up to 6,000,000 Option Shares at the same purchase
price per Share as the Underwriters shall pay for the Firm Shares. This option may be exercised only to cover over-allotments in the sale
of the Firm Shares by the Underwriters. This option may be exercised in whole or in part at any time on or before the 45th day after the
date of the Prospectus upon written or telegraphic notice by the Representative to the Company setting forth the number of Option Shares
as to which the several Underwriters are exercising the option and the settlement date. Each Underwriter shall purchase the same percentage
of the total number of Option Shares to be purchased by the several Underwriters as such Underwriter is purchasing of the Firm Shares,
subject to such adjustments as the Representative in its absolute discretion shall make to eliminate any fractional shares.
(c)
In addition to the discount from the public offering price represented by the purchase price set forth in the first sentence of
Section 2(a) of this Agreement, the Company hereby agrees to pay to the Underwriters a deferred discount of $0.35 per Share (for both
Firm Shares and Option Shares) purchased hereunder (the “Deferred
Discount”). The Deferred Discount will be paid directly to the
Representative, on behalf of the Underwriters, by the Trustee from amounts on deposit in the Trust Account by wire transfer if and when
the Company consummates an Initial Business Combination. The Underwriters hereby agree that if no Initial Business Combination is consummated
within the time period provided in the Amended and Restated Certificate of Incorporation and the funds held under the Trust Agreement
are distributed to the holders of the Shares sold pursuant to this Agreement (the “Public
Stockholders”), (i) the Underwriters will forfeit any rights
or claims to the Deferred Discount and (ii) the Trustee under the Trust Agreement is authorized to distribute the Deferred Discount to
the Public Stockholders on a pro rata basis.
3.
Delivery and Payment.
(a)
Delivery of and payment for the Firm Shares and the Option Shares (if the option provided for in Section 2(b) hereof shall have
been exercised on or before the second Business Day prior to the Closing Date) shall be made at 10:00 a.m., New York City time, on [●],
2021, or at such time on such later date at least two Business Days after the foregoing date as the Representative shall designate, which
date and time may be postponed by agreement between the Representative and the Company or as provided in Section 9 hereof (such date and
time of delivery and payment for the Shares being herein called the “Closing
Date”). Delivery of the Shares shall be made to the Representative
for the respective accounts of the several Underwriters against payment by the several Underwriters through the Representative of the
purchase price thereof by wire transfer payable in same-day funds to an account specified by the Company and to the Trust Account as described
below in this Section 3. Delivery of the Firm Shares and the Option Shares shall be made through the facilities of The Depository
Trust Company (“DTC”)
unless the Representative shall otherwise instruct.
(b)
Payment for the Firm Shares shall be made as follows: $800,000,000 of the proceeds received by the Company for the Firm Shares,
including $14,000,000 of the Deferred Discount, shall be deposited in the Trust Account pursuant to the terms of the Trust Agreement along
with such portion of the gross proceeds of the Private Placement Shares in order for the Trust Account to equal the product of the number
of Shares sold and the public offering price per Share as set forth on the cover of the Prospectus upon delivery to the Representative
of the Firm Shares through the facilities of DTC or, if the Representative has otherwise instructed, upon delivery to the Representative
of certificates (in form and substance satisfactory to the Representative) representing the Firm Shares, in each case for the account
of the Underwriters. The Firm Shares shall be registered in such name or names and in such authorized denominations as the Representative
may request in writing at least two Business Days prior to the Closing Date. If delivery is not made through the facilities of DTC, the
Company will permit the Representative to examine and package the Firm Shares for delivery, at least one Business Day prior to the Closing
Date. The Company shall not be obligated to sell or deliver the Firm Shares except upon tender of payment by the Representative for all
the Firm Shares. Payment by the Underwriters for the Firm Shares is contingent on the payment by the Sponsor to the Trust Account for
the Private Placement Shares at least one Business Day prior to the Closing Date.
(c)
Payment for the Option Shares shall be made as follows: $9.80 per Option Share (including any Deferred Discount attributable to
the Option Shares) shall be deposited in the Trust Account pursuant to the terms of the Trust Agreement along with such portion of the
gross proceeds of the Private Placement Shares in order for the Trust Account to equal the product of the number of Shares sold and the
public offering price per Share as set forth on the cover of the Prospectus, upon delivery to the Representative of the Option Shares
through the facilities of DTC or, if the Representative has otherwise instructed, upon delivery to the Representative of certificates
(in form and substance satisfactory to the Representative) representing the Option Shares (or through the facilities of DTC) for the account
of the Underwriters. The Option Shares shall be registered in such name or names and in such authorized denominations as the Representative
may request in writing at least two Business Days prior to the Closing Date. If delivery is not made through the facilities of DTC, the
Company will permit the Representative to examine and package the Option Shares for delivery, at least one Business Day prior to the Closing
Date. The Company shall not be obligated to sell or deliver the Option Shares except upon tender of payment by the Representative for
all the Option Shares. Payment by the Underwriters for the Option Shares is contingent on the payment by the Sponsor to the Trust Account
for the Private Placement Shares at least one Business Day prior to the applicable settlement date.
(d)
If the option provided for in Section 2(b) hereof is exercised after the second Business Day prior to the Closing Date, the Company
will deliver the Option Shares (at the expense of the Company) to the Representative, at c/o Citigroup Global Markets Inc., at 388 Greenwich
Street, New York, New York, on the date specified by the Representative (which shall be within three Business Days after exercise of said
option) for the respective accounts of the several Underwriters, against payment by the several Underwriters through the Representative
of the purchase price thereof to the Trust Account as described above in Section 3(c). If settlement for the Option Shares occurs after
the Closing Date, the Company will deliver to the Representative on the settlement date for the Option Shares, and the obligation of the
Underwriters to purchase the Option Shares shall be conditioned upon receipt of, supplemental opinions, certificates and letters confirming
as of such date the opinions, certificates and letters delivered on the Closing Date pursuant to Section 6 hereof.
4.
Offering by Underwriters. It is understood that the several Underwriters propose to offer the Shares for sale to
the public as set forth in the Prospectus.
5.
Agreements. The Company agrees with the several Underwriters that:
(a)
Filing of Prospectus; Notice to Representative; Stop Orders. Prior to the termination of the Offering, the Company will
not file any amendment to the Registration Statement or supplement to the Prospectus or any Rule 462(b) Registration Statement unless
the Company has furnished you a copy for your review prior to filing and will not file any such proposed amendment or supplement to which
the Representative reasonably objects. The Company will cause the Prospectus, properly completed, and any supplement thereto to be filed
in a form approved by the Representative with the Commission pursuant to the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the Representative of such timely filing. The Company will promptly advise the Representative
(i) when the Prospectus, and any supplement thereto, shall have been filed (if required) with the Commission pursuant to Rule 424(b) or
when any Rule 462(b) Registration Statement or any Written Testing-the-Waters Communication shall have been filed with the Commission,
(ii) when, prior to termination of the Offering, any amendment to the Registration Statement shall have been filed or become effective,
(iii) of any request by the Commission or its staff for any amendment of the Registration Statement, or any Rule 462(b) Registration Statement,
or any Written Testing-the-Waters Communications or for any supplement to the Prospectus or for any additional information, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any notice objecting to
its use or the institution or threatening of any proceeding for that purpose or pursuant to Section 8A of the Act and (v) of the receipt
by the Company of any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the
institution or threatening of any proceeding for such purpose. The Company will use its best efforts to prevent the issuance of any such
stop order or the occurrence of any such suspension or objection to the use of the Registration Statement and, upon such issuance, occurrence
or notice of objection, to obtain as soon as possible the withdrawal of such stop order or relief from such occurrence or objection, including,
if necessary, by filing an amendment to the Registration Statement or a new registration statement and using its best efforts to have
such amendment or new registration statement declared effective as soon as practicable.
(b)
Statutory Prospectus. If, at any time prior to the filing of the Prospectus pursuant to Rule 424(b), any event occurs as
a result of which the Statutory Prospectus would include any untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under which they were made at such time not misleading, or if it shall
be necessary to amend the Registration Statement or supplement the Statutory Prospectus to comply with the Act or the rules thereunder,
the Company will (i) notify promptly the Representative so that any use of the Statutory Prospectus may cease until it is amended or supplemented;
(ii) amend or supplement the Statutory Prospectus to correct such statement or omission; and (iii) supply any amendment or supplement
to you in such quantities as you may reasonably request.
(c)
Amendment to Prospectus. If, at any time when a prospectus relating to the Shares is required to be delivered under the
Act (including in circumstances where such requirement may be satisfied pursuant to Rule 172), any event occurs as a result of which the
Prospectus as then supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to
make the statements therein in the light of the circumstances under which they were made at such time not misleading, or if it shall be
necessary to amend the Registration Statement or supplement the Prospectus to comply with the Act or the rules thereunder, the Company
promptly will (i) notify the Representative of any such event; (ii) prepare and file with the Commission, subject to the second sentence
of paragraph (a) of this Section 5, an amendment or supplement which will correct such statement or omission or effect such compliance;
and (iii) supply any supplemented Prospectus to you in such quantities as you may reasonably request.
(d)
Delivery of Earnings Statements. As soon as practicable, the Company will make generally available to its security holders
and to the Representative an earnings statement or statements of the Company and its subsidiaries which will satisfy the provisions of
Section 11(a) of the Act and Rule 158.
(e)
Delivery of Documents. The Company will furnish to the Representative and counsel for the Underwriters, without charge,
signed copies of the Registration Statement (including exhibits thereto) and to each other Underwriter a copy of the Registration Statement
(without exhibits thereto) and, so long as delivery of a prospectus by an Underwriter or dealer may be required by the Act (including
in circumstances where such requirement may be satisfied pursuant to Rule 172), as many copies of each Preliminary Prospectus, the Prospectus
and any supplement thereto as the Representative may reasonably request. The Company will pay the expenses of printing or other production
of all documents s relating to the Offering.
(f) Qualification
of Shares. The Company will arrange, if necessary, for the qualification of the Shares for sale under the laws of such
jurisdictions as the Representative may designate and will maintain such qualifications in effect so long as required for the
distribution of the Shares; provided that in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that would subject it to service of process in suits, other than
those arising out of the offering or sale of the Shares, in any jurisdiction where it is not now so subject.
(g)
Lock-Up. The Company will not, without the prior written consent of the Representative, offer, sell, contract to sell, pledge,
hedge or otherwise dispose of (or enter into any transaction that is designed to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the Company or any affiliate
of the Company or any person in privity with the Company or any affiliate of the Company), directly or indirectly, including the filing
(or participation in the filing) of a registration statement with the Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to, any
other shares of Common Stock or any securities convertible into, or exercisable, or exchangeable for, shares of Common Stock or publicly
announce an intention to effect any such transaction during the period commencing on the date hereof and ending 180 days after the date
of this Agreement; provided, however, that the Company may (1) issue and sell the Private Placement Shares, (2) issue and sell the Option
Shares on exercise of the option provided for in Section 2(b) hereof, (3) issue shares of Common Stock or any securities convertible
into, or exchangeable for, shares of Common Stock in connection with a Business Combination, and (4) register with the Commission pursuant
to the Registration Rights Agreement, in accordance with the terms of the Registration Rights Agreement, the resale of the Founder Shares
and the Private Placement Shares.
(h)
No Stabilization or Manipulation. The Company will not take, directly or indirectly, any action designed to or that would
constitute or that might reasonably be expected to cause or result in, under the Exchange Act or otherwise, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of the Shares.
(i)
Payment of Expenses. The Company agrees to pay the costs and expenses relating to the following matters: (i) the preparation,
printing or reproduction and filing with the Commission of the Registration Statement (including financial statements and exhibits thereto),
each Preliminary Prospectus, the Prospectus, and each amendment or supplement to any of them; (ii) the printing (or reproduction) and
delivery (including postage, air freight charges and charges for counting and packaging) of such copies of the Registration Statement,
each Preliminary Prospectus, the Prospectus and all amendments or supplements to any of them, as may, in each case, be reasonably requested
for use in connection with the offering and sale of the Shares; (iii) the preparation, printing, authentication, issuance and delivery
of certificates, if any, for the Shares, including any stamp or transfer taxes in connection with the original issuance and sale of the
Shares; (iv) the printing (or reproduction) and delivery of this Agreement, and all other agreements or documents printed (or reproduced)
and delivered in connection with the Offering; (v) the registration of the Shares under the Exchange Act and the listing of the Shares
on the New York Stock Exchange; (vi) the printing and delivery of a preliminary blue sky memorandum, any registration or qualification
of the Shares for offer and sale under the securities or blue sky laws of the several U.S. States (including filing fees and the reasonable
and documented fees and expenses of counsel for the Underwriters relating to such registration and qualification); (vii) any filings required
to be made with FINRA (including filing fees and up to $20,000 for the reasonable and documented fees and expenses of counsel for the
Underwriters relating to such filings); (viii) the transportation and other expenses incurred by the Company and its executive officers
(and not the Underwriters) in connection with presentations to prospective purchasers of the Shares; (ix) the fees and expenses of the
Company’s accountants and the fees and expenses of counsel (including
local and special counsel) for the Company; and (x) all other costs and expenses incident to the performance by the Company of its obligations
hereunder.
(j)
Use of Free Writing Prospectus. The Company agrees that it will not make any offer relating to the Shares that would constitute
an Issuer Free Writing Prospectus or that would otherwise constitute a “free
writing prospectus” (as defined in Rule 405) required to be filed
by the Company with the Commission or retained by the Company under Rule 433.
(k) Maintenance
of Registration. For a period of at least five (5) years from the Effective Date, or until such earlier time upon which the
Company is required to be liquidated, the Company will use its best efforts to maintain the registration of the Common Stock under
the provisions of the Exchange Act, except after giving effect to a going private transaction after the completion of an Initial
Business Combination. The Company will not deregister the Common Stock under the Exchange Act (except in connection with a going
private transaction after the completion of an Initial Business Combination) without the prior consent of the Representative.
(l)
Form 8-K. The Company shall, on the date hereof, retain its independent registered public accounting firm to audit the balance
sheet of the Company as of the Closing Date (the “Audited Balance
Sheet”) reflecting the receipt by the Company of the proceeds
of the Offering on the Closing Date. As soon as the Audited Balance Sheet becomes available, the Company shall promptly, but not later
than four Business Days after the Closing Date, file the Closing Form 8-K with the Commission, which shall contain the Company’s
Audited Balance Sheet. Additionally, if not disclosed on the Closing Form 8-K, upon the Company’s
receipt of the proceeds from the exercise of all or any portion of the option provided for in Section 2(b) hereof, the Company
shall promptly, but not later than four Business Days after the receipt of such proceeds, file a Current Report on Form 8-K with the Commission,
which report shall disclose the Company’s sale of the Option Shares
and its receipt of the proceeds therefrom.
(m)
Review of Financial Statements. For a period commencing on the Effective Date and ending at least five (5) years from the
date of the consummation of the Initial Business Combination or until such earlier time at which the Company is required to be liquidated
or the Common Stock cease to be publicly traded, the Company, at its expense, shall cause its regularly engaged independent registered
public accounting firm to review (but not audit) the Company’s financial
statements for each of the first three fiscal quarters prior to the announcement of quarterly financial information, the filing of the
Company’s Form 10-Q quarterly report and the mailing, if any, of
quarterly financial information to stockholders.
(n)
Publicly Available Statements and Reports. For a period of five (5) years from the Effective Date or until such earlier
time that the Company is required to be liquidated or the Common Stock cease to be publicly traded, the Company will furnish to the Representative
such copies of financial statements and other periodic and special reports as the Company from time to time furnishes generally to holders
of any class of its securities and such additional documents and information with respect to the Company as the Representative may from
time to time reasonably request. Any financial statements and reports filed on the Commission’s
EDGAR website or otherwise available on the Company’s website will
be considered furnished for purposes of this section.
(o)
Affiliate Transactions. Except as disclosed in the Registration Statement, the Company shall not pay the Sponsor, any of
the Company’s directors or executive officers, any special advisor,
or any of the Company’s or their respective affiliates any fees
or compensation of any kind (including finder’s and consulting fees
reimbursement, monies in respect of any payment of a loan or other compensation paid by the Company to the Sponsor, the Company’s
executive officers, directors or any of their respective affiliates, except as otherwise disclosed in the Registration Statement) for
services rendered to the Company prior to, or in connection with, the consummation of the Initial Business Combination.
(p)
Net Proceeds. The Company will apply the net proceeds from the Offering and the sale of the Private Placement Shares received
by it in a manner consistent with the applications described under the caption “Use
of Proceeds” in the Statutory Prospectus and the Prospectus.
(q)
Notice to FINRA.
(1)
For a period of 60 days following the Effective Date, in the event any person or entity (regardless of any FINRA affiliation or
association) is engaged to assist the Company in its search for a merger candidate or to provide any other merger and acquisition services,
or has provided or will provide any investment banking, financial, advisory and/or consulting services to the Company, the Company agrees
that it shall promptly provide to FINRA (via a FINRA submission), the Representative and its counsel a notification prior to entering
into the agreement or transaction relating to a potential Business Combination: (i) the identity of the person or entity providing any
such services; (ii) complete details of all such services and copies of all agreements governing such services; and (iii) justification
as to why the value received by any person or entity for such services is not underwriting compensation for the Offering. The Company
also agrees that proper disclosure of such arrangement or potential arrangement will be made in the tender offer materials or proxy statement,
as applicable, which the Company may file in connection with the Initial Business Combination for purposes of offering redemption of shares
held by its stockholders or for soliciting stockholder approval, as applicable.
(2)
The Company shall advise FINRA, the Representative and its counsel if it is aware that any 5% or greater stockholder of the Company
becomes an affiliate or associated person of a Member participating in the distribution of the Company’s
Shares.
(r)
Investment Company. The Company shall cause the proceeds of the Offering and the sale of Private Placement Shares to be
held in the Trust Account to be invested only in United States “government
securities” within the meaning of Section 2(a)(16) of the Investment
Company Act of 1940 having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act which invest only in direct U.S. government treasury obligations, as set forth in the Trust Agreement
and disclosed in the Statutory Prospectus and the Prospectus. The Company will otherwise conduct its business in a manner so that it will
not become subject to the Investment Company Act. Furthermore, once the Company consummates the Initial Business Combination, it will
be engaged in a business other than that of investing, reinvesting, owning, holding or trading securities.
(s)
[Reserved].
(t)
Issuance of Shares. Prior to the consummation of the Initial Business Combination or the liquidation of the Trust Account,
the Company shall not issue any Common Stock, warrants or any options or other securities convertible into Common Stock, or any shares
of preferred stock, in each case, which participate in any manner in the Trust Account or which vote as a class with the shares of Common
Stock on an Initial Business Combination.
(u)
Independent Director Review of Expenses. Prior to the consummation of the Initial Business Combination or the liquidation
of the Trust Account, the Company shall cause its Board of Directors to review and approve all payments made to the Sponsor, any of the
Company’s directors or executive officers, any special advisor,
or any of the Company’s or their respective affiliates, with any
interested directors abstaining from such review and approval.
(v)
Rule 419. The Company agrees that it will use its best efforts to prevent the Company from becoming subject to Rule 419
under the Act prior to the consummation of the Initial Business Combination, including, but not limited to, using its best efforts to
prevent any of the Company’s outstanding securities from being deemed
to be a “penny stock”
as defined in Rule 3a-51-1 under the Exchange Act during such period.
(w)
Internal Controls. The Company will maintain “disclosure
controls and procedures” (as defined under Rule 13a-15(e) under
the Exchange Act) and a system of internal accounting controls sufficient to provide reasonable assurances that: (1) transactions are
executed in accordance with management’s general or specific authorization,
(2) transactions are recorded as necessary in order to permit preparation of financial statements in accordance with GAAP and to maintain
accountability for assets, (3) access to assets is permitted only in accordance with management’s
general or specific authorization, and (4) the recorded accountability for assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(x)
Sarbanes-Oxley, New York Stock Exchange Listing Standards. As soon as legally required to do so, the Company and its directors
and executive officers, in their capacities as such, shall take all actions necessary to comply with any applicable provision of the Sarbanes-Oxley
Act, including Section 402 related to loans and Sections 302 and 906 related to certifications, and to comply with the New York Stock
Exchange’s Listing Standards.
(y)
No Violation of Amended and Restated Certificate of Incorporation. The Company shall not take any action or omit to take
any action that would cause the Company to be in breach or violation of its Amended and Restated Certificate of Incorporation.
(z)
Transfer Agent. For a period commencing on the Effective Date and ending at least five (5) years from the date of the consummation
of the initial Business Combination or until such earlier time at which the company is required to be liquidated or the Common Stock cease
to be publicly traded, the Company shall retain a transfer agent.
(aa)
Initial Business Combination.
(1) Trust
Account Waiver Acknowledgment. The Company will seek to have all vendors, service providers (other than independent
accountants), prospective target businesses or other entities with which it does business enter into agreements waiving any right,
title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of the Public Stockholders. If a
prospective target business or vendors, service providers or third party were to refuse to enter into such a waiver, management will
perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not
executed a waiver if management believes that such third party’s
engagement would be significantly more beneficial than any alternative.
(2) Initial
Business Combination/Distribution Procedure. The Company may consummate the Initial Business Combination and conduct
redemptions of Common Stock for cash upon consummation of such Initial Business Combination without a stockholder vote pursuant to
Rule 13e-4 and Regulation 14E of the Exchange Act, including the filing of tender offer documents with the Commission. Such tender
offer documents will contain substantially the same financial and other information about the Initial Business Combination and the
redemption rights as is required under the Commission’s proxy
rules and will provide each stockholder of the Company with the opportunity prior to the consummation of the Initial Business
Combination to redeem the Common Stock held by such stockholder for an amount of cash equal to (A) the aggregate amount then on
deposit in the Trust Account as of two Business Days prior to the consummation of the Initial Business Combination representing (x)
the proceeds held in the Trust Account from the Offering and the sale of the Private Placement Shares and (y) any interest (which
shall be net of amounts withdrawn to fund the Company’s
working capital requirements, subject to an annual limit of $1,000,000 and/or to pay taxes), divided by (B) the total number of
Public Shares then outstanding. In the event the Company conducts redemptions pursuant to the tender offer rules, the Company’s
offer to redeem will remain open for at least 20 Business Days, in accordance with Rule 14e-1(a) under the Exchange Act, and the
Company will not be permitted to complete the Initial Business Combination until the expiration of the tender offer period. If,
however, the Company elects not to file such tender offer documents, a stockholder vote is required by law or stock exchange listing
requirement in connection with the Initial Business Combination, or the Company decides to hold a stockholder vote for business or
other legal reasons, the Company will submit such Initial Business Combination to the Company’s
stockholders for their approval (“Business Combination
Vote”). The company will give not less than 10 days nor
more than 60 days prior written notice of any such meeting, if required, at which a Business Combination Vote shall be taken. With
respect to the Business Combination Vote, the Sponsor and the Company’s
initial stockholders, executive officers and directors have agreed to vote all of their Founder Shares, Private Placement Shares and
Public Shares in favor of the Company’s initial Business
Combination. If the Company seeks stockholder approval of the Initial Business Combination, the Company will offer to each Public
Stockholder holding shares of Common Stock the right to have its shares redeemed in conjunction with a proxy solicitation pursuant
to the proxy rules of the Commission at a per share redemption price (the “Redemption
Price”) equal to (I) the aggregate amount then on deposit
in the Trust Account as of two Business Days prior to the consummation of the Initial Business Combination representing (1) the
proceeds held in the Trust Account from the Offering and the sale of the Private Placement Shares and (2) any interest, (which shall
be net of amounts withdrawn to fund the Company’s working
capital requirements, subject to an annual limit of $1,000,000 and/or to pay taxes), divided by (II) the total number of Public
Shares then outstanding. The Company may proceed with such Initial Business Combination only if a majority of the shares voted are
voted to approve such Initial Business Combination. If, after seeking and receiving such stockholder approval, the Company elects to
so proceed, it will redeem shares, at the Redemption Price, from those Public Stockholders who affirmatively requested such
redemption. Only Public Stockholders holding Common Stock who properly exercise their redemption rights, in accordance with the
applicable tender offer or proxy materials related to such Initial Business Combination, shall be entitled to receive distributions
from the Trust Account in connection with an Initial Business Combination, and the Company shall pay no distributions with respect
to any other holders or shares of capital stock of the Company in connection therewith. In the event that the Company does not
effect an Initial Business Combination within the time period set forth in the Amended and Restated Certificate of Incorporation,
the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more
than ten (10) Business Days thereafter, redeem 100% of the Public Shares, at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the Trust Account, including any interest (which shall be net of amounts withdrawn to fund the
Company’s working capital requirements, subject to an annual
limit of $1,000,000 and/or to pay taxes and up to $100,000 of interest to pay dissolution expenses), divided by the number of then
outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights
as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as
promptly as reasonably possible following such redemption, subject to the approval of the Company’s
remaining stockholders and the Company’s board of directors,
dissolve and liquidate, subject in each case to the Company’s
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Only Public
Stockholders holding the Shares shall be entitled to receive such redemption amounts and the Company shall pay no such redemption
amounts or any distributions in liquidation with respect to any other shares of capital stock of the Company. The Company will not
propose any amendment to the Amended and Restated Certificate of Incorporation to modify the substance or timing of the Company’s
obligation to provide for the redemption of the Public Shares in connection with an Initial Business Combination or to redeem 100%
of its Public Shares if it does not complete its initial business combination within the time period set forth in the Amended and
Restated Certificate of Incorporation, unless it provides its public stockholders with the opportunity to redeem their shares of
Class A common stock upon approval of any such amendment, as described in the Statutory Prospectus and Prospectus.
(3)
In the event that the Company desires or is required by an applicable law or regulation to cause an announcement (“Business
Combination Announcement”) to be placed in The Wall Street Journal,
The New York Times or any other news or media publication or outlet or to be made via a public filing with the Commission announcing the
consummation of the Initial Business Combination that indicates that the Underwriters were the underwriters in the Offering, the Company
shall supply the Representative with a draft of the Business Combination Announcement and provide the Representative with a reasonable
advance opportunity to comment thereon, subject to the agreement of the Underwriters to keep confidential such draft announcement in accordance
with the Representative’s standard policies regarding confidential
information.
(bb)
Deferred Compensation. Upon the consummation of the Initial Business Combination, the Company will cause the Trustee to
pay to the Representative, on behalf of the Underwriters, the Deferred Discount. Payment of the Deferred Discount will be made out of
the proceeds of the Offering held in the Trust Account. The Underwriters shall have no claim to payment of any interest earned on the
portion of the proceeds held in the Trust Account representing the Deferred Discount. If the Company fails to consummate its Initial Business
Combination within the time period prescribed in the Amended and Restated Certificate of Incorporation, the Deferred Discount will not
be paid to the Representative and will, instead, be included in the liquidation distribution of the proceeds held in the Trust Account
made to the Public Stockholders. In connection with any such liquidation distribution, the Underwriters will forfeit any rights or claims
to the Deferred Discount.
(cc)
The Company will use commercially reasonable efforts to effect and, for a period commencing on the Effective Date and ending at
least five (5) years from the date of the consummation of the Initial Business Combination or until such earlier time at which the liquidation
occurs or the Common Stock cease to be publicly traded, maintain the listing of the Shares on the New York Stock Exchange (or another
national securities exchange).
(dd)
If at any time following the distribution of any Written Testing-the-Waters Communication, any event occurs as a result of which
such Written Testing-the-Waters Communication would include any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the circumstances under which they were made at such time not misleading, the
Company will (i) notify promptly the Representative so that use of the Written Testing-the-Waters Communication may cease until it is
amended or supplemented; (ii) amend or supplement the Written Testing-the-Waters Communication to correct such statement or omission;
and (iii) supply any amendment or supplement to the Representative in such quantities as may be reasonably requested.
(ee)
The Company will promptly notify the Representative if the Company ceases to be an Emerging Growth Company at any time prior to
the later of (a) completion of the distribution of the Shares within the meaning of the Act and (b) completion of the 180-day restricted
period referred to in Section 5(g) hereof.
(ff)
Upon the earlier to occur of the expiration or termination of the Underwriters’
over-allotment option, the Company shall cancel or otherwise effect the forfeiture of Founder Shares from the Sponsor, in an aggregate
amount equal to the number of Founder Shares determined by multiplying (a) 1,500,000 by (b) a fraction, (i) the numerator of which is
6,000,000 minus the number of shares of Common Stock purchased by the Underwriters upon the exercise of their over-allotment option, and
(ii) the denominator of which is 6,000,000. For the avoidance of doubt, if the Underwriters exercise their over-allotment option in full,
the Company shall not cancel or otherwise effect the forfeiture of the Founder Shares pursuant to this subsection.
(gg)
The Company will deliver to the Representative executed copies of the Trust Agreement, the Securities Subscription Agreement,
the Private Placement Shares Purchase Agreement, the Administrative Services Agreement, the Registration Rights Agreement and the Insider
Letters.
(hh)
In no event will the amounts payable by the Company under the Administrative Services Agreement be more than $30,000 per month
in the aggregate for office space, utilities, secretarial and administrative support until the earlier of the date of the consummation
of the Initial Business Combination or until the time that the Company is required to liquidate.
6.
Conditions to the Obligations of the Underwriters. The obligations of the Underwriters to purchase the Firm Shares
and the Option Shares, as the case may be, shall be subject to the accuracy of the representations and warranties on the part of the Company
contained herein as of the Execution Time, the Closing Date and any settlement date pursuant to Section 3 hereof, to the accuracy of the
statements of the Company made in any certificates pursuant to the provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a)
Filing of Prospectus; No Stop Order. The Prospectus, and any supplement thereto, have been filed in the manner and within
the time period required by Rule 424(b); any other material required to be filed by the Company pursuant to Rule 433(d) under the Act
shall have been filed with the Commission within the applicable time periods prescribed for such filings by Rule 433; and no stop order
suspending the effectiveness of the Registration Statement or any notice objecting to its use shall have been issued and no proceedings
for that purpose or pursuant to Section 8A of the Act shall have been instituted or threatened.
(b)
Opinion of U.S. Counsel for the Company. The Company shall have requested and caused Weil, Gotshal & Manges LLP, counsel
for the Company, to have furnished to the Representative its opinions dated the Closing Date and addressed to the Representative in form
and substance acceptable to the Representative.
(c)
Opinion of Counsel for the Representative. The Representative shall have received from White & Case LLP, counsel for
the Underwriters, such opinion or opinions, dated the Closing Date and addressed to the Representative, with respect to the issuance and
sale of the Shares, the Registration Statement, the Statutory Prospectus, the Prospectus (together with any supplement thereto) and other
related matters as the Representative may reasonably require, and the Company shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(d)
Officer’s Certificate. The Company shall have furnished
to the Representative a certificate of the Company, signed by the Chief Executive Officer and the principal financial or accounting officer
of the Company, dated the Closing Date, to the effect that the signers of such certificate have carefully examined the Registration Statement,
each Preliminary Prospectus, the Prospectus and any amendment or supplement thereto, as well as each electronic road show used in connection
with the Offering, and this Agreement and that:
(1)
the representations and warranties of the Company in this Agreement are true and correct on and as of the Closing Date with the
same effect as if made on the Closing Date and the Company has complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing Date;
(2)
no stop order suspending the effectiveness of the Registration Statement or any notice objecting to its use has been issued and
no proceedings for that purpose have been instituted or, to the Company’s
knowledge, threatened; and
(3)
since the date of the most recent financial statements included in the Statutory Prospectus and the Prospectus (exclusive of any
supplement thereto), there has been no Material Adverse Effect, whether or not arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Statutory Prospectus and the Prospectus (exclusive of any supplement thereto).
(e) Secretary’s
Certificate. The Company shall have furnished to the Representative a certificate signed by the Secretary or Assistant Secretary
of the Company, dated the Closing Date, certifying (i) that the Amended and Restated Certificate of Incorporation is true and
complete, has not been modified and is in full force and effect, (ii) that the resolutions relating to the Offering contemplated by
this Agreement are in full force and effect and have not been modified, (iii) copies of all correspondence between the Company or
its counsel and the Commission, and (iv) as to the incumbency of the executive officers of the Company. The documents referred to in
such certificate shall be attached to such certificate.
(f)
Comfort Letters. The Company shall have requested and caused Marcum to have furnished to the Representative, at the Execution
Time and at the Closing Date, letters, dated respectively as of the Execution Time and as of the Closing Date, in form and substance satisfactory
to the Representative, confirming that they are a registered public accounting firm that is independent with respect to the Company within
the meaning of the Act and the Exchange Act and the applicable rules and regulations adopted by the Commission thereunder and that they
have performed a review of the audited financial statements of the Company for the period February 1, 2021 (the date of inception) through
March 31, 2021, provided that the cutoff date shall not be more than two Business Days prior to such Execution Time or Closing Date, as
applicable, and stating in effect that:
(i)
in their opinion the audited financial statements and financial statement schedules included in the Registration Statement, the
Statutory Prospectus and the Prospectus and reported on by them comply as to form in all material respects with the applicable accounting
requirements of the Act and the related rules and regulations adopted by the Commission;
(ii)
they have performed certain other specified procedures as a result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial or statistical information derived from the general accounting
records of the Company) set forth in the Registration Statement, the Statutory Prospectus and the Prospectus, including the information
set forth under the captions “Dilution”
and “Capitalization”
in the Statutory Prospectus and the Prospectus, agrees with the accounting records of the Company, excluding any questions of legal interpretation;
and
(iii)
statements as to such other matters incident to the transaction contemplated hereby as the Representative may reasonably request.
References to the Prospectus
in this paragraph (f) include any supplement thereto at the date of the letter.
(g)
Material Change. Subsequent to the Execution Time or, if earlier, the dates as of which information is given in the Registration
Statement (exclusive of any amendment thereof), the Statutory Prospectus and the Prospectus (exclusive of any amendment or supplement
thereto), there shall not have been (1) any change or decrease specified in the letter or letters referred to in paragraph (f) of this
Section 6 or (2) any change, or any development involving a prospective change, in or affecting the condition (financial or otherwise),
prospects, management, earnings, business or properties of the Company, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Statutory Prospectus and the Prospectus (exclusive of any supplement thereto)
the effect of which, in any case referred to in clause (1) or (2) above, is, in the sole judgment of the Representative, so material and
adverse as to make it impractical or inadvisable to proceed with the offering or delivery of the Shares as contemplated by the Registration
Statement (exclusive of any amendment thereof), the Statutory Prospectus and the Prospectus (exclusive of any amendment or supplement
thereto).
(h)
Further Information. Prior to the Closing Date, the Company shall have furnished to the Representative such further information,
certificates and documents as the Representative may reasonably request.
(i)
FINRA. FINRA shall not have raised any objection with respect to the fairness or reasonableness of the underwriting or other
arrangements of the transactions contemplated hereby.
(j)
New York Stock Exchange. The Shares shall be duly listed, subject to notice of issuance, on the New York Stock Exchange,
satisfactory evidence of which shall have been provided to the Representative.
(k)
Delivery of Agreements. On the Effective Date, the Company shall have delivered to the Representative executed copies of
the Trust Agreement, the Securities Subscription Agreement, the Private Placement Shares Purchase Agreement, the Administrative Services
Agreement, the Registration Rights Agreement and the Insider Letters.
(l) No
Brokers. On the Closing Date, the Company shall have requested and caused the Sponsor and the Company’s
directors and executive officers to have executed and furnished to the Representative a certificate, dated the Closing Date and
addressed to the Representative, to the effect that, except as described in the Registration Statement, the Statutory Prospectus and
the Prospectus, there are no claims, payments, arrangements, contracts, agreements or understandings relating to the payment of a
brokerage commission or finder’s, consulting, origination or
similar fee by the Sponsor or the Company’s directors or
executive officers with respect to the sale of the Shares hereunder or any other arrangements, agreements or understandings by the
Sponsor or the Company’s directors or executive officers that
may affect the Underwriters’ compensation, as determined by
FINRA.
(m)
Trust Account. On the Closing Date, the Company shall have furnished to the Representative one or more certificates signed
by an authorized officer of the Trustee to the effect of certifying that $1,000,000,000 shall have been deposited in the Trust Account.
(n)
No stop orders. No order preventing or suspending the sale of the Shares in any jurisdiction designated by the Representative
shall have been issued as of the Closing Date, and no proceedings for that purpose shall have been instituted or shall have been threatened.
(o)
Deposit. At least one (1) Business Day prior to the Closing Date, the Sponsor shall have paid to the Company the purchase
price for the Private Placement Shares, including the deposit of the net proceeds thereof into the Trust Account.
If any of the conditions specified
in this Section 6 shall not have been fulfilled when and as provided in this Agreement, or if any of the opinions and certificates mentioned
above or elsewhere in this Agreement shall not be reasonably satisfactory in form and substance to the Representative and counsel for
the Underwriters, this Agreement and all obligations of the Underwriters hereunder may be cancelled at, or at any time prior to, the Closing
Date by the Representative. Notice of such cancellation shall be given to the Company in writing or by telephone or facsimile confirmed
in writing.
The documents required to
be delivered by this Section 6 shall be delivered at the office of White & Case LLP, counsel for the Underwriters, at 1221 Avenue
of the Americas, New York, New York 10020, on the Closing Date.
7.
Reimbursement of Underwriters’ Expenses. If the sale of the Shares provided for herein is not consummated because
any condition to the obligations of the Underwriters set forth in Section 6 hereof is not satisfied, because of any termination pursuant
to Section 10 hereof or because of any refusal, inability or failure on the part of the Company to perform any agreement herein or comply
with any provision hereof other than by reason of a default by any of the Underwriters, the Company will reimburse the Underwriters severally
through the Representative on demand for all reasonable and documented out-of-pocket expenses (including reasonable and documented fees
and disbursements of counsel) that shall have been incurred by them in connection with the proposed purchase and sale of the Shares.
8.
Indemnification and Contribution.
(a)
The Company agrees to indemnify and hold harmless each Underwriter, the directors, officers, employees, affiliates and agents of
each Underwriter, each person who controls any Underwriter within the meaning of either the Act or the Exchange Act and each affiliate
of each Underwriter against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other U.S. federal or state statutory law or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration Statement for the registration of the Shares as originally filed
or in any amendment thereof, or in any Preliminary Prospectus, the Prospectus, any “road
show” as defined in Section 433(h) of the Act or any Written Testing-the-Waters
Communication, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company
by or on behalf of any Underwriter through the Representative specifically for inclusion therein, it being understood and agreed that
only such information furnished by any Underwriter consists of the information described in the last sentence of Section 8(b) hereof.
This indemnity agreement will be in addition to any liability which the Company may otherwise have.
(b) Each
Underwriter severally and not jointly agrees to indemnify and hold harmless the Company, each of its directors, each of its
executive officers who signs the Registration Statement, and each person who controls the Company within the meaning of either the
Act or the Exchange Act, to the same extent as the foregoing indemnity from the Company to each Underwriter, but only with reference
to written information relating to such Underwriter furnished to the Company by or on behalf of such Underwriter through the
Representative specifically for inclusion in the documents referred to in the foregoing indemnity. This indemnity agreement will be
in addition to any liability which any Underwriter may otherwise have. The Company acknowledges that the statements set forth (i) in
the last paragraph of the cover page regarding delivery of Shares and (ii) in the section entitled “Underwriting” of
the Statutory Prospectus and Prospectus, the last sentence of the third paragraph concerning sales to discretionary accounts and the
11th and 12th paragraphs concerning the purchase and sale of Shares in the open market and other stabilizing
transactions by the underwriters and penalty bids, constitute the only information furnished in writing by or on behalf of the
several Underwriters for inclusion in any Preliminary Prospectus and the Prospectus.
(c)
Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party
in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under
paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture
by the indemnifying party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying
party shall be entitled to appoint counsel of the indemnifying party’s
choice at the indemnifying party’s expense to represent the indemnified
party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for
the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however,
that such counsel shall be satisfactory to the indemnified party. Notwithstanding the indemnifying party’s
election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate
counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel
if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict
of interest, (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the
institution of such action or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise
or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(d) In
the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company and the
Underwriters severally agree to contribute to the aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending the same) (collectively, “Losses”)
to which the Company and one or more of the Underwriters may be subject in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and by the Underwriters on the other from the Offering. If the allocation provided
by the immediately preceding sentence is unavailable for any reason, the Company and the Underwriters severally shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one
hand and of the Underwriters on the other in connection with the statements or omissions which resulted in such Losses as well as
any other relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to the total net proceeds
from the Offering (before deducting expenses) received by it, and benefits received by the Underwriters shall be deemed to be equal
to the total underwriting discounts and commissions actually received by the Underwriters, in each case as set forth on the cover
page of the Prospectus. Relative fault shall be determined by reference to, among other things, whether any untrue or any alleged
untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information provided by
the Company on the one hand or the Underwriters on the other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or omission. The Company and the Underwriters agree that it
would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d),
in no event shall an Underwriter be required to contribute any amount in excess of the amount by which the total underwriting
discounts and commissions received by such Underwriter with respect to the Offering exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this paragraph (d), no
person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, each person
who controls an Underwriter within the meaning of either the Securities Act or the Exchange Act and each director, officer,
employee, affiliate and agent of an Underwriter shall have the same rights to contribution as such Underwriter, and each person who
controls the Company within the meaning of either the Securities Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have the same rights to contribution as the Company,
subject in each case to the applicable terms and conditions of this paragraph (d).
The Underwriters’ obligations to contribute pursuant to this
Section 8 are several in proportion to their respective purchase obligations hereunder and are not joint.
9.
Default by an Underwriter. If any one or more Underwriters shall fail to purchase and pay for any of the Shares agreed
to be purchased by such Underwriter or Underwriters hereunder and such failure to purchase shall constitute a default in the performance
of its or their obligations under this Agreement, the remaining Underwriters shall be obligated severally to take up and pay for (in the
respective proportions that the amount of Shares set forth opposite their names in Schedule I hereto bears to the aggregate amount of
Shares set forth opposite the names of all the remaining Underwriters) the Shares that the defaulting Underwriter or Underwriters agreed
but failed to purchase; provided, however, that in the event that the aggregate amount of Shares that the defaulting Underwriter or Underwriters
agreed but failed to purchase shall exceed 10% of the Firm Shares, the remaining Underwriters shall have the right to purchase all, but
shall not be under any obligation to purchase any, of the Shares. If within one Business Day after such default relating to more than
10% of the Firm Shares the remaining Underwriters do not arrange for the purchase of such Firm Shares, then the Company shall be entitled
to a further period of one Business Day within which to procure another party or parties reasonably satisfactory to you to purchase said
Firm Shares. In the event that neither the remaining Underwriters nor the Company purchase or arrange for the purchase of all of the Firm
Shares to which a default relates as provided in this Section 9, this Agreement will terminate without liability to any non-defaulting
Underwriter or the Company. In the event of a default by any Underwriter as set forth in this Section 9, the Closing Date shall be postponed
for such period, not exceeding five Business Days, as the Representative shall determine in order that the required changes in the Registration
Statement and the Prospectus or in any other documents or arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to the Company and any non-defaulting Underwriter for damages occasioned by its default
hereunder.
10.
Termination. This Agreement shall be subject to termination in the absolute discretion of the Representative, by
notice given to the Company prior to delivery of and payment for the Shares, if at any time prior to such delivery and payment (i) trading
in the Company’s Common Stock shall have been suspended by the Commission
or the New York Stock Exchange (or successor trading market) or trading in securities generally on the New York Stock Exchange or The
Nasdaq Capital Market (or successor trading market) shall have been suspended or limited or minimum prices shall have been established
on such exchange or trading market, (ii) the Company shall not have obtained authorization for quotation of the Common Stock on the New
York Stock Exchange (or successor trading market), (iii) a banking moratorium shall have been declared either by U.S. federal or New York
State authorities, (iv) there shall have occurred a material disruption in commercial banking or securities settlement or clearance services
or (v) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national emergency or
war, or other national or international calamity or crisis the effect of which on financial markets is such as to make it, in the sole
judgment of the Representative, impractical or inadvisable to proceed with the offering or delivery of the Shares as contemplated by the
Statutory Prospectus or the Prospectus (exclusive of any supplement thereto).
11.
Recognition of the U.S. Special Resolution Regimes.
(a) In
the event that any Underwriter that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the
transfer from such Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will be effective to
the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any such interest
and obligation, were governed by the laws of the United States or a state of the United States.
(b)
In the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to a proceeding
under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against such Underwriter are permitted
to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement
were governed by the laws of the United States or a state of the United States.
12.
Representations and Indemnities to Survive. The respective agreements, representations, warranties, indemnities and
other statements of the Company or its executive officers and of the Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or the Company or any of the
executive officers, directors, employees, agents, affiliates or controlling persons referred to in Section 8 hereof, and will survive
delivery of and payment for the Shares. The provisions of Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
13.
Notices. All communications hereunder will be in writing and effective only on receipt, and, if sent to the Representative,
will be mailed, delivered or telefaxed to Citigroup Global Markets Inc., 388 Greenwich Street, New York, New York, 10013, Attention: General
Counsel (fax no.: (646) 291-1469), and confirmed to White & Case LLP, 1221 Avenue of the Americas, New York, NY 10020, Attention:
Joel L. Rubinstein (fax no.: (212) 354-8113); or, if sent to the Company, will be mailed, delivered or telefaxed to AltC Acquisition Corp.,
Attention: Michael Klein, and confirmed to Weil, Gotshal & Manges LLP, Attention: Alexander D. Lynch (fax no.: (212) 310-8007).
14.
Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective
successors and the executive officers, directors, employees, agents and controlling persons and their affiliates referred to in Section
8 hereof, and no other person will have any right or obligation hereunder.
15.
No Fiduciary Duty. The Company hereby acknowledges that (a) the purchase and sale of the Shares pursuant to this
Agreement is an arm’s-length commercial transaction between the
Company, on the one hand, and the Underwriters and any affiliate through which it may be acting, on the other, (b) the Underwriters are
acting as principal and not as an agent or fiduciary of the Company and (c) the Company’s
engagement of the Underwriters in connection with the Offering and the process leading up to the Offering is as independent contractors
and not in any other capacity. Furthermore, the Company agrees that it is solely responsible for making its own judgments in connection
with the Offering (irrespective of whether any of the Underwriters has advised or is currently advising the Company on related or other
matters). The Company agrees that it will not claim that the Underwriters have rendered advisory services of any nature or respect, or
owe an agency, fiduciary or similar duty to the Company, in connection with such transaction or the process leading thereto.
16.
Integration. This Agreement supersedes all prior agreements and understandings (whether written or oral) between
the Company and the Underwriters, or any of them, with respect to the subject matter hereof.
17.
Applicable Law. This Agreement will be governed by and construed in accordance with the laws of the State of New
York applicable to contracts made and to be performed within the State of New York.
18.
Jurisdiction. The Company agrees that any suit, action or proceeding against the Company brought by any Underwriter,
the directors, officers, employees, affiliates and agents of any Underwriter, or by any person who controls any Underwriter, arising out
of or based upon this Agreement or the transactions contemplated hereby must be instituted in any State or U.S. federal court in the City
of New York and County of New York, and waives any objection which it may now or hereafter have to the laying of venue of any such proceeding,
and irrevocably submits to the exclusive jurisdiction of such courts in any suit, action or proceeding.
19.
Waiver of Jury Trial. THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
20.
In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)),
the Underwriters are required to obtain, verify and record information that identifies their respective clients, including the Company,
which information may include the name and address of their respective clients, as well as other information that will allow the Underwriters
to properly identify their respective clients.
21.
Counterparts. This Agreement may be signed in one or more counterparts, each of which shall constitute an original
and all of which together shall constitute one and the same agreement.
22.
Headings. The section headings used herein are for convenience only and shall not affect the construction hereof.
23.
Definitions. The terms which follow, when used in this Agreement, shall have the meanings indicated.
“Act” shall
mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.
“BHC Act Affiliate”
shall mean “affiliate” as defined in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k).
“Business Day”
shall mean any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized
or obligated by law to close in New York City.
“Commission”
shall mean the Securities and Exchange Commission.
“Covered Entity”
shall mean any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12
C.F.R. § 252.82(b), (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R.
§ 47.3(b) or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right”
shall mean default right as defined and interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“Effective Date”
shall mean each date and time that the Registration Statement, any post-effective amendment or amendments thereto and any Rule 462(b)
Registration Statement became or becomes effective.
“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.
“Execution Time”
shall mean [●], 2021, at [●] p.m., New York City time.
“Issuer Free Writing
Prospectus” shall mean an issuer free writing prospectus, as defined in Rule 433.
“Preliminary Prospectus”
shall mean the preliminary prospectus referred to in paragraph 1(a) above and any preliminary prospectus included in the Registration
Statement at the Effective Date that omits Rule 430A Information.
“Prospectus”
shall mean the prospectus relating to the Shares that is first filed pursuant to Rule 424(b) after the Execution Time.
“Registration Statement”
shall mean the registration statement referred to in paragraph 1(a) above, including exhibits and financial statements and any information
deemed part of such registration statement pursuant to Rule 430A, as amended or supplemented at the Execution Time and, in the event any
post-effective amendment thereto or any Rule 462(b) Registration Statement becomes effective prior to the Closing Date, shall also mean
such registration statement as so amended or such Rule 462(b) Registration Statement, as the case may be.
“Rule 158”,
“Rule 172”, “Rule 405”, “Rule 415”, “Rule 419”, “Rule
424”, “Rule 430A”, “Rule 430B”, “Rule 433” and “Rule 462”
refer to such rules under the Act.
“Rule 430A Information”
shall mean information with respect to the Securities and the Offering thereof permitted to be omitted from the Registration Statement
when it becomes effective pursuant to Rule 430A.
“Rule 462(b) Registration
Statement” shall mean a registration statement and any amendments thereto filed pursuant to Rule 462(b) relating to the Offering
covered by the registration statement referred to in Section 1(a) hereof.
“Statutory Prospectus”
shall mean the (i) Preliminary Prospectus dated [●], 2021, relating to the Shares and (ii) the Time of Delivery Information, if
any, set forth on Schedule II hereto.
“U.S. Special Resolution
Regime” shall mean each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II
of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.
If the foregoing is in accordance
with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance
shall represent a binding agreement among the Company and the several Underwriters.
[Signature Pages Follow]
| |
ALTC ACQUISITION CORP. |
| |
|
| |
By: |
|
| |
|
Name: |
Jay Taragin |
| |
|
Title: |
Chief Financial Officer |
[Signature Page to Underwriting
Agreement]
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
CITIGROUP GLOBAL MARKETS INC.
| By: |
|
|
| |
Name: |
John Eydenberg |
|
| |
Title: |
Vice Chairman of Banking, Capital Markets, and Advisory |
|
For themselves and the other several Underwriters
named in Schedule I to the foregoing Agreement.
[Signature Page to Underwriting
Agreement]
SCHEDULE I
| Underwriters | |
Number of
Underwritten
Shares
to be Purchased | |
| Citigroup Global Markets Inc. | |
| [●] | |
| J.P. Morgan Securities LLC | |
| [●] | |
| Goldman Sachs & Co. LLC | |
| [●] | |
| BofA Securities, Inc. | |
| [●] | |
| Total | |
| 40,000,000 | |
SCHEDULE II
Time of Delivery Information
| |
1. |
The initial price to the public of the Shares: $10.00 per Share. |
| |
2. |
Number of Firm Shares offered: 40,000,000. |
| |
3. |
The Company has granted an option to the Underwriters to purchase an aggregate of not more than 6,000,000 Option Shares. |
| |
4. |
The Sponsor has agreed to purchase additional Private Placement Shares if and when the Underwriters exercise their over-allotment option as necessary to maintain 100% of the Offering proceeds in the Trust Account. |
SCHEDULE III
Schedule of Written Testing-the-Waters Communications
Exhibit 3.3
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ALTC ACQUISITION CORP.
[●], 2021
AltC Acquisition Corp., a corporation organized
and existing under the laws of the State of Delaware, DOES HEREBY CERTIFY AS FOLLOWS:
1. The name of the Corporation is “AltC
Acquisition Corp.”. The original certificate of incorporation of the Corporation was filed under the name of Churchill Capital
Corp VIII with the Secretary of State of the State of Delaware on February 1, 2021 (the “Certificate”).
2. An Amended Certificate of Incorporation
of the Corporation was filed with the Secretary of State of the State of Delaware on February 23, 2021 (the "Amendment"
and, together with the Certificate, the "Original Certificate").
3. This Amended and Restated Certificate
of Incorporation (the “Amended and Restated Certificate”), which both restates and amends the provisions of
the Original Certificate, was duly adopted in accordance with Sections 228, 242 and 245 of the General Corporation Law of the
State of Delaware, as amended from time to time (the “DGCL”).
4. This Amended and Restated Certificate
of Incorporation shall become effective on the date of filing with the Secretary of State of Delaware.
5. The text of the Original Certificate is
hereby restated and amended in its entirety to read as follows:
Article I
NAME
The name of the corporation is AltC Acquisition
Corp. (the “Corporation”).
Article II
PURPOSE
The purpose of the Corporation is to engage
in any lawful act or activity for which corporations may be organized under the DGCL. In addition to the powers and privileges
conferred upon the Corporation by law and those incidental thereto, the Corporation shall possess and may exercise all the powers
and privileges that are necessary or convenient to the conduct, promotion or attainment of the business or purposes of the Corporation,
including, but not limited to, effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or
similar business combination, involving the Corporation and one or more businesses (a “Business Combination”).
Article III
REGISTERED AGENT
The address of the Corporation’s registered
office in the State of Delaware is 850 New Burton Road, Suite 201, Dover, County of Kent, State of Delaware, 19904, and the
name of the Corporation’s registered agent at such address is Cogency Global Inc.
Article IV
CAPITALIZATION
Section 4.1 Authorized
Capital Stock. The total number of shares of all classes of capital stock, each with a par value of $0.0001 per share, which
the Corporation is authorized to issue is 601,000,000 shares, consisting of (a) 600,000,000 shares of common stock (the “Common
Stock”), including (i) 500,000,000 shares of Class A common stock (the “Class A Common Stock”),
and (ii) 100,000,000 shares of Class B common stock (the “Class B Common Stock”), and (b) 1,000,000
shares of preferred stock (the “Preferred Stock”).”
Section 4.2 Preferred
Stock. Subject to Article IX of this Amended and Restated Certificate, the Board of Directors of the Corporation
(the “Board”) is hereby expressly authorized to provide out of the unissued shares of the Preferred Stock for
one or more series of Preferred Stock and to establish from time to time the number of shares to be included in each such series
and to fix the voting rights, if any, designations, powers, preferences and relative, participating, optional, special and other
rights, if any, of each such series and any qualifications, limitations and restrictions thereof, as shall be stated in the resolution
or resolutions adopted by the Board providing for the issuance of such series and included in a certificate of designation (a
“Preferred Stock Designation”) filed pursuant to the DGCL, and the Board is hereby expressly vested with the
authority to the full extent provided by law, now or hereafter, to adopt any such resolution or resolutions.
Section 4.3 Common
Stock.
(a) Voting.
(i) Except
as otherwise required by law or this Amended and Restated Certificate (including any Preferred Stock Designation and Section 9.9),
the holders of shares of Common Stock shall exclusively possess all voting power with respect to the Corporation.
(ii) Except
as otherwise required by law or this Amended and Restated Certificate (including any Preferred Stock Designation), the holders
of shares of Common Stock shall be entitled to one vote for each such share on each matter properly submitted to the stockholders
of the Corporation on which the holders of the Common Stock are entitled to vote.
(iii) Except
as otherwise required by law or this Amended and Restated Certificate (including any Preferred Stock Designation), at any annual
or special meeting of the stockholders of the Corporation, prior to the closing of the initial Business Combination, the holders
of Class B Common Stock, voting together as a single class, shall have the exclusive right to elect and remove any director
and the holders of Class A Common Stock shall have no right to vote on the election or removal of any director; provided,
however, that with respect to the election of directors in connection with a meeting of the stockholders of the Corporation in
which a Business Combination is submitted to the stockholders of the Corporation for approval, holders of the Class A Common
Stock and holders of the Class B Common Stock, voting together as a single class, shall have the exclusive right to vote
for the election of directors. The provisions described in the foregoing sentence may only be amended by a majority of the Class B
Common Stock then outstanding. Notwithstanding the foregoing, except as otherwise required by law or this Amended and Restated
Certificate (including any Preferred Stock Designation), holders of shares of any series of Common Stock shall not be entitled
to vote on any amendment to this Amended and Restated Certificate (including any amendment to any Preferred Stock Designation)
that relates solely to the terms of one or more outstanding series of Preferred Stock or other series of Common Stock if the holders
of such affected series of Preferred Stock or Common Stock, as applicable, are entitled, either separately or together with the
holders of one or more other such series, to vote thereon pursuant to this Amended and Restated Certificate (including any Preferred
Stock Designation) or the DGCL.
(b) Class B
Common Stock.
(i) Shares
of Class B Common Stock shall be convertible into shares of Class A Common Stock on a one-for-one basis (the “Initial
Conversion Ratio”) automatically at the time of the Business Combination.
(ii) Notwithstanding
the Initial Conversion Ratio, in the case that additional shares of Class A Common Stock, or Equity-linked Securities (as
defined below), are issued or deemed issued in excess of the amounts sold in the Corporation’s initial public offering of
securities (the “Offering”) and related to or in connection with the closing of the initial Business Combination,
the number of shares of Class A Common Stock into which all issued and outstanding shares of Class B Common Stock shall
automatically convert at the time of the closing of the initial Business Combination will be adjusted (unless the holders of a
majority of the outstanding shares of Class B Common Stock agree to waive such adjustments with respect to any such issuance
or deemed issuance) so that the number of shares of Class A Common Stock issuable upon conversion of all shares of Class B
Common Stock will equal, in the aggregate, 25% of the sum of (a) the total number of all shares of Class A Common Stock
issued in the Offering (including any shares of Class A Common Stock issued pursuant to the underwriters’ over-allotment
option) plus (b) the total number of shares of Class A Common Stock issued or deemed issued or issuable upon conversion
or exercise of any Equity-linked securities or rights issued or deemed issued in connection with or in relation to the consummation
of a Business Combination (including any shares of Class A Common Stock issued pursuant to a forward purchase agreement),
excluding any shares of Class A Common Stock or Equity-linked securities or rights issued, or to be issued, to the owners
of the target of such Business Combination in consideration for such persons’ interest in the Business Combination target,
any private placement shares issued to AltC Sponsor LLC, (the “Sponsor”), or an affiliate of the Sponsor
or the Corporation’s officers and directors upon the conversion of working capital loans made to the Corporation and any
shares of Class A Common Stock issued pursuant to a forward purchase agreement, minus (c) the number of shares of Class A Common Stock redeemed
in connection with a Business Combination, provided that such conversion of shares of Class B Common Stock shall never be
less than the Initial Conversion Ratio.
As used herein, the term “Equity-linked
Securities” means any securities of the Corporation which are convertible into or exchangeable or exercisable for Common
Stock.
Notwithstanding anything to the contrary
contained herein, (i) the foregoing adjustment to the Initial Conversion Ratio may be waived as to any particular issuance
or deemed issuance of additional shares of Class A Common Stock or Equity-linked Securities by the written consent or agreement
of holders of a majority of the shares of Class B Common Stock then outstanding consenting or agreeing separately as a single
class in the manner provided in Section 4.3(b)(iii), and (ii) in no event shall the Class B Common Stock
convert into Class A Common Stock at a ratio that is less than one-for-one.
The foregoing conversion ratio shall also
be adjusted to account for any subdivision (by stock split, subdivision, exchange, stock dividend, reclassification, recapitalization
or otherwise) or combination (by reverse stock split, exchange, reclassification, recapitalization or otherwise) or similar reclassification
or recapitalization of the outstanding shares of Class A Common Stock into a greater or lesser number of shares occurring
after the original filing of this Amended and Restated Certificate without a proportionate and corresponding subdivision, combination
or similar reclassification or recapitalization of the outstanding shares of Class B Common Stock.
Each share of Class B Common Stock shall
convert into its pro rata number of shares of Class A Common Stock pursuant to this Section 4.3(b). The
pro rata share for each holder of Class B Common Stock will be determined as follows: Each share of Class B Common
Stock shall convert into such number of shares of Class A Common Stock as is equal to the product of one (1) multiplied
by a fraction, the numerator of which shall be the total number of shares of Class A Common Stock into which all of the issued
and outstanding shares of Class B Common Stock shall be converted pursuant to this Section 4.3(b) and the
denominator of which shall be the total number of issued and outstanding shares of Class B Common Stock at the time of conversion.
(iii) Voting.
Except as otherwise required by law or this Amended and Restated Certificate (including any Preferred Stock Designation),
for so long as any shares of Class B Common Stock shall remain outstanding, the Corporation shall not, without the prior
vote or written consent of the holders of a majority of the shares of Class B Common Stock then outstanding, voting separately
as a single class, amend, alter or repeal any provision of this Amended and Restated Certificate, whether by merger, consolidation
or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences or relative, participating,
optional or other or special rights of the Class B Common Stock. Any action required or permitted to be taken at any meeting
of the holders of Class B Common Stock may be taken without a meeting, without prior notice and without a vote, if a consent
or consents in writing, setting forth the action so taken, shall be signed by the holders of the outstanding Class B Common
Stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at
which all shares of Class B Common Stock were present and voted and shall be delivered to the Corporation by delivery to
its registered office in the State of Delaware, its principal place of business, or to the Secretary of the Corporation or another
officer or agent of the Corporation having custody of the book in which minutes of proceedings of stockholders are recorded. Delivery
made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested.
Prompt written notice of the taking of corporate action without a meeting by less than unanimous written consent of the holders
of Class B Common Stock shall, to the extent required by law, be given to those holders of Class B Common Stock who
have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting
if the record date for notice of such meeting had been the date that written consents signed by a sufficient number of holders
of Class B Common Stock to take the action were delivered to the Corporation.
(c) Dividends.
Subject to applicable law, the rights, if any, of the holders of any outstanding series of the Preferred Stock and the provisions
of Article IX hereof, the holders of shares of Common Stock shall be entitled to receive such dividends and other
distributions (payable in cash, property or capital stock of the Corporation) when, as and if declared thereon by the Board from
time to time out of any assets or funds of the Corporation legally available therefor and shall share equally on a per share basis
in such dividends and distributions.
(d) Liquidation,
Dissolution or Winding Up of the Corporation. Subject to applicable law, the rights, if any, of the holders of any
outstanding series of the Preferred Stock and the provisions of Article IX hereof, in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, after payment or provision for payment of the debts and
other liabilities of the Corporation, the holders of shares of Common Stock shall be entitled to receive all the remaining assets
of the Corporation available for distribution to its stockholders, ratably in proportion to the number of shares of Class A
Common Stock (on an as converted basis with respect to the Class B Common Stock) held by them.
Section 4.4 Rights
and Options. The Corporation has the authority to create and issue rights, warrants and options entitling the holders thereof
to acquire from the Corporation any shares of its capital stock of any class or classes, with such rights, warrants and options
to be evidenced by or in instrument(s) approved by the Board. The Board is empowered to set the exercise price, duration,
times for exercise and other terms and conditions of such rights, warrants or options; provided, however, that the
consideration to be received for any shares of capital stock issuable upon exercise thereof may not be less than the par value
thereof.
Article V
BOARD OF DIRECTORS
Section 5.1 Board
Powers. The business and affairs of the Corporation shall be managed by, or under the direction of, the Board. In addition
to the powers and authority expressly conferred upon the Board by statute, this Amended and Restated Certificate or the By Laws
of the Corporation (“Bylaws”), the Board is hereby empowered to exercise all such powers and do all such acts
and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the DGCL, this Amended
and Restated Certificate, and any Bylaws adopted by the stockholders of the Corporation; provided, however, that
no Bylaws hereafter adopted by the stockholders of the Corporation shall invalidate any prior act of the Board that would have
been valid if such Bylaws had not been adopted.
Section 5.2 Number,
Election and Term.
(a) The
number of directors of the Corporation, other than those who may be elected by the holders of one or more series of the Preferred
Stock voting separately by class or series, shall be fixed from time to time exclusively by the Board pursuant to a resolution
adopted by a majority of the Board.
(b) Subject
to Section 5.5 hereof, the Board shall be divided into three classes, as nearly equal in number as possible and designated
Class I, Class II and Class III. The term of the initial Class I Directors shall expire at the first annual
meeting of the stockholders of the Corporation following the effectiveness of this Amended and Restated Certificate; the term
of the initial Class II Directors shall expire at the second annual meeting of the stockholders of the Corporation following
the effectiveness of this Amended and Restated Certificate; and the term of the initial Class III Directors shall expire
at the third annual meeting of the stockholders of the Corporation following the effectiveness of this Amended and Restated Certificate.
At each succeeding annual meeting of the stockholders of the Corporation, beginning with the first annual meeting of the stockholders
of the Corporation following the effectiveness of this Amended and Restated Certificate, successors to the class of directors
whose term expires at that annual meeting shall be elected for a three-year term or until the election and qualification of their
respective successors in office, subject to their earlier death, resignation or removal. Subject to Section 5.5 hereof,
if the number of directors is changed, any increase or decrease shall be apportioned by the Board among the classes so as to maintain
the number of directors in each class as nearly equal as possible, but in no case shall a decrease in the number of directors
shorten the term of any incumbent director. Directors shall be elected by a plurality of the votes cast at an annual meeting of
stockholders by holders of the Common Stock. The Board is hereby expressly authorized, by resolution or resolutions thereof, to
assign members of the Board already in office to the aforesaid classes at the time this Amended and Restated Certificate (and
therefore such classification) becomes effective in accordance with the DGCL.
(c) Unless
and except to the extent that the Bylaws shall so require, the election of directors need not be by written ballot.
Section 5.3 Newly
Created Directorships and Vacancies. Subject to Section 5.5 hereof, newly created directorships resulting from
an increase in the number of directors and any vacancies on the Board resulting from death, resignation, retirement, disqualification,
removal or other cause may be filled solely and exclusively by a majority vote of the remaining directors then in office, even
if less than a quorum, or by a sole remaining director (and not by stockholders), and any director so chosen shall hold office
for the remainder of the full term of the class of directors to which the new directorship was added or in which the vacancy occurred
and until his or her successor has been elected and qualified, subject, however, to such director’s earlier death, resignation,
retirement, disqualification or removal.
Section 5.4 Removal.
Subject to Section 5.5 hereof, and pursuant to Section 4.3(a)(iii) hereof, and except as otherwise
required by this Amended and Restated Certificate (including Section 9.9 hereof), any or all of the directors may
be removed from office at any time, with or without cause, by the affirmative vote of holders of a majority of the voting power
of all then outstanding shares of the Class B Common Stock entitled to vote generally in the election of directors, voting
together as a single class.
Section 5.5 Preferred
Stock—Directors. Notwithstanding any other provision of this Article V, and except as otherwise required
by law, whenever the holders of one or more series of the Preferred Stock shall have the right, voting separately by class or
series, to elect one or more directors, the term of office, the filling of vacancies, the removal from office and other features
of such directorships shall be governed by the terms of such series of the Preferred Stock as set forth in this Amended and Restated
Certificate (including any Preferred Stock Designation) and such directors shall not be included in any of the classes created
pursuant to this Article V unless expressly provided by such terms.
Article VI
BYLAWS
In furtherance and not in limitation of the
powers conferred upon it by law, the Board shall have the power and is expressly authorized to adopt, amend, alter or repeal the
Bylaws. The Bylaws also may be adopted, amended, altered or repealed by the stockholders of the Corporation; provided,
however, that in addition to any vote of the holders of any class or series of capital stock of the Corporation required
by law or by this Amended and Restated Certificate (including any Preferred Stock Designation), the affirmative vote of the holders
of a majority of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally
in the election of directors, voting together as a single class, shall be required for the stockholders of the Corporation to
adopt, amend, alter or repeal the Bylaws; and provided further, however, that no Bylaws hereafter adopted by the
stockholders of the Corporation shall invalidate any prior act of the Board that would have been valid if such Bylaws had not
been adopted.
Article VII
SPECIAL MEETINGS OF STOCKHOLDERS; ACTION BY WRITTEN CONSENT
Section 7.1 Special
Meetings. Subject to the rights, if any, of the holders of any outstanding series of the Preferred Stock, and to the requirements
of applicable law, special meetings of stockholders of the Corporation may be called only by the Chairman of the Board, Chief
Executive Officer of the Corporation, or the Board pursuant to a resolution adopted by a majority of the Board, and the ability
of the stockholders of the Corporation to call a special meeting is hereby specifically denied. Except as provided in the foregoing
sentence, special meetings of stockholders of the Corporation may not be called by another person or persons.
Section 7.2 Advance
Notice. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders
before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws.
Section 7.3 Action
by Written Consent. Except as may be otherwise provided for or fixed pursuant to this Amended and Restated Certificate (including
any Preferred Stock Designation) relating to the rights of the holders of any (i) Class B Common Stock or (ii) outstanding
series of Preferred Stock, subsequent to the consummation of the Offering, any action required or permitted to be taken by the
stockholders of the Corporation must be effected by a duly called annual or special meeting of such stockholders and may not be
effected by written consent of the stockholders other than with respect to the Class B Common Stock with respect to which
action may be taken by written consent.
Article VIII
LIMITED LIABILITY; INDEMNIFICATION
Section 8.1 Limitation
of Director Liability. A director of the Corporation shall not be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation
thereof is not permitted under the DGCL as the same exists or may hereafter be amended. Any amendment, modification or repeal
of the foregoing sentence shall not adversely affect any right or protection of a director of the Corporation hereunder in respect
of any act or omission occurring prior to the time of such amendment, modification or repeal.
Section 8.2 Indemnification
and Advancement of Expenses.
(a) To
the fullest extent permitted by applicable law, as the same exists or may hereafter be amended, the Corporation shall indemnify
and hold harmless each person who is or was made a party or is threatened to be made a party to or is otherwise involved in any
threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”)
by reason of the fact that he or she is or was a director or officer of the Corporation or, while a director or officer of the
Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust, other enterprise or nonprofit entity, including service with respect to an employee
benefit plan (an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity
as a director, officer, employee or agent, or in any other capacity while serving as a director, officer, employee or agent, against
all liability and loss suffered and expenses (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise
taxes and penalties and amounts paid in settlement) reasonably incurred by such indemnitee in connection with such proceeding.
The Corporation shall to the fullest extent not prohibited by applicable law pay the expenses (including attorneys’ fees)
incurred by an indemnitee in defending or otherwise participating in any proceeding in advance of its final disposition; provided,
however, that, to the extent required by applicable law, such payment of expenses in advance of the final disposition of the proceeding
shall be made only upon receipt of an undertaking, by or on behalf of the indemnitee, to repay all amounts so advanced if it shall
ultimately be determined that the indemnitee is not entitled to be indemnified under this Section 8.2 or otherwise.
The rights to indemnification and advancement of expenses conferred by this Section 8.2 shall be contract rights and
such rights shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of his or her heirs, executors and administrators. Notwithstanding the foregoing provisions of this Section 8.2(a),
except for proceedings to enforce rights to indemnification and advancement of expenses, the Corporation shall indemnify and advance
expenses to an indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding
(or part thereof) was authorized by the Board.
(b) The
rights to indemnification and advancement of expenses conferred on any indemnitee by this Section 8.2 shall not be
exclusive of any other rights that any indemnitee may have or hereafter acquire under law, this Amended and Restated Certificate,
the Bylaws, an agreement, vote of stockholders or disinterested directors, or otherwise.
(c) Any
repeal or amendment of this Section 8.2 by the stockholders of the Corporation or by changes in law, or the adoption
of any other provision of this Amended and Restated Certificate inconsistent with this Section 8.2, shall, unless
otherwise required by law, be prospective only (except to the extent such amendment or change in law permits the Corporation to
provide broader indemnification rights on a retroactive basis than permitted prior thereto), and shall not in any way diminish
or adversely affect any right or protection existing at the time of such repeal or amendment or adoption of such inconsistent
provision in respect of any proceeding (regardless of when such proceeding is first threatened, commenced or completed) arising
out of, or related to, any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision.
(d) This
Section 8.2 shall not limit the right of the Corporation, to the extent and in the manner authorized or permitted
by law, to indemnify and to advance expenses to persons other than indemnitees.
(e) To
the extent an indemnitee has rights to indemnification, advancement of expenses and/or insurance provided by a third party, (i) the
Corporation shall be the indemnitor of first resort (i.e., that its obligations to an indemnitee are primary and any obligation
of such third party to advance expenses or to provide indemnification for the same expenses or liabilities incurred by an indemnitee
are secondary), (ii) the Corporation shall be required to advance the full amount of expenses incurred by an indemnitee and
shall be liable for the full amount of all claims, liabilities, damages, losses, costs and expenses (including amounts paid in
satisfaction of judgments, in compromises and settlements, as fines and penalties and legal or other costs and reasonable expenses
of investigating or defending against any claim or alleged claim) to the extent legally permitted and as required by the terms
of this Amended and Restated Certificate of Incorporation, the Bylaws and the agreements to which the Corporation is a party,
without regard to any rights an indemnitee may have against such third party and (iii) the Corporation irrevocably waives,
relinquishes and releases such third party from any and all claims against them for contribution, subrogation or any other recovery
of any kind in respect thereof. No advancement or payment by such third party on behalf of an indemnitee with respect to any claim
for which an indemnitee has sought indemnification from the Corporation shall affect the foregoing, and such third party shall
have a right of contribution and be subrogated to the extent of such advancement or payment to all of the rights of recovery of
an indemnitee against the Corporation.
Article IX
BUSINESS COMBINATION REQUIREMENTS; EXISTENCE
Section 9.1 General.
(a) The
provisions of this Article IX shall apply during the period commencing upon the effectiveness of this Amended and
Restated Certificate and terminating upon the earlier to occur of (i) consummation of the Corporation’s initial Business
Combination or (ii) the filing of an amendment to, or amendment and restatement of, this Amended and Restated Certificate,
in connection with the closing of an initial Business Combination, which (A) amendment or amendment and restatement (1) has
been approved by the Board of Directors in connection with the initial Business Combination, and (2) has been adopted by
the requisite vote of the stockholders of the Corporation at a meeting of the stockholders of the Corporation held to approve
the initial Business Combination and (B) initial Business Combination has been approved by the requisite vote of the stockholders
of the Corporation (the earlier of such date in clauses “(i)” and “(ii)”), the “Article IX
Termination Date”). Other than any amendment to this Amended and Restated Certificate made in connection with an
initial Business Combination that (1) has been approved by the Board of Directors in connection with the initial Business
Combination, (2) has been adopted by the requisite vote of the stockholders of the Corporation at a meeting of the stockholders
of the Corporation held to approve the initial Business Combination and (3) is filed in connection with the initial Business
Combination that has been approved by the requisite vote of the stockholders of the Corporation, no amendment to this Article IX
shall be effective prior to the Article IX Termination Date unless approved by the affirmative vote of the holders of
at least sixty-five percent (65%) of all then outstanding shares of the Common Stock.
(b) Immediately
after the Offering, a certain amount of the net offering proceeds received by the Corporation in the Offering (including the proceeds
of any exercise of the underwriters’ over-allotment option) and certain other amounts specified in the Corporation’s
registration statement on Form S-1, as initially filed with the U.S. Securities and Exchange Commission (the “SEC”)
on January 8, 2021, as amended (the “Registration Statement”), shall be deposited in a trust account (the
“Trust Account”), established for the benefit of the Public Stockholders (as defined below) pursuant to a trust
agreement described in the Registration Statement. Except for the amounts withdrawn to fund the Corporation’s working capital
requirements, to the extent set forth in the Registration Statement, and/or to pay the Corporation’s taxes (“Permitted
Withdrawals”), none of the funds held in the Trust Account (including the interest earned on the funds held in the Trust
Account) will be released from the Trust Account until the earliest to occur of (i) the completion of the initial Business
Combination, (ii) the redemption of 100% of the Offering Shares (as defined below) if the Corporation is unable to complete
its initial Business Combination within the 24 months from the closing of the Offering, or 27 months from the closing of the Offering
if the Company has executed a letter of intent, agreement in principle or definitive agreement for an initial business combination
within 24 months from the closing of the Offering (“Completion Window”) or (iii) the redemption of shares
in connection with a vote seeking to amend any provisions of this Amended and Restated Certificate as described in Section 9.7.
Holders of shares of the Common Stock sold in the Offering (the “Offering Shares”)
(whether such Offering Shares were purchased in the Offering or in the secondary market following the Offering and whether or
not such holders are affiliates or officers or directors of the Corporation, or affiliates of any of the foregoing) are referred
to herein as “Public Stockholders.”
Section 9.2 Redemption
Rights.
(a) Prior
to the consummation of the initial Business Combination, the Corporation shall provide all holders of Offering Shares with the
opportunity to have their Offering Shares redeemed (irrespective of whether they voted in favor or against the Business Combination)
pursuant to, and subject to the limitations of, Sections 9.2(b) and 9.2(c) hereof (such rights of such
holders to have their Offering Shares redeemed pursuant to such Sections, the “Redemption Rights”) for cash
equal to the applicable redemption price per share determined in accordance with Section 9.2(b) hereof (the “Redemption
Price”); provided, however, that the Corporation will only redeem or repurchase Offering Shares so long as (after such
redemptions or repurchases) the Corporation’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (or any successor rule)) will be at least
$5,000,001 either immediately prior to or upon consummation of the initial Business Combination, or any greater net tangible assets
or cash requirement which may be contained in the agreement relating to the initial Business Combination (such limitation hereinafter
called the “Redemption Limitation”).
(b) If
the Corporation offers to redeem the Offering Shares other than in conjunction with a stockholder vote on an initial Business
Combination with a proxy solicitation pursuant to Regulation 14A under the Exchange Act (or any successor rules or regulations)
and filing proxy materials with the SEC, the Corporation shall offer to redeem the Offering Shares, with payment to be made upon
the consummation of the initial Business Combination, subject to lawfully available funds therefor, in accordance with the provisions
of Section 9.2(a) hereof pursuant to a tender offer in accordance with Rule 13e-4 and Regulation 14E under
the Exchange Act (or any successor rule or regulation) (such rules and regulations hereinafter called the “Tender
Offer Rules”) which it shall commence prior to the consummation of the initial Business Combination and shall file tender
offer documents with the SEC prior to the consummation of the initial Business Combination that contain substantially the same
financial and other information about the initial Business Combination and the Redemption Rights as is required under Regulation
14A under the Exchange Act (or any successor rule or regulation) (such rules and regulations hereinafter called the
“Proxy Solicitation Rules”), even if such information is not required under the Tender Offer Rules. If a stockholder
vote is required by law to approve the proposed initial Business Combination, or the Corporation decides to submit the proposed
initial Business Combination to the stockholders for their approval for business or other legal reasons, the Corporation shall
offer to redeem the Offering Shares, subject to lawfully available funds therefor, in accordance with the provisions of Section 9.2(a) hereof
in conjunction with a proxy solicitation pursuant to the Proxy Solicitation Rules (and not the Tender Offer Rules) at a price
per share equal to the Redemption Price calculated in accordance with the following provisions of this Section 9.2(b).
In the event that the Corporation offers to redeem the Offering Shares pursuant to a tender offer in accordance with the Tender
Offer Rules, the Redemption Price per share of the Common Stock payable to holders of the Offering Shares tendering their Offering
Shares pursuant to such tender offer shall be equal to the quotient obtained by dividing: (i) the aggregate amount on deposit
in the Trust Account as of two business days prior to the consummation of the initial Business Combination, including interest
not previously released to the Corporation as Permitted Withdrawals, by (ii) the total number of then outstanding Offering
Shares. If the Corporation offers to redeem the Offering Shares in conjunction with a stockholder vote on the proposed initial
Business Combination pursuant to a proxy solicitation, the Redemption Price per share of the Common Stock payable to holders of
the Offering Shares exercising their Redemption Rights (irrespective of whether they voted in favor or against the Business Combination)
shall be equal to the quotient obtained by dividing (a) the aggregate amount on deposit in the Trust Account as of two business
days prior to the consummation of the initial Business Combination, including interest not previously released to the Corporation
as Permitted Withdrawals, by (b) the total number of then outstanding Offering Shares. In the event that the Business Combination
is not consummated, any shares tendered or delivered for redemption or repurchase shall be returned to relevant holders.
(c) If
the Corporation offers to redeem the Offering Shares in conjunction with a stockholder vote on an initial Business Combination
pursuant to a proxy solicitation, a Public Stockholder, together with any affiliate of such stockholder or any other person with
whom such stockholder is acting in concert or as a “group” (as defined under Section 13(d)(3) of
the Exchange Act), shall be restricted from seeking Redemption Rights with respect to more than an aggregate of 15% of the Offering
Shares without the consent of the Corporation.
(d) In
the event that the Corporation has not consummated an initial Business Combination within the Completion Window, the Corporation
shall (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not
more than ten business days thereafter subject to lawfully available funds therefor, redeem 100% of the Offering Shares in consideration
of a per share price, payable in cash, equal to the quotient obtained by dividing (A) the aggregate amount then on deposit
in the Trust Account, including interest (net of amounts withdrawn as Permitted Withdrawals and less up to $100,000 of such net
interest to pay dissolution expenses), by (B) the total number of then outstanding Offering Shares, which redemption will
completely extinguish rights of the Public Stockholders (including the right to receive further liquidating distributions, if
any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of the remaining stockholders and the Board in accordance with applicable law, dissolve and liquidate, subject in each case to
the Corporation’s obligations under the DGCL to provide for claims of creditors and other requirements of applicable law.
(e) If
the Corporation offers to redeem the Offering Shares in conjunction with a stockholder vote on an initial Business Combination,
the Corporation shall consummate the proposed initial Business Combination only if (i) such initial Business Combination
is approved by the affirmative vote of the holders of a majority of the shares of the Common Stock that are voted at a stockholder
meeting held to consider such initial Business Combination (or such other vote as the applicable law or stock exchange rules then
in effect may require) and (ii) the Redemption Limitation is not exceeded.
(f) If
the Corporation conducts a tender offer pursuant to Section 9.2(b), the Corporation shall consummate the proposed
initial Business Combination only if the Redemption Limitation is not exceeded.
Section 9.3 Distributions
from the Trust Account.
(a) A
Public Stockholder shall be entitled to receive funds from the Trust Account only as provided in Sections 9.2(a), 9.2(b),
9.2(d) or 9.7 hereof. In no other circumstances shall a Public Stockholder have any right or interest of any
kind in or to distributions from the Trust Account, and no stockholder other than a Public Stockholder shall have any interest
in or to the Trust Account.
(b) Each
Public Stockholder that does not exercise its Redemption Rights shall retain its interest in the Corporation and shall be deemed
to have given its consent to the release of the remaining funds in the Trust Account to the Corporation, and following payment
to any Public Stockholders exercising their Redemption Rights, the remaining funds in the Trust Account shall be released to the
Corporation.
(c) The
exercise by a Public Stockholder of the Redemption Rights shall be conditioned on such Public Stockholder following the specific
procedures for redemptions set forth by the Corporation in any applicable tender offer or proxy materials sent to the Public Stockholders
relating to the proposed initial Business Combination. Payment of the amounts necessary to satisfy the Redemption Rights properly
exercised shall be made as promptly as practical after the consummation of the initial Business Combination.
Section 9.4 Share
Issuances. Prior to the consummation of the Corporation’s initial Business Combination, the Corporation shall not issue
any additional shares of capital stock of the Corporation that would entitle the holders thereof to receive funds from the Trust
Account or vote on any initial Business Combination, on any pre-Business Combination activity or on any amendment to this Article IX.
Section 9.5 Transactions
with Affiliates. In the event the Corporation enters into an initial Business Combination with a target business that is affiliated
with an owner of Class B Common Stock, or the directors or officers of the Corporation, the Corporation, or a committee of
the independent directors of the Corporation, shall obtain an opinion from an independent accounting firm or an independent investment
banking firm that is a member of the Financial Industry Regulatory Authority or an independent accounting firm that such Business
Combination is fair to the Corporation from a financial point of view.
Section 9.6 No
Transactions with Other Blank Check Companies. The Corporation shall not enter into an initial Business Combination with another
blank check company or a similar company with nominal operations.
Section 9.7 Additional
Redemption Rights. If, in accordance with Section 9.1(a), any amendment is made to this Certificate of Incorporation
to modify the substance or timing of the Corporation’s obligation to provide for the redemption of the Offering Shares in
connection with an initial Business Combination or to redeem 100% of the Offering Shares if the Corporation has not consummated
an initial Business Combination within the Completion Window or with respect to any other material provisions of this Certificate
of Incorporation relating to stockholder’s rights or pre-initial Business Combination activity, the Public Stockholders
shall be provided with the opportunity to redeem their Offering Shares upon the approval of any such amendment, at a per share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (net of amounts
withdrawn as Permitted Withdrawals), divided by the number of then outstanding Offering Shares. The Corporation’s ability
to provide such opportunity is subject to the Redemption Limitation.
Section 9.8 Minimum
Value of Target. The Corporation’s initial Business Combination must occur with one or more operating businesses that
together have a fair market value of at least 80% of the net assets held in the Trust Account (net of amounts disbursed as Permitted
Withdrawals and excluding the amount of any deferred underwriting discount) at the time of the agreement to enter into the initial
Business Combination.
Section 9.9 Appointment
and Removal of Directors. Notwithstanding any other provision in this Amended and Restated Certificate, prior to the closing
of the initial Business Combination, the holders of Class B Common Stock shall have the exclusive right to elect and remove
any director, and the holders of Class A Common Stock shall have no right to vote on the election or removal of any director.
This Section 9.9 may be amended only by a resolution passed by a holders of at least 90% of the outstanding Common Stock
entitled to vote thereon.
Article X
BUSINESS COMBINATIONS
Section 10.1 Section 203
of the DGCL. The Corporation will not be subject to Section 203 of the DGCL.
Section 10.2 Limitations
on Business Combinations. Notwithstanding Section 10.1, the Corporation shall not engage in any business combination
(as defined below), at any point in time at which the Corporation’s common stock is registered under Section 12(b) or
12(g) of the Exchange Act (as defined below), with any interested stockholder (as defined below) for a period of three years
following the time that such stockholder became an interested stockholder, unless:
(a) prior
to such time, the Board approved either the business combination or the transaction which resulted in the stockholder becoming
an interested stockholder, or
(b) upon
consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock (as defined below) of the Corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested
stockholder) those shares owned by (i) persons who are directors and also officers of the Corporation or (ii) employee
stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer, or
(c) at
or subsequent to such time, the business combination is approved by the Board and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock of the Corporation
which is not owned by the interested stockholder.
Section 10.3 Definitions.
For the purposes of this Article X:
(a) “affiliate”
means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common
control with, another person.
(b) “associate,”
when used to indicate a relationship with any person, means: (i) any corporation, partnership, unincorporated association
or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more
of any class of voting stock; (ii) any trust or other estate in which such person has at least a 20% beneficial interest
or as to which such person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such
person, or any relative of such spouse, who has the same residence as such person.
(c) “business
combination,” when used in reference to the Corporation and any interested stockholder, means:
(i) any
merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation (a) with
the interested stockholder, or (b) with any other corporation, partnership, unincorporated association or other entity if
the merger or consolidation is caused by the interested stockholder and as a result of such merger or consolidation Article XI
is not applicable to the surviving entity;
(ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except
proportionately as a stockholder of the Corporation, to or with the interested stockholder, whether as part of a dissolution or
otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets
have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Corporation
determined on a consolidated basis or the aggregate market value of all the outstanding stock of the Corporation;
(iii) any
transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary
of the Corporation of any stock of the Corporation or of such subsidiary to the interested stockholder, except: (a) pursuant
to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation
or any such subsidiary which securities were outstanding prior to the time that the interested stockholder became such; (b) pursuant
to a merger under Section 251(g) of the DGCL; (c) pursuant to a dividend or distribution paid or made, or the exercise,
exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such
subsidiary which security is distributed, pro rata to all holders of a class or series of stock of the Corporation subsequent
to the time the interested stockholder became such; (d) pursuant to an exchange offer by the Corporation to purchase stock
made on the same terms to all holders of said stock; or (e) any issuance or transfer of stock by the Corporation; provided,
however, that in no case under items (c)-(e) of this subsection (iii) shall there be an increase in the interested
stockholder’s proportionate share of the stock of any class or series of the Corporation or of the voting stock of the Corporation
(except as a result of immaterial changes due to fractional share adjustments);
(iv) any
transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect,
directly or indirectly, of increasing the proportionate share of the stock of any class or series, or securities convertible into
the stock of any class or series, of the Corporation or of any such subsidiary which is owned by the interested stockholder, except
as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares
of stock not caused, directly or indirectly, by the interested stockholder; or
(v) any
receipt by the interested stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of the Corporation),
of any loans, advances, guarantees or pledges (other than those expressly permitted in subsections (i)-(iv) above) provided
by or through the Corporation or any direct or indirect majority-owned subsidiary.
(d) “control,”
including the terms “controlling,” “controlled by” and “under common control with,”
means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of
a person, whether through the ownership of voting stock, by contract, or otherwise. A person who is the owner of 20% or more of
the outstanding voting stock of the Corporation, partnership, unincorporated association or other entity shall be presumed to
have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing,
a presumption of control shall not apply where such person holds voting stock, in good faith and not for the purpose of circumventing
this Article X, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually
or as a group have control of such entity.
(e) “interested
stockholder” means any person (other than the Corporation or any direct or indirect majority-owned subsidiary of the
Corporation) that (i) is the owner of 15% or more of the outstanding voting stock of the Corporation, or (ii) is an
affiliate or associate of the Corporation and was the owner of 15% or more of the outstanding voting stock of the Corporation
at any time within the three year period immediately prior to the date on which it is sought to be determined whether such person
is an interested stockholder, and the affiliates and associates of such person; provided, however, that the term
“interested stockholder” shall not include (a) the Principal Stockholder or Principal Stockholder Transferees
or any “group” (within the meaning of Rule 13d-5 of the Exchange Act) that includes any Principal Stockholder
or Principal Stockholder Transferee or (b) any person whose ownership of shares in excess of the 15% limitation set forth
herein is the result of any action taken solely by the Corporation; provided that such person specified in this clause
(b) shall be an interested stockholder if thereafter such person acquires additional shares of voting stock of the Corporation,
except as a result of further corporate action not caused, directly or indirectly, by such person. For the purpose of determining
whether a person is an interested stockholder, the voting stock of the Corporation deemed to be outstanding shall include stock
deemed to be owned by the person through application of the definition of “owner” below but shall not include any
other unissued stock of the Corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
(f) “owner,”
including the terms “own” and “owned,” when used with respect to any stock, means a person
that individually or with or through any of its affiliates or associates:
(i) beneficially
owns such stock, directly or indirectly; or
(ii) has
(a) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options,
or otherwise; provided, however, that a person shall not be deemed the owner of stock tendered pursuant to a tender
or exchange offer made by such person or any of such person’s affiliates or associates until such tendered stock is accepted
for purchase or exchange; or (b) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided,
however, that a person shall not be deemed the owner of any stock because of such person’s right to vote such stock
if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response
to a proxy or consent solicitation made to ten or more persons; or
(iii) has
any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable
proxy or consent as described in item (b) of subsection (ii) above), or disposing of such stock with any other person
that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such stock.
(g) “person”
means any individual, corporation, partnership, unincorporated association or other entity.
(h) “stock”
means, with respect to any corporation, capital stock and, with respect to any other entity, any equity interest.
(i) “Principal
Stockholder” means, collectively, (i) the Sponsor, (ii) M. Klein and Company, (iii) Michael S. Klein,
and (iv) any affiliate or successor of a person referenced in clauses (i) through (iii) of this definition.
(j) “Principal
Stockholder Transferee” means any Person who acquires voting stock of the Corporation from the Principal Stockholder
(other than in connection with a public offering) and who is designated in writing by the Principal Stockholder as a “Principal
Stockholder Transferee.”
(k) “voting
stock” means stock of any class or series entitled to vote generally in the election of directors.
Article XI
CORPORATE OPPORTUNITY
To the fullest extent allowed by law (including
without limitation Section 122(17) of the DGCL, the doctrine of corporate opportunity, or any other analogous doctrine, shall
not apply with respect to the Corporation or any of its officers or directors, or any of their respective affiliates, and the
Corporation renounces any expectancy that any of the directors or officers of the Corporation, or any of their respective affiliates,
will offer any such corporate opportunity of which he or she may become aware to the Corporation, except, the doctrine of corporate
opportunity shall apply with respect to any of the directors or officers of the Corporation only with respect to a corporate opportunity
that was offered to such person solely and exclusively in his or her capacity as a director or officer of the Corporation and
such opportunity is one the Corporation is legally and contractually permitted to undertake and would otherwise be reasonable
for the Corporation to pursue, and to the extent the director or officer is permitted to refer that opportunity to the Corporation
without violating any legal obligation.
Article XII
AMENDMENT OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
The Corporation reserves the right at any
time and from time to time to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate
(including any Preferred Stock Designation), and other provisions authorized by the laws of the State of Delaware at the time
in force that may be added or inserted, in the manner now or hereafter prescribed by this Amended and Restated Certificate and
the DGCL; and, except as set forth in Article VIII, all rights, preferences and privileges of whatever nature herein
conferred upon stockholders, directors or any other persons by and pursuant to this Amended and Restated Certificate in its present
form or as hereafter amended are granted subject to the right reserved in this Article XII; provided, however,
that Article IX of this Amended and Restated Certificate may be amended only as provided therein.
Article XIII
EXCLUSIVE FORUM FOR CERTAIN LAWSUITS
Section 13.1 Forum. Unless
the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if
the Court of Chancery lacks jurisdiction, a state court located within the State of Delaware or the federal district court for the
District of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for: any (i) derivative action or
proceeding brought on behalf of the Corporation, (ii) action asserting a claim of breach of a fiduciary duty owed by or other
wrongdoing by any current or former director, officer, employee, agent or stockholder of the Corporation to the Corporation or the
Corporation’s stockholders, (iii) action asserting a claim under any provision of the DGCL or this Amended and Restated
Certificate or the Bylaws (as either may be amended from time to time), or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of
Delaware, or (iv) action asserting a claim governed by the internal affairs doctrine.
The federal district courts of the United States of America shall be the sole and exclusive forum for the resolution of any action asserting
a claim arising under the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder. The provisions of this
Section 13.1 shall not preclude or contract the scope of exclusive federal jurisdiction for suits brought under the Exchange Act or the
rules and regulations promulgated thereunder.
If any provision or provisions of this Section 13.1 shall be held to be invalid, illegal or unenforceable as applied to any person or
entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability
of such provisions in any other circumstance and of the remaining provisions of this Section 13.1 (including, without limitation, each
portion of any sentence of this Section 13.1 containing any such provision held to be invalid, illegal or unenforceable that is not itself
held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall
not in any way be affected or impaired thereby. Any person or entity purchasing or otherwise acquiring or holding any interest in shares
of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of Section 13.1.
Section 13.2 Consent
to Jurisdiction. If any action the subject matter of which is within the scope of Section 13.1 immediately above
is filed in a court other than a court located within the State of Delaware (a “Foreign Action”) in the name
of any stockholder, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the state and
federal courts located within the State of Delaware in connection with any action brought in any such court to enforce Section 13.1
immediately above (an “FSC Enforcement Action”) and (ii) having service of process made upon such
stockholder in any such FSC Enforcement Action by service upon such stockholder’s counsel in the Foreign Action as agent
for such stockholder.
Article XIV
SEVERABILITY
If any provision or provisions (or any part
thereof) of this Amended and Restated Certificate shall be held to be invalid, illegal or unenforceable as applied to any person
or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, (i) the validity, legality
and enforceability of such provisions in any other circumstance and of the remaining provisions of this Amended and Restated Certificate
(including, without limitation, each portion of any paragraph of this Amended and Restated Certificate containing any such provision
held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application
of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby, and (ii) the
provisions of this Amended and Restated Certificate (including, without limitation, each portion of any paragraph of this Amended
and Restated Certificate containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as
to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their
faith service or for the benefit of the Corporation to the fullest extent permitted by law.
[Signature page follows]
IN WITNESS WHEREOF, AltC Acquisition Corp.
has caused this Amended and Restated Certificate to be duly executed and acknowledged in its name and on its behalf by an authorized
officer as of the date first set forth above.
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ALTC ACQUISITION CORP. |
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By: |
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Name: |
Jay Taragin |
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Title: |
Chief Financial Officer |
[Signature Page to Amended and Restated Certificate of Incorporation]
Exhibit 4.1
NUMBER
C-
SHARES
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP
ALTC ACQUISITION CORP.
INCORPORATED UNDER THE LAWS OF THE STATE
OF DELAWARE
CLASS A COMMON STOCK
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF $0.0001 EACH OF THE CLASS A COMMON STOCK OF
ALTC ACQUISITION CORP.
(THE “CORPORATION”)
transferable on the books of the Corporation in person or by
duly authorized attorney upon surrender of this certificate properly endorsed.
The Corporation will be forced to offer
to redeem of all its shares of Class A common stock in connection with an initial business combination or to redeem all of
its shares of Class A common stock if it is unable to complete a business combination by , 2023 (unless extended pursuant
to the Corporation’s Certificate of Incorporation as in effect at such time), all as more fully described in the Corporation’s
final prospectus dated , 2021.
This certificate is not valid unless countersigned
by the Transfer Agent and registered by the Registrar.
Witness the seal of the Corporation and
the facsimile signatures of its duly authorized officers.
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| Secretary |
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[Corporate Seal] Delaware |
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Chief Executive Officer |
ALTC ACQUISITION CORP.
The Corporation will furnish without charge
to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof of the Corporation and the qualifications, limitations, or restrictions of such
preferences and/or rights. This certificate and the shares represented thereby are issued and shall be held subject to all the
provisions of the Certificate of Incorporation and all amendments thereto and resolutions of the Board of Directors providing for
the issue of securities (copies of which may be obtained from the secretary of the Corporation), to all of which the holder of
this certificate by acceptance hereof assents. The following abbreviations, when used in the inscription on the face of this certificate,
shall be construed as though they were written out in full according to applicable laws or regulations:
| TEN COM |
— |
as tenants in common |
UNIF GIFT MIN ACT — |
Custodian |
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| TEN ENT |
— |
as tenants by the entireties |
|
(Cust) |
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(Minor) |
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| JT TEN |
— |
as joint tenants with right of survivorship and not as tenants in common |
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under Uniform Gifts to Minors Act
(State) |
Additional abbreviations may also be used
though not in the above list.
For value received, hereby sells, assigns
and transfers unto
(PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER(S) OF ASSIGNEE(S))
(PLEASE PRINT OR TYPEWRITE NAME(S) AND
ADDRESS(ES), INCLUDING ZIP CODE, OF ASSIGNEE(S))
Shares of the capital stock represented
by the within Certificate, and hereby irrevocably constitutes and appoints
Attorney to transfer the said stock on the
books of the within named Corporation with full power of substitution in the premises.
Dated:
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Notice: The signature to this assignment must
correspond
with the name as written upon the face of
the certificate in every particular, without alteration
or enlargement or any change
whatever. |
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| Signature(s) Guaranteed: |
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| By |
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THE SIGNATURE(S) MUST BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15 (OR ANY SUCCESSOR RULE).
In each case, as more fully described in
the Corporation’s final prospectus dated , 2021, the holder(s) of this certificate shall be entitled to receive a pro-rata
portion of certain funds held in the trust account established in connection with its initial public offering only in the event
that (i) the Corporation redeems the shares of Class A common stock sold in the Company’s initial public offering
and liquidates because it does not consummate an initial business combination by , 2023 (or such later date if such period is extended
pursuant to the Company’s Certificate of Incorporation as in effect at such time), (ii) the Corporation redeems the
shares of Class A common stock sold in its initial public offering in connection with a stockholder vote to amend the Corporation’s
amended and restated certificate of incorporation to modify the substance or timing of the Corporation’s obligation to redeem
100% of the Class A common stock if it does not consummate an initial business combination by , 2023 (or such later date if
such period is extended pursuant to the Company’s Certificate of Incorporation as in effect at such time) or with respect
to any other material provisions relating to stockholders’ rights of pre-initial business combination activity, or (iii) if
the holder(s) seek(s) to redeem for cash his, her or its respective shares of Class A common stock in connection
with a tender offer (or proxy solicitation, solely in the event the Corporation seeks stockholder approval of the proposed initial
business combination) setting forth the details of a proposed initial business combination. In no other circumstances shall the
holder(s) have any right or interest of any kind in or to the trust account.
Exhibit 10.2
[●], 2021
AltC Acquisition Corp.
640 Fifth Avenue, 12th Floor
New York, NY 10019
(212) 380-7500
Re: Initial
Public Offering
Ladies and Gentlemen:
This letter (this “Letter
Agreement”) is being delivered to you in accordance with the Underwriting Agreement (the “Underwriting
Agreement”) to be entered into by and among AltC Acquisition Corp., a Delaware
corporation (the “Company”) and Citigroup Global Markets Inc. (the “Representative”), relating
to an underwritten initial public offering (the “Public Offering”), of up to 46,000,000 (including up to
6,000,000 shares that may be purchased to cover over-allotments, if any) shares (the “Shares”) of the Company’s
Class A common stock, par value $0.0001 per share (the “Common Stock”) The Shares will be sold in the Public
Offering pursuant to a registration statement on Form S-1 and a prospectus (the “Prospectus”) filed by the
Company with the U.S. Securities and Exchange Commission (the “Commission”). Certain capitalized terms used
herein are defined in paragraph 11 hereof.
In order to induce the Company and the
Representative to enter into the Underwriting Agreement and to proceed with the Public Offering and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, [AltC Sponsor LLC (the “Insider”
or “Sponsor”)] [the undersigned, whom is a member of the Company’s board of directors and/or management
team (the “Insider”), hereby agrees with the Company as follows:
1. The
Insider agrees with the Company that if the Company seeks stockholder approval of a proposed Business Combination, then in connection
with such proposed Business Combination, the Insider shall (i) vote any shares of Capital Stock owned by the Insider in favor
of any proposed Business Combination and (ii) not redeem any shares of Common Stock owned by the Insider in connection with
such stockholder approval. If the Company seeks to consummate a proposed Business Combination by engaging in a tender offer, the
Insider agrees that the Insider will not sell or tender any shares of Capital Stock owned by the Insider in connection therewith.
2. The
Insider hereby agrees with the Company that in the event that the Company fails to consummate a Business Combination within 24
months from the closing of the Public Offering, or such later period approved by the Company’s stockholders in accordance
with the Company’s amended and restated certificate of incorporation (the “Charter”), the Insider shall
take all reasonable steps to cause the Company to (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but not more than 10 business days thereafter, subject to lawfully available funds therefor, redeem
100% of the Shares sold in the Public Offering (the “Offering Shares”), at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (net of amounts
withdrawn to fund the Company’s working capital requirements, subject to an annual limit of $1,000,000, and/or to pay the
Company’s taxes (“Permitted Withdrawals”)) and less up to $100,000 of interest to pay dissolution expenses)),
divided by the number of then outstanding Offering Shares, which redemption will completely extinguish all Public Stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law,
and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining
stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations
under Delaware law to provide for claims of creditors and other requirements of applicable law. The Insider agrees to not propose
any amendment to the Charter that would modify the substance or timing of the Company’s obligation to redeem 100% of the
Offering Shares if the Company does not complete a Business Combination within the required time period set forth in the Charter
or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity,
unless the Company provides its Public Stockholders with the opportunity to redeem their Offering Shares upon approval of any
such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including
interest (net of Permitted Withdrawals), divided by the number of then outstanding Offering Shares.
The Insider acknowledges that
the Insider has no right, title, interest or claim of any kind in or to any monies held in the Trust Account as a result of any
liquidation of the Company with respect to the Founder Shares held by the Insider. The Insider hereby further waives, with respect
to any shares of Common Stock held by the Insider, if any, any redemption rights the Insider may have in connection with the consummation
of a Business Combination, including, without limitation, any such rights available in the context of a stockholder vote to approve
such Business Combination or in the context of a tender offer made by the Company to purchase shares of Common Stock (although
the Insider and the Insider’s affiliates shall be entitled to redemption and liquidation rights with respect to any Offering
Shares they hold if the Company fails to consummate a Business Combination within the time period set forth in the Charter or
in connection with a stockholder vote to approve an amendment to the Charter to modify the substance or timing of the Company’s
obligation to redeem 100% of the Offering Shares if the Company does not complete a Business Combination within the time period
set forth in the Charter or with respect to any other material provisions relating to stockholders' rights or pre-initial business
combination activity).
3. During
the period commencing on the effective date of the Underwriting Agreement and ending 180 days after such date, the Insider shall
not, without the prior written consent of the Representative, (i) sell, offer to sell, contract or agree to sell, hypothecate,
pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase
a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the Commission
promulgated thereunder, with respect to any shares of Capital Stock or any securities convertible into, or exercisable,
or exchangeable for, shares of Common Stock owned by the Insider, (ii) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of ownership of any shares of Capital Stock
or any securities convertible into, or exercisable, or exchangeable for, shares of Common Stock owned by the Insider, whether
any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (iii) publicly announce any
intention to effect any transaction specified in clause (i) or (ii). The Insider acknowledges and agrees that, prior to the
effective date of any release or waiver of the restrictions set forth in this paragraph 3 or paragraph 7 below, the Company shall
announce the impending release or waiver by press release through a major news service at least two business days before the effective
date of the release or waiver. Any such release or waiver granted shall only be effective two business days after the publication
date of such press release. The provisions of this paragraph will not apply if (i) the release or waiver is effected solely
to permit a transfer of securities without consideration and (ii) the transferee has agreed in writing to be bound by the
same terms described in this Letter Agreement to the extent and for the duration that such terms remain in effect at the time
of the transfer.
4. In
the event of the liquidation of the Trust Account, [AltC Sponsor LLC (the “Sponsor”)] [the Sponsor] (which
for purposes of clarification shall not extend to any other shareholders, members or managers of the Sponsor) [has agreed] [agrees]
to indemnify and hold harmless the Company against any and all loss, liability, claim, damage and expense whatsoever (including,
but not limited to, any and all legal or other expenses reasonably incurred in investigating, preparing or defending against any
litigation, whether pending or threatened, or any claim whatsoever) to which the Company may become subject as a result of any
claim by (i) any third party for services rendered or products sold to the Company or (ii) any prospective target business
with which the Company has entered into a letter of intent, confidentiality or other similar agreement for a Business Combination
(a “Target”); provided, however, that such indemnification of the Company by the Sponsor (x) shall
apply only to the extent necessary to ensure that such claims by a third party or a Target do not reduce the amount of funds in
the Trust Account to below the lesser of (i) $10.00 per Offering Share or (ii) the actual amount per Offering Share
held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per Offering Share is then
held in the Trust Account due to reductions in the value of the trust assets less Permitted Withdrawals, (y) shall not apply
to any claims by a third party (including a Target) that executed a waiver of any and all rights to the monies held in the Trust
Account (whether or not such waiver is enforceable) and (z) shall not apply to any claims under the Company’s indemnity
of the Representative against certain liabilities, including liabilities under the Securities Act of 1933, as amended. The Sponsor
shall have the right to defend against any such claim with counsel of its choice reasonably satisfactory to the Company if, within
15 days following written receipt of notice of the claim to the Sponsor, the Sponsor notifies the Company in writing that it shall
undertake such defense. For the avoidance of doubt, none of the Company’s officers or directors will indemnify the Company
for claims by third parties, including, without limitation, claims by vendors and prospective target businesses.
5. To
the extent that the Representative does not exercise its over-allotment option to purchase up to an additional 6,000,000 Shares
within 45 days from the date of the Prospectus (and as further described in the Prospectus), the Sponsor [agrees] [has agreed] to
forfeit, at no cost, a number of Founder Shares in the aggregate equal to the product of 1,500,000 multiplied by a fraction,
(i) the numerator of which is 6,000,000 minus the number of Shares purchased by the Representative upon the exercise of its
over-allotment option, and (ii) the denominator of which is 6,000,000. The forfeiture will be adjusted to the extent that the
over-allotment option is not exercised in full by the Representative so that the Initial Stockholders will own an aggregate of 20.0%
of the Company’s issued and outstanding shares of Capital Stock after the Public Offering (not including the Private Placement
Shares). To the extent that the size of the Public Offering is increased or decreased, the Company will effect a capitalization or
share repurchase, redemption or stock split or other appropriate mechanism, as applicable, immediately prior to the consummation of
the Public Offering in such amount as to maintain the ownership of the Capital Stock of the Initial Stockholders prior to the Public
Offering at 20.0% of the Company’s issued and outstanding Capital Stock upon the consummation of the Public Offering. In
connection with such increase or decrease in the size of the Public Offering, (A) references to 6,000,000 in the numerator and
denominator of the formula in the first sentence of this paragraph shall be changed to a number equal to 15% of the number of shares
of Common Stock issued in the Public Offering and (B) the reference to 1,500,000 in the formula set forth in the immediately
preceding sentence shall be adjusted to such number of Founder Shares that the Sponsor would have to return to the Company in order
to hold (with all of the Initial Stockholders) an aggregate of 20.0% of the Company’s issued and outstanding Capital Stock
after the Public Offering (not including the Private Placement Shares).
6. (a) The
Insider hereby agrees and acknowledges that: (i) the Representative and the Company would be irreparably injured in the event
of a breach by the Insider of the Insider’s obligations under paragraphs 1, 2, 3, 4, 5, 7(a), 7(b), and 9, as applicable,
of this Letter Agreement (ii) monetary damages may not be an adequate remedy for such breach and (iii) the non-breaching
party shall be entitled to injunctive relief, in addition to any other remedy that such party may have in law or in equity, in
the event of such breach.
7. (a) The
Insider agrees that the Insider shall not Transfer any Founder Shares (or shares of Common Stock issuable upon conversion thereof)
until the earlier of (A) one year after the completion of the Company’s initial Business Combination or (B) subsequent
to the Business Combination, (x) if the closing price of the Common Stock equals or exceeds $12.00 per share (as adjusted
for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading
day period commencing at least 150 days after the Company’s initial Business Combination or (y) the date on which the
Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all
of the Company’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property
(the “Founder Shares Lock-up Period”).
(b) The
Insider agrees that the Insider shall not Transfer any Private Placement Shares until 30 days after the completion of a Business
Combination (the “Private Placement Shares Lock-up Period”, together with the Founder Shares Lock-up Period,
the “Lock-up Periods”).
(c) Notwithstanding
the provisions set forth in paragraphs 3 and 7(a) and (b), Transfers of the Founder Shares, Private Placement Shares or the
Founder Shares and that are held by the Insider or any of the Insider’s permitted transferees (that have complied with this
paragraph 7(c)), are permitted (a) to the Company’s officers or directors, any affiliates or family members of any of the
Company’s officers or directors, any members of the Insider, or any affiliates of the Insider; (b) in the case of an
individual, transfers by gift to a member of the individual’s immediate family, to a trust, the beneficiary of which is a
member of the individual’s immediate family or an affiliate of such person, or to a charitable organization; (c) in the
case of an individual, transfers by virtue of laws of descent and distribution upon death of the individual; (d) in the case of
an individual, transfers pursuant to a qualified domestic relations order; (e) transfers by private sales or transfers made in
connection with the consummation of a Business Combination at prices no greater than the price at which the securities were
originally purchased; (f) transfers in the event of the Company’s liquidation prior to the completion of an initial
Business Combination; (g) transfers by virtue of the laws of the State of Delaware or the Sponsor’s limited liability
company agreement upon dissolution of the Sponsor; (h) in the event of the Company’s completion of a liquidation, merger,
stock exchange, reorganization or other similar transaction which results in all of the Company’s public stockholders having
the right to exchange their shares of Class A common stock for cash, securities or other property subsequent to the completion
of the initial business combination; (i) to a nominee or custodian of a person or entity to whom a disposition or transfer
would be permissible under clauses (a) through (h) above; provided, however, that in the case of clauses
(a) through (e) and (i), these permitted transferees must enter into a written agreement with the Company agreeing to be
bound by the transfer restrictions herein and the other restrictions contained in this Agreement (including provisions relating to
voting, the Trust Account and liquidating distributions).
8. The
Insider represents and warrants that the Insider has never been suspended or expelled from membership in any securities or commodities
exchange or association or had a securities or commodities license or registration denied, suspended or revoked. Each Insider’s
biographical information furnished to the Company (including any such information included in the Prospectus) is true and accurate
in all respects and does not omit any material information with respect to the Insider’s background. The Insider’s
questionnaire furnished to the Company is true and accurate in all respects. The Insider represents and warrants that: the Insider
is not subject to or a respondent in any legal action for, any injunction, cease-and-desist order or order or stipulation to desist
or refrain from any act or practice relating to the offering of securities in any jurisdiction; the Insider has never been convicted
of, or pleaded guilty to, any crime (i) involving fraud, (ii) relating to any financial transaction or handling of funds
of another person, or (iii) pertaining to any dealings in any securities and the Insider is not currently a defendant in
any such criminal proceeding.
9. Except
as disclosed in the Prospectus, neither the Insider nor any affiliate of the Insider, shall receive from the Company any
finder’s fee, reimbursement, consulting fee, monies in respect of any repayment of a loan or other compensation prior to, or
in connection with any services rendered in order to effectuate the consummation of the Company’s initial Business Combination
(regardless of the type of transaction that it is), other than the following, none of which will be made from the proceeds held in
the Trust Account prior to the completion of the initial Business Combination: repayment of a loan and advances of up to $600,000
made to the Company by the Sponsors to cover expenses related to the organization of the Company and the Public Offering; payment to
M. Klein and Company or another affiliate of the Sponsor for customary financial advisory fee; payment to M. Klein
Associates, Inc. for office space and related support services for a total of $50,000 per month; reimbursement for any
reasonable out-of-pocket expenses related to identifying, investigating and consummating an initial Business Combination,
and repayment of loans, if any, and on such terms as to be determined by the Company from time to time, made by the Sponsor or
certain of the Company’s officers and directors to finance transaction costs in connection with an intended initial Business
Combination, provided, that, if the Company does not consummate an initial Business Combination, a portion of the working capital
held outside the Trust Account may be used by the Company to repay such loaned amounts so long as no proceeds from the Trust Account
are used for such repayment. Up to $1,500,000 of such loans may be convertible into shares at a price of $10.00 per share at the
option of the lender. Such shares would be identical to the Private Placement Shares.
10. The
Insider has full right and power, without violating any agreement to which the Insider is bound (including, without limitation,
any non-competition or non-solicitation agreement with any employer or former employer), to enter into this Letter Agreement and,
as applicable, to serve as an officer and/or a director on the board of directors of the Company and hereby consents to being
named in the Prospectus as an officer and/or a director of the Company.
11. As
used herein, (i) “Business Combination” shall mean a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination, involving the Company and one or more businesses;
(ii) “Capital Stock” shall mean, collectively, the Common Stock and the Founder Shares;
(iii) “Founder Shares” shall mean the 10,000,000 shares of the Company’s Class B common stock,
par value $0.0001 per share, (or 11,500,000 shares if the over-allotment option is not exercised by the Representative) initially
held by the Sponsor; (iv) “Initial Stockholders” shall mean the Sponsor and any other holder of Founder
Shares immediately prior to the Public Offering; (v) “Private Placement Shares” shall mean the
up to 1,250,000 shares of Common Stock of the Company (or 1,370,000 shares of Common Stock if the over-allotment option
is exercised in full) that the Sponsor has agreed to purchase for an aggregate purchase price of $12,500,000 in the aggregate (or
$13,700,000 if the over-allotment option is exercised in full), or $10.00 per share, in a private placement that shall occur
simultaneously with the consummation of the Public Offering; (vi) “Public Stockholders” shall mean the
holders of securities issued in the Public Offering; (vii) “Trust Account” shall mean the trust fund into
which a portion of the net proceeds of the Public Offering and the sale of the Private Placement Shares shall be deposited; and
(viii) “Transfer” shall mean the (a) sale or assignment of, offer to sell, contract or agreement to
sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or
indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call
equivalent position within the meaning of Section 16 of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder with respect to, any security, (b) entry into any swap or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by
delivery of such securities, in cash or otherwise, or (c) public announcement of any intention to effect any transaction
specified in clause (a) or (b).
12. This
Letter Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof
and supersedes all prior understandings, agreements, or representations by or among the parties hereto, written or oral, to the
extent they relate in any way to the subject matter hereof or the transactions contemplated hereby. This Letter Agreement may
not be changed, amended, modified or waived (other than to correct a typographical error) as to any particular provision, except
by a written instrument executed by all parties hereto.
13. Except
as otherwise provided herein, no party hereto may assign either this Letter Agreement or any of its rights, interests, or obligations
hereunder without the prior written consent of the other parties. Any purported assignment in violation of this paragraph shall
be void and ineffectual and shall not operate to transfer or assign any interest or title to the purported assignee. This Letter
Agreement shall be binding on the Insider and the Insider’s successors, heirs and assigns and permitted transferees.
14. Nothing
in this Letter Agreement shall be construed to confer upon, or give to, any person or entity other than the parties hereto any
right, remedy or claim under or by reason of this Letter Agreement or of any covenant, condition, stipulation, promise or agreement
hereof. All covenants, conditions, stipulations, promises and agreements contained in this Letter Agreement shall be for the sole
and exclusive benefit of the parties hereto and their successors, heirs, personal representatives and assigns and permitted transferees.
15. This
Letter Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
16. This
Letter Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect
the validity or enforceability of this Letter Agreement or of any other term or provision hereof. Furthermore, in lieu of any
such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Letter
Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.
17. This
Letter Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without
giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction.
The parties hereto (i) all agree that any action, proceeding, claim or dispute arising out of, or relating in any way to,
this Letter Agreement shall be brought and enforced in the courts of New York City, in the State of New York, and irrevocably
submit to such jurisdiction and venue, which jurisdiction and venue shall be exclusive and (ii) waive any objection to such
exclusive jurisdiction and venue or that such courts represent an inconvenient forum.
18. Any
notice, consent or request to be given in connection with any of the terms or provisions of this Letter Agreement shall be in
writing and shall be sent by express mail or similar private courier service, by certified mail (return receipt requested), by
hand delivery or facsimile transmission.
19. This
Letter Agreement shall terminate on the earlier of (i) the expiration of the Lock-up Periods or (ii) the liquidation
of the Company; provided, however, that this Letter Agreement shall earlier terminate in the event that the Public
Offering is not consummated and closed by [●], 2021; provided further that paragraph 4 of this Letter Agreement shall
survive such liquidation for a period of six years.
[Signature Page Follows]
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Sincerely, |
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[ALTC SPONSOR LLC |
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By: |
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Name: |
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Title: ] |
[Signature Page to Letter Agreement]
1
Each Insider to sign separate agreement.
[Signature Page to Letter
Agreement]
Acknowledged and Agreed:
ALTC ACQUISITION CORP.
[Signature Page to Letter Agreement]
Exhibit 10.3
INVESTMENT MANAGEMENT TRUST AGREEMENT
This Investment Management Trust Agreement
(this “Agreement”) is made effective as of [●], 2021 by and between AltC Acquisition Corp., a Delaware
corporation (the “Company”), and Continental Stock Transfer & Trust Company, a New York limited
purpose trust company (the “Trustee”).
WHEREAS, the Company’s registration
statement on Form S-1, File No. [●] (the “Registration Statement”) and prospectus (the
“Prospectus”) for the initial public offering of the Company’s shares (the “Shares”) of the
Company’s Class A common stock, par value $0.0001 per share (the “Common Stock”) (such initial public
offering hereinafter referred to as the “Offering”), has been declared effective as of the date hereof by the
U.S. Securities and Exchange Commission; and
WHEREAS, the Company has entered into an Underwriting
Agreement (the “Underwriting Agreement”) with Citigroup Global Markets Inc. (the “Representative”);
and
WHEREAS, as described in the Prospectus,
$400,000,000 of the proceeds of the Offering and sale of the Private Placement Shares (as defined in the Underwriting Agreement) (or
$460,000,000 if the Representative’s over-allotment option is exercised in full) will be delivered to the Trustee to be
deposited and held in a segregated trust account located at all times in the United States (the “Trust Account”)
for the benefit of the Company and the holders of the Common Stock issued in the Offering as hereinafter
provided (the amount to be delivered to the Trustee (and any interest subsequently earned thereon) is referred to herein as
the “Property,” the stockholders for whose benefit the Trustee shall hold the Property will be referred to
as the “Public Stockholders,” and the Public Stockholders and the Company will be referred to together as the
“Beneficiaries”); and
WHEREAS, pursuant to the Underwriting Agreement,
a portion of the Property equal to $14,000,000, or $16,100,000 if the Representative’s over-allotment option is exercised
in full, is attributable to deferred underwriting discounts and commissions that will be payable by the Company to the Representative
upon and concurrently with the consummation of the Business Combination (as defined below) (the “Deferred Discount”);
and
WHEREAS, the Company and the Trustee desire
to enter into this Agreement to set forth the terms and conditions pursuant to which the Trustee shall hold the Property.
NOW THEREFORE, IT IS AGREED:
1. Agreements
and Covenants of Trustee. The Trustee hereby agrees and covenants to:
(a) Hold
the Property in trust for the Beneficiaries in accordance with the terms of this Agreement in the Trust Account established by
the Trustee in the United States at JPMorgan Chase Bank N.A. (or at another U.S. – chartered commercial bank with consolidated
assets of $100 billion or more) and at a brokerage institution selected by the Trustee that is reasonably satisfactory to the Company;
(b) Manage,
supervise and administer the Trust Account subject to the terms and conditions set forth herein;
(c) In
a timely manner, upon the written instruction of the Company, invest and reinvest the Property in solely United States government
securities within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, having a maturity of
185 days or less, or in money market funds meeting the conditions of paragraphs (d)(1), (d)(2), (d)(3) and (d)(4) of
Rule 2a-7 promulgated under the Investment Company Act of 1940, as amended (or any successor rule), which invest only in direct
U.S. government treasury obligations, as determined by the Company; the Trustee may not invest in any other securities or assets,
it being understood that the Trust Account will earn no interest while account funds are uninvested awaiting the Company’s
instructions hereunder and the Trustee may earn bank credit or other consideration;
(d) Collect
and receive, when due, all interest or other income arising from the Property, which shall become part of the “Property,”
as such term is used herein;
(e) As
soon as practicable notify the Company and the Representative of all communications received by the Trustee with respect to any
Property requiring action by the Company;
(f) Supply
any necessary information or documents as may be requested by the Company (or its authorized agents) in connection with the Company’s
preparation of the tax returns relating to assets held in the Trust Account;
(g) Participate
in any plan or proceeding for protecting or enforcing any right or interest arising from the Property if, as and when instructed
by the Company to do so;
(h) Render
to the Company monthly written statements of the activities of, and amounts in, the Trust Account reflecting all receipts and disbursements
of the Trust Account;
(i) Commence
liquidation of the Trust Account only after and promptly after (x) receipt of, and only in accordance with, the terms of a
letter from the Company (“Termination Letter”) in a form substantially similar to that attached hereto as either
Exhibit A or Exhibit B, as applicable, signed on behalf of the Company by its Chief Executive Officer, President,
Chief Financial Officer, Secretary or Chairman of the board of directors of the Company (the “Board”) or other
authorized officer of the Company and, in the case of Exhibit A, acknowledged and agreed to by the Representative and
complete the liquidation of the Trust Account and distribute the Property in the Trust Account, including interest earned on funds
held in the Trust Account (net of amounts withdrawn in accordance with this Agreement and less up to $100,000 of interest that
may be released to the Company to pay dissolution expenses), only as directed in the Termination Letter and the other documents
referred to therein, or (y) upon the date which is the later of (i) 24 months after the closing of the Offering or 27
months from the closing of the Offering if the Company has executed a letter of intent, agreement in principle or definitive agreement
for an initial Business Combination within 24 months from the closing of the Offering and (ii) such later date as may be approved
by the Company’s stockholders in accordance with the Company’s amended and restated Certificate of Incorporation, if
a Termination Letter has not been received by the Trustee prior to such date, in which case the Trust Account shall be liquidated
in accordance with the procedures set forth in the Termination Letter attached as Exhibit B and the Property in the
Trust Account, including interest earned on funds held in the Trust Account (net of amounts withdrawn in accordance with this Agreement
and less up to $100,000 of interest that may be released to the Company to pay dissolution expenses) shall be distributed to the
Public Stockholders of record as of such date;
(j) Upon
written request from the Company, which may be given from time to time in a form substantially similar to that attached hereto
as Exhibit C (a “Tax Payment Withdrawal Instruction”), withdraw from the Trust Account and distribute
to the Company the amount of interest earned on the Property requested by the Company to cover any tax obligation owed by the Company
as a result of assets of the Company or interest or other income earned on the Property, which such payment the Company shall forward
to the relevant taxing authority; provided, however, that to the extent there is not sufficient cash in the Trust
Account to pay such tax obligation, the Trustee shall liquidate such assets held in the Trust Account as shall be designated by
the Company in writing to make such distribution, so long as there is no reduction in the principal amount initially deposited
in the Trust account; provided, further, that if the tax to be paid is a franchise tax, the written request by the
Company to make such distribution shall be accompanied by a copy of the franchise tax bill from the relevant taxing authority for
the Company. The written request of the Company referenced above shall constitute presumptive evidence that the Company is entitled
to said funds, and the Trustee shall have no responsibility to look beyond said request;
(k) Upon
written request from the Company, which may be given from time to time in a form substantially similar to that attached
hereto as Exhibit D (a “Working Capital
Withdrawal Instruction”), withdraw from the Trust Account and distribute to the Company the amount of interest earned
on the Property requested by the Company to fund working capital compliance requirements (a “Working Capital Withdrawal”),
which amount shall be delivered directly to the Company; provided, however, that to the extent there is not sufficient
cash in the Trust Account to fund such Working Capital Withdrawal, the Trustee shall liquidate such assets held in the Trust Account
as shall be designated by the Company in writing to make such distribution, so long as there is no reduction in the principal
amount initially deposited in the Trust account. The written request of the Company referenced
above shall constitute presumptive evidence that the Company is entitled to said funds, and the Trustee shall have no responsibility
to look beyond said request; provided, further, that Working Capital Withdrawal shall not exceed $1,000,000 per annum;
(l) Upon
written request from the Company, which may be given from time to time in a form substantially similar to that attached hereto
as Exhibit E (a “Stockholder Redemption Withdrawal Instruction”), the Trustee shall distribute to
the Public Stockholders on behalf of the Company the amount requested by the Company to be used to redeem shares of Common Stock
from Public Stockholders properly submitted in connection with a stockholder vote to approve an amendment to the Company’s
amended and restated Certificate of Incorporation to modify the substance or timing of the Company’s obligation to redeem
100% of its public shares of Common Stock if the Company has not consummated an initial Business Combination within such time as
is described in the Company’s amended and restated Certificate of Incorporation or with respect to any other material provisions
relating to stockholders’ rights or pre-initial Business Combination activity. The written request of the Company referenced
above shall constitute presumptive evidence that the Company is entitled to distribute said funds, and the Trustee shall have no
responsibility to look beyond said request; and
(m) Not
make any withdrawals or distributions from the Trust Account other than pursuant to Section 1(i), (j), (k) or
(l) above.
2. Agreements
and Covenants of the Company. The Company hereby agrees and covenants to:
(a) Give
all instructions to the Trustee hereunder in writing, signed by the Company’s Chairman of the Board, President, Chief Executive
Officer, Chief Financial Officer or Secretary. In addition, except with respect to its duties under Sections 1(i), 1(j), 1(k) and
1(l) hereof, the Trustee shall be entitled to rely on, and shall be protected in relying on, any verbal or telephonic advice
or instruction which it, in good faith and with reasonable care, believes to be given by any one of the persons authorized above
to give written instructions, provided that the Company shall promptly confirm such instructions in writing;
(b) Subject
to Section 4 hereof, hold the Trustee harmless and indemnify the Trustee from and against any and all expenses, including
reasonable counsel fees and disbursements, or losses suffered by the Trustee in connection with any action taken by it hereunder
and in connection with any action, suit or other proceeding brought against the Trustee involving any claim, or in connection with
any claim or demand, which arises out of or relates to this Agreement, the services of the Trustee hereunder, or the Property or
any interest earned on the Property, except for expenses and losses resulting from the Trustee’s, or its representatives’,
gross negligence, fraud or willful misconduct. Promptly after the receipt by the Trustee of notice of demand or claim or the commencement
of any action, suit or proceeding, pursuant to which the Trustee intends to seek indemnification under this Section 2(b),
it shall notify the Company in writing of such claim (hereinafter referred to as the “Indemnified Claim”). The
Trustee shall have the right to conduct and manage the defense against such Indemnified Claim; provided that the Trustee
shall obtain the consent of the Company with respect to the selection of counsel; provided, further that the Company
may conduct and manage the defense against any Indemnified Claim if the Trustee does not promptly take reasonable steps to mount
such a defense. The Trustee may not agree to settle any Indemnified Claim without the prior written consent of the Company. The
Company may participate in any such action with its own counsel;
(c) Pay
the Trustee the fees set forth on Schedule A hereto, including an initial set-up fee, annual administration fee, and
transaction processing fee which fees shall be subject to modification by the parties from time to time. It is expressly understood
that the Property shall not be used to pay such fees unless and until the property is distributed to the Company pursuant to Sections 1(i) hereof.
The Company shall pay the Trustee the initial set-up fee and the first annual administration fee at the consummation of the Offering.
The Trustee shall refund to the Company the annual administration fee (on a pro rata basis) with respect to any period after
the liquidation of the Trust Account. The Company shall not be responsible for any other fees or charges of the Trustee except
as set forth in this Section 2(c), Schedule A and as may be provided in Section 2(b) hereof;
(d) In
connection with any vote of the Company’s stockholders regarding a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination involving the Company and one or more businesses (the “Business
Combination”), provide to the Trustee an affidavit or certificate of the inspector of elections for the stockholder meeting
verifying the vote of such stockholders regarding such Business Combination;
(e) Provide
the Representative with a copy of any Termination Letter(s) and/or any other correspondence that is sent to the Trustee with
respect to any proposed withdrawal from the Trust Account promptly after it issues the same;
(f) Unless
otherwise agreed between the Company and the Representative, ensure that any Instruction Letter delivered in connection with a
Termination Letter in the form of Exhibit A expressly provides that the Deferred Discount is paid directly to the accounts
as directed by the Representative prior to any transfer of the funds held in the Trust Account to the Company or any other person;
(g) Instruct
the Trustee to make only those distributions that are permitted under this Agreement, and refrain from instructing the Trustee
to make any distributions that are not permitted under this Agreement; and
(h) Within
four (4) business days after the Representative exercises the over-allotment option (or any unexercised portion thereof) or
such over-allotment expires, provide the Trustee with a notice in writing of the total amount of the Deferred Discount, which shall
in no event be less than $14,000,000, or $16,100,000 if the underwriters’ overallotment option is exercised in full.
3. Limitations
of Liability. The Trustee shall have no responsibility or liability to:
(a) Imply
obligations, perform duties, inquire or otherwise be subject to the provisions of any agreement or document other than this Agreement
and that which is expressly set forth herein;
(b) Take
any action with respect to the Property, other than as directed in Section 1 hereof, and the Trustee shall have no
liability to any party except for liability arising out of the Trustee’s, or its representatives’, gross negligence,
fraud, or willful misconduct;
(c) Institute
any proceeding for the collection of any principal and income arising from, or institute, appear in or defend any proceeding of
any kind with respect to, any of the Property unless and until it shall have received instructions from the Company given as provided
herein to do so and the Company shall have advanced or guaranteed to it funds sufficient to pay any reasonably incurred expenses
incident thereto;
(d) Refund
any depreciation in principal of any Property;
(e) Assume
that the authority of any person designated by the Company to give instructions hereunder shall not be continuing unless provided
otherwise in such designation, or unless the Company shall have delivered a written revocation of such authority to the Trustee;
(f) The
other parties hereto or to anyone else for any action taken or omitted by it, or any action suffered by it to be taken or omitted,
in good faith and in the Trustee’s best judgment, except for the Trustee’s, or its representatives’, gross negligence,
fraud, or willful misconduct. The Trustee may rely conclusively and shall be protected in acting upon any order, notice, demand,
certificate, opinion or advice of counsel (including counsel chosen by the Trustee, which counsel may be the Company’s counsel),
statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of
its provisions, but also as to the truth and acceptability of any information therein contained) which the Trustee believes, in
good faith and with reasonable care, to be genuine and to be signed or presented by the proper person or persons. The Trustee shall
not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement or any of the terms
hereof, unless evidenced by a written instrument delivered to the Trustee, signed by the proper party or parties and, if the duties
or rights of the Trustee are affected, unless it shall give its prior written consent thereto;
(g) Verify
the accuracy of the information contained in the Registration Statement;
(h) Provide
any assurance that any Business Combination entered into by the Company or any other action taken by the Company is as contemplated
by the Registration Statement;
(i) File
information returns with respect to the Trust Account with any local, state or federal taxing authority or provide periodic written
statements to the Company documenting the taxes payable by the Company, if any, relating to any interest income earned on the Property;
(j) Prepare,
execute and file tax reports, income or other tax returns and pay any taxes with respect to any income generated by, and activities
relating to, the Trust Account, regardless of whether such tax is payable by the Trust Account or the Company, including, but not
limited to, franchise and income tax obligations, except pursuant to Section 1(j) hereof; or
(k) Verify
calculations, qualify or otherwise approve the Company’s written requests for distributions pursuant to Sections 1(i),
1(j), 1(k) and 1(l) hereof.
4. Trust
Account Waiver. The Trustee has no right of set-off or any right, title, interest or claim of any kind (“Claim”)
to, or to any monies in, the Trust Account, and hereby irrevocably waives any Claim to, or to any monies in, the Trust Account
that it may have now or in the future. In the event the Trustee has any Claim against the Company under this Agreement, including,
without limitation, under Section 2(b) or Section 2(c) hereof, the Trustee shall pursue such
Claim solely against the Company and its assets outside the Trust Account and not against the Property or any monies in the Trust
Account.
5. Termination
and Replacement of Trustee. This Agreement shall terminate as follows:
(a) If
the Trustee gives written notice to the Company that it desires to resign under this Agreement, the Company shall use its reasonable
efforts to locate a successor trustee, pending which the Trustee shall continue to act in accordance with this Agreement. At such
time that the Company notifies the Trustee that a successor trustee has been appointed and has agreed to become subject to the
terms of this Agreement, the Trustee shall transfer the management of the Trust Account to the successor trustee, including but
not limited to the transfer of copies of the reports and statements and any other reasonable transfer requests that the Company
may make, whereupon this Agreement shall terminate; provided, however, that in the event that the Company does not
locate a successor trustee within ninety (90) days of receipt of the resignation notice from the Trustee, the Trustee may submit
an application to have the Property deposited with any court in the State of New York or with the United States District Court
for the Southern District of New York and upon such deposit, the Trustee shall be immune from any liability whatsoever; or
(b) At
such time that the Trustee has completed the liquidation of the Trust Account and its obligations in accordance with the provisions
of Section 1(i) hereof and distributed the Property in accordance with the provisions of the Termination Letter,
this Agreement shall terminate except with respect to Section 2(b).
6. Miscellaneous.
(a) The
Company and the Trustee each acknowledge that the Trustee will follow the security procedures set forth below with respect to funds
transferred from the Trust Account. The Company and the Trustee will each restrict access to confidential information relating
to such security procedures to authorized persons. Each party must notify the other party immediately if it has reason to believe
unauthorized persons may have obtained access to such confidential information, or of any change in its authorized personnel. In
executing funds transfers, the Trustee shall rely upon all information supplied to it by the Company, including, account names,
account numbers, and all other identifying information relating to a Beneficiary, Beneficiary’s bank or intermediary bank.
Except for any liability arising out of the Trustee’s, or its representatives’, gross negligence, fraud, or willful
misconduct, the Trustee shall not be liable for any loss, liability or expense resulting from any error in the information or transmission
of the funds.
(b) This
Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving
effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. This
Agreement may be executed in several original or facsimile counterparts, each one of which shall constitute an original, and together
shall constitute but one instrument.
(c) This
Agreement contains the entire agreement and understanding of the parties hereto with respect to the subject matter hereof. This
Agreement or any provision hereof may only be changed, amended or modified (other than to correct a typographical error) by a writing
signed by each of the parties hereto.
(d) Sections 1(i) and
1(l) hereof may only be changed, amended or modified pursuant to Section 6(c) hereof with the Consent
of the Stockholders, it being the specific intention of the parties hereto that each of the Company’s stockholders is, and
shall be, a third party beneficiary of this Section 6(d) with the same right and power to enforce this Section 6(d) as
the other parties hereto. For purposes of this Section 6(d), the “Consent of the Stockholders” means
receipt by the Trustee of a certificate from the inspector of elections of the stockholder meeting certifying that either (i) the
Company’s stockholders of record as of a record date established in accordance with Section 213(a) of the Delaware
General Corporation Law, as amended (“DGCL”) (or any successor rule), who hold sixty-five percent (65%) or more
of all then outstanding shares of the Common Stock and Class B common stock, par value $0.0001 per share, of the Company voting
together as a single class, have voted in favor of such change, amendment or modification, or (ii) the Company’s stockholders
of record as of the record date who hold sixty-five percent (65%) or more of all then outstanding shares of the Common Stock and
Class B common stock, par value $0.0001 per share, of the Company voting together as a single class, have delivered to such
entity a signed writing approving such change, amendment or modification. No such amendment will affect any Public Stockholder
who has otherwise indicated his election to redeem his share of Common Stock in connection with a stockholder vote sought to amend
the Certificate of Incorporation. Except for any liability arising out of the Trustee’s, or its representatives’, gross
negligence, fraud, or willful misconduct, the Trustee may rely conclusively on the certification from the inspector or elections
referenced above and shall be relieved of all liability to any party for executing the proposed amendment in reliance thereon.
(e) The
parties hereto consent to the jurisdiction and venue of any state or federal court located in the City of New York, County
of New York, State of New York, for purposes of resolving any disputes hereunder. AS TO ANY CLAIM, CROSS-CLAIM OR COUNTERCLAIM
IN ANY WAY RELATING TO THIS AGREEMENT, EACH PARTY WAIVES THE RIGHT TO TRIAL BY JURY.
(f) Any
notice, consent or request to be given in connection with any of the terms or provisions of this Agreement shall be in writing
and shall be sent by express mail or similar private courier service, by certified mail (return receipt requested), by hand delivery
or by facsimile transmission:
if to the Trustee, to:
Continental Stock Transfer &
Trust Company
1 State Street, 30th Floor
New York, NY 10004
Attn: Francis Wolf and Celeste Gonzalez
Email: fwolf@continentalstock.com
Email: cgonzalez@continentalstock.com
if to the Company, to:
AltC Acquisition Corp.
640 Fifth Avenue, 12th Floor
New York, NY 10019
Attn: Jay Taragin
in each case, with copies to:
Weil, Gotshal & Manges
LLP
767 Fifth Avenue
New York, NY 10153
Attn: Alexander Lynch
Barbra Broudy
Fax No.:
(212) 310-8007
and
Citigroup Global Markets Inc.
388 Greenwich Street
New York, NY 10013
Attn: Pavan Bellur
in each case, with copies to:
White & Case LLP
1221 Avenue of the Americas
New York, NY 10020
Attention: Joel L. Rubinstein
Email: joel.rubinstein@whitecase.com
(g) Each
of the Company and the Trustee hereby represents that it has the full right and power and has been duly authorized to enter into
this Agreement and to perform its respective obligations as contemplated hereunder. The Trustee acknowledges and agrees that it
shall not make any claims or proceed against the Trust Account, including by way of set-off, and shall not be entitled to any funds
in the Trust Account under any circumstance.
(h) Each
of the Company and the Trustee hereby acknowledges and agrees that the Representative is a third party beneficiary of this Agreement.
(i) The
Trustee shall perform its duties under this Agreement in compliance with all applicable laws and keep confidential all information
relating to this Agreement and, except as required by applicable law, shall not use such information for any purpose other than
the performance of the Trustee’s obligations under this Agreement.
(j) Except
as specified herein, no party to this Agreement may assign its rights or delegate its obligations hereunder to any other person
or entity.
(k) This
Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all
of which together shall constitute one and the same Agreement. Only one counterpart signed by the party against whom enforceability
is sought needs to be produced to evidence the existence of this Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have
duly executed this Investment Management Trust Agreement as of the date first written above.
| | Continental Stock Transfer & Trust Company, as Trustee |
| | | |
| | | |
| By: | |
| | | Name: |
| | | Title: |
| | AltC Acquisition Corp. |
| | | |
| | | |
| By: | |
| | | Name: |
| | | Title: |
[Signature Page to Investment Management Trust Agreement]
SCHEDULE A
| Fee Item |
Time and method of payment |
Amount |
| Initial set-up fee. |
Initial closing of Offering by wire transfer. |
$ 2,000.00 |
| Trustee administration fee |
Payable annually. First year fee payable at initial closing of Offering by wire transfer; thereafter, payable by wire transfer or check. |
$ 10,000.00 |
| Transaction processing fee for disbursements to Company under Sections 1(i), 1(j), 1(k) and 1(l) |
Billed to Company following disbursement made to Company under Section 1 |
$ 250.00 |
| Paying Agent services as required pursuant to Section 1(i) and 1(l) |
Billed to Company upon delivery of service pursuant to Section 1(i) and 1(l) |
Prevailing rates |
EXHIBIT A
[Letterhead of Company]
[Insert date]
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, NY 10004
Attn: Francis Wolf and Celeste Gonzalez
| Re: | Trust Account No. Termination Letter |
Dear Mr. Wolf and Ms. Gonzalez:
Pursuant to Section 1(i) of
the Investment Management Trust Agreement between AltC Acquisition Corp. (the “Company”) and Continental Stock
Transfer & Trust Company (the “Trustee”), dated as of , 2021 (the “Trust Agreement”),
this is to advise you that the Company has entered into an agreement with [insert name] (the “Target Business”)
to consummate a business combination with Target Business (the “Business Combination”) on or about [insert date].
The Company shall notify you at least seventy-two (72) hours in advance of the actual date of the consummation of the Business
Combination (the “Consummation Date”). Capitalized terms used but not defined herein shall have the meanings
set forth in the Trust Agreement.
In accordance with the terms of the Trust
Agreement, we hereby authorize you to commence to liquidate all of the assets of the Trust Account, and to transfer the proceeds
into the trust operating account at JPMorgan Chase Bank N.A. to the effect that, on the Consummation Date, all of the funds held
in the Trust Account will be immediately available for transfer to the account or accounts that the Company shall direct on the
Consummation Date (including as directed to it by the Representative) (with respect to the Deferred Discount). It is acknowledged
and agreed that while the funds are on deposit in the trust operating account at JPMorgan Chase Bank N.A. awaiting distribution,
the Company will not earn any interest or dividends.
On the Consummation Date (i) counsel
for the Company shall deliver to you written notification that the Business Combination has been consummated, or will be consummated
concurrently with your transfer of funds to the accounts as directed by the Company (the “Notification”) and
(ii) the Company shall deliver to you (a) [an affidavit] [a certificate] of the Chief Executive Officer of the Company,
which verifies that the Business Combination has been approved by a vote of the Company’s stockholders, if a vote is held
and (b) a joint written instruction signed by the Company and the Representative with respect to the transfer of the funds
held in the Trust Account, including payment of amounts owed to public stockholders who have properly exercised their redemptions
rights and payment of amounts of the Deferred Discount to the underwriter from the Trust Account (the “Instruction Letter”).
You are hereby directed and authorized to transfer the funds held in the Trust Account immediately upon your receipt of the Notification
and the Instruction Letter, in accordance with the terms of the Instruction Letter. In the event that certain deposits held in
the Trust Account may not be liquidated by the Consummation Date without penalty, you will notify the Company in writing of the
same and the Company shall direct you as to whether such funds should remain in the Trust Account and be distributed after the
Consummation Date to the Company. Upon the distribution of all the funds, net of any payments necessary for reasonable unreimbursed
expenses related to liquidating the Trust Account, your obligations under the Trust Agreement shall be terminated.
In the event that the Business Combination
is not consummated on the Consummation Date described in the notice thereof and we have not notified you on or before the original
Consummation Date of a new Consummation Date, then upon receipt by the Trustee of written instructions from the Company, the funds
held in the Trust Account shall be reinvested as provided in Section 1(c) of the Trust Agreement on the business day
immediately following the Consummation Date as set forth in such written instruction as soon thereafter as possible.
| | Very truly yours, |
| | |
| | AltC Acquisition Corp. |
| | | |
| | | |
| By: | |
| | | Name: |
| | | Title: |
| Acknowledged: |
|
| |
|
| Citigroup Global Markets
Inc. |
|
| | |
|
| | |
|
| By: | |
|
| | Name: |
|
| | Title: |
|
EXHIBIT B
[Letterhead of Company] [Insert date]
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, NY 10004
Attn: Francis Wolf and Celeste Gonzalez
| Re: | Trust Account No. Termination Letter |
Dear Mr. Wolf and Ms. Gonzalez:
Pursuant to Section 1(i) of the
Investment Management Trust Agreement between AltC Acquisition Corp. (the “Company”) and Continental Stock Transfer &
Trust Company (the “Trustee”), dated as of , 2021 (the “Trust Agreement”), this is to advise you that the
Company has been unable to effect a Business Combination with a Target Business within the time frame specified in the Company’s
amended and restated Certificate of Incorporation, as described in the Company’s Prospectus relating to the Offering. Capitalized
terms used but not defined herein shall have the meanings set forth in the Trust Agreement.
In accordance with the terms of the Trust
Agreement, we hereby authorize you to liquidate all of the assets in the Trust Account and to transfer the total proceeds into
a segregated account held by you on behalf of the Beneficiaries to await distribution to the Public Stockholders. The Company has
selected [insert completion deadline] as the effective date for the purpose of determining when the Public Stockholders will be
entitled to receive their share of the liquidation proceeds. You agree to be the Paying Agent of record and, in your separate capacity
as Paying Agent, agree to distribute said funds directly to the Public Stockholders in accordance with the terms of the Trust Agreement
and the amended and restated Certificate of Incorporation of the Company. Upon the distribution of all the funds, net of any payments
necessary for reasonable unreimbursed expenses related to liquidating the Trust Account, your obligations under the Trust Agreement
shall be terminated, except to the extent otherwise provided in Section 1(i) of the Trust Agreement.
| | Very truly yours, |
| | |
| | AltC Acquisition Corp. |
| | | |
| | | |
| By: | |
| | | Name: |
| | | Title: |
| cc: | Citigroup Global Markets Inc. |
EXHIBIT C
[Letterhead of Company] [Insert date]
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, NY 10004
Attn: Francis Wolf and Celeste Gonzalez
| Re: | Trust Account No. Tax Payment Withdrawal Instruction |
Dear Mr. Wolf and Ms. Gonzalez:
Pursuant to Section 1(j) of
the Investment Management Trust Agreement between AltC Acquisition Corp. (the “Company”) and Continental Stock
Transfer & Trust Company (the “Trustee”), dated as of , 2021 (the “Trust Agreement”),
the Company hereby requests that you deliver to the Company $___________ of the interest income earned on the Property as of the
date hereof. Capitalized terms used but not defined herein shall have the meanings set forth in the Trust Agreement.
The Company needs such funds [to pay for the
tax obligations as set forth on the attached tax return or tax statement]. In accordance with the terms of the Trust Agreement,
you are hereby directed and authorized to transfer (via wire transfer) such funds promptly upon your receipt of this letter to
the Company’s operating account at:
| [WIRE INSTRUCTION INFORMATION] |
| | |
| | Very truly yours, |
| | |
| | AltC Acquisition Corp. |
| | | |
| | | |
| By: | |
| | | Name: |
| | | Title: |
| cc: | Citigroup Global Markets Inc. |
EXHIBIT D
[Letterhead of Company] [Insert date]
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, NY 10004
Attn: Francis Wolf and Celeste Gonzalez
| Re: | Trust Account No. Working Capital Withdrawal Instruction |
Dear Mr. Wolf and Ms. Gonzalez:
Pursuant to Section 1(k) of
the Investment Management Trust Agreement between AltC Acquisition Corp. (the “Company”) and Continental Stock
Transfer & Trust Company (the “Trustee”), dated as of , 2021 (the “Trust Agreement”),
the Company hereby requests that you deliver to the Company $___________ of the interest income earned on the Property as of the
date hereof. Capitalized terms used but not defined herein shall have the meanings set forth in the Trust Agreement.
The Company needs such funds to fund its working
capital requirements. In accordance with the terms of the Trust Agreement, you are hereby directed and authorized to transfer (via
wire transfer) such funds promptly upon your receipt of this letter to the Company’s operating account at:
| [WIRE INSTRUCTION INFORMATION] |
| | |
| | Very truly yours, |
| | |
| | AltC Acquisition Corp. |
| | | |
| | | |
| By: | |
| | | Name: |
| | | Title: |
| cc: | Citigroup Global Markets Inc. |
EXHIBIT E
[Letterhead of Company] [Insert date]
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, NY 10004
Attn: Francis Wolf and Celeste Gonzalez
| Re: | Trust Account No. Stockholder Redemption Withdrawal Instruction |
Dear Mr. Wolf and Ms. Gonzalez:
Pursuant to Section 1(l) of
the Investment Management Trust Agreement between AltC Acquisition Corp. (the “Company”) and Continental Stock
Transfer & Trust Company (the “Trustee”), dated as of , 2021 (the “Trust Agreement”),
the Company hereby requests that you deliver to the redeeming Public Stockholders of the Company $__________ of the principal and
interest income earned on the Property as of the date hereof into a segregated account held by you on behalf of the Beneficiaries
for distribution to the Stockholders who have requested redemption of their shares. Capitalized terms used but not defined herein
shall have the meanings set forth in the Trust Agreement.
The Company needs such funds to pay its Public
Stockholders who have properly elected to have their shares of Common Stock redeemed by the Company in connection with a stockholder
vote to approve an amendment to the Company’s amended and restated Certificate of Incorporation. As such, you are hereby
directed and authorized to transfer (via wire transfer) such funds promptly upon your receipt of this letter.
| | AltC Acquisition Corp. |
| | | |
| | | |
| By: | |
| | | Name: |
| | | Title: |
| cc: | Citigroup Global Markets Inc. |
Exhibit 10.4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”),
dated as of [●], 2021, is made and entered into by and among AltC Acquisition Corp.,
a Delaware corporation (the “Company”), AltC Sponsor LLC, a Delaware limited liability company (the “Sponsor”),
and the undersigned parties listed under Holder on the signature page hereto (each such party, together with the Sponsor and
any person or entity who hereafter becomes a party to this Agreement pursuant to Section 5.2 of this Agreement, a “Holder”
and collectively the “Holders”).
RECITALS
WHEREAS, the Company and the
Sponsor have entered into that certain Securities Subscription Agreement, dated as of March 4, 2021 pursuant to which
the Sponsor purchased an aggregate of 43,125,000 shares of the Company’s
Class B common stock, par value $0.0001 per share (the “Class B Common Stock”).
WHEREAS, the Sponsor subsequently
forfeited [31,625,000] shares of Class B Common Stock for no consideration, resulting in an aggregate of [11,500,000] shares of
Class B Common Stock (“Founder Shares”) outstanding;
WHEREAS, the Founder Shares are convertible
into shares of the Company’s Class A common stock, par value $0.0001 per share (the “Common Stock”),
on the terms and conditions provided in the Company’s amended and restated certificate of incorporation;
WHEREAS, on [●], 2021, the Company
and the Sponsor entered into that certain Private Placement Share Purchase Agreement, pursuant to which the Sponsor agreed to
purchase an aggregate of 1,250,000 shares of Common Stock (or up to 1,370,000 shares if the
over-allotment option in connection with the Company’s initial public offering is exercised in full) (the “Private
Placement Shares”), in a private placement occurring simultaneously with the closing of the Company’s initial
public offering;
WHEREAS, in order to finance transaction
costs in connection with an intended initial business combination, the Sponsor or an affiliate of the Sponsor or certain of the
Company’s officer and directors may loan to the Company funds as the Company may require, of which up to $1,500,000 of such
loans may be convertible into private placement-equivalent shares (“Working Capital Shares”) at a price of $10.00 per share; and
WHEREAS, the Company and the Holders
desire to enter into this Agreement, pursuant to which the Company shall grant the Holders certain registration rights with respect
to certain securities of the Company, as set forth in this Agreement.
NOW, THEREFORE, in consideration
of the representations, covenants and agreements contained herein, and certain other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
Article I
DEFINITIONS
1.1 Definitions.
The terms defined in this Article I shall, for all purposes of this Agreement, have the respective meanings set forth
below:
“Adverse Disclosure” shall
mean any public disclosure of material non-public information, which disclosure, in the good faith judgment of the Chief Executive
Officer or principal financial officer of the Company, after consultation with counsel to the Company, (i) would be required
to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to
contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein
(in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not
misleading, (ii) would not be required to be made at such time if the Registration Statement were not being filed, and (iii) the
Company has a bona fide business purpose for not making such information public.
“Agreement” shall have
the meaning given in the Preamble.
“Board” shall mean the
Board of Directors of the Company.
“Business Combination”
shall mean any merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination
with one or more businesses, involving the Company.
“Business Day” means any
day, other than a Saturday or a Sunday, that is neither a legal holiday nor a day on which banking institutions are generally authorized
or required by law or regulation to close in the City of New York, New York.
“Class B Common Stock”
shall have the meaning given in the Recitals hereto.
“Commission” shall mean
the Securities and Exchange Commission.
“Common Stock” shall have
the meaning given in the Recitals hereto.
“Company” shall have the
meaning given in the Preamble.
“Demand Registration” shall
have the meaning given in subsection 2.1.1.
“Demanding Holder” shall
have the meaning given in subsection 2.1.1.
“Exchange Act” shall mean
the Securities Exchange Act of 1934, as it may be amended from time to time.
“Form S-1” shall have
the meaning given in subsection 2.1.1.
“Form S-3” shall have
the meaning given in subsection 2.3.
“Founder Shares” shall
have the meaning given in the Recitals hereto and shall be deemed to include the shares of Common Stock issuable upon conversion
thereof.
“Founder Shares Lock-up Period”
shall mean, with respect to the Founder Shares, the period ending on the earlier of (A) one year after the completion of the
Company’s initial Business Combination or (B) subsequent to the Business Combination, (x) if the closing price
of the Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Company’s initial
Business Combination or (y) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization
or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares
of Common Stock for cash, securities or other property.
“Holders” shall have the
meaning given in the Preamble.
“Insider Letters” shall
mean those certain letter agreements, dated as of [●], 2021, by and among the Company, the Sponsor and each of the Company’s
officers, directors and director nominees.
“Maximum Number of Securities”
shall have the meaning given in subsection 2.1.4.
“Misstatement” shall mean
an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement
or Prospectus, or necessary to make the statements in a Registration Statement or Prospectus (in the case of a Prospectus, in the
light of the circumstances under which they were made) not misleading.
“Permitted Transferees”
shall mean any person or entity to whom a Holder of Registrable Securities is permitted to transfer such Registrable Securities
prior to the expiration of the Founder Shares Lock-up Period or Private Placement Lock-up Period, as the case may be, and pursuant
to the Insider Letters and any other applicable agreement between such Holder and the Company, in each case for so long as such
agreements remain in effect, and to any transferee thereafter.
“Piggyback Registration”
shall have the meaning given in subsection 2.2.1.
“Private Placement Lock-up Period”
shall mean, with respect to Private Placement Shares that are held by the initial purchasers of such Private Placement Shares or
their Permitted Transferees, the period ending 30 days after the completion of the Company’s initial Business Combination.
“Private Placement Shares”
shall have the meaning given in the Recitals hereto.
“Prospectus” shall mean
the prospectus included in any Registration Statement, as supplemented by any and all prospectus supplements and as amended by
any and all post-effective amendments and including all material incorporated by reference in such prospectus.
“Registrable Security”
shall mean (a) the shares of Common Stock issued or issuable upon the conversion of any Founder Shares, (b) the Private
Placement Shares,
(c) any outstanding share of Common Stock or any other equity security (including, without limitation, the shares of Common
Stock issued or issuable upon the exercise of any other equity security) of the Company held by a Holder from time to time, (d) any equity securities (including the shares of Common
Stock issued or issuable upon the exercise of any such equity security) of the Company issuable upon conversion of any working
capital loans in an amount up to $1,500,000 made to the Company by a Holder (including the Working Capital Shares), and (e) any other equity security of the Company
issued or issuable with respect to any such share of Common Stock by way of a stock dividend or stock split or in connection with
a combination of shares, recapitalization, merger, consolidation or reorganization; provided, however, that, as to
any particular Registrable Security, such securities shall cease to be Registrable Securities when: (A) a Registration Statement
with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have
been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (B) such securities shall
have been otherwise transferred, new certificates for such securities not bearing a legend restricting further transfer shall have
been delivered by the Company and subsequent public distribution of such securities shall not require registration under the Securities
Act; (C) such securities shall have ceased to be outstanding; (D) such securities have been sold without registration
pursuant to Rule 144 promulgated under the Securities Act (or any successor rule promulgated by the Commission); or (E) such
securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities transaction.
“Registration” shall mean
a registration effected by preparing and filing a registration statement or similar document in compliance with the requirements
of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming
effective.
“Registration Expenses”
shall mean the out-of-pocket expenses of a Registration, including, without limitation, the following:
(A) all
registration and filing fees (including fees with respect to filings required to be made with the Financial Industry Regulatory
Authority, Inc.) and any securities exchange on which the Common Stock is then listed;
(B) fees
and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel for the Underwriters
in connection with blue sky qualifications of Registrable Securities);
(C) printing,
messenger, telephone and delivery expenses;
(D) reasonable
fees and disbursements of counsel for the Company;
(E) reasonable
fees and disbursements of all independent registered public accountants of the Company incurred specifically in connection with
such Registration; and
(F) reasonable
fees and expenses of one (1) legal counsel selected by the majority-in-interest of the Demanding Holders initiating a Demand
Registration to be registered for offer and sale in the applicable Registration.
“Registration Statement”
shall mean any registration statement that covers the Registrable Securities pursuant to the provisions of this Agreement, including
the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such
registration statement, and all exhibits to and all material incorporated by reference in such registration statement.
“Requesting Holder” shall
have the meaning given in subsection 2.1.1.
“Securities Act” shall
mean the Securities Act of 1933, as amended from time to time.
“Sponsor” shall have the
meaning given in the Preamble hereto.
“Underwriter” shall mean
a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part of such dealer’s
market-making activities.
“Underwritten Registration”
or “Underwritten Offering” shall mean a Registration in which securities of the Company are sold to an Underwriter
in a firm commitment underwriting for distribution to the public.
“Working Capital Shares”
shall have the meaning given in the Recitals hereto.
Article II
REGISTRATIONS
2.1 Demand
Registration.
2.1.1 Request
for Registration. Subject to the provisions of subsection 2.1.4 and Section 2.4 hereof, at any time and
from time to time on or after the date the Company consummates the Business Combination, the Holders of at least 20% in interest
of the then-outstanding number of Registrable Securities (the “Demanding Holders”) may make a written demand
for Registration of all or part of their Registrable Securities, which written demand shall describe the amount and type of securities
to be included in such Registration and the intended method(s) of distribution thereof (such written demand a “Demand
Registration”). The Company shall, within three (3) Business Days of the Company’s receipt of the Demand Registration,
notify, in writing, all other Holders of Registrable Securities of such demand, and each Holder of Registrable Securities who thereafter
wishes to include all or a portion of such Holder’s Registrable Securities in a Registration pursuant to a Demand Registration
(each such Holder that includes all or a portion of such Holder’s Registrable Securities in such Registration, a “Requesting
Holder”) shall so notify the Company, in writing, within five (5) Business Days after the receipt by the Holder
of the notice from the Company. Upon receipt by the Company of any such written notification from a Requesting Holder(s) to
the Company, such Requesting Holder(s) shall be entitled to have their Registrable Securities included in a Registration pursuant
to a Demand Registration and the Company shall effect, as soon thereafter as practicable, but not more than forty five (45) days
immediately after the Company’s receipt of the Demand Registration, the Registration of all Registrable Securities requested
by the Demanding Holders and Requesting Holders pursuant to such Demand Registration. Under no circumstances shall the Company
be obligated to effect more than an aggregate of four (4) Registrations pursuant to a Demand Registration under this subsection
2.1.1 with respect to any or all Registrable Securities; provided, however, that a Registration shall not be
counted for such purposes unless a Form S-1 or any similar long-form registration statement that may be available at such
time (“Form S-1”) has become effective and all of the Registrable Securities requested by the Requesting
Holders to be registered on behalf of the Requesting Holders in such Form S-1 Registration have been sold, in accordance with
Section 3.1 of this Agreement.
2.1.2 Effective
Registration. Notwithstanding the provisions of subsection 2.1.1 above or any other part of this Agreement, a Registration
pursuant to a Demand Registration shall not count as a Registration unless and until (i) the Registration Statement filed
with the Commission with respect to a Registration pursuant to a Demand Registration has been declared effective by the Commission
and (ii) the Company has complied with all of its obligations under this Agreement with respect thereto; provided,
further, that if, after such Registration Statement has been declared effective, an offering of Registrable Securities in
a Registration pursuant to a Demand Registration is subsequently interfered with by any stop order or injunction of the Commission,
federal or state court or any other governmental agency the Registration Statement with respect to such Registration shall be deemed
not to have been declared effective, unless and until, (i) such stop order or injunction is removed, rescinded or otherwise
terminated, and (ii) a majority-in-interest of the Demanding Holders initiating such Demand Registration thereafter affirmatively
elect to continue with such Registration and accordingly notify the Company in writing, but in no event later than five (5) days,
of such election; provided, further, that the Company shall not be obligated or required to file another Registration
Statement until the Registration Statement that has been previously filed with respect to a Registration pursuant to a Demand Registration
becomes effective or is subsequently terminated.
2.1.3 Underwritten
Offering. Subject to the provisions of subsection 2.1.4 and Section 2.4 hereof, if a majority-in-interest
of the Demanding Holders so advise the Company as part of their Demand Registration that the offering of the Registrable Securities
pursuant to such Demand Registration shall be in the form of an Underwritten Offering, then the right of such Demanding Holder
or Requesting Holder (if any) to include its Registrable Securities in such Registration shall be conditioned upon such Holder’s
participation in such Underwritten Offering and the inclusion of such Holder’s Registrable Securities in such Underwritten
Offering to the extent provided herein. All such Holders proposing to distribute their Registrable Securities through an Underwritten
Offering under this subsection 2.1.3 shall enter into an underwriting agreement in customary form with the Underwriter(s) selected
for such Underwritten Offering by the majority-in-interest of the Demanding Holders initiating the Demand Registration.
2.1.4 Reduction
of Underwritten Offering. If the managing Underwriter or Underwriters in an Underwritten Registration pursuant to a Demand
Registration, in good faith, advises the Company, the Demanding Holders and the Requesting Holders (if any) in writing that the
dollar amount or number of Registrable Securities that the Demanding Holders and the Requesting Holders (if any) desire to sell,
taken together with all other Common Stock or other equity securities that the Company desires to sell and the Common Stock, if
any, as to which a Registration has been requested pursuant to separate written contractual piggy-back registration rights held
by any other stockholders who desire to sell, exceeds the maximum dollar amount or maximum number of equity securities that can
be sold in the Underwritten Offering without adversely affecting the proposed offering price, the timing, the distribution method,
or the probability of success of such offering (such maximum dollar amount or maximum number of such securities, as applicable,
the “Maximum Number of Securities”), then the Company shall include in such Underwritten Offering, as follows:
(i) first, the Registrable Securities of the Demanding Holders and the Requesting Holders (if any) (pro rata based
on the respective number of Registrable Securities that each Demanding Holder and Requesting Holder (if any) holds prior to such
Underwritten Registration) that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent
that the Maximum Number of Securities has not been reached under the foregoing clause (i), Common Stock or other equity securities
for the account of other persons or entities that the Company is obligated to register pursuant to separate written contractual
arrangements with such persons or entities and that can be sold without exceeding the Maximum Number of Securities; and (iii) third,
to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), Common
Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities.
2.1.5 Demand
Registration Withdrawal. A majority-in-interest of the Demanding Holders initiating a Demand Registration or a majority-in-interest
of the Requesting Holders (if any), pursuant to a Registration under subsection 2.1.1 shall have the right to withdraw from
a Registration pursuant to such Demand Registration for any or no reason whatsoever upon written notification to the Company and
the Underwriter or Underwriters (if any) of their intention to withdraw from such Registration prior to the effectiveness of the
Registration Statement filed with the Commission with respect to the Registration of their Registrable Securities pursuant to such
Demand Registration. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration
Expenses incurred in connection with a Registration pursuant to a Demand Registration prior to its withdrawal under this subsection
2.1.5.
2.2 Piggyback
Registration.
2.2.1 Piggyback
Rights. If, at any time on or after the date the Company consummates a Business Combination, the Company proposes to file a
Registration Statement under the Securities Act with respect to an offering of equity securities, or securities or other obligations
exercisable or exchangeable for, or convertible into equity securities, for its own account or for the account of stockholders
of the Company (or by the Company and by the stockholders of the Company including, without limitation, pursuant to Section 2.1
hereof), other than a Registration Statement (i) filed in connection with any employee stock option or other benefit plan,
(ii) for an exchange offer or offering of securities solely to the Company’s existing stockholders, (iii) for an
offering of debt that is convertible into equity securities of the Company or (iv) for a dividend reinvestment plan, then
the Company shall give written notice of such proposed filing to all of the Holders of Registrable Securities as soon as practicable
but not less than three (3) Business Days before the anticipated filing date of such Registration Statement, which notice
shall (A) describe the amount and type of securities to be included in such offering, the intended method(s) of distribution,
and the name of the proposed managing Underwriter or Underwriters, if any, in such offering, and (B) offer to all of the Holders
of Registrable Securities the opportunity to register the sale of such number of Registrable Securities as such Holders may request
in writing within five (5) Business Days after receipt of such written notice (such Registration a “Piggyback Registration”).
The Company shall, in good faith, cause such Registrable Securities to be included in such Piggyback Registration and shall use
its best efforts to cause the managing Underwriter or Underwriters of a proposed Underwritten Offering to permit the Registrable
Securities requested by the Holders pursuant to this subsection 2.2.1 to be included in a Piggyback Registration on the
same terms and conditions as any similar securities of the Company included in such Registration and to permit the sale or other
disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All such Holders
proposing to distribute their Registrable Securities through an Underwritten Offering under this subsection 2.2.1 shall
enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering by
the Company.
2.2.2 Reduction
of Piggyback Registration. If the managing Underwriter or Underwriters in an Underwritten Registration that is to be a Piggyback
Registration, in good faith, advises the Company and the Holders of Registrable Securities participating in the Piggyback Registration
in writing that the dollar amount or number of shares of Common Stock that the Company desires to sell, taken together with (i) the
shares of Common Stock, if any, as to which Registration has been demanded pursuant to separate written contractual arrangements
with persons or entities other than the Holders of Registrable Securities hereunder, (ii) the Registrable Securities as to
which registration has been requested pursuant to Section 2.2 hereof, and (iii) the shares of Common Stock, if
any, as to which Registration has been requested pursuant to separate written contractual piggy-back registration rights of other
stockholders of the Company, exceeds the Maximum Number of Securities, then:
(a) If
the Registration is undertaken for the Company’s account, the Company shall include in any such Registration (A) first,
Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number
of Securities; and (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing
clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to
subsection 2.2.1 hereof and Common Stock, if any, as to which Registration has been requested pursuant to written contractual
piggy-back registration rights of other stockholders of the Company (pro rata based on the respective number of Registrable
Securities that each stockholder holds prior to such Underwritten Registration), which can be sold without exceeding the Maximum
Number of Securities;
(b) If
the Registration is pursuant to a request by persons or entities other than the Holders of Registrable Securities, then the Company
shall include in any such Registration (A) first, Common Stock or other equity securities, if any, of such requesting persons
or entities, other than the Holders of Registrable Securities, which can be sold without exceeding the Maximum Number of Securities;
(B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable
Securities of Holders exercising their rights to register their Registrable Securities pursuant to subsection 2.2.1 and
Common Stock or other equity securities for the account of other persons or entities that the Company is obligated to register
pursuant to separate written contractual arrangements with such persons or entities (pro rata based on the respective number
of Registrable Securities that each stockholder holds prior to such Underwritten Registration), which can be sold without exceeding
the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities has not been reached
under the foregoing clauses (A) and (B), Common Stock or other equity securities that the Company desires to sell, which can
be sold without exceeding the Maximum Number of Securities.
2.2.3 Piggyback
Registration Withdrawal. Any Holder of Registrable Securities shall have the right to withdraw from a Piggyback Registration
for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of his, her
or its intention to withdraw from such Piggyback Registration prior to the effectiveness of the Registration Statement filed with
the Commission with respect to such Piggyback Registration. The Company (whether on its own good faith determination or as the
result of a request for withdrawal by persons pursuant to separate written contractual obligations) may withdraw a Registration
Statement filed with the Commission in connection with a Piggyback Registration at any time prior to the effectiveness of such
Registration Statement. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration
Expenses incurred in connection with the Piggyback Registration prior to its withdrawal under this subsection 2.2.3.
2.2.4 Unlimited
Piggyback Registration Rights. For purposes of clarity, any Registration effected pursuant to Section 2.2 hereof
shall not be counted as a Registration pursuant to a Demand Registration effected under Section 2.1 hereof.
2.3 Registrations
on Form S-3. The Holders of Registrable Securities may at any time, and from time to time, request in writing that the
Company, pursuant to Rule 415 under the Securities Act (or any successor rule promulgated thereafter by the Commission
if so requested), register the resale of any or all of their Registrable Securities on Form S-3 or any similar short form
registration statement that may be available at such time (“Form S-3”). Within three (3) Business
Days of the Company’s receipt of a written request from a Holder or Holders of Registrable Securities for a Registration
on Form S-3, the Company shall promptly give written notice of the proposed Registration on Form S-3 to all other Holders
of Registrable Securities, and each Holder of Registrable Securities who thereafter wishes to include all or a portion of such
Holder’s Registrable Securities in such Registration on Form S-3 shall so notify the Company, in writing, within ten
(10) days after the receipt by the Holder of the notice from the Company. As soon as practicable thereafter, but not more
than twelve (12) days after the Company’s initial receipt of such written request for a Registration on Form S-3, the
Company shall register all or such portion of such Holder’s Registrable Securities as are specified in such written request,
together with all or such portion of Registrable Securities of any other Holder or Holders joining in such request as are specified
in the written notification given by such Holder or Holders; provided, however, that the Company shall not be obligated
to effect any such Registration pursuant to Section 2.3 hereof if (i) a Form S-3 is not available for such
offering; or (ii) the Holders of Registrable Securities, together with the Holders of any other equity securities of the
Company entitled to inclusion in such Registration, propose to sell the Registrable Securities and such other equity securities
(if any) at any aggregate price to the public of less than $25,000,000.
Any request for an underwritten offering pursuant
to a Form S-3 shall follow the procedures of Section 2.1 (including Section 2.1.4) but shall not count
against the number of long form Demand Registrations that may be made pursuant to Section 2.1.1.
2.4 Restrictions
on Registration Rights. If (A) during the period starting with the date sixty (60) days prior to the Company’s
good faith estimate of the date of the filing of, and ending on a date one hundred and twenty (120) days after the effective date
of, a Company initiated Registration and provided that the Company has delivered written notice to the Holders prior to
receipt of a Demand Registration pursuant to subsection 2.1.1 and it continues to actively employ, in good faith, all reasonable
efforts to cause the applicable Registration Statement to become effective; (B) the Holders have requested an Underwritten
Registration and the Company and the Holders are unable to obtain the commitment of underwriters to firmly underwrite the offer;
or (C) in the good faith judgment of the Board such Registration would be seriously detrimental to the Company and the Board
concludes as a result that it is essential to defer the filing of such Registration Statement at such time, then in each case
the Company shall furnish to such Holders a certificate signed by the Chairman of the Board stating that in the good faith judgment
of the Board it would be seriously detrimental to the Company for such Registration Statement to be filed in the near future and
that it is therefore essential to defer the filing of such Registration Statement. In such event, the Company shall have the right
to defer such filing for a period of not more than thirty (30) days; provided, however, that the Company shall not
defer its obligation in this manner more than once in any 12-month period. Notwithstanding anything to the contrary contained
in this Agreement, no Registration shall be effected or permitted and no Registration Statement shall become effective, with respect
to any Registrable Securities held by any Holder, until after the expiration of the Founder Shares Lock-Up Period or the Private
Placement Lock-Up Period, as the case may be.
Article III
COMPANY PROCEDURES
3.1 General
Procedures. If at any time on or after the date the Company consummates a Business Combination the Company is required to
effect the Registration of Registrable Securities, the Company shall use its best efforts to effect such Registration to permit
the sale of such Registrable Securities in accordance with the intended plan of distribution thereof, and pursuant thereto the
Company shall, as expeditiously as possible:
3.1.1 prepare
and file with the Commission as soon as practicable a Registration Statement with respect to such Registrable Securities and use
its reasonable best efforts to cause such Registration Statement to become effective and remain effective until all Registrable
Securities covered by such Registration Statement have been sold;
3.1.2 prepare
and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements
to the Prospectus, as may be requested by the Holders or any Underwriter of Registrable Securities or as may be required by the
rules, regulations or instructions applicable to the registration form used by the Company or by the Securities Act or rules and
regulations thereunder to keep the Registration Statement effective until all Registrable Securities covered by such Registration
Statement are sold in accordance with the intended plan of distribution set forth in such Registration Statement or supplement
to the Prospectus;
3.1.3 prior
to filing a Registration Statement or prospectus, or any amendment or supplement thereto, furnish without charge to the Underwriters,
if any, and the Holders of Registrable Securities included in such Registration, and such Holders’ legal counsel, copies
of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case
including all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement
(including each preliminary Prospectus), and such other documents as the Underwriters and the Holders of Registrable Securities
included in such Registration or the legal counsel for any such Holders may request in order to facilitate the disposition of the
Registrable Securities owned by such Holders;
3.1.4 prior
to any public offering of Registrable Securities, use its best efforts to (i) register or qualify the Registrable Securities
covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United
States as the Holders of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution)
may request and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement
to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations
of the Company and do any and all other acts and things that may be necessary or advisable to enable the Holders of Registrable
Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions;
provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify or take any action to which it would be subject to general service of process
or taxation in any such jurisdiction where it is not then otherwise so subject;
3.1.5 cause
all such Registrable Securities to be listed on each securities exchange or automated quotation system on which similar securities
issued by the Company are then listed;
3.1.6 provide
a transfer agent and registrar for all such Registrable Securities no later than the effective
date of such Registration Statement;
3.1.7 advise
each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance
of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening
of any proceeding for such purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued;
3.1.8 at
least five (5) days prior to the filing of any Registration Statement or Prospectus or any amendment or supplement to such
Registration Statement or Prospectus or any document that is to be incorporated by reference into such Registration Statement or
Prospectus, furnish a copy thereof to each seller of such Registrable Securities or its counsel;
3.1.9 notify
the Holders at any time when a Prospectus relating to such Registration Statement is required to be delivered under the Securities
Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect,
includes a Misstatement, and then to correct such Misstatement as set forth in Section 3.4 hereof;
3.1.10 permit
a representative of the Holders, the Underwriters, if any, and any attorney or accountant retained by such Holders or Underwriter
to participate, at each such person’s own expense, in the preparation of the Registration Statement, and cause the Company’s
officers, directors and employees to supply all information reasonably requested by any such representative, Underwriter, attorney
or accountant in connection with the Registration; provided, however, that such representatives or Underwriters enter
into a confidentiality agreement, in form and substance reasonably satisfactory to the Company, prior to the release or disclosure
of any such information;
3.1.11 obtain
a “cold comfort” letter from the Company’s independent registered public accountants in the event of an Underwritten
Registration, in customary form and covering such matters of the type customarily covered by “cold comfort” letters
as the managing Underwriter may reasonably request, and reasonably satisfactory to a majority-in-interest of the participating
Holders;
3.1.12 on the date the Registrable Securities are
delivered for sale pursuant to such Registration, obtain an opinion, dated such date, of counsel representing the Company for
the purposes of such Registration, addressed to the Holders, the placement agent or sales agent, if any, and the
Underwriters, if any, covering such legal matters with respect to the Registration in respect of which such opinion is being
given as the Holders, placement agent, sales agent, or Underwriter may reasonably request and as are customarily included in
such opinions and negative assurance letters, and reasonably satisfactory to a majority in interest of the participating
Holders;
3.1.13 in
the event of any Underwritten Offering, enter into and perform its obligations under an underwriting agreement, in usual and customary
form, with the managing Underwriter of such offering;
3.1.14 make
available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve
(12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration
Statement which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any successor rule promulgated thereafter by the Commission);
3.1.15 if
the Registration involves the Registration of Registrable Securities involving gross proceeds in excess of $25,000,000, use its
reasonable efforts to make available senior executives of the Company to participate in customary “road show” presentations
that may be reasonably requested by the Underwriter in any Underwritten Offering; and
3.1.16 otherwise,
in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the Holders, in connection
with such Registration, including, without limitation, making available senior executives of the Company to participate in any
due diligence sessions that may be reasonably requested by the Underwriter in any Underwritten Offering.
3.2 Registration
Expenses. The Registration Expenses of all Registrations shall be borne by the Company. It is acknowledged by the Holders
that the Holders shall bear all incremental selling expenses relating to the sale of Registrable Securities, such as Underwriters’
commissions and discounts, brokerage fees, Underwriter marketing costs and, other than as set forth in the definition of “Registration
Expenses,” all reasonable fees and expenses of any legal counsel representing the Holders.
3.3 Requirements
for Participation in Underwritten Offerings. No person may participate in any Underwritten Offering for equity securities
of the Company pursuant to a Registration initiated by the Company hereunder unless such person (i) agrees to sell such person’s
securities on the basis provided in any underwriting arrangements approved by the Company and (ii) completes and executes
all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting agreements and other customary
documents as may be reasonably required under the terms of such underwriting arrangements.
3.4 Suspension
of Sales; Adverse Disclosure. Upon receipt of written notice from the Company that a Registration Statement or Prospectus
contains a Misstatement, each of the Holders shall forthwith discontinue disposition of Registrable Securities until he, she or
it has received copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company
hereby covenants to prepare and file such supplement or amendment as soon as practicable after the time of such notice), or until
he, she or it is advised in writing by the Company that the use of the Prospectus may be resumed. If the filing, initial effectiveness
or continued use of a Registration Statement in respect of any Registration at any time would require the Company to make an Adverse
Disclosure or would require the inclusion in such Registration Statement of financial statements that are unavailable to the Company
for reasons beyond the Company’s control, the Company may, upon giving prompt written notice of such action to the Holders,
delay the filing or initial effectiveness of, or suspend use of, such Registration Statement for the shortest period of time,
but in no event more than thirty (30) days, determined in good faith by the Company to be necessary for such purpose. In the event
the Company exercises its rights under the preceding sentence, the Holders agree to suspend, immediately upon their receipt of
the notice referred to above, their use of the Prospectus relating to any Registration in connection with any sale or offer to
sell Registrable Securities. The Company shall immediately notify the Holders of the expiration of any period during which it
exercised its rights under this Section 3.4.
3.5 Reporting
Obligations. As long as any Holder shall own Registrable Securities, the Company, at all times while it shall be a reporting
company under the Exchange Act, covenants to file timely (or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by the Company after the date hereof pursuant to Sections 13(a) or 15(d) of
the Exchange Act and to promptly furnish the Holders with true and complete copies of all such filings. The Company further covenants
that it shall take such further action as any Holder may reasonably request, all to the extent required from time to time to enable
such Holder to sell shares of Common Stock held by such Holder without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter
by the Commission), including providing any legal opinions. Upon the request of any Holder, the Company shall deliver to such
Holder a written certification of a duly authorized officer as to whether it has complied with such requirements.
Article IV
INDEMNIFICATION AND CONTRIBUTION
4.1 Indemnification.
4.1.1 The
Company agrees to indemnify, to the extent permitted by law, each Holder of Registrable Securities, its officers and directors
and each person who controls such Holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities
and expenses (including attorneys’ fees) caused by any untrue or alleged untrue statement of material fact contained in any
Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except
insofar as the same are caused by or contained in any information furnished in writing to the Company by such Holder expressly
for use therein. The Company shall indemnify the Underwriters, their officers and directors and each person who controls such Underwriters
(within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to the indemnification
of the Holder.
4.1.2 In
connection with any Registration Statement in which a Holder of Registrable Securities is participating, such Holder shall furnish
to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such
Registration Statement or Prospectus and, to the extent permitted by law, shall indemnify the Company, its directors and officers
and agents and each person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages,
liabilities and expenses (including without limitation reasonable attorneys’ fees) resulting from any untrue statement of
material fact contained in the Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement
thereto or any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading,
but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing
by such Holder expressly for use therein; provided, however, that the obligation to indemnify shall be several, not
joint and several, among such Holders of Registrable Securities, and the liability of each such Holder of Registrable Securities
shall be in proportion to and limited to the net proceeds received by such Holder from the sale of Registrable Securities pursuant
to such Registration Statement. The Holders of Registrable Securities shall indemnify the Underwriters, their officers, directors
and each person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the
foregoing with respect to indemnification of the Company.
4.1.3 Any
person entitled to indemnification herein shall (i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s
right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless
in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties
may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability
for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees
and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless
in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other
of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party,
consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money
(and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.
4.1.4 The
indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by
or on behalf of the indemnified party or any officer, director or controlling person of such indemnified party and shall survive
the transfer of securities. The Company and each Holder of Registrable Securities participating in an offering also agrees to make
such provisions as are reasonably requested by any indemnified party for contribution to such party in the event the Company’s
or such Holder’s indemnification is unavailable for any reason.
4.1.5 If
the indemnification provided under Section 4.1 hereof from the indemnifying party is unavailable or insufficient to
hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then
the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified
party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether
any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, was made by, or relates to information supplied by, such indemnifying party or indemnified party, and the
indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct
or prevent such action; provided, however, that the liability of any Holder under this subsection 4.1.5 shall
be limited to the amount of the net proceeds received by such Holder in such offering giving rise to such liability. The amount
paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject
to the limitations set forth in subsections 4.1.1, 4.1.2 and 4.1.3 above, any legal or other fees, charges
or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that
it would not be just and equitable if contribution pursuant to this subsection 4.1.5 were determined by pro rata
allocation or by any other method of allocation, which does not take account of the equitable considerations referred to in this
subsection 4.1.5. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution pursuant to this subsection 4.1.5 from any person who was not guilty of
such fraudulent misrepresentation.
Article V
MISCELLANEOUS
5.1 Notices.
Any notice or communication under this Agreement must be in writing and given by (i) deposit in the United States mail, addressed
to the party to be notified, postage prepaid and registered or certified with return receipt requested, (ii) delivery in
person or by courier service providing evidence of delivery, or (iii) transmission by hand delivery, electronic mail, telecopy,
telegram or facsimile. Each notice or communication that is mailed, delivered, or transmitted in the manner described above shall
be deemed sufficiently given, served, sent, and received, in the case of mailed notices, on the third business day following the
date on which it is mailed and, in the case of notices delivered by courier service, hand delivery, electronic mail, telecopy,
telegram or facsimile, at such time as it is delivered to the addressee (with the delivery receipt or the affidavit of messenger)
or at such time as delivery is refused by the addressee upon presentation. Any notice or communication under this Agreement must
be addressed, if to the Company, to: 640 Fifth Avenue, 12th Floor, New York, NY 10019, Attention: Michael Klein, and, if to any
Holder, at such Holder’s address or facsimile number as set forth in the Company’s books and records. Any party may
change its address for notice at any time and from time to time by written notice to the other parties hereto, and such change
of address shall become effective thirty (30) days after delivery of such notice as provided in this Section 5.1.
5.2 Assignment;
No Third Party Beneficiaries.
5.2.1 This
Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole
or in part.
5.2.2 A
Holder may assign or delegate such Holder’s rights, duties or obligations under this Agreement, in whole or in part, to a
Permitted Transferee who agrees to become bound by the transfer restrictions set forth in this Agreement.
5.2.3 This
Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors
and the permitted assigns of the Holders, which shall include Permitted Transferees.
5.2.4 This
Agreement shall not confer any rights or benefits on any persons that are not parties hereto, other than as expressly set forth
in this Agreement and Section 5.2 hereof.
5.2.5 No
assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate
the Company unless and until the Company shall have received (i) written notice of such assignment as provided in Section 5.1
hereof and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the
terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement).
Any transfer or assignment made other than as provided in this Section 5.2 shall be null and void.
5.3 Counterparts.
This Agreement may be executed in multiple counterparts (including facsimile or PDF counterparts), each of which shall be deemed
an original, and all of which together shall constitute the same instrument, but only one of which need be produced.
5.4 Governing
Law; Venue. NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES
EXPRESSLY AGREE THAT THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO AGREEMENTS
AMONG NEW YORK RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS
OF SUCH JURISDICTION AND (II) THE VENUE FOR ANY ACTION TAKEN WITH RESPECT TO THE AGREEMENT SHALL BE ANY STATE OR FEDERAL
COURT IN NEW YORK COUNTY IN THE STATE OF NEW YORK.
EACH PARTY HERETO ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE,
EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
5.5 Amendments
and Modifications. Upon the written consent of the Company and the Holders of at least a majority in interest of the Registrable
Securities at the time in question, compliance with any of the provisions, covenants and conditions set forth in this Agreement
may be waived, or any of such provisions, covenants or conditions may be amended or modified; provided, however,
that notwithstanding the foregoing, any amendment hereto or waiver hereof that adversely affects one Holder, solely in his, her
or its capacity as a holder of the shares of capital stock of the Company, in a manner that is materially different from the other
Holders (in such capacity) shall require the consent of the Holder so affected. No course of dealing between any Holder or the
Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or
remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial
exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other
rights or remedies hereunder or thereunder by such party.
5.6 Other
Registration Rights. The Company represents and warrants that no person, other than a Holder of Registrable Securities has
any right to require the Company to register any securities of the Company for sale or to include such securities of the Company
in any Registration filed by the Company for the sale of securities for its own account or for the account of any other person.
Further, the Company represents and warrants that this Agreement supersedes any other registration rights agreement or agreement
with similar terms and conditions and in the event of a conflict between any such agreement or agreements and this Agreement,
the terms of this Agreement shall prevail.
5.7 Term.
This Agreement shall terminate upon the date as of which (A) all of the Registrable Securities have been sold pursuant to
a Registration Statement (but in no event prior to the applicable period referred to in Section 4(a)(3) of the Securities
Act and Rule 174 thereunder (or any successor rule promulgated thereafter by the Commission)) or (B) the Holders
of all Registrable Securities are permitted to sell the Registrable Securities under Rule 144 (or any similar provision)
under the Securities Act without limitation on the amount of securities sold or the manner of sale. The provisions of Section 3.5
and Article IV shall survive any termination.
[Signature pages follow]
IN WITNESS WHEREOF, the undersigned have caused
this Agreement to be executed as of the date first written above.
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COMPANY: |
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AltC Acquisition Corp.
a
Delaware corporation |
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By: |
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Name: |
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Title: |
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HOLDERS: |
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AltC Sponsor LLC |
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By: |
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Name: |
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Title: |
[Signature Page to Registration Rights Agreement]
Exhibit 10.7
PRIVATE PLACEMENT
SHARES PURCHASE AGREEMENT
THIS PRIVATE PLACEMENT SHARES AGREEMENT,
dated as of [●], 2021 (this “Agreement”), is entered into by and between AltC Acquisition Corp., a Delaware
corporation (the “Company”), and AltC Sponsor LLC, a Delaware limited liability company (the “Purchaser”).
WHEREAS, the Company intends to consummate an initial
public offering (the “Public Offering”), of the Company’s Class A common stock, par value $0.0001 per share
(each, a “Share”), as set forth in the Company’s registration statement on Form S-1 related to the Public Offering
(the “Registration Statement”); and
WHEREAS, the Purchaser now wishes to purchase an
aggregate of 1,250,000 Shares (or 1,370,000 Shares if the underwriters’ over-allotment option is exercised in full) (the “Private
Placement Shares”).
NOW THEREFORE, in consideration of the mutual promises
contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties to this Agreement hereby, intending legally to be bound, agree as follows:
AGREEMENT
Section 1.
Authorization, Purchase and Sale; Terms of the Private Placement Shares.
A.
Authorization of the Private Placement Shares. The Company has duly authorized the issuance and sale of the Private Placement
Shares to the Purchaser.
B.
Purchase and Sale of the Private Placement Shares.
(i)
As payment in full for the 1,250,000 Private Placement Shares being purchased under this Agreement, the Purchaser shall pay $12,500,000
(the “Purchase Price”), by wire transfer of immediately available funds in accordance with the Company’s wiring
instructions, at least one (1) business day prior to the effective date of the Registration Statement, or on such other date as the Company
and the Purchaser may agree.
(ii)
In the event that the underwriters’ over-allotment option is exercised in full, the Purchaser shall purchase up to an additional
120,000 Private Placement Shares (the “Additional Private Placement Shares”), in the same proportion as the amount
of the over-allotment option that is exercised, and simultaneously with such purchase of Additional Private Placement Shares, as payment
in full for the Additional Private Placement Shares being purchased hereunder, and at least one (1) business day prior to the closing
of all or any portion of the over-allotment option, or on such other date as the Company and the Purchaser may agree, the Purchaser shall
pay $10.00 per Additional Private Placement Share, up to an aggregate amount of $1,200,000, by wire transfer of immediately available
funds in accordance with the Company’s wiring instructions.
(iii)
The closing of the purchase and sale of the Private Placement Shares shall take place simultaneously with the closing of the Public
Offering (the “Initial Closing Date”). The closing of the purchase and sale of the Additional Private Placement Shares,
if applicable, shall take place simultaneously with the closing of all or any portion of the over-allotment option (such closing date,
together with the Initial Closing Date, the “Closing Dates” and each, a “Closing Date”). The closing
of the purchase and sale of each of the Private Placement Shares and the Additional Private Placement Shares shall take place at the
offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York, 10153, or such other place as may be agreed upon by
the parties hereto.
C.
Terms of the Private Placement Shares.
(i) The
Private Placement Shares are substantially identical to the Shares to be offered in the Public Offering except: (a) as provided in that
letter agreement, dated as of the date hereof (the “Letter Agreement”), by and among the Company, the Purchaser and each
of the Company’s officers, directors and director nominees, and (b) the Private Placement Shares are being purchased pursuant to
an exemption from the registration requirements of the Securities Act and will become freely tradable only after the expiration of the
lockup described above in the Letter Agreement and they are registered pursuant to the Registration Rights Agreement (as defined below)
or an exemption from registration is available, and the restrictions described above in clause (a) have expired.
(ii)
At or prior to the time of the Initial Closing Date, the Company and the Purchaser shall enter into a registration rights agreement
(the “Registration Rights Agreement”) pursuant to which the Company will grant certain registration rights to the
Purchaser relating to the Private Placement Shares.
Section 2.
Representations and Warranties of the Company. As a material inducement to the Purchaser to enter into this Agreement and
purchase the Private Placement Shares, the Company hereby represents and warrants to the Purchaser (which representations and warranties
shall survive the Closing Dates) that:
A.
Organization and Corporate Power. The Company is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and is qualified to do business in every jurisdiction in which the failure to so qualify would reasonably
be expected to have a material adverse effect on the financial condition, operating results or assets of the Company. The Company possesses
all requisite corporate power and authority necessary to carry out the transactions contemplated by this Agreement.
B.
Authorization; No Breach.
(i)
The execution, delivery and performance of this Agreement and the Private Placement Shares have been duly authorized by the Company
as of the Closing Dates. This Agreement constitutes a valid and binding obligation of the Company, enforceable in accordance with its
terms. Upon issuance in accordance with, and payment pursuant to, the terms of the this Agreement, the Private Placement Shares will
constitute valid and binding obligations of the Company, enforceable in accordance with their terms as of the Closing Dates.
(ii)
The execution and delivery by the Company of this Agreement and the Private Placement Shares, the issuance and sale of the Private
Placement Shares and the fulfillment of, and compliance with, the respective terms hereof and thereof by the Company, do not and will
not as of the Closing Dates (a) conflict with or result in a breach of the terms, conditions or provisions of, (b) constitute a default
under, (c) result in the creation of any lien, security interest, charge or encumbrance upon the Company’s capital stock or assets
under, (d) result in a violation of, or (e) require any authorization, consent, approval, exemption or other action by or notice or declaration
to, or filing with, any court or administrative or governmental body or agency pursuant to the certificate of incorporation or the bylaws
of the Company (in effect on the date hereof or as may be amended prior to completion of the contemplated Public Offering), or any material
law, statute, rule or regulation to which the Company is subject, or any agreement, order, judgment or decree to which the Company is
subject, except for any filings required after the date hereof under federal or state securities laws.
C. Title
to Securities. Upon issuance in accordance with, and payment pursuant to, the terms hereof, the Private Placement Shares will be
duly and validly issued, fully paid and nonassessable. Upon issuance in accordance with, and payment pursuant to, the terms hereof,
the Purchaser will have good title to the Private Placement Shares, free and clear of all liens, claims and encumbrances of any
kind, other than (i) transfer restrictions hereunder and under the other agreements contemplated hereby, (ii) transfer restrictions
under federal and state securities laws, and (iii) liens, claims or encumbrances imposed due to the actions of the Purchaser.
D.
Governmental Consents. No permit, consent, approval or authorization of, or declaration to or filing with, any governmental
authority is required in connection with the execution, delivery and performance by the Company of this Agreement or the consummation
by the Company of any other transactions contemplated hereby.
E.
Regulation D Qualification. Neither the Company nor, to its knowledge, any of its affiliates, officers, directors or beneficial
stockholders of 20% or more of its outstanding securities, has experienced a disqualifying event as enumerated pursuant to Rule 506(d)
of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”).
Section 3.
Representations and Warranties of the Purchaser. As a material inducement to the Company to enter into this Agreement and
issue and sell the Private Placement Shares to the Purchaser, the Purchaser hereby represents and warrants to the Company (which representations
and warranties shall survive the Closing Dates) that:
A.
Organization and Requisite Authority. The Purchaser possesses all requisite power and authority necessary to carry out
the transactions contemplated by this Agreement.
B.
Authorization; No Breach.
(i)
This Agreement constitutes a valid and binding obligation of the Purchaser, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws of general applicability relating to or affecting
creditors’ rights and to general equitable principles (whether considered in a proceeding in equity or law).
(ii)
The execution and delivery by the Purchaser of this Agreement and the fulfillment of and compliance with the terms hereof by
the Purchaser does not and shall not as of the Closing Dates conflict with or result in a breach by the Purchaser of the terms, conditions
or provisions of any agreement, instrument, order, judgment or decree to which the Purchaser is subject.
C.
Investment Representations.
(i)
The Purchaser is acquiring the Private Placement Shares for the Purchaser’s own account, for investment purposes only and
not with a view towards, or for resale in connection with, any public sale or distribution thereof.
(ii)
The Purchaser is an “accredited investor” as such term is defined in Rule 501(a)(3) of Regulation D under the Securities
Act and the Purchaser has not experienced a disqualifying event as enumerated pursuant to Rule 506(d) of Regulation D under the Securities
Act.
(iii)
The Purchaser understands that the Private Placement Shares are being offered and will be sold to it in reliance on specific exemptions
from the registration requirements of the United States federal and state securities laws and that the Company is relying upon the truth
and accuracy of, and the Purchaser’s compliance with, the representations and warranties of the Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of the Purchaser to acquire such Private Placement Shares.
(iv)
The Purchaser did not enter into this Agreement as a result of any general solicitation or general advertising within the meaning
of Rule 502(c) under the Securities Act.
(v)
The Purchaser has been furnished with all materials relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Private Placement Shares which have been requested by the Purchaser. The Purchaser has been afforded
the opportunity to ask questions of the executive officers and directors of the Company. The Purchaser understands that its investment
in the Private Placement Shares involves a high degree of risk and it has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to the acquisition of the Private Placement Shares.
(vi)
The Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed
on or made any recommendation or endorsement of the Private Placement Shares or the fairness or suitability of the investment in the
Private Placement Shares by the Purchaser nor have such authorities passed upon or endorsed the merits of the offering of the Private
Placement Shares.
(vii)
The Purchaser understands that: (a) the Private Placement Shares have not been and are not being registered under the Securities
Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (1) subsequently registered thereunder
or (2) sold in reliance on an exemption therefrom; and (b) except as specifically set forth in the Registration Rights Agreement, neither
the Company nor any other person is under any obligation to register the Private Placement Shares under the Securities Act or any state
securities laws or to comply with the terms and conditions of any exemption thereunder.
(viii)
The Purchaser has such knowledge and experience in financial and business matters, knowledge of the high degree of risk associated
with investments in the securities of companies in the development stage such as the Company, is capable of evaluating the merits and
risks of an investment in the Private Placement Shares and is able to bear the economic risk of an investment in the Private Placement
Shares in the amount contemplated hereunder for an indefinite period of time. The Purchaser has adequate means of providing for its current
financial needs and contingencies and will have no current or anticipated future needs for liquidity which would be jeopardized by the
investment in the Private Placement Shares. The Purchaser can afford a complete loss of its investments in the Private Placement Shares.
Section 4.
Conditions of the Purchaser’s Obligations. The obligations of the Purchaser to purchase and pay for the Private Placement
Shares are subject to the fulfillment, on or before the Closing Dates, of each of the following conditions:
A.
Representations and Warranties. The representations and warranties of the Company contained in Section 2 shall be
true and correct at and as of the Closing Dates as though then made.
B.
Performance. The Company shall have performed and complied with all agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or before the Closing Dates.
C.
No Injunction. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby, which prohibits the consummation of any of the transactions contemplated
by this Agreement or the Warrant Agreement.
D. Registration
Rights Agreement. The Company shall have entered into a Registration Rights Agreement on terms satisfactory to the
Purchaser.
Section 5.
Conditions of the Company’s Obligations. The obligations of the Company to the Purchaser under this Agreement are
subject to the fulfillment, on or before the Closing Dates, of each of the following conditions:
A.
Representations and Warranties. The representations and warranties of the Purchaser contained in Section 3 shall
be true and correct at and as of the Closing Dates as though then made.
B.
Performance. The Purchaser shall have performed and complied with all agreements, obligations and conditions contained
in this Agreement that are required to be performed or complied with by the Purchaser on or before the Closing Dates.
C.
No Injunction. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby, which prohibits the consummation of any of the transactions contemplated
by this Agreement.
Section 6.
Termination. This Agreement may be terminated at any time after [●], [2021] upon the election by either the Company
or the Purchaser upon written notice to the other parties if the closing of the Public Offering does not occur prior to such date.
Section 7.
Survival of Representations and Warranties. All of the representations and warranties contained herein shall survive the
Closing Dates.
Section 8.
Definitions. Terms used but not otherwise defined in this Agreement shall have the meaning assigned to such terms in the
Registration Statement.
Section 9.
Miscellaneous.
A.
Successors and Assigns. Except as otherwise expressly provided herein, all covenants and agreements contained in this Agreement
by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors of the parties hereto whether
so expressed or not. Notwithstanding the foregoing or anything to the contrary herein, the parties may not assign this Agreement, other
than assignments by the Purchaser to affiliates thereof.
B.
Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.
C.
Counterparts. This Agreement may be executed simultaneously in two or more counterparts, none of which need contain the
signatures of more than one party, but all such counterparts taken together shall constitute one and the same agreement.
D.
Descriptive Headings; Interpretation. The descriptive headings of this Agreement are inserted for convenience only and
do not constitute a substantive part of this Agreement. The use of the word “including” in this Agreement shall be by way
of example rather than by limitation.
E.
Governing Law. This Agreement and the rights and obligations of the parties hereunder shall be construed in accordance
with and governed by the laws of New York applicable to contracts wholly performed within the borders of such state, without giving effect
to the conflict of law principles thereof. The parties hereto irrevocably submit to the exclusive jurisdiction of any federal court sitting
in the Southern District of New York or any state court located in New York County, State of New York, over any suit, action or proceeding
arising out of or relating to this Agreement. To the fullest extent they may effectively do so under applicable law, the parties hereto
irrevocably waive and agree not to assert, by way of motion, as a defense or otherwise, any claim that they are not subject to the jurisdiction
of any such court, any objection that they may now or hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient
forum.
F.
Amendments. This letter agreement may not be amended, modified or waived as to any particular provision, except by a written
instrument executed by all parties hereto.
[Signature page follows]
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement to be effective as of the date first set forth above.
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COMPANY: |
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ALTC ACQUISITION CORP. |
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By: |
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Name: |
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Title: |
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ALTC SPONSOR LLC |
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By: |
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Name: |
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Title: |
[Signature Page to Private Placement Shares
Purchase Agreement]
Exhibit 10.10
Surrender of Shares and
Amendment No. 2 to the
Securities Subscription Agreement
This Surrender of Shares and Amendment No.2 to the Securities Subscription
Agreement, dated May 7, 2021 (this “Agreement”), is made by and between AltC Acquisition Corp., a Delaware corporation
(the “Company”), and AltC Sponsor LLC, a Delaware limited liability company (the “Subscriber”).
WHEREAS, the Company and the Subscriber have entered into that
certain Securities Subscription Agreement, dated as of March 4, 2021 (the “Subscription Agreement”), pursuant to which
the Subscriber subscribed for an aggregate of 43,125,000 shares of Class B common stock, par value $0.0001 per share of the Company (“Class
B Shares”), for an aggregate purchase price of $25,000, and up to 5,625,000 of such Class B Shares were subject to complete
or partial forfeiture by the Subscriber if the underwriters of the Company’s initial public offering (the “IPO”)
did not fully exercise their over-allotment option as described therein;
WHEREAS, the Company and the Subscriber have entered into that
certain Surrender of Shares and Amendment No. 1 to the Securities Subscription Agreement, dated March 9, 2021 (“Amendment No.
1”) pursuant to which the Subscriber surrendered for no consideration 14,375,000 Class B Shares, resulting in an aggregate of
28,750,000 Class B shares outstanding, up to 3,750,000 of which were subject to complete or partial forfeiture by the Subscriber if the
underwriters of the Company’s IPO did not fully exercise their over-allotment option as described in the Subscription Agreement;
and
WHEREAS, the Company and the Subscriber desire to amend the
Subscription Agreement to modify the number of Class B Shares subject to forfeiture in connection with the IPO and the Subscriber desires
to provide an irrevocable notice of surrender of certain Class B Shares to the Company in connection with the pricing of the IPO.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
| (a) | Immediately following the pricing of the IPO, the Subscriber
hereby irrevocably surrenders to the Company for no consideration a number of Class B Shares so that the number of Class B Shares outstanding
following such surrender will equal, in the aggregate, 25% of the total number of all shares of Class A common stock, par value $0.0001
per share, of the Company (the “Class A Shares”) (including any Class A Shares issuable upon exercise of by the underwriters
of the over-allotment option but excluding any Class A Shares issued to Subscriber in connection with a private placement at the time
of the IPO). |
| (b) | The Subscriber confirms that the Company has not, as at the
date of this letter, issued any share certificates to it. |
| 2. | Amendment to Subscription Agreement. Section 3.1 of the Subscription Agreement is hereby amended and restated in its entirety
as follows: “In the event the Over-allotment Option granted to the representative of the underwriters of the IPO is not exercised
in full, the Subscriber acknowledges and agrees that it (and, if applicable, any transferee of Shares) shall forfeit any and all rights
to such number of Shares (pro rata based upon the percentage of the Over-allotment Option exercised) such that immediately following such
forfeiture, the Subscriber (and any such transferees) will own an aggregate number of Shares (not including any Common Stock purchased
by Subscriber in any private placement, the IPO or in the aftermarket) equal to 20% of the issued and outstanding Common Stock immediately
following the IPO.” |
| 3. | Agreement Remains Effective. Except as modified herein or amended hereby, the terms and conditions contained in the Subscription
Agreement shall continue in full force and effect. |
| 4. | Governing Law. This Agreement and the rights and obligations of the parties hereunder shall be construed in accordance with
and governed by the laws of New York applicable to contracts wholly performed within the borders of such state, without giving effect
to the conflict of law principles thereof. |
| 5. | Headings and Captions. The headings and captions of the various subdivisions of this Agreement are for convenience of reference
only and shall in no way modify or affect the meaning or construction of any of the terms or provisions hereof. |
| 6. | Counterparts. This Agreement may be executed in one or more counterparts, all of which when taken together shall be considered
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party,
it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission
or any other form of electronic delivery, such signature shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such signature page were an original thereof. |
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be executed as of the date first written above.
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ALTC ACQUISITION CORP. |
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By: |
/s/ Jay Taragin |
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Name: |
Jay Taragin |
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Title: |
Chief Financial Officer |
| ALTC SPONSOR LLC |
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By: |
/s/ Jay Taragin |
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Name: |
Jay Taragin |
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Title: |
Authorized Person |
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[Signature Page to Surrender of Shares and
Amendment No. 2 to the Securities Subscription
Agreement]
Exhibit 23.1
Independent
Registered Public Accounting Firm’s Consent
We consent to the inclusion in this Registration
Statement of AltC Acquisition Corp. (“the Company”) on Form S-1, File No. 333-254263, of our report dated March 15,
2021, which includes an explanatory paragraph as to the Company’s ability to continue as a going concern, with respect to our audit
of the financial statements of AltC Acquisition Corp. as of March 31, 2021 and for the period from February 1, 2021 (inception)
through March 31, 2021, which report appears in the Prospectus, which is part of this Registration Statement. We also consent to
the reference to our Firm under the heading “Experts” in such Prospectus.
/s/ Marcum llp
Marcum llp
New York, NY
May 7, 2021
Exhibit 99.1
Consent to be Named as a Director Nominee
In connection with the filing by AltC Acquisition Corp. of the Registration
Statement on Form S-1 with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities
Act”), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of AltC
Acquisition Corp. in the Registration Statement and any and all amendments and supplements thereto. I also consent to the filing of this
consent as an exhibit to such Registration Statement and any amendments thereto.
Dated: March 31, 2021
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/s/ Sam Altman |
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Name: Sam Altman |
