As filed with the U.S. Securities and Exchange Commission on September 28, 2020.
Registration No. 333-248429
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
FG New America Acquisition Corp.
(Exact name of registrant as specified in its charter)
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Delaware
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6770
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85-1648122
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(State or other jurisdiction of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification Number)
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105 S. Maple Street
Itasca, Illinois 60143
Tel: (847) 791-6817
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Hassan Baqar
105 S. Maple Street
Itasca, Illinois 60143
Tel: (847) 791-6817
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
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Joel L. Rubinstein
Elliott M. Smith
White & Case LLP
1221 Avenue of the Americas
New York, New York 10020
Tel: (212) 819-8200
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Mitchell S. Nussbaum
Giovanni Caruso
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154
Tel: (212) 407-4000
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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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Units, each consisting of one share of Class A common stock, $0.0001 par value,
and one-half of one redeemable warrant(2)
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25,875,000 Units
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$ |
10.00 |
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$ |
258,750,000 |
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$ |
33,585.75 |
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Shares of Class A common stock included as part of the units(3)
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25,875,000 Shares
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— |
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— |
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—(4) |
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Redeemable warrants included as part of the units(3)
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12,937,500 Warrants
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— |
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— |
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—(4) |
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| Total |
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$ |
258,750,000 |
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$ |
33,585.75(5) |
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(1)
Estimated solely for the purpose of calculating the registration fee.
(2)
Includes 3,375,000 units, consisting of 3,375,000 shares of Class A common stock and 1,687,500 redeemable warrants, which may be issued upon exercise of a 45-day option granted to the underwriters to cover over-allotments, if any.
(3)
Pursuant to Rule 416, there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions.
(4)
No fee pursuant to Rule 457(g).
(5)
Previously paid.
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.
PRELIMINARY PROSPECTUSSUBJECT TO COMPLETION, DATED SEPTEMBER 28, 2020
$225,000,000
FG New America Acquisition Corp.
22,500,000 Units
FG New America Acquisition Corp. is a blank check company whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to 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. Although we may acquire a business in any industry, we intend to focus our search for a target business in the insurance and financial services industries.
This is an initial public offering of our securities. Each unit has an offering price of $10.00 and consists of one share of Class A common stock and one-half of one redeemable warrant. Each whole warrant entitles the holder thereof to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment as described herein. Only whole warrants are exercisable. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. The warrants will become exercisable on the later of 30 days after the completion of our initial business combination and 12 months from the closing of this offering, and will expire five years (or ten years with respect to the $15 Exercise Price Warrants (as defined below)) after the completion of our initial business combination or earlier upon redemption or our liquidation, as described herein. The underwriters have a 45-day option from the date of this prospectus to purchase up to 3,375,000 additional units to cover over-allotments, if any.
We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of 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 as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account (which interest shall be net of taxes payable), divided by the number of then outstanding shares of Class A common stock that were sold as part of the units in this offering, which we refer to collectively as our public shares, subject to the limitations and on the conditions described herein. If we are unable to complete our 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 earned on the funds held in the trust account (which interest shall be net of taxes payable, 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 insiders (and/or their designees) have committed to purchase from us an aggregate of (i) 3,848,750 warrants (“founder warrants”) at a price of $1.00 per warrant, (ii) 462,500 units (the “private units”) at a price of $10.00 per unit, with each unit consisting of one share of Class A common stock (the “private shares”) and one-half of one warrant (each whole warrant, a “private warrant”) to purchase one share of Class A common stock at an exercise price of $11.50 per share by exercising a whole private warrant, and (iii) 1,512,500 warrants (“$15 Exercise Price Warrants” and, together with the founder warrants and private units, the “private placement securities”) at a price of $0.10 per warrant, for an aggregate purchase price of $8,625,000. These purchases will take place on a private placement basis simultaneously with the consummation of this offering.
Our initial stockholders currently own an aggregate of 6,468,750 shares of Class B common stock (up to 843,750 shares of which are subject to forfeiture depending on the extent to which the underwriters’ over-allotment option is exercised), which will automatically convert into shares of Class A common stock concurrently with or immediately following the consummation of our initial business combination on a one-for-one basis, subject to the adjustments described herein.
Currently, there is no public market for our units, Class A common stock or warrants. We have applied to have our units listed on the New York Stock Exchange, or the NYSE, under the symbol “FGNA.U” on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for listing on the NYSE. We expect the shares of Class A common stock and warrants comprising the units to begin separate trading on the 52nd day following the date of this prospectus unless ThinkEquity, a division of Fordham Financial Management, Inc., and Piper Sandler & Co. inform us of their decision to allow earlier separate trading, subject to our satisfaction of certain conditions. Once the securities comprising the units begin separate trading, we expect that the Class A common stock and warrants will be listed on the NYSE under the symbols “FGNA” and “FGNA WS,” respectively.
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 a high degree of risk. See “
Risk Factors” beginning on page
35 for a discussion of information that should be considered in connection with an investment in our securities. Investors will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings.
Neither the U.S. Securities and Exchange Commission 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 Unit
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Total
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Public offering price
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$ |
10.00 |
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$ |
225,000,000 |
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Underwriting commissions(1)
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$ |
0.04 |
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$ |
1,000,000 |
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Proceeds, before expenses, to us
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$ |
9.96 |
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$ |
224,000,000 |
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(1)
In addition to the cash compensation set forth herein, we have agreed to issue to the underwriters 112,500 units, or up to 129,375 units if the underwriters’ over-allotment option is exercised in full, each consisting of one share of common stock and one-half of one redeemable warrant (the “Underwriter Units”), in a private placement to be completed concurrently with the consummation of this offering. Except with respect to certain registration rights and transfer restrictions, the Underwriter Units will be identical to the public units sold in 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 securities described in this prospectus, $230.625 million ($10.25 per unit), or $264.38 million if the underwriters’ over-allotment option is exercised in full (approximately $10.22 per unit), will be deposited into a trust account in the United States with Continental Stock Transfer & Trust Company acting as trustee, after deducting $1,000,000 in underwriting commissions payable upon the closing of this offering and an aggregate of $2,000,000 to pay fees and expenses in connection with the closing of this offering and for working capital following the closing of this offering.
The underwriters are offering the units for sale on a firm commitment basis. The underwriters expect to deliver the units to the purchasers on or about , 2020.
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Joint Book-Running Managers
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Piper Sandler |
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ThinkEquity
a division of Fordham Financial Management, Inc.
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, 2020
TABLE OF CONTENTS
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1
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12
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34
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35
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67
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68
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71
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72
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74
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75
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80
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107
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119
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122
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124
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140
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148
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154
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154
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154
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F-1
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We are responsible for the information contained in this prospectus. We have not authorized anyone to provide you with different information, and we take no responsibility for any other information others may give to you. We are not, and the underwriters are not, making an offer to sell securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus.
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 TM 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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“we,” “us,” “company” or “our company” are to FG New America Acquisition Corp., a Delaware corporation;
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“DGCL” refers to the Delaware General Corporation Law as the same may be amended from time to time;
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“founder shares” are to shares of Class B common stock initially purchased by our sponsor in a private placement prior to this offering and the shares of Class A common stock that will be issued upon the automatic conversion of the shares of Class B common stock at the time of our initial business combination as described herein;
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“initial stockholders” are to holders of our founder shares prior to this offering;
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“management” or our “management team” are to our executive officers, directors and our senior advisor;
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“directors” are to our current directors and director nominees;
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“common stock” are to our Class A common stock and our Class B common stock;
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“private placement” are to the private placement to our insiders (and/or their designees) of the private units, founder warrants and $15 Exercise Price Warrants that will occur simultaneously with this offering.
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“private placement securities” are to the private units (including the underlying private shares and private warrants), the founder warrants, and the $15 Exercise Price Warrants (including the underlying Class A shares) underlying securities;
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“private placement warrants” are to the warrants issued to our insiders (and/or their designees) in a private placement simultaneously with the closing of this offering;
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“private shares” are to the shares of Class A common stock sold as part of the private units;
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“private units” are to the units issued to our insiders (and/or their designees) in a private placement simultaneously closing with the closing of this offering, with each private unit consisting of one private share and one-half of one private warrant;
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“private warrants” are to the warrants sold as part of the private units;
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“public shares” are to shares of Class A common stock sold as part of the units 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 initial stockholders and management team to the extent our initial stockholders and/or members of our management team purchase public shares, provided that each initial stockholder’s and member of our management team’s status as a “public stockholder” will only exist with respect to such public shares;
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“sponsor” are to FG New America Investors LLC, a Delaware limited liability company, formed by our Chief Executive Officer, President and Chairman;
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“Underwriter Shares” are to the shares of Class A common stock issued as part of the Underwriter Units;
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“Underwriter Warrants” are to the warrants issued as part of the Underwriter Units; and
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“Underwriter Units” are to the units issued to ThinkEquity, a division of Fordham Financial Management, Inc., and Piper Sandler & Co., the representatives of the underwriters of this offering, in a private placement simultaneously with the closing of this offering.
Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option.
GENERAL
We are a newly organized blank check company formed as a Delaware corporation for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Throughout this prospectus we will refer to this 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.
While we may pursue an acquisition in any business industry or sector, we intend to concentrate our efforts identifying businesses in the insurance and financial services industry with an enterprise value of approximately $300 million to $600 million, with particular emphasis on businesses that are providing or changing technology for traditional financial services (“FinTech”), insurance (“InsureTech”), or other sectors where disruptive and/or adaptive technology or other factors are driving changes in a new era in the American business landscape. In addition, we intend to capitalize on the ability of our management team to identify, acquire, and manage a business in the insurance and financial services industry that can benefit from their experience and differentiated global network.
BUSINESS STRATEGY
We believe that there have been significant changes in the business landscape over the past several years that have accelerated in recent months. Those changes include disruption of several industries caused by technology, need to adapt to implications of global supply chain, change in consumer behavior and other reactions of pandemic realities, and changes in acceptance of combinations with companies such as FG New America Acquisition Corp. Innovative technology within insurance and financial services has contributed to increased consolidation and opportunities. We believe there are many potential targets within the InsureTech, FinTech, broader financial services and insurance sectors along with other sectors such as retail and consumer goods that could become attractive public companies. These potential targets exhibit a broad range of business models and financial characteristics from high growth innovative and/or disruptive companies to mature businesses with recurring revenues and profitability with strong cash flows.
While we will not limit our search to any business segment, we will focus on a wide variety of companies across the InsureTech, FinTech, insurance (including insurance companies, insurance services, reinsurance, agents, insurance brokers, managing agencies, etc.), financial services, wealth, financial advisory, investment and asset management sectors.
With increased adoption of technology solutions by consumers and businesses alike, we believe that all components of industry, including both mature and innovative newcomers, are poised for continued growth in overall market size and penetration. Key industry characteristics include potential or historical long-term organic growth, growth through consolidation, and attractive competitive dynamics. Key business characteristics include high barriers to entry, competitive moat from technology, and public market-ready scale. Key financial metrics include revenue growth, recurring revenues, and strong cash flow conversion. We will seek to acquire established businesses that we believe are fundamentally sound, but would benefit from the financial, operational, technological, strategic or managerial improvements our Company and management team can provide to maximize value. We will also look at earlier-stage companies that exhibit the potential to change the industries in which they participate, and which offer the potential of sustained high levels of revenue growth with an articulated path to profitability. We will also look for opportunities in a broader group of sectors that are experiencing changes in this new era of the American business landscape.
Consistent with our focus, we intend to target InsureTech, FinTech, insurance and financial services businesses that have strong management teams, differentiated products or services, potential or historical growth and an identified path to profitability. We believe that the extensive networks of our management team, board of directors and advisors will deliver access to a broad spectrum of opportunities across the insurance, financial services, retail, consumer, manufacturing and other sectors. In addition to any potential business candidates we may identify on our own, we anticipate that other target business candidates will be brought to our attention from various unaffiliated sources, including investment market participants, private equity funds and large business enterprises seeking to divest non-core assets or divisions.
OUR MANAGEMENT TEAM
We will seek to capitalize on the financial services experience and contacts of the members of our management team. Our management team is comprised of finance, technology and investment and merchant banking leaders with senior level, multi-national operational and transactional experience drawn from top global institutions, including TD Ameritrade Holding Corporation (Nasdaq: AMTD), Merrill Lynch, AXA Financial (OTCMKTS: AXAHY) Chicago Board Options Exchange and T. Rowe Price (Nasdaq: TROW). Furthermore, the members of our management have a variety of experience and expertise in capital markets, asset management, financial product development, FinTech, insurance, InsureTech, sports and entertainment, real estate, and data and analytics as well as experience as investors and entrepreneurs. We have completed numerous going-public, mergers and acquisitions and financing transactions with billions of dollars of deal value, including in the financial services and technology industry. Our management team also has extensive experience in operating public and private financial services companies, serving on both public and private company boards of directors, including financial institutions, FinTech, insurance, and InsureTech companies, strong knowledge and experience in financial, legal and regulatory matters, initial public offerings and private equity and venture capital.
We will seek to capitalize on the significant contacts and experience of our management team, including Joseph Moglia, our Chairman, Larry Swets, Jr., our Chief Executive Officer and Director, D. Kyle Cerminara, our President and Director, Robert Weeks and Nicholas Rudd, members of our board of directors, and Hassan Baqar, our Chief Financial Officer, as well as our Senior Advisor Allan Tessler.
We believe that these networks of contacts and relationships will provide us with an important source of potential initial business combination targets. In addition, we anticipate that target business candidates may be brought to our attention from various unaffiliated sources, including investment market participants, private equity groups, investment banking firms, consultants, accounting firms and large business enterprises. Upon completion of this offering, members of our management team will communicate with these networks of relationships to articulate the parameters for our search for a target business and a potential business combination and begin the process of pursuing and reviewing promising leads.
Joseph Moglia has served as our Chairman since July 2020. Mr. Moglia is the Chairman of the Board at TD Ameritrade, Chairman of Fundamental Global Investors and Capital Wealth Advisors and Chair of Athletics and Executive Advisor to the President at Coastal Carolina University.
In 1984 Mr. Moglia entered the MBA Training Program at Merrill Lynch, where there were 26 people. 25 MBA’s and 1 football coach. By 1988, he was Merrill Lynch’s Number One Producer in the World. By the time he left, he had been a member of both the Institutional and Private Client Executive Committees, and his final responsibilities were all Investment Products, the Insurance Company, the 401(k) Business and the Middle Market Business. Prior to that, he was head of Global Fixed Income Institutional Sales and ran the firm’s Municipal division.
Mr. Moglia became the CEO of TD Ameritrade in 2001, and when he stepped down in 2008, shareholders had enjoyed a 500% return. In 2009 he became Chairman of the Board. TD Ameritrade just announced that they would be acquired by Charles Schwab. The combined company with synergies should be worth $100 BILLION and has client assets of $5 TRILLION. When Mr. Moglia arrived, these numbers were $700 million and $24 Billion.
He has served on the Boards of AXA Financial (2002 – 2011) and the Chicago Board Options Exchange (1997 – 2002).
Mr. Moglia has also been a Football Coach for 25 years, but it’s not been a traditional 25 years. He began his career as a coach for 16 years, moved to the business world for over 20, and back to coaching in 2009. In his last 11 years of college coaching, he has been a part of 8 championship teams, and as a head coach has a winning percentage of .718. In 2020, he was named to the 2010 – 2019 Big South Football All-Decade Team, one of 10 Coastal Carolina Chanticleers — the most by any school on the All-Decade Team. He was the fastest coach in Big South history to 30 overall wins (30-8) and 40 overall wins (40-11) and has the most FCS Playoff appearances by a head coach in Big South history. He has also received multiple Coach of the Year honors, including the Eddie Robinson National Coach of the Year award, was a recipient of the Vince Lombardi Award, and was also inducted into the Lombardi Hall of Fame.
Mr. Moglia has received the Ellis Island Medal of Honor and the Sharp Trophy for Leadership. He has been honored by the National Italian American Foundation, the Columbus Citizens Foundation, the American Institute for Stuttering and the Stuttering Association for the Young. He has been inducted into seven Halls of Fame, is a member of the National Economics Society and is the recipient of three Honorary Doctorates. Mr. Moglia has already had a book written about his life, and he is the only author in the world that has written two books published on both investing and football.
He earned his degree of economics from Fordham University and his masters from the University of Delaware.
Larry G. Swets, Jr. has served as our Chief Executive Officer and Director since July 2020. Mr. Swets has over 25 years of experience within financial services encompassing both non-executive and executive roles. Mr. Swets founded Itasca Financial LLC, an advisory and investment firm, in 2005 and has served as its managing member since inception. Mr. Swets also founded and is also the President of Itasca Golf Managers, Inc., a management services and advisory firm focused on the real estate and hospitality industries, in August 2018. Mr. Swets has served as a director and the Chief Executive Officer of Itasca Capital Ltd. (TSXV: ICL) (formerly Kobex Capital Corp.), a publicly-traded investment firm since June 2016. In June 2020, Mr. Swets began serving as interim Chief Executive Officer of 1347 Property Insurance Holdings, Inc. (Nasdaq: PIH), which intends to operate as a diversified reinsurance, investment management and real estate holding company. Previously, he served as the Chief Executive Officer of Kingsway Financial Services Inc. (NYSE: KFS) from July 2010 to September 2018, including as its President from July 2010 to March 2017. Prior to founding Itasca Financial LLC, Mr. Swets served as an insurance company executive and advisor, including the role of director of investments and fixed income portfolio manager for Lumbermens Mutual Casualty Company, a/k/a Kemper Insurance Companies. Mr. Swets began his career in insurance as an intern in the Kemper Scholar program in 1994. Mr. Swets has also served as a member of the board of directors of 1347 Property Insurance Holdings, Inc. since November 2013, Limbach Holdings, Inc. (Nasdaq: LMB), a company which provides building infrastructure services since July 2016, Insurance Income Strategies Ltd. since October 2017, Harbor Custom Development, Inc. since February 2020, Alexian Brothers Foundation since March 2018, and Unbounded Media Corporation since June 2019. Previously, he served as a member of the board of directors of Kingsway Financial Services Inc. from September 2013 to December 2018, Atlas Financial Holdings, Inc. (Nasdaq: AFH) from December 2010 to January 2018, FMG Acquisition Corp. (Nasdaq: FMGQ) from May 2007 to September 2008, United Insurance Holdings Corp. from 2008 to March 2012, and Risk Enterprise Management Ltd. from November 2007 to May 2012. He is a member of the Young Presidents’ Organization. Mr. Swets earned a Master’s Degree in Finance from DePaul University in 1999 and a Bachelor’s Degree from Valparaiso University in 1997. He also holds the Chartered Financial Analyst (CFA) designation.
D. Kyle Cerminara has served as our President and Director since July 2020. Mr. Cerminara has over 20 years’ experience as an institutional investor, asset manager, director, chief executive, founder and operator of multiple financial services and technology businesses. Mr. Cerminara co-founded Fundamental Global Investors, LLC, an SEC registered investment advisor that manages alternative investment funds, in 2012 and serves as its chief executive officer. Mr. Cerminara is also the co-chief investment officer of CWA Asset Management Group, LLC, a wealth advisor and multi-family office affiliated with Fundamental Global Investors, LLC, which position he has held since January 2013. Mr. Cerminara is a member of the board of directors of a number of companies focused in the reinsurance, investment management, real estate, technology and communication sectors, including BK Technologies Corporation (NYSE American: BKTI), a provider of two-way radio communications equipment, since July 2015, Ballantyne Strong, Inc. (NYSE American: BTN), a holding company with diverse business activities focused on serving the cinema, retail, financial and government markets, since February 2015, 1347 Property Insurance Holdings, Inc. (Nasdaq: PIH), which intends to operate as a diversified reinsurance, investment management and real estate holding company, since December 2016, Itasca Capital Ltd. (TSXV: ICL) (formerly Kobex Capital Corp.), a publicly-traded investment firm, since June 2016, and Firefly Systems Inc., a venture-backed digital advertising company, since August 2020. He was appointed chairman of 1347 Property Insurance Holdings, Inc. in May 2018 and served as its principal executive officer from March 2020 to June 2020. He was also appointed chairman of Itasca Capital Ltd. in June 2018. Mr. Cerminara has served as the chairman of Ballantyne Strong, Inc. since May 2015. He also previously
served as its chief executive officer from November 2015 through April 2020. Mr. Cerminara was also the chairman of BK Technologies Corporation from March 2017 until April 2020. He also served on the board of directors of Limbach Holdings, Inc. (Nasdaq: LMB), a company which provides building infrastructure services, from March 2019 to March 2020; Iteris, Inc. (Nasdaq: ITI), a publicly-traded, applied informatics company, from August 2016 to November 2017; and Magnetek, Inc., a publicly-traded manufacturer, in 2015. He serves as a Trustee and President of StrongVest ETF Trust, which was an open-end management investment company that is in the process of being dissolved, since July 2016. He previously served on the board of directors of blueharbor bank, a community bank, from October 2013 to January 2020. Prior to these roles, Mr. Cerminara was a portfolio manager at Sigma Capital Management, an independent financial adviser, from 2011 to 2012, a director and sector head of the Financials Industry at Highside Capital Management from 2009 to 2011, and a portfolio manager and director at CR Intrinsic Investors from 2007 to 2009. Before joining CR Intrinsic Investors, Mr. Cerminara was a vice president, associate portfolio manager and analyst at T. Rowe Price (Nasdaq: TROW) from 2001 to 2007, where he was named amongst Institutional Investor’s Best of the Buy Side Analysts in November 2006, and an analyst at Legg Mason (NYSE: LM) from 2000 to 2001. Mr. Cerminara received an MBA degree from the Darden Graduate School of Business at the University of Virginia and a B.S. in Finance and Accounting from the Smith School of Business at the University of Maryland, where he was a member of Omicron Delta Kappa, an NCAA Academic All American and Co-Captain of the men’s varsity tennis team. He also completed a China Executive Residency at the Cheung Kong Graduate School of Business in Beijing, China. Mr. Cerminara holds the Chartered Financial Analyst (CFA) designation.
Hassan R. Baqar has served as our Chief Financial Officer since July 2020. Mr. Baqar has over 20 years of experience within financial services focused on corporate development, mergers & acquisitions, capital raising, investments and real estate transactions. Mr. Baqar has served as the founder and managing member of Sequoia Financial LLC, a financial services and advisory firm, since January 2019. Mr. Baqar has also served as Chief Financial Officer of Insurance Income Strategies Ltd., a Bermuda based reinsurance company since October 2017, as a director and Chief Financial Officer of Itasca Capital Ltd. (TSXV: ICL) (formerly Kobex Capital Corp.), a publicly-traded investment firm since June 2016, as a director of Fundamental Global Reinsurance Ltd., a Cayman Islands reinsurance company since June 2020, and as a director and Chief Financial Officer of Unbounded Media Corporation since June 2019. Previously, he served as Vice President of Kingsway Financial Services Inc. (NYSE: KFS) (“Kingsway”) from January 2014 to January 2019 and as a Vice President of Kingsway’s subsidiary Kingsway America Inc. from January 2010 to January 2019. Mr. Baqar also served as Chief Financial Officer and director of 1347 Capital Corp., a special purpose acquisition company, from April 2014 to July 2016 when the company completed its initial business combination to form Limbach Holdings, Inc. (Nasdaq: LMB). Mr. Baqar served as a member of the board of directors of 1347 Property Insurance Holdings, Inc. (Nasdaq: PIH) from October 2012 to May 2015. By virtue of a management services agreement between 1347 Advisors LLC, a wholly owned subsidiary of Kingsway, and United Insurance Management, L.C., he also served as the Chief Financial Officer of United Insurance Holdings Corp. (Nasdaq: UIHC), a publicly held property and casualty insurance holding company, from August 2011 to April 2012. His previous experience also includes director of finance at Itasca Financial, LLC from 2008 to 2009 and positions held at Lumbermens Mutual Casualty Company, a/k/a Kemper Insurance Companies, a diversified mutual property-casualty insurance provider, from June 2000 to April 2008, where he most recently served as a senior analyst. Mr. Baqar earned a Master’s Degree in Business Administration from Northeastern Illinois University in 2009 and a Bachelor’s Degree in Accounting and Business Administration from Monmouth College in 2000. He also holds a Certified Public Accountant designation.
Nicholas Rudd has served on our board of directors since July 2020. Mr. Rudd is a financial services executive with a broad background in capital markets, insurance and insurance technology, investing, digital product development, and sports entertainment. Mr. Rudd has spent the past five years with a deep focus on the digital economy. Mr. Rudd worked at Two Sigma Insurance Quantified (“TSIQ”) from September 2017 to August 2020. During his time at TSIQ, he worked in partnerships, business operations, corporate development and business development. From February 2017 to September 2017, he was the business lead for Chubb’s Innovation Center. Mr. Rudd started his career at Banc of America Securities, the predecessor to BofA Securities, in July 2005. From BofA, Mr. Rudd moved into the sports and entertainment space, where he worked in a variety of functions for the executive leadership team of the United Football League (“UFL”) from August 2009 to April 2011. In April 2011, Mr. Rudd joined TD
Ameritrade as the Chief of Staff to the Chairman, Joseph Moglia. Mr. Rudd has been a member of the board of managers of Brightline Partners, an advertising technology business, since September 2016. He also serves on the board of trustees of Madison Square Boys & Girls Club, which provides after-school programming for young people ages 6 to 18 across six clubhouses (located in the Bronx, Brooklyn, and Harlem). Mr. Rudd earned his B.A. in History from Columbia University’s Columbia College, and was an inaugural member of Cornell University’s Cornell Tech MBA program.
Robert Weeks, has served on our board of directors since July 2020. Mr. Weeks has a background in investing, capital markets, investment banking and financial product development. Mr. Weeks has served as Chief of Staff to the Chairman of the board at TD Ameritrade Holding Corporation (Nasdaq: AMTD) since May 2014. Mr. Weeks has also served as an advisor to a private charitable foundation, where he has responsibility for all aspects of the foundation’s endowment and charitable operations since May 2014. Previously, from February 2010 to May 2014, Mr. Weeks worked at Merrill Lynch, where he developed financial products using commodity, equity, foreign exchange and interest rate derivatives. Mr. Weeks began his career at Merrill Lynch as an investment banker focused on capital markets where he completed debt financings for companies in the technology, real estate, transportation and electric utility sectors. He also represented international financial institutions on structured note offerings. Mr. Weeks has served on the board of managers of Brightline Partners, an advertising technology business since September 2016. He has also served as a board observer at aWhere, Inc., an agronomic big data analytics company, since April 2017. He has also served on the board of directors of the Olympic Club Foundation since January 2020. Mr. Weeks earned a B.A. in Economics and M.S. in Finance from Washington University in St. Louis.
Allan Tessler will serve as our Senior Advisor effective as of the closing of this offering. Mr. Tessler has been the chief executive officer of International Financial Group, Inc., an international merchant banking firm, since 1987. Mr. Tessler was the chairman of Epoch Holding Corporation, an investment management firm that was sold to Toronto Dominion Bank. With a specialization in the area of turnaround financing, Mr. Tessler combines extensive management experience with proficiency in corporate and securities legal matters. Mr. Tessler served as co-chief executive officer and chairman of Data Broadcasting Corporation, now known as Interactive Data Corporation, and formerly served as chairman of Enhance Financial Services Group, Inc., an insurance holding company he co-founded which was merged into Radian Group (NYSE: RDN). Mr. Tessler was also Chairman and a principal shareholder of Great Dane Holdings, a company that manufactured tractor trailers and automobile stampings, as well as, controlling a property casualty insurer and transportation companies. Mr. Tessler started his career in the law firm of Cleary, Gottlieb, Steen & Hamilton LLP. In the legal arena he has also served as counsel to Spengler, Carlson, Gubar & Churchill, and was senior managing partner of Shea & Gould. He is admitted to the Federal and State of New York Bar, in retired status. In the investment banking arena, Mr. Tessler has held top management and leadership positions with Ladenburg, Thalman & Co., Devon Securities and Loeb, Rhoades & Co. He was also the president of Slater, Walker of America, a real estate and retail operating company, Ameriscribe, Inc., a back office out sourcing firm and Fifth Ave Coach Lines, an investment company. In addition, Mr. Tessler is also a director of TD Ameritrade (NYSE: AMTD). He formerly sat as the lead director and chairman of the finance committee of L Brands, Inc. (NYSE: LB), sat on the board of directors of Steel Partners Holding GP, Inc. (NYSE: SPLP) where he held a position from 2010-2018. He joined the board of Imperva, Inc. (NYSE: IMPV) in February 2014 and was elected Chairman. In February 2012 he became the chairman and chief executive officer of Teton Financial Services and chairman of Rocky Mountain Bank as a result of the acquisition and recapitalization of that troubled bank located in Jackson, Wyoming. He is chairman emeritus of the Board of the Hudson Institute and the former president and trustee of the Jackson Hole Land Trust. He is a member of the board of governors of the Boys & Girls Clubs of America. He is a past president of the Grand Teton Music Festival. He served in the United States Navy, where he attained the rank of Lieutenant, Junior Grade. Mr. Tessler received his undergraduate degree from Cornell University and his L.L.B. from Cornell University Law School. He was editor-in-chief of the Cornell Law Quarterly and was elected to Phi Kappa Phi and the Order of the Coif. Mr. Tessler has continued actively to support his alma mater as a member of the Cornell Law School Fund from 1983 to 1985, the co-chairman of the Cornell Law School Capital Campaign, and is a trustee emeritus and presidential counselor of Cornell University.
The past performance of our management team or their respective affiliates is not a guarantee of either: (i) success with respect to any business combination we may consummate; or (ii) that we will be able to
identify a suitable candidate for our initial business combination. You should not rely on the historical record of our management team’s or their respective affiliates’ performance as indicative of any future performance.
For more information on the experience and background of our management team, see the section entitled “Management.”
BUSINESS COMBINATION CRITERIA
Consistent with our business strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will use these criteria and guidelines in evaluating initial business combination opportunities, but we may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines. We intend to seek to acquire companies within industries that exhibit strong characteristics including, but not limited to, the following:
•
Low risk of technological obsolescence;
•
Public market-ready scale;
•
Strong management team;
•
Differentiated products or services;
•
Recurring revenues;
•
Strong cash flow conversion.
•
Long-term organic growth;
•
Attractive competitive dynamics;
•
Consolidation opportunities to scale; and
•
High barrier to entry.
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 other considerations, factors and criteria that our management team 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 proxy solicitation materials or tender offer documents, as applicable, that we would file with the SEC. In evaluating a prospective target business, we expect to conduct a due diligence review which may encompass, among other things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspections of facilities, as well as reviewing financial and other information which will be made available to us.
INITIAL BUSINESS COMBINATION
NYSE rules require that we must consummate an initial business combination 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 permitted). Our board of directors will make the determination as to the fair market value of our initial business combination. If our board of directors is not able to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of the target’s assets or prospects.
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 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 sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or 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 the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the 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 taken into account for purposes of the 80% of net assets test described above. If the 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.
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 Securities Exchange Act of 1934, as amended, or 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.
SOURCING OF POTENTIAL INITIAL BUSINESS COMBINATION TARGETS
We believe our management team’s significant operating and transaction experience and relationships will provide us with a substantial number of potential initial business combination targets. Over the course of their careers, the members of our management team and our directors and advisors have developed a broad network of contacts and corporate relationships around the world, which includes private equity firms, venture capitalists and entrepreneurs. This network has grown through the activities of our management team sourcing, acquiring and financing businesses, the reputation of our management team for integrity and fair dealing with sellers, financing sources and target management teams and the experience of our management team in executing transactions under varying economic and financial market conditions. In addition, members of our management team have developed contacts derived directly from serving on the boards of directors of several public and private companies.
This network has provided our management team with a flow of referrals, which in the past has resulted in numerous transactions which were proprietary or where a limited group of investors were invited to participate in the sale process. We believe that this network will provide us with multiple investment opportunities. In addition, we anticipate that target business combination candidates will be brought to our attention by various unaffiliated sources, including participants in our targeted markets and their advisors, private equity funds and large business enterprises seeking to divest non-core assets or divisions.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, executive officers or directors, or completing the business combination through a joint venture or other form of shared ownership with our sponsor, executive officers or directors. In the event we seek to complete an initial business combination with a target that is affiliated with our sponsor, executive officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm stating that such an initial business combination is fair to our company from a financial point of view.
Members of our management team and our independent directors will directly or indirectly own founder shares and/or private placement securities following this offering and, accordingly, 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.
Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such other entity. 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 such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our initial business combination.
In addition, our sponsor and our officers and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue other business or investment ventures during the period in which we are seeking an initial business combination. Any such companies, businesses or investments may present additional conflicts of interest in pursuing an initial business combination. However, we do not believe that any such potential conflicts would materially affect our ability to complete our initial business combination.
CORPORATE INFORMATION
Our executive offices are located at 105 S. Maple Street, Itasca, Illinois 60143, and our telephone number is (847) 791-6817. We intend to maintain a corporate website at www.fgnewamerica.com following the consummation of this offering.
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, or 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 Class A common stock that is held by non-affiliates exceeds $700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” will have the meaning associated with it in the JOBS Act.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller
reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds $250 million as of the prior June 30th, and (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30.
THE OFFERING
In making your decision on 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” in this prospectus.
22,500,000 units, at $10.00 per unit, each unit consisting of:
•
one share of Class A common stock; and
•
one-half of one redeemable warrant.
Units: “FGNA.U”
Class A common stock: “FGNA”
Warrants: “FGNA WS”
Trading commencement and separation of shares of Class A common stock and warrants
The units are expected to begin trading on or promptly after the date of this prospectus. The shares of Class A common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless ThinkEquity, a division of Fordham Financial Inc. (“ThinkEquity”) and Piper Sandler & Co. (“Piper Sandler”) inform us of their decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Once the shares of Class A common stock and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component securities. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of Class A common stock and warrants. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least two units, you will not be able to receive or trade a whole warrant.
Separate trading of the Class A common stock and warrants is prohibited until we have filed a Current Report on Form 8-K
In no event will the Class A common stock and warrants be traded separately until we have filed with the SEC a Current Report on Form 8-K which includes an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. We will file the Current Report on Form 8-K promptly after the closing of this offering, which closing is anticipated to take place three business days from the date of this prospectus. If the underwriters’ over-allotment option 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’ over-allotment option.
Units:
Number outstanding before this
offering
0
Number of private units to be issued in a private placement simultaneously with this offering
462,500(1)
Number of underwriter units to be issued in a private placement simultaneously with this offering
112,500(2)
Number outstanding after this
offering
23,075,000(3)
Common stock:
Number outstanding before this
offering
6,468,750(4)(5)
Number outstanding after this
offering
28,700,000(3)(5)(6)
Warrants:
Number of warrants outstanding before this offering
0
Number of warrants to be outstanding after this offering and the private placements
16,898,750(3)(7)
Each whole warrant offered in this offering is exercisable to purchase one share of Class A common stock. Only whole warrants are exercisable. No fractional warrants will be issued upon separation of the units and only whole warrants will trade.
We structured each unit to contain one-half of one warrant, with each whole warrant exercisable for one share of Class A common stock, as compared to units issued by some other similar special purpose acquisition companies which contain whole warrants exercisable for one whole share, in order
(1)
Represents the issuance to our insiders (and/or their designees) of 462,500 private units in a private placement to be completed concurrently with the consummation of this offering.
(2)
Represents the issuance to the underwriters of 112,500 units, each consisting of one share of common stock and one-half of one redeemable warrant (the “Underwriter Units”), in a private placement to be completed concurrently with the consummation of this offering. Excludes the issuance of an additional 16,875 Underwriter Units if the underwriters’ over-allotment option is exercised in full. Except as described herein, the Underwriter Units are identical to the units issued in this offering.
(3)
Assumes no exercise of the underwriters’ over-allotment option and the forfeiture of 843,750 founder shares by our initial stockholders for no consideration.
(4)
Includes up to 843,750 founder shares that will be forfeited by our initial stockholders depending on the extent to which the underwriters’ over-allotment option is exercised.
(5)
Founder shares are currently classified as shares of Class B common stock, which shares will automatically convert into shares of Class A common stock concurrently with or immediately following the consummation 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.”
(6)
Includes (i) 22,500,000 public shares, (ii) 5,625,000 founder shares, (iii) 462,500 private shares underlying the private units and (iv) 112,500 shares of Class A common stock underlying the Underwriter Units (the “Underwriter Shares”).
(7)
Includes (i) 11,250,000 public warrants included in the units to be sold in this offering, (ii) 56,250 warrants underlying the Underwriter Units (the “Underwriter Warrants”) and (iii) 5,592,500 private placement warrants, consisting of (x) 3,848,750 founder warrants, (y) 1,512,500 $15 Exercise Price Warrants and (z) 231,250 private warrants to be sold in private placements occurring simultaneously with the closing of this offering.
to reduce the dilutive effect of the warrants upon completion of a business combination as compared to units that each contain a whole warrant to purchase one whole share, thus making us, we believe, a more attractive business combination partner for target businesses.
$11.50 per share, subject to adjustments as described herein. In addition, if (x) we issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by our board of directors and, in the case of any such issuance to our initial stockholders or their affiliates, without taking into account any founder shares held by our initial stockholders or such affiliates, as applicable, prior to such issuance), (the “Newly Issued Price”) (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date of the consummation of our initial business combination (net of redemptions), and (z) the volume weighted average trading price of our Class A common stock during the 20 trading day period starting on the trading day after the day on which we consummate our initial business combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described below under “Redemption of warrants” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The warrants will become exercisable on the later of:
•
30 days after the completion of our initial business combination, and
•
12 months from the closing of this offering;
provided in each case that we have an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder (or we permit holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement). If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
We are not registering the shares of Class A common stock issuable upon exercise of the warrants at this time. However,
we have agreed that as soon as practicable, but in no event later than 15 business days after the closing of our initial business combination, we will use our best efforts to file with the SEC and have an effective registration statement covering the shares of Class A common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of our initial business combination, warrant holders may, until such time as there is an effective registration statement and during any period when we will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if our shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, and in the event we do not so elect, we will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
The warrants will expire at 5:00 p.m., New York City time, five years (or ten years with respect to the $15 Exercise Price Warrants) after the completion of our initial business combination or earlier upon redemption or liquidation. On the exercise of any warrant, the warrant exercise price will be paid directly to us and not placed in the trust account.
Once the warrants become exercisable, we may redeem the outstanding warrants for cash (except as described herein with respect to the private placement warrants):
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in whole and not in part;
•
at a price of $0.01 per warrant;
•
upon a minimum of 30 days’ prior written notice of redemption, which we refer to as the 30-day redemption period; and
•
if, and only if, the closing price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like and for certain issuances of Class A common stock and equity-linked securities for capital raising purposes in connection with the closing of our initial business combination as described elsewhere in this prospectus) for any 20 trading days within a 30-trading day period ending on the third trading day
prior to the date on which we send the notice of redemption to the warrant holders.
We will not redeem the warrants for cash unless an effective registration statement under the Securities Act covering the Class A common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of Class A common stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
None of the private placement warrants will be redeemable by us so long as they are held by the initial purchasers of the private placement warrants or their permitted transferees.
If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In determining whether to require all holders to exercise their warrants on a “cashless basis,” our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of Class A common stock issuable upon the exercise of our warrants. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the excess of the “fair market value” of our Class A common stock (defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” will mean the average reported closing price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Please see “Description of Securities — Warrants — Public Stockholders’ Warrants” for additional information.
On July 13, 2020, our sponsor paid $30,000 to cover certain of our offering costs in exchange for 6,468,750 founder shares, or approximately $0.005 per share. On August 7, 2020, our sponsor transferred an aggregate of 1,250,000 founder shares to members of our management and our board of directors, resulting in our sponsor holding 5,218,750 founder shares. Prior to the initial investment in the company of $30,000 by the sponsor, the company had no assets, tangible or intangible. The per share price of the founder shares was determined by dividing the amount of cash contributed to the company by the number of founder shares issued. The number of founder shares outstanding was determined based on the expectation that the total size of
this offering would be a maximum of 25,875,000 units if the underwriters’ over- allotment option is exercised in full, and therefore that such founder shares would represent 20% of the outstanding shares after this offering (not including the shares of Class A common stock included in the Underwriter Units or the private units). Up to 843,750 of the founder shares will be forfeited depending on the extent to which the underwriters’ over-allotment option is not exercised. If we increase or decrease the size of the offering pursuant to Rule 462(b) under the Securities Act, we will effect a stock dividend or 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 the offering in such amount as to maintain the ownership of founder shares by our initial stockholders, on an as-converted basis, at 20.0% of our issued and outstanding common stock upon the consummation of this offering (not including the shares of Class A common stock included in the Underwriter Units or private units).
The founder shares are identical to the shares of Class A common stock included in the units being sold in this offering, except that:
•
the founder shares are subject to certain transfer restrictions, as described in more detail below;
•
the founder shares are entitled to registration rights;
•
our initial stockholders, sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to (i) waive their redemption rights with respect to any founder shares and public shares they hold in connection with the completion of our initial business combination, (ii) waive their redemption rights with respect to any founder shares and public shares they hold 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 redeem 100% of our public shares if we have not consummated an initial business combination within 24 months from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity and (iii) 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 24 months from the closing of this offering or any extended period of time that we may have to consummate an initial business combination as a result of an amendment to our amended and restated certificate of incorporation (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 prescribed time frame). If we submit our initial business combination to our public stockholders for a vote, our initial stockholders and the underwriters have agreed to vote their founder shares, private shares and Underwriter Shares, as applicable, and any public shares purchased during or after this offering in favor of our initial business combination. As a result, in addition to our initial stockholders’ founder shares and private shares and the underwriters’ Underwriter Shares, we would need 8,150,001, or approximately 36.22%, of the 22,500,000 public shares sold in this offering to be voted in favor of an initial business combination in order to have our initial business combination approved (assuming all outstanding shares are voted and the over-allotment option is not exercised). Further, assuming that the over-allotment option is not exercised, a quorum of 14,350,001 shares of our common stock present in person or by proxy would be required to hold the stockholder meeting to approve our initial business combination, and, assuming only the minimum number of shares representing a quorum are voted, such approval would require the affirmative vote of 7,175,002 shares of our common stock, which means that, in addition to our initial stockholders’ founder shares and private shares and the underwriters’ Underwriter Shares, we would need only 975,002, or approximately 4.3%, of the 22,500,000 public shares sold in this offering to be voted in favor of an initial business combination in order to have our initial business combination approved; and
•
the founder shares are automatically convertible into our Class A common stock concurrently with or immediately following the consummation of our initial business combination on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described below adjacent to the caption “Founder shares conversion and anti-dilution rights.”
Transfer restrictions on founder
shares
Our initial stockholders have agreed not to transfer, assign or sell any of their founder shares until: (i) with respect to 50% of the founder shares, the earlier of (x) twelve months after the date of the consummation of an initial business combination or (y) the date on which the closing price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination and (ii) with respect to the remaining 50% of the founder shares, twelve months after the date of the consummation of our initial business combination; except to certain permitted transferees and under certain circumstances
as described herein under “Principal Stockholders — Transfers of Founder Shares and Private Placement Securities”. Any permitted transferees will be subject to the same restrictions and other agreements of our initial stockholders with respect to any founder shares. We refer to such transfer restrictions throughout this prospectus as the lock-up. Notwithstanding the foregoing, if we consummate a transaction after our initial business combination which results in our stockholders having the right to exchange their shares for cash, securities or other property, the founder shares will be released from the lock-up.
Founder shares conversion and anti-dilution rights
The founder shares will automatically convert into shares of Class A common stock concurrently with or immediately following the consummation of our initial business combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further 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 connection with our initial business combination, the number of shares of Class A common stock issuable upon conversion of all founder shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by public stockholders and excluding the shares of Class A common stock underlying the Underwriter Units), including 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, by the Company in connection with or in relation to the consummation of the initial business combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in the initial business combination and any private placement warrants issued to our sponsor, officers or directors upon conversion of working capital loans, provided that such conversion of founder shares will never occur on a less than one-for-one basis.
Holders of record of our Class A common stock and holders of record of our Class B common stock will vote together as a single class on all matters submitted to a vote of our stockholders, with each share of common stock entitling the holder to one vote except as required by law.
Private units and underlying
securities
Our insiders (and/or our designees) have committed, pursuant to a written agreement, to purchase an aggregate of 462,500 private units at $10.00 per unit for an aggregate purchase price of $4,625,000. The private units are identical to the units sold in this offering except that (a) the private units (including the underlying securities) may not, subject to
certain limited exceptions, be transferred, assigned or sold by the holders until 30 days after the completion of our initial business combination and (b) the private warrants, so long as they are held by our insiders (and/or our designees) or their permitted transferees, (i) will not be redeemable by us (except as described below under “Principal Stockholders — Transfers of Founder Shares and Private Placement Securities”), (ii) may be exercised by the holders on a cashless basis and (iii) will be entitled to registration rights. A portion of the purchase price of the private units will be added to the proceeds from this offering to be held in the trust account such that at the time of closing $230.625 million (or $264.375 million if the underwriters exercise their over-allotment option in full) will be held in the trust account. If we do not complete our initial business combination within 24 months from the closing of this offering, the private units (and the underlying securities) will expire worthless.
Founder Warrants and $15 Exercise Price Warrants
In addition to the private warrants underlying the private units, our insiders (and/or our designees) have committed, pursuant to written agreements, to purchase an aggregate of (i) 3,848,750 warrants at $1.00 per warrant, each exercisable to purchase one share of Class A common stock at $11.50 per share (the “founder warrants”) and (ii) 1,512,500 warrants at $0.10 per warrant, each exercisable to purchase one share of Class A common stock at $15.00 per share (the “$15 Exercise Price Warrants and, together with the founder warrants and the private warrants, the “private placement warrants”), in private placements that will close simultaneously with the closing of this offering. A portion of the purchase price of the founder warrants and $15 Exercise Price Warrants will be added to the proceeds from this offering to be held in the trust account such that at the time of closing of this offering $230.625 million (or $264.375 million if the underwriters exercise their over-allotment option in full) will be held in the trust account. If we do not complete our initial business combination within 24 months from the closing of this offering, the private placement warrants will expire worthless. The private placement warrants will be non-redeemable and exercisable on a cashless basis so long as they are held by their initial purchasers or their permitted transferees (except as described below under “Principal Stockholders — Transfers of Founder Shares and Private Placement Securities”). If the private placement warrants are held by holders other than their initial purchasers or their permitted transferees, the private placement warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering.
Transfer restrictions on private placement securities
The private placement securities (including the Class A shares underlying the units and warrants contained therein) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination,
except as described herein under “Principal Stockholders — Transfers of Founder Shares and Private Placement Securities”.
Underwriter Units and underlying securities
We have agreed to issue to the underwriters 112,500 units, or up to 129,375 units if the underwriters’ over-allotment option is exercised in full at the closing of this offering. The Underwriter Units are identical to the units sold in this offering except that the Underwriter Warrants, so long as they are held by the underwriter or its permitted transferees, (i) will not be redeemable by us, (ii) may not (including the Class A common stock issuable upon exercise of these warrants), subject to certain limited exceptions, be transferred, assigned or sold by the holders until after the completion of our initial business combination, (iii) may be exercised by the holders on a cashless basis, (iv) will be entitled to registration rights and (v) for so long as they are held by the underwriters, will not be exercisable more than five years from the effective date of the registration statement of which this prospectus forms a part in accordance with FINRA Rule 5110(f)(2)(G)(i).
If the Underwriter Warrants are held by holders other than the underwriter or its permitted transferees, the Underwriter Warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. In addition, for as long as the Underwriter Warrants are held by the underwriters or their designees or affiliates, they may not be exercised after five years from the effective date of the registration statement of which this prospectus forms a part.
The underwriters have agreed to (i) waive their redemption rights with respect to their Underwriter Shares in connection with the completion of our initial business combination, (ii) waive their redemption rights with respect to their Underwriter Shares in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity and (iii) waive their rights to liquidating distributions from the trust account with respect to their Underwriter Shares if we fail to complete our initial business combination within 24 months from the closing of this offering. In addition, the underwriters have agreed to vote any Underwriter Shares held by them in favor of our initial business combination.
Transfer restrictions on Underwriter Units and underlying securities
The Underwriter Units (including the underlying Underwriter Warrants, the Underwriter Shares and the shares of Class A common stock issuable upon exercise of the Underwriter Warrants) will not be transferable, assignable or salable until the completion of our initial business combination. Following such period, the Underwriter Units (including the Underwriter Warrants, the Underwriter Shares and the shares
of Class A common stock issuable upon exercise of the Underwriter Warrants) will be transferable, assignable or salable, except that the Underwriter Units will not trade.
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 securities be deposited in a trust account. Of the proceeds we will receive from this offering and the sale of the private placement securities described in this prospectus, $230.625 million ($10.25 per unit), or $264.375 million if the underwriters’ over-allotment option is exercised in full (approximately $10.22 per unit), will be deposited into a segregated trust account located in the United States at JPMorgan Chase Bank, N.A. with Continental Stock Transfer & Trust Company acting as trustee, after deducting $1,000,000 in underwriting commissions payable upon the closing of this offering and an aggregate of $2,000,000 to pay fees and expenses in connection with the closing of this offering and for working capital following the closing of this offering.
Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our taxes, the proceeds from this offering and the sale of the private placement securities will not be released from the trust account until the earliest of (i) the completion of our initial business combination, (ii) the redemption of our public shares if we are unable to complete our initial business combination within 24 months from the closing of this offering, subject to applicable law, and (iii) the redemption of our 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 redeem 100% of our public shares if we have not consummated an initial business combination within 24 months from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders.
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 the withdrawal of interest to pay our taxes and/or to redeem our public shares in connection with an amendment to our amended and restated certificate of incorporation, as described above. The proceeds held in the trust account will be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. We estimate the interest earned on the trust account will be approximately $225,000 per year, assuming an interest rate of 0.1% 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:
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the net proceeds of this offering and the sale of the private placement securities not held in the trust account, which initially will be approximately $1,050,000 in working capital after the payment of approximately $950,000 in expenses relating to this offering; and
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any loans or additional investments from our sponsor, members of our management team or their affiliates or other third parties, although they are under no obligation to advance funds 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. Up to $1,500,000 of such loans may be convertible into founder warrants, at a price of $1.00 per warrant, at the option of the lender.
Conditions to completing our initial business combination
NYSE rules require that we must consummate an initial business combination 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 permitted. Our board of directors will make the determination as to the fair market value of our initial business combination. If our board of directors is not able to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of the target’s assets or prospects. 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 is otherwise not 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 business combination company, depending on valuations ascribed to the target and us in the 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 or shares 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 issued and 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 taken into account for purposes of the 80% of net assets test described above, provided that in the event that the 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 and we will treat the target businesses together as our initial business combination for purposes of a seeking stockholder approval or conducting a tender offer, as applicable.
Permitted purchases of public shares and public warrants 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, initial stockholders, directors, executive officers, advisors or their affiliates may purchase shares or public warrants 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 our initial stockholders, directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law and the NYSE rules. 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. None of the funds held in the trust account will be used to purchase shares or public warrants 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 nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. 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. We expect 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. See “Proposed Business — Permitted Purchases of Our Securities” for a description of how our sponsor, initial stockholders, directors, executive officers, advisors or any of their 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 business combination and thereby increase the likelihood of obtaining stockholder approval of the 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 any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrantholders for approval in connection with our initial business combination. 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 Class A common stock or warrants 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 upon completion of 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 calculated as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account (which interest shall be net of taxes payable), divided by the number of then outstanding public shares, subject to the limitations and on the conditions described herein. The amount in the trust account is initially anticipated to be $10.25 per public share, assuming no exercise by the underwriters of their over-allotment option. There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Our initial stockholders, sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares they hold and any public shares they may acquire during or after this offering 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 (i) in connection with a stockholder meeting called to approve the business combination or (ii) without a stockholder vote 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 share 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 Class A common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. So long as we obtain and maintain a listing for our securities on the NYSE we will be required to comply with the NYSE’s stockholder approval rules.
The requirement that we provide our public stockholders with the opportunity to redeem their public shares by one of the two methods listed above will be contained in provisions of our amended and restated certificate of incorporation and will apply whether or not we maintain our registration under the Exchange Act or our listing on the NYSE. Such provisions may be amended if approved by holders of 65% of our common stock entitled to vote thereon. If we amend such provisions of our amended and restated certificate of incorporation, we will provide our public stockholders with the opportunity to redeem their public shares in connection with a stockholder meeting.
If we provide our public stockholders with the opportunity to redeem their public shares in connection with a stockholder meeting, we will:
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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.
If we seek stockholder approval, 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 initial 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 will count towards this quorum and our initial stockholders, sponsor, officers and directors and the underwriters have agreed to vote any founder shares, private shares and Underwriter Shares they hold and any public shares purchased during or after this offering (including in open market and privately-negotiated transactions) in favor of our initial business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained. As a result, in addition to our initial stockholders’ founder shares and private shares and the underwriters’ Underwriter Shares, we would need only 8,150,001, or
approximately 36.22%, of the 22,500,000 public shares sold in this offering to be voted in favor of an initial business combination (assuming all outstanding shares are voted and the Underwriter Shares are voted in favor of the transaction) in order to have our initial business combination approved (assuming the over-allotment option is not exercised). Further, assuming that the over-allotment option is not exercised, a quorum of 14,350,001 shares of our common stock present in person or by proxy would be required to hold the stockholder meeting to approve our initial business combination, and, assuming only the minimum number of shares representing a quorum are voted, such approval would require the affirmative vote of 7,175,002 shares of our common stock, which means that, in addition to our initial stockholders’ founder shares and private shares and the underwriters’ Underwriter Shares, we would need only 975,002, or approximately 4.3%, of the 22,500,000 public shares sold in this offering to be voted in favor of an initial business combination in order to have our initial business combination approved. These quorum and voting thresholds, and the voting agreements of our initial stockholders, 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.
If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will:
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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 our initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
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.
Upon the public announcement of our initial business combination, if we elect to conduct redemptions pursuant to
the tender offer rules, we or 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.
We intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent or deliver their shares to our transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) system, prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up to two business days prior to the vote on the proposal to approve the initial business combination. In addition, if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its public shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial owner of such shares is included. The proxy materials or tender offer documents, 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. We believe that this will allow our transfer agent to efficiently process any redemptions without the need for further communication or action from the redeeming public stockholders, which could delay redemptions and result in additional administrative cost. If the proposed initial business combination is not approved and we continue to search for a target company, we will promptly return any certificates or shares delivered by public stockholders who elected to redeem their shares.
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. In addition, our proposed initial business combination may impose a minimum cash requirement for: (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. 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 initial business combination exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem any shares in connection with such initial business combination, and all shares of Class A common stock submitted for redemption will be returned to the holders thereof. We may, however, raise funds through the issuance of 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 consummation of this offering, in order to, among other reasons, satisfy such net tangible assets or minimum cash requirements.
Limitation on redemption rights of stockholders holding 15% or more of the shares sold in this offering if we hold 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 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 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 management 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, our sponsor or our management 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.
Release of funds in trust account on closing of our initial business combination
On the completion 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 “Redemption rights for public stockholders upon completion of our initial business combination,” 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, 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 24 months from the closing of this offering to complete our initial business combination. If we are unable to complete our initial business combination within such 24 month period, we 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 earned on the funds held in the trust account (which interest shall be net of taxes payable 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), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject, in each case, to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our initial business combination within the 24-month time period.
Our initial stockholders have entered into agreements with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 24 months from the closing of this offering or any extended period of time that we may have to consummate an initial business combination as a result of an amendment to our amended and restated certificate of incorporation. However, if our initial stockholders or management team 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 complete our initial business combination within the allotted 24-month time frame.
Our sponsor, executive 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 redeem 100% of our public shares if
we do not complete our initial business combination within 24 months from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their 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 earned on the funds held in the trust account (which interest shall be net of taxes payable), divided by the number of then outstanding public shares, subject to the limitations described above under “Limitations on redemptions.” For example, our board of directors may propose such an amendment if it determines that additional time is necessary to complete our initial business combination. In such event, we will conduct a proxy solicitation and distribute proxy materials pursuant to Regulation 14A of the Exchange Act seeking stockholder approval of such proposal, and in connection therewith, provide our public stockholders with the redemption rights described above upon stockholder approval of such 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 any affiliate of our sponsor or officers prior to, or in connection with any services rendered in order to effectuate, the consummation of our initial business combination (regardless of the type of transaction that it is). However, the following payments will 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 funds held outside the trust account.
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Repayment of up to an aggregate of $300,000 in loans made to us by our sponsor to cover offering-related and organizational expenses;
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Payment to our sponsor of $10,000 per month for office space, secretarial and administrative services provided to members of our management team;
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Reimbursement for any out-of-pocket expenses related to identifying, investigating, negotiating and completing an initial business combination; and
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Repayment of loans which may be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination. Up to $1,500,000 of such loans may be convertible into founder warrants at a price of $1.00 per warrant at the option of the lender. Except for the foregoing, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans.
We will establish and maintain an audit committee. Among its responsibilities, the audit committee will review on a
quarterly basis all payments that were made to our sponsor, officers or directors, or our or their affiliates and monitor compliance with the other terms relating to this offering. If any noncompliance is identified, then the audit committee will be charged with the responsibility to promptly take all action necessary to rectify such noncompliance or otherwise to cause compliance with the terms of this offering. For more information, see the section entitled “Management — Committees of the Board of Directors — Audit Committee.”
RISKS
We are a blank check company that has conducted no operations and has generated no revenues to date. 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. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see “Proposed Business — Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419.” 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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July 13, 2020
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| Balance Sheet Data: |
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Working capital deficit
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$ |
(15,000) |
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Total assets
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$ |
44,000 |
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Total liabilities
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|
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$ |
15,000 |
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Total stockholder’s equity
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|
|
|
$ |
29,000 |
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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 units. 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.
We are a blank check 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 blank check company incorporated under the laws of the State of Delaware 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. 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.
Our 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 choose not to hold a stockholder vote to approve our initial business combination if the business combination would not require stockholder approval under applicable law or stock exchange listing requirement. Except for as required by applicable law or stock exchange requirement, 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 complete our initial business combination even if a majority of our public stockholders do not approve of the business combination we complete. Please see the section entitled “Proposed Business — Stockholders May Not Have the Ability to Approve Our Initial Business Combination” for additional information.
Your only opportunity to affect the investment decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares from us for cash.
At the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of our initial business combination. 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, unless we seek such stockholder vote. Accordingly, your only opportunity to affect the investment decision regarding our initial 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.
If we seek stockholder approval of our initial business combination, our initial stockholders and management team have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote.
Our initial stockholders will own 20% of our outstanding common stock immediately following the completion of this offering (not including the shares of Class A common stock underlying the Underwriter Units). Our initial stockholders and management team also may from time to time purchase Class A common stock prior to our initial business combination. Our amended and restated certificate of incorporation provides that, if we seek stockholder approval of an initial business combination, such initial business combination will be approved if we receive the affirmative vote of a majority of the shares voted at such meeting, including the founder shares. As a result, in addition to our initial stockholders’ founder shares and private shares and the underwriters’ Underwriting Shares, we would need only
8,150,001, or approximately 36.22%, of the 22,500,000 public shares sold in this offering to be voted in favor of an initial business combination (assuming all outstanding shares are voted and the Underwriter Shares are voted in favor of the transaction) in order to have our initial business combination approved (assuming the over-allotment option is not exercised). Further, assuming that the over-allotment option is not exercised, a quorum of 14,350,001 shares of our common stock present in person or by proxy would be required to hold the stockholder meeting to approve our initial business combination, and, assuming only the minimum number of shares representing a quorum are voted, such approval would require the affirmative vote of 7,175,002 shares of our common stock, which means that, in addition to our initial stockholders’ founder shares and the underwriters’ Underwriter Shares, we would need only 975,002, or approximately 4.3%, of the 22,500,000 public shares sold in this offering to be voted in favor of an initial business combination in order to have our initial business combination approved. Accordingly, if we seek stockholder approval of our initial business combination, the agreement by our initial stockholders and management team to vote in favor of our initial business combination will increase the likelihood that we will receive the requisite stockholder approval for such 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 minimum cash requirement for (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. 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. 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. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or make us unable to satisfy a minimum cash 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.
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 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 issues of shares of Class A common stock on a greater than one-to-one basis upon conversion of the shares of Class B common stock at the time of our 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 shares.
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 is increased. 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 shares in the open market; however, at such time our shares 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 your exercise of redemption rights until we liquidate or you are able to sell your shares in the open market.
The requirement that we complete our initial business combination within 24 months after the closing of this offering 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 24 months from the closing of this offering. 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 24 months after the closing of this offering, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate.
We may not be able to find a suitable target business and complete our initial business combination within 24 months after the closing of this offering. 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: (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 earned on the funds held in the trust account (which interest shall be net of taxes payable 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), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case, to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
If we seek stockholder approval of our initial business combination, our sponsor, initial stockholders, directors, executive officers, advisors and their affiliates may elect to purchase shares or public warrants from public stockholders, which may influence a vote on a proposed business combination and reduce the public “float” 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 sponsor, initial stockholders, directors, executive officers, advisors or their affiliates may purchase shares or public warrants 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 to do so. There is no limit on the number of shares our initial stockholders, directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law and the NYSE rules. However, other than as expressly stated herein, 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. None of the funds in the trust account will be used to purchase shares or public warrants in such transactions. Such purchases may include a contractual acknowledgment 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.
In the event that our sponsor, initial stockholders, directors, executive officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. The purpose of any such purchases of shares could be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of the 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 any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrantholders for approval in connection with our initial business combination. Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible. We expect 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. See “Proposed Business — Permitted Purchases of Our Securities” for a description of how our sponsor, directors, executive officers, advisors or any of their 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 or public warrants and the number of beneficial holders of our securities may be reduced, possibly making it difficult to obtain or maintain 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 proxy rules or tender offer 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 proxy materials or tender offer documents, as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents, 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 submit public shares for redemption. For example, we intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent, or to deliver their shares to our transfer agent electronically prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up to two business days prior to the vote on the proposal to approve the initial business combination. In addition, if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its public shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial owner of such shares is included. In the event that a stockholder fails to comply with these or any other procedures disclosed in the proxy or tender offer materials, as applicable, its shares may not be redeemed. See the section of this prospectus entitled “Proposed Business — Manner of Conducting Redemptions.”
You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
Our public stockholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) our completion of an 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, (ii) the redemption of any public shares properly tendered 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 redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, and (iii) the redemption of our public shares if we are unable to complete an initial business combination within 24 months from the closing of this offering, subject to applicable law and as further described herein. In
addition, if our plan to redeem our public shares if we are unable to complete an initial business combination within 24 months from the closing of this offering is not completed 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 24 months from the closing of this offering 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. Holders of warrants will not have any right to the proceeds held in the trust account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
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 have applied to have our units listed on the NYSE on or promptly after the date of this prospectus and our Class A common stock and warrants on or promptly after their date of separation. We cannot guarantee that our securities will be approved for listing on the NYSE. Although after giving effect to this offering we expect to meet, on a pro forma basis, the minimum initial listing standards set forth in the NYSE’s 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 share price levels. Generally, we must maintain a minimum average global market capitalization and 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 share price would generally be required to be at least $4.00 per share, our global market capitalization would be required to be at least $150 million, the aggregate market value of our publicly-held shares would be required to be at least $40 million and we would be required to have a minimum of 400 round lot holders and 1,100,000 publicly held shares. We cannot assure you that we will be able to meet those initial listing requirements at that time.
If the NYSE delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our 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 units and eventually our Class A common stock and warrants will be listed on the NYSE, our units, Class A common stock and warrants will qualify as covered securities under the 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 the 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 securities 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 United States securities laws. However, because we will have net tangible assets in excess of $5,000,000 upon the completion of this offering and the sale of the private placement securities and will file a Current Report on Form 8-K, including an audited balance sheet 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 units 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 an initial business combination. For a more detailed comparison of our offering to offerings that comply with Rule 419, please see “Proposed Business — Comparison of This Offering to Those of Blank Check Companies Subject to 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 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 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, we would not be restricting 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 that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your shares in open market transactions, 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 their pro rata portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
We expect to encounter 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, 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 similar or greater technical, human and other resources to ours 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 are numerous target businesses we could potentially acquire with the net proceeds of this offering and the sale of the private placement securities, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, we are obligated to offer holders of our public shares the right to redeem their shares for cash at the time of our initial business combination in conjunction with a stockholder vote or via a tender offer. Target companies
will be aware that this may 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 a business combination. If we are unable to complete our initial business combination, our public stockholders may receive only their pro rata portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
If the net proceeds of this offering not being held in the trust account are insufficient to allow us to operate for at least the 24 months following the closing of the offering, 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 and to complete our initial business combination.
Of the net proceeds of this offering, only $1,050,000 will be available to us initially outside the trust account to fund our working capital requirements. We believe that, upon closing of this offering, the funds available to us outside of the trust account will be sufficient to allow us to operate for at least the 24 months following such closing; 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.
In the event that our offering expenses exceed our estimate of $950,000, we may fund such excess with funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $950,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount. The amount held in the trust account will not be impacted as a result of such increase or decrease. 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 affiliates is under any obligation to advance funds to us in such circumstances. Any such advances would be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial business combination. Up to $1,500,000 of such loans may be convertible into founder warrants at a price of $1.00 per warrant at the option of the lender. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor 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. 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. Consequently, our public stockholders may only receive an estimated $10.25 per share, or possibly less, on our redemption of our public shares, and our warrants will expire worthless.
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 debt financing to partially finance the initial business combination or thereafter. Accordingly, any stockholders or warrant holders who choose to remain stockholders or warrant holders following the business combination could suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy materials or tender offer documents, as applicable, relating to the business combination contained an actionable material misstatement or material omission.
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 $10.25 (or $10.217 if the underwriters’ over-allotment option is exercised in full) 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, prospective target businesses and 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 consider whether competitive alternatives are reasonably available to us and will only enter into an agreement with such third party if management believes that such third party’s engagement would be in the best interests of the company under the circumstances. The underwriters of this offering as well as our registered independent public accounting firm will not execute agreements with us waiving such claims to the monies held in the trust account.
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 management is 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 prescribed timeframe, 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 $10.25 (or $10.217 if the underwriters’ over-allotment option is exercised in full) per public share initially held in the trust account, due to claims of such creditors. Pursuant to the letter agreement the form of which is filed as an exhibit to the registration statement of which this prospectus forms a part, our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party 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 other similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.25 (or $10.217 if the underwriters’ over-allotment option is exercised in full) per public share and (ii) 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 $10.25 (or $10.217 if the underwriters’ over-allotment option is exercised in full) per public share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all
rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and we believe that our sponsor’s only assets are securities of our company. 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 $10.25 (or $10.217 if the underwriters’ over-allotment option is exercised in full) 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 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 (i) $10.25 (or $10.217 if the underwriters’ over-allotment option is exercised in full) per share and (ii) 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 $10.25 (or $10.217 if the underwriters’ over-allotment option is exercised in full) per public share due to reductions in the value of the trust assets, in each case less taxes payable, 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 and subject to their fiduciary duties may choose not to do so in any particular instance. 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 $10.25 (or $10.217 if the underwriters’ over-allotment option is exercised in full) per share.
We may not have sufficient funds to satisfy indemnification claims of our directors and executive officers.
We have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to waive any right, title, interest or claim of any kind in or to any monies in the trust account and to not seek recourse against the trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination. Our obligation to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, 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 our officers and directors pursuant to these indemnification provisions.
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 stockholders in connection with our liquidation may 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 other rules and regulations that we are 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 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 either: (i) the completion of our initial business combination; (ii) the redemption of any public shares properly tendered 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 redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering; and (iii) absent an initial business combination within 24 months from the closing of this offering or with respect to any other material
provisions relating to stockholders’ rights or pre-initial business combination activity, 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 complete a business combination. If we are unable to complete our initial business combination, our public stockholders may only receive their pro rata portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
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.
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 24 months from the closing of this offering 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 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 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, 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 24 months from the closing of this offering is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to
be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), 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 the consummation of our initial business combination, which could delay the opportunity for our stockholders to elect directors.
In accordance with the NYSE’s corporate governance requirements, we are not required to hold an annual meeting until no 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.
You will not be permitted to exercise your warrants unless we register and qualify the underlying Class A common stock or certain exemptions are available.
If the issuance of the Class A common stock upon exercise of the warrants is not registered, qualified or exempt from registration or qualification under the Securities Act and applicable state securities laws, holders of warrants will not be entitled to exercise such warrants and such warrants may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the Class A common stock included in the units.
We are not registering the Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However, under the terms of the warrant agreement, we have agreed that, as soon as practicable, but in no event later than 15 business days, after the closing of our initial business combination, we will use our best efforts to file with the SEC a registration statement covering the registration under the Securities Act of the Class A common stock issuable upon exercise of the warrants and thereafter will use our best efforts to cause the same to become effective within 60 business days following our initial business combination and to maintain a current prospectus relating to the Class A common stock issuable upon exercise of the warrants until the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop order.
If the shares of Class A common stock issuable upon exercise of the warrants are not registered under the Securities Act, under the terms of the warrant agreement, holders of warrants who seek to exercise their warrants will not be permitted to do so for cash and, instead, will be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption.
In no event will warrants be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration or qualification is available.
If our shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of “covered securities” under Section 18(b)(1) of the Securities Act, we may, at our option, not permit holders of warrants who seek to exercise their warrants to do so for cash and, instead, require them to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act; in the event we so elect, we will not be required to file or maintain in effect a registration statement or register or qualify the shares underlying the warrants under applicable state securities laws, and in the event we do not so elect, we will use our best efforts to register or qualify the shares underlying the warrants under applicable state securities laws to the extent an exemption is not available.
In no event will we be required to net cash settle any warrant, or issue securities (other than upon a cashless exercise as described above) or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under the Securities Act or applicable state securities laws.
You may only be able to exercise your public warrants on a “cashless basis” under certain circumstances, and if you do so, you will receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for cash.
The warrant agreement provides that in the following circumstances holders of warrants who seek to exercise their warrants will not be permitted to do for cash and will, instead, be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act: (i) if the shares of Class A common stock issuable upon exercise of the warrants are not registered under the Securities Act in accordance with the terms of the warrant agreement; (ii) if we have so elected and the shares of Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of “covered securities” under Section 18(b)(1) of the Securities Act; and (iii) if we have so elected and we call the public warrants for redemption. If you exercise your public warrants on a cashless basis, you would pay the warrant exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the excess of the “fair market value” of our shares of Class A common stock (as defined in the next sentence) over the exercise price of the warrants by (y) the fair market value. The “fair market value” is the average reported closing price of the shares of Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of exercise is received by the warrant agent or on which the notice of redemption is sent to the holders of warrants, as applicable. As a result, you would receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for cash.
The grant of registration rights to our initial stockholders and holders of our private placement warrants, private units and Underwriter Units 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 shares of 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 shares of Class A common stock into which founder shares are convertible, holders of our private placement securities and their permitted transferees can demand that we register the private placement securities and the Class A common stock issuable upon exercise of the warrants included therein, holders of warrants that may be issued upon conversion of working capital loans may demand that we register such warrants or the Class A common stock issuable upon conversion of such warrants and holders of the Underwriter Units can demand that we register the Underwriter Shares, the Underwriter Warrants and the shares of Class A common stock underlying the Underwriter Warrants. The registration rights will be exercisable with respect to the founder shares, the private placement warrants, the Class A common stock issuable upon exercise of such private placement warrants, the private shares, the Underwriter Shares, the Underwriter Units and the Class A common stock issuable upon exercise of the Underwriter Warrants. 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 conclude. 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 shares of common stock owned by our initial stockholders, holders of our private placement warrants, holders of the Underwriter Units or holders of our working capital loans or their respective permitted transferees are registered.
Because we are neither limited to evaluating a target business in a particular industry sector 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.
Our efforts to identify a prospective initial business combination target will not be limited to a particular industry, sector or geographic region. While we may pursue an initial business combination opportunity
in any industry or sector, we intend to capitalize on the ability of our management team to identify, acquire and operate a business or businesses that can benefit from our management team’s established global relationships and operating experience. Our management team has extensive experience in identifying and executing strategic investments globally and has done so successfully in a number of sectors. Our amended and restated certificate of incorporation prohibits us from effectuating a business combination with another blank check company or similar company with nominal operations. Because we have not yet selected 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 units 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 or warrant holders who choose to remain stockholders or warrant holders following the business combination could suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy materials or tender offer documents, as applicable, relating to the business combination contained an actionable material misstatement or material omission.
Past performance by our management team and their affiliates may not be indicative of future performance of an investment in us.
Information regarding performance by, or businesses associated with, our management team or businesses associated with them is presented for informational purposes only. The past performance of our management team or their respective affiliates is not a guarantee of either: (i) success with respect to any business combination we may consummate; or (ii) that we will be able to identify a suitable candidate for our initial business combination. You should not rely on the historical record of our management team’s or their respective affiliates’ performance as indicative of any future performance.
Involvement of members of our management and companies with which they are affiliated in civil disputes and litigation or governmental investigations unrelated to our business affairs could materially impact our ability to consummate an initial business combination.
Members of our management team and companies with which they are affiliated have been, and in the future will continue to be, involved in a wide variety of business affairs, including transactions, such as sales and purchases of businesses, and ongoing operations. As a result of such involvement, members of our management and companies with which they are affiliated in past have been, and may in the future continue to be, involved in civil disputes and litigation and governmental investigations relating to their business affairs unrelated to our company which may progress. Given our management’s extensive involvement in financial services, asset management, insurance and other regulated industries, those civil disputes, litigation and governmental investigations could involve FINRA, SEC and/or state regulatory bodies and could result in settlements where parties are named publicly. Any such claims, investigations or settlements may be detrimental to our reputation and could negatively affect our ability to identify and complete an initial business combination and may have an adverse effect on the price of our securities.
We may seek business combination opportunities in industries or sectors that may be outside of our management’s areas of expertise.
We will consider a business combination outside of our management’s areas of expertise if a business combination candidate is presented to us and we determine that such candidate offers an attractive business combination opportunity for our company. Although our management will endeavor to evaluate the
risks inherent in any particular business combination candidate, we cannot assure you that we will adequately ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our units will not ultimately prove to be less favorable to investors in this offering than a direct investment, if an opportunity were available, in a business combination candidate. In the event we elect to pursue a business combination 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 ascertain or assess adequately all of the relevant risk factors. Accordingly, any stockholders who choose to remain stockholders following our initial business combination could suffer a reduction in the value of their shares. 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 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 law, or we decide to obtain stockholder approval for business or other legal 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 only receive their pro rata portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
We are not required to obtain an opinion from an independent investment banking firm or from a valuation or appraisal 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 or our board of directors cannot independently determine the fair market value of the target business or businesses (including with the assistance of financial advisors), we are not required to obtain an opinion from an independent investment banking firm which is a member of FINRA or from a valuation or appraisal firm that the price we are paying is fair to our stockholders from a financial point of view. 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 proxy materials or tender offer documents, as applicable, related to our initial business combination.
We may issue additional shares of Class A common stock or shares of 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 founder shares at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained in our amended and restated certificate of incorporation. Any such issuances would dilute the interest of our stockholders and likely present other risks.
Our amended and restated certificate of incorporation authorizes the issuance of up to 380,000,000 shares of Class A common stock, par value $0.0001 per share, 20,000,000 shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share. Immediately after this offering, there will be 356,925,000 and 14,375,000 (assuming in each case that the underwriters have not exercised their over-allotment option and the forfeiture of 843,750 shares of Class B common stock) authorized but unissued shares of Class A common stock and Class B common
stock, respectively, available for issuance which amount does not take into account shares reserved for issuance upon exercise of outstanding warrants or shares issuable upon conversion of the Class B common stock. The Class B common stock is automatically convertible into Class A common stock concurrently with or immediately following the consummation of our initial business combination, initially at a one-for-one ratio but subject to adjustment as set forth herein and in our amended and restated certificate of incorporation. 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 or shares of 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 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 as set forth therein. However, our amended and restated certificate of incorporation provides, among other things, that prior to our initial business combination, we may not issue additional shares that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote as a class with our public shares (a) on any initial business combination or (b) to approve an amendment to our amended and restated certificate of incorporation to (x) extend the time we have to consummate a business combination beyond 24 months from the closing of this offering or (y) amend the foregoing provisions. These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated certificate of incorporation, may be amended with a stockholder vote. The issuance of additional shares of common stock or shares of 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 Class A common stock if shares of preferred stock are issued with rights senior to those afforded our Class A common stock;
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could cause a change in control if a substantial number of shares of Class A common stock is 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 units, Class A common stock and/or warrants.
Unlike some other similarly structured special purpose acquisition companies, our initial stockholders will receive additional shares of Class A common stock if we issue certain shares to consummate an initial business combination.
The founder shares will automatically convert into shares of Class A common stock concurrently with or immediately following the consummation of our initial business combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further 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 connection with our initial business combination, the number of shares of Class A common stock issuable upon conversion of all founder shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by public stockholders and excluding the shares of Class A common stock underlying the Underwriter Units), including 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, by the company in connection with or in relation to the consummation of the initial business combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in the initial business combination and any private placement warrants issued to our sponsor, officers or directors upon conversion of working capital loans, provided that such conversion of founder shares will never occur on a less than one-for-one basis. This is different than some other similarly structured special purpose acquisition companies in which the initial stockholders will only be issued an aggregate of 20% of the total number of shares to be outstanding prior to our initial business combination.
Resources could be wasted in researching 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 only receive their pro rata portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
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 only receive their pro rata portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
We are dependent upon our executive officers and directors and their loss could adversely affect our ability to operate.
Our operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors and our senior advisor. 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. In addition, our executive officers and directors are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating their time among various business activities, including identifying potential business combinations and monitoring the related due diligence. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or executive officers. The unexpected loss of the services of one or more of our directors or executive 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, it is likely that some or all of the management of the target business will remain in place. 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.
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 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 a particular business combination is the most advantageous.
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, subject to their fiduciary duties under Delaware law.
We may have a limited ability to assess the management of a prospective target business and, as a result, may effect 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 or warrant holders who choose to remain stockholders or warrant holders following the business combination could suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the business combination contained an actionable material misstatement or material omission.
The officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The loss 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.
Our executive 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 executive 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 businesses. We do not intend to have any full-time employees prior to the completion of our initial business combination. Each of our executive officers is engaged in several other business endeavors for which he may be entitled to substantial compensation, and our executive officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors also serve as officers and board members for other entities. If our executive 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. For a complete discussion of our executive officers’ and directors’ other business affairs, please see “Management — Officers and Directors.”
Our officers and directors presently have, and any of them in the future may have additional, fiduciary or contractual obligations to other entities and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity 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. Each of our officers and directors presently has, and any of them in the future may have, additional fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. 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 such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
In addition, our sponsor and our officers and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue other business or investment ventures during the period in which we are seeking an initial business combination. Any such companies, businesses or investments may present additional conflicts of interest in pursuing an initial business combination. However, we do not believe that any such potential conflicts would materially affect our ability to complete our initial business combination.
For a complete discussion of our executive officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware of, please see “Management — Officers and Directors,” “Management — Conflicts of Interest” and “Certain Relationships and Related Party Transactions.”
Our executive 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, executive 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 our sponsor, our directors or executive officers, although we do not intend to do so. Nor do we 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.
The personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and completing a business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in our stockholders’ best interest. If this were the case, it would be a breach of their fiduciary duties to us as a matter of Delaware law and we or our stockholders might have a claim against such individuals for infringing on our stockholders’ rights. However, we might not ultimately be successful in any claim we may make against them for such reason.
We may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated with our sponsor, executive officers, directors or existing holders which may raise potential conflicts of interest.
In light of the involvement of our sponsor, executive officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our sponsor, executive officers, directors or existing holders. 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 — Business Combination Criteria” 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 which is a member of FINRA or a valuation or appraisal firm regarding the fairness to our company from a financial point of view of a business combination with one or more domestic or international businesses affiliated with our sponsor, executive officers, directors or existing holders, 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.
Since our sponsor, executive officers and directors will lose their entire investment in us if our initial business combination is not completed (other than with respect to public shares they may acquire during or after this offering), a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination.
On July 13, 2020, our sponsor paid $30,000 to cover certain of our offering costs in exchange for 6,468,750 founder shares, or approximately $0.005 per share. On August 7, 2020, our sponsor transferred an aggregate of 1,250,000 founder shares to members of our management and our board of directors, resulting in our sponsor holding 5,218,750 founder shares. Prior to the initial investment in the company of $30,000 by the 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 the company by the number of founder shares issued.
The number of founder shares outstanding was determined based on the expectation that the total size of this offering would be a maximum of 25,875,000 units if the underwriters’ over-allotment option is exercised in full, and therefore that such founder shares would represent 20% of the outstanding shares after this offering (not including the shares of Class A common stock included in the private units and the Underwriter Units). Up to 843,750 of the founder shares will be forfeited depending on the extent to which the underwriters’ over-allotment is exercised. The founder shares will be worthless if we do not complete an initial business combination. In addition, our insiders (and/or their designees) have committed to purchase an aggregate of 5,361,250 private placement warrants, consisting of (i) 3,848,750 founder warrants and (ii) 1,512,500 $15 Exercise Price Warrants, exercisable for one share of Class A common stock at $11.50 per share and $15.00 per share, respectively, for an aggregate purchase price of $3,848,750, or $1.00 per founder warrant, and $151,250, or $0.10 per $15 Exercise Price Warrant, that will also be worthless if we do not complete our initial business combination. In addition, our insiders (and/or their designees) have committed to purchase an aggregate of 462,500 private units, consisting of one private share and one-half of one private warrant, that will also be worthless if we do not complete our initial business combination. The personal and financial interests of our executive 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 24-month anniversary of the closing of this offering nears, which is the deadline for our completion of an initial business combination.
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 and our officers 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 is outstanding;
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our inability to pay dividends on our Class A 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 Class A 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.
We may only be able to complete one business combination with the proceeds of this offering and the sale of the private placement securities, 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 negatively impact our operations and profitability.
The net proceeds from this offering and the sale of the private placement securities will provide us with $231,675,000 (or $265,425,000 if the underwriters’ over-allotment option is exercised in full) that we may use to complete our initial business combination.
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 developments. 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 business combination 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 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 the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination. For example, we could pursue a transaction in which we issue a substantial number of new shares of Class A 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 Class A common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding Class A 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 shares than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain 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 or warrant holders do not agree.
Our amended and restated certificate of incorporation does 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. In addition, our proposed initial business combination may impose a minimum cash requirement for: (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. 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 affiliates. 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 in connection with such initial business combination, all shares of Class A 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, special purpose acquisition companies have, in the recent past, amended various provisions of their charters and other governing instruments, including their warrant agreements. 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 our stockholders may not support.
In order to effectuate a business combination, special purpose acquisition companies have, in the recent past, amended various provisions of their charters and governing instruments, including their warrant agreements. For example, special purpose acquisition companies have amended the definition of business combination, increased redemption thresholds and extended the time to consummate an initial business combination and, with respect to their warrants, amended their warrant agreements to require the warrants
to be exchanged for cash and/or other securities. Amending our amended and restated certificate of incorporation will require the approval of holders of 65% of our common stock, and amending our warrant agreement will require a vote of holders of at least 50% of the public warrants and, solely with respect to any amendment to the terms of the private placement warrants or any provision of the warrant agreement with respect to the private placement warrants, 50% of the number of the then outstanding private placement warrants. In addition, our amended and restated certificate of incorporation requires us to provide our public stockholders with the opportunity to redeem their public shares for cash if we propose an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete an initial business combination within 24 months of the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity. To the extent any of such amendments would be deemed to fundamentally change the nature of the securities offered through this registration statement, we would register, or seek an exemption from registration for, the affected securities. 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.
The 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 65% of our common stock, which is a lower amendment threshold than that of some other special purpose acquisition companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation to facilitate the completion of an initial business combination that some of our stockholders may not support.
Our amended and restated certificate of incorporation provides that any of its provisions related to pre-business combination activity (including the requirement to deposit proceeds of this offering and the private placements of warrants and the private units into 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 65% of our common stock entitled to vote thereon 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 entitled to vote thereon. If we amend such provisions of our amended and restated certificate of incorporation, we will provide our public stockholders with the opportunity to redeem their public shares in connection with a stockholder meeting. In all other instances, our amended and restated certificate of incorporation may be amended by holders of a majority of our outstanding common stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. Our initial stockholders, who will collectively beneficially own 20% of our common stock upon the closing of this offering (assuming they do not purchase any units in this offering and excluding the shares of Class A common stock underlying the Underwriter Units), 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 govern our pre-business combination behavior more easily than some other special purpose acquisition companies, and this may increase our ability to complete a 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, executive officers and directors have agreed, pursuant to written agreements 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 redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their 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 earned on the funds held in the trust account (which interest shall be net of taxes payable), divided by the number of then outstanding public shares. 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, executive officers, directors or director
nominees 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.
Certain agreements related to this offering may be amended without stockholder approval.
Each of the agreements related to this offering to which we are a party, other than the warrant agreement and the investment management trust agreement, may be amended without stockholder approval. Such agreements are: the underwriting agreement; the letter agreement among us and our initial stockholders, sponsor, officers and directors; the registration rights agreement among us and our initial stockholders; the private placement warrants purchase agreement between us and our sponsor; the private placement units purchase agreement between us and our sponsor; and the administrative services agreement among us, our sponsor and an affiliate of our sponsor. These agreements contain various provisions that our public stockholders might deem to be material. For example, our letter agreement and the underwriting agreement contain certain lock-up provisions with respect to the founder shares, private placement warrants and other securities held by our initial stockholders, sponsor, officers and directors. Amendments to such agreements would require the consent of the applicable parties thereto and would need to be approved by our board of directors, which may do so for a variety of reasons, including to facilitate our initial business combination. While we do not expect our board of directors to approve any amendment to any of these agreements prior to our initial business combination, it may be possible that our board of directors, in exercising its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments to any such agreement. Any amendment entered into in connection with the consummation of our initial business combination will be disclosed in our proxy materials or tender offer documents, as applicable, related to such initial business combination, and any other material amendment to any of our material agreements will be disclosed in a filing with the SEC. 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. For example, amendments to the lock-up provision discussed above may result in our initial stockholders selling their securities earlier than they would otherwise be permitted, which may have an adverse effect on the price of our securities.
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.
We have not selected any specific business combination target but 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 securities. As a result, if the cash portion of the purchase price exceeds the amount available from the trust account, net of amounts needed to satisfy any redemption by public stockholders, we may be required to seek additional financing to complete such proposed initial business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. 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. Further, we may be required to obtain additional financing in connection with the closing of our initial business combination for general corporate purposes, including for maintenance or expansion of operations of the post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, or to fund the purchase of other companies. If we are unable to complete our initial business combination, our public stockholders may only receive their pro rata portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless. 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.
Our initial stockholders control a substantial interest in us and thus may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
Upon closing of this offering, our initial stockholders will own 20% of our issued and outstanding common stock (assuming they do not purchase any units in this offering and excluding the shares of
Class A common stock underlying the Underwriter Units). Accordingly, they may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate of incorporation. If our initial stockholders purchase any units in this offering or if our initial stockholders purchase any additional Class A common stock in the aftermarket or in privately negotiated transactions, this would increase their control. 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, our board of directors, whose members were elected by our sponsor, is and will be divided into three classes, each of which will generally serve for a terms for three years with only one class of directors being elected in each year. We may not hold an annual meeting of stockholders to elect new directors prior to the completion of our initial business combination, in which case all of the current directors will continue in office until at least the completion of the business combination. If there is an annual meeting, as a consequence of our “staggered” board of directors, only a minority of the board of directors will be considered for election and our initial stockholders, because of their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will continue to exert control at least until the completion of our initial business combination.
Our sponsor paid an aggregate of $30,000 to cover certain of our offering costs in exchange for 6,468,750 founder shares, or approximately $0.005 per founder share and, accordingly, you will experience immediate and substantial dilution from the purchase of our shares of Class A common stock.
The difference between the public offering price per share (allocating all of the unit purchase price to the share of Class A common stock and none to the warrant included in the unit) 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 initial stockholders acquired the founder shares at a nominal price, significantly contributing to this dilution. Upon closing of this offering, and assuming no value is ascribed to the warrants included in the units, the private units, or to the founder warrants and $15 Exercise Price Warrants and the other public stockholders will incur an immediate and substantial dilution of approximately 92.3% or $9.23 per share, assuming no exercise of the underwriters’ over-allotment option), the difference between the pro forma net tangible book value per share after this offering of $0.77 and the initial offering price of $10.00 per unit. This dilution would increase to the extent that the anti-dilution provisions of the founder shares result in the issuance of shares of Class A common stock on a greater than one-to-one basis upon conversion of the founder shares at the time of our initial business combination and would become exacerbated to the extent that public stockholders seek redemptions from the trust for their public shares. In addition, because of the anti-dilution protection in the founder shares, any equity or equity-linked securities issued in connection with our initial business combination would be disproportionately dilutive to our Class A common stock.
We may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 50% of the then outstanding public warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and the number of shares of Class A common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 50% of the then outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least 50% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash or stock (at a ratio different than initially provided), shorten the exercise period or decrease the number of shares of Class A common stock purchasable upon exercise of a warrant.
Our warrant agreement will designate the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement will provide that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding the foregoing, these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
This choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like and for certain issuances of Class A common stock and equity-linked securities for capital raising purposes in connection with the closing of our initial business combination as described elsewhere in this prospectus) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to proper notice of such redemption provided that on the date we give notice of redemption. We will not redeem the warrants unless an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of Class A common stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force you to (i) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants. None of the private placement warrants will be redeemable by us so long as they are held by their initial purchasers or their permitted transferees.
Our warrants may have an adverse effect on the market price of our shares of Class A common stock and make it more difficult to effectuate our initial business combination.
We will be issuing warrants to purchase 11,250,000 shares of our Class A common stock (or up to 12,937,500 shares of Class A common stock if the underwriters’ over-allotment option is exercised in full) as part of the units offered by this prospectus and, simultaneously with the closing of this offering, we will be issuing in a private placement an aggregate of (x) 5,592,500 private placement warrants, consisting of (i) 3,848,750 founder warrants, (ii) 1,512,500 $15 Exercise Price Warrants and (iii) 231,250 private warrants, and (y) 56,250 Underwriter Warrants (or up to 64,688 Underwriter Warrants if the underwriters’ over-allotment option is exercised in full). In addition, if our sponsor or an affiliate of our sponsor or certain of our officers and directors makes any working capital loans, such lender may convert those loans into up to an additional 1,500,000 founder warrants, at the price of $1.00 per warrant. To the extent we issue common stock to effectuate a business transaction, the potential for the issuance of a substantial number of additional shares of Class A common stock upon exercise of these warrants could make us a less attractive acquisition vehicle to a target business. Such warrants, when exercised, will increase the number of issued and outstanding shares of Class A common stock and reduce the value of the Class A common stock issued to complete the business transaction. Therefore, our warrants may make it more difficult to effectuate a business transaction or increase the cost of acquiring the target business.
Because each unit contains one-half of one warrant and only a whole warrant may be exercised, the units may be worth less than units of other special purpose acquisition companies.
Each unit contains one-half of one warrant. Pursuant to the warrant agreement, no fractional warrants will be issued upon separation of the units, and only whole units will trade. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number the number of shares of Class A common stock to be issued to the warrant holder. This is different from other offerings similar to ours whose units include one common share and one warrant to purchase one whole share. We have established the components of the units in this way in order to reduce the dilutive effect of the warrants upon completion of a business combination since the warrants will be exercisable in the aggregate for one-half of the number of shares compared to units that each contain a whole warrant to purchase one share, thus making us, we believe, a more attractive merger partner for target businesses. Nevertheless, this unit structure may cause our units to be worth less than if it included a warrant to purchase one whole share.
The determination of the offering price of our units, the size of this offering and terms of the units 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 units properly reflects the value of such units 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 units and the terms of the warrants 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 units, including the Class A common stock and warrants underlying the units, 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 at attractive values;
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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 operating companies;
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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 terms of the units 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. 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 the proxy statement with respect to the vote on an initial business combination include historical and 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 (“GAAP”), or international financial reporting standards as issued by the International Accounting Standards Board (“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) (“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 statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.
We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting 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 internal controls 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 Class A common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. 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 an 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.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds $250 million as of the prior June 30th, and (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
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, 2021. 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 business combination.
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 shares of Class A common stock and could entrench management.
Our amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These provisions include a staggered board of directors and the ability of the board of directors to designate the terms of and issue new series of preferred stock, 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.
We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
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, unless we consent in writing to the selection of an alternative forum, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee to us or our stockholders, (iii) any action asserting a claim against us, our directors, officers or employees arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation
or bylaws, or (iv) any action asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine may be brought only in the Court of Chancery in the State of Delaware, except any claim (A) as to which the Court of Chancery of the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery or (C) for which the Court of Chancery does not have subject matter jurisdiction, as to which the Court of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction. 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.
Notwithstanding the foregoing, our amended and restated certificate of incorporation will provide that the exclusive forum provision will not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. 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. Additionally, unless we consent in writing to the selection of an alternative forum, the federal courts shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act against us or any of our directors, officers, other employees or agents. Any person or entity purchasing or otherwise acquiring any interest in our securities shall be deemed to have notice of and consented to these provisions. We note, however, that there is uncertainty as to whether a court would enforce this provision and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. 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, the provision may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us and may have the effect of discouraging lawsuits against our directors and officers.
Cyber incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As an early stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to financial loss.
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 coronavirus (COVID-19) outbreak.
The outbreak of COVID-19 has resulted 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.
If we effect our initial business combination with a company located outside of the United States, we would be subject to a variety of additional risks that may adversely affect us.
If we pursue a target 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 initial business 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 we pursue a target 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;
•
rules and regulations regarding currency redemption;
•
complex corporate withholding taxes on individuals;
•
laws governing the manner in which future business combinations may be effected;
•
exchange listing and/or delisting requirements;
•
tariffs and trade barriers;
•
regulations related to customs and import/export matters;
•
local or regional economic policies and market conditions;
•
unexpected changes in regulatory requirements;
•
challenges in managing and staffing international operations;
•
longer payment cycles;
•
tax issues, such as tax law changes and variations in tax laws as compared to the United States;
•
currency fluctuations and exchange controls;
•
rates of inflation;
•
challenges in collecting accounts receivable;
•
cultural and language differences;
•
employment regulations;
•
underdeveloped or unpredictable legal or regulatory systems;
•
corruption;
•
protection of intellectual property;
•
social unrest, crime, strikes, riots and civil disturbances;
•
regime changes and political upheaval;
•
terrorist attacks and wars; and
•
deterioration of political relations with the United States.
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, financial condition and results of operations.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus may constitute “forward-looking statements” for purposes of the federal securities laws. 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 the 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;
•
our potential ability to obtain additional financing to complete our initial business combination;
•
our pool of prospective 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 use of proceeds not held in the trust account or available to us 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 22,500,000 units at an offering price of $10.00 per unit. We estimate that the net proceeds of this offering together with the funds we will receive from the sale of the private placement securities will be used as set forth in the following table.
| |
|
|
Without
Over-allotment
Option
|
|
|
Over-allotment
Option
Exercised
|
|
| Gross proceeds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross proceeds from units offered to public(1)
|
|
|
|
$ |
225,000,000 |
|
|
|
|
$ |
258,750,000 |
|
|
|
Gross proceeds from private placement
|
|
|
|
|
8,625,000 |
|
|
|
|
|
8,625,000 |
|
|
|
Total gross proceeds
|
|
|
|
$ |
233,625,000 |
|
|
|
|
$ |
267,375,000 |
|
|
| Estimated offering expenses(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting commissions (excluding units payable to the underwriters at the closing of this offering)(3)
|
|
|
|
$ |
1,000,000 |
|
|
|
|
$ |
1,000,000 |
|
|
|
Legal fees and expenses
|
|
|
|
|
345,000 |
|
|
|
|
|
345,000 |
|
|
|
Printing and engraving expenses
|
|
|
|
|
45,000 |
|
|
|
|
|
45,000 |
|
|
|
Accounting fees and expenses
|
|
|
|
|
25,000 |
|
|
|
|
|
25,000 |
|
|
|
SEC/FINRA Expenses
|
|
|
|
|
73,000 |
|
|
|
|
|
73,000 |
|
|
|
Travel and road show
|
|
|
|
|
25,000 |
|
|
|
|
|
25,000 |
|
|
|
NYSE listing and filing fees
|
|
|
|
|
85,000 |
|
|
|
|
|
85,000 |
|
|
|
Directors and officers insurance
|
|
|
|
|
300,000 |
|
|
|
|
|
300,000 |
|
|
|
Miscellaneous
|
|
|
|
|
52,000 |
|
|
|
|
|
52,000 |
|
|
|
Total offering expenses (other than underwriting commissions)
|
|
|
|
$ |
950,000 |
|
|
|
|
$ |
950,000 |
|
|
|
Proceeds after estimated offering expenses
|
|
|
|
$ |
231,675,000 |
|
|
|
|
$ |
265,425,000 |
|
|
|
Held in trust account(4)
|
|
|
|
$ |
230,625,000 |
|
|
|
|
$ |
264,375,000 |
|
|
|
% of public offering size
|
|
|
|
|
102.5% |
|
|
|
|
|
102.17% |
|
|
|
Not held in trust account
|
|
|
|
$ |
1,050,000 |
|
|
|
|
$ |
1,050,000 |
|
|
The following table shows the use of the approximately $1,050,000 of net proceeds not held in the trust account(5).
| |
|
|
Amount
|
|
|
% of Total
|
|
|
Legal, accounting, due diligence, travel, and other expenses in connection with
any business combination(6)
|
|
|
|
$ |
500,000 |
|
|
|
|
|
47.62% |
|
|
|
Legal and accounting fees related to regulatory reporting obligations
|
|
|
|
|
75,000 |
|
|
|
|
|
7.14% |
|
|
|
NYSE listing and filing fees
|
|
|
|
|
85,000 |
|
|
|
|
|
8.10% |
|
|
|
Payment for office space, secretarial and administrative services
|
|
|
|
|
240,000 |
|
|
|
|
|
22.86% |
|
|
|
Consulting, travel and miscellaneous expenses incurred during search for initial
business combination target
|
|
|
|
|
75,000 |
|
|
|
|
|
7.14% |
|
|
|
Working capital to cover miscellaneous expenses
|
|
|
|
|
75,000 |
|
|
|
|
|
7.14% |
|
|
| Total |
|
|
|
$ |
1,050,000 |
|
|
|
|
|
100.0% |
|
|
(1)
Includes gross proceeds from this offering of $225,000,000 (or $258,750,000 if the underwriters’ overallotment option is exercised in full) as well as amounts payable to public stockholders who properly redeem their shares in connection with our successful completion of our initial business combination.
(2)
A portion of the offering expenses have been paid from the proceeds of loans from our sponsor of up to $300,000 as described in this prospectus. These loans will be repaid upon completion of this offering out of the $950,000 of offering proceeds that has been allocated for the payment of offering expenses other than underwriting commissions. In the event that offering expenses are more than as set forth in this table, they will be repaid using a portion of the $1,050,000 of offering proceeds not held in the trust account and set aside for post-closing working capital expenses. In the event that offering expenses are less than set forth in this table, any such amounts will be used for post-closing working capital expenses.
(3)
The underwriters will receive units equaling 0.5% of the units sold in this offering, or 112,500 units, at the closing of this offering. If the underwriters’ over-allotment option is exercised, an additional 16,875 units will be paid to the underwriters if the underwriters’ over-allotment option is exercised in full. See “Underwriting”.
(4)
The funds held in the trust account, 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.
(5)
These expenses are estimates only. Our actual expenditures for some or all of these items may differ from the estimates set forth herein. For example, we may incur greater legal and accounting expenses than our current estimates in connection with negotiating and structuring our initial business combination based upon the level of complexity of such business combination. In the event we identify a business combination target in a specific industry subject to specific regulations, we may incur additional expenses associated with legal due diligence and the engagement of special legal counsel. In addition, our staffing needs may vary and as a result, we may engage a number of consultants to assist with legal and financial due diligence. We do not anticipate any change in our intended use of proceeds, other than fluctuations among the current categories of allocated expenses, which fluctuations, to the extent they exceed current estimates for any specific category of expenses, would not be available for our expenses. The amount in the table above does not include interest available to us from the trust account. The proceeds held in the trust account will be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. We estimate the interest earned on the trust account will be approximately $225,000 per year, assuming an interest rate of 0.1% per year; however, we can provide no assurances regarding this amount.
(6)
Includes estimated amounts that may also be used in connection with our initial business combination to fund a “no shop” provision and commitment fees for financing.
The rules of the NYSE provide that at least 90% of the gross proceeds from this offering and the sale of the private placement securities be deposited in a trust account. Of the $233.625 million in gross proceeds we receive from this offering and the sale of the private placement securities described in this prospectus, or $267.375 million if the underwriters’ over-allotment option is exercised in full, $230.625 million ($10.25 per unit), or $264.375 million if the underwriters’ over-allotment option is exercised in full (approximately $10.22 per unit), will be deposited into a trust account with Continental Stock Transfer & Trust Company acting as trustee, after deducting $1 million in underwriting commissions payable upon the closing of this offering and an aggregate of $2 million to pay fees and expenses in connection with the closing of this offering and for working capital following this offering. The proceeds 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 meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. We estimate the interest earned on the trust account will be approximately $225,000 per year, assuming an interest rate of 0.1% per year; however, we can provide no assurances regarding this amount.
We expect that the interest earned on the trust account will be sufficient to pay income taxes. We will not be permitted to withdraw any of the principal or interest held in the trust account, except for the withdrawal of interest to pay our taxes, until the earliest of (i) the completion of our initial business combination, (ii) the redemption of our public shares if we are unable to complete our initial business combination within 24 months from the closing of this offering, subject to applicable law, and (iii) the redemption of our public shares properly submitted 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 redeem 100% of our public shares if we have not consummated our initial business combination within 24 months from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity.
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, we may apply the balance of the cash released from the trust account for general corporate purposes, including for maintenance or expansion of operations of the post-transaction company, 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 through
the issuance of 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 consummation of this offering. However, our amended and restated certificate of incorporation provides that, following this offering and prior to the consummation of our initial business combination, we will be prohibited from issuing additional securities that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote as a class with our public shares (a) on any initial business combination or (b) to approve an amendment to our amended and restated certificate of incorporation to (x) extend the time we have to consummate a business combination beyond 24 months from the closing of this offering or (y) amend the foregoing provisions.
We believe that amounts not held in trust will be sufficient to pay the costs and expenses to which such proceeds are allocated. This belief is based on the fact that while we may begin preliminary due diligence of a target business in connection with an indication of interest, we intend to undertake in-depth due diligence, depending on the circumstances of the relevant prospective business combination, only after we have negotiated and signed a letter of intent or other preliminary agreement that addresses the terms of a business combination. However, if our estimate of the costs of undertaking in-depth due diligence and negotiating a business combination is less than the actual amount necessary to do so, we may be required to raise additional capital, the amount, availability and cost of which is currently unascertainable. If we are required to seek additional capital, we could seek such additional capital through loans or additional investments from our sponsor, members of our management team or any of their affiliates, but such persons are not under any obligation to advance funds to, or invest in, us.
Subsequent to the closing of this offering, we will pay our sponsor $10,000 per month for office space, secretarial and administrative services provided to members of our management team. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
Prior to the closing of this offering, our sponsor has agreed to loan us up to $300,000 to be used for a portion of the expenses of this offering. These loans are non-interest bearing, unsecured and are due at the earlier of December 31, 2020 or the closing of this offering. The loan will be repaid upon the closing of this offering out of the $950,000 of offering proceeds that has been allocated to the payment of offering expenses.
In addition, in order to 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. If we complete our initial business combination, we would repay such loaned amounts. 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 founder warrants at a price of $1.00 per warrant at the option of the lender. Except as set forth above, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor 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. If we increase or decrease the size of this offering pursuant to Rule 462(b) under the Securities Act, we will effect a stock dividend or share contribution back to capital or other appropriate mechanism immediately prior to the consummation of this offering in such amount as to maintain the number of founder shares at 20.0% of our issued and outstanding common stock upon the consummation of this offering (not including the shares of Class A common stock underlying the Underwriter Units). 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, assuming no value is attributed to the warrants included in the units we are offering pursuant to this prospectus, or to the private warrants, founder warrants, or $15 Exercise Price Warrants, 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. Such calculation does not reflect any dilution associated with the sale and exercise of warrants, including the private warrants, founder warrants and $15 Exercise Price Warrants, which would cause the actual dilution to the public stockholders to be higher, particularly where a cashless exercise is utilized. 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 shares of Class A common stock which may be redeemed for cash), by the number of shares of outstanding Class A common stock.
At July 13, 2020, our net tangible book deficit was $(15,000), or approximately $0 per share of common stock. After giving effect to the sale of 22,500,000 shares of Class A common stock included in the units we are offering by this prospectus (or 25,875,000 shares of Class A common stock if the underwriters’ over-allotment option is exercised in full), the private placement of private units, founder warrants, and $15 Exercise Price Warrants and the deduction of underwriting commissions and estimated expenses of this offering, our pro forma net tangible book value at July 13, 2020 would have been $5,000,010 or $0.77 per share (or $5,000,010 or $0.68 per share if the underwriters’ over-allotment option is exercised in full), representing an immediate increase in net tangible book value (as decreased by the value of the 22,207,899 shares of Class A common stock that may be redeemed for cash, or 25,582,899 shares of Class A common stock if the underwriters’ over-allotment option is exercised in full) of $0.77 per share (or $0.68 if the underwriters’ over-allotment option is exercised in full) to our initial stockholders as of the date of this prospectus and an immediate dilution to public stockholders from this offering of $9.23 per share (or $9.32 if the underwriters’ over-allotment option is exercised in full).
The following table illustrates the dilution to the public stockholders on a per-share basis, assuming no value is attributed to the warrants included in the units, private units or to the founder warrants or $15 Exercise Price Warrants:
| |
|
|
No exercise of
over-allotment
option
|
|
|
Exercise of
over-allotment
option in full
|
|
|
Public offering price
|
|
|
|
|
|
|
|
|
|
$ |
10.00 |
|
|
|
|
|
|
|
|
|
|
$ |
10.00 |
|
|
|
Net tangible book deficit before this offering
|
|
|
|
$ |
0.00 |
|
|
|
|
|
|
|
|
|
|
$ |
0.00 |
|
|
|
|
|
|
|
|
|
Increase attributable to public stockholders
|
|
|
|
|
0.77 |
|
|
|
|
|
|
|
|
|
|
|
0.68 |
|
|
|
|
|
|
|
|
|
Pro forma net tangible book value after this offering and the sale of
the private placement securities
|
|
|
|
|
0.77 |
|
|
|
|
|
|
|
|
|
|
|
0.68 |
|
|
|
|
|
|
|
|
|
Dilution to public stockholders
|
|
|
|
|
|
|
|
|
|
$ |
9.23 |
|
|
|
|
|
|
|
|
|
|
$ |
9.32 |
|
|
|
Percentage of dilution to public stockholders
|
|
|
|
|
|
|
|
|
|
|
92.3% |
|
|
|
|
|
|
|
|
|
|
|
93.2% |
|
|
For purposes of presentation, we have reduced our pro forma net tangible book value after this offering (assuming no exercise of the underwriters’ over-allotment option) by $226,703,990 because holders of up to approximately 98.7% 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 earned on the funds held in the trust account and not previously released to us to pay our taxes), 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)
|
|
|
|
|
5,625,000 |
|
|
|
|
|
19.60% |
|
|
|
|
$ |
30,000 |
|
|
|
|
|
0.01% |
|
|
|
|
$ |
0.005 |
|
|
|
Shares underlying private units
|
|
|
|
|
462,500 |
|
|
|
|
|
1.61% |
|
|
|
|
$ |
4,625,000 |
|
|
|
|
|
2.01 |
|
|
|
|
$ |
10.00 |
|
|
|
Shares underlying underwriter units
|
|
|
|
|
112,500 |
|
|
|
|
|
0.39 |
|
|
|
|
$ |
0 |
|
|
|
|
|
0.00 |
|
|
|
|
$ |
0.0 |
|
|
|
Public Stockholders
|
|
|
|
|
22,500,000 |
|
|
|
|
|
78.40 |
|
|
|
|
|
225,000,000 |
|
|
|
|
|
97.98 |
|
|
|
|
$ |
10.00 |
|
|
| |
|
|
|
|
28,700,000 |
|
|
|
|
|
100.0% |
|
|
|
|
$ |
229,650,000 |
|
|
|
|
|
100.0% |
|
|
|
|
|
|
|
|
(1)
Assumes that 843,750 founder shares are forfeited after the closing of this offering in the event the underwriters do not exercise their over-allotment option.
The pro forma net tangible book value per share after the offering is calculated as follows:
| |
|
|
Without
Over-allotment
|
|
|
With
Over-allotment
|
|
| Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net tangible book deficit before this offering
|
|
|
|
$ |
(15,000) |
|
|
|
|
$ |
(15,000) |
|
|
|
Net proceeds from this offering and the private placement(1)
|
|
|
|
|
231,675,000 |
|
|
|
|
|
265,425,000 |
|
|
|
Plus: Offering costs paid in advance, excluded from tangible book
value
|
|
|
|
|
44,000 |
|
|
|
|
|
44,000 |
|
|
|
Less: Proceeds held in trust subject to redemption(2)
|
|
|
|
|
(226,703,990) |
|
|
|
|
|
(260,453,990) |
|
|
| |
|
|
|
$ |
5,000,010 |
|
|
|
|
$ |
5,000,010 |
|
|
| Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B common stock outstanding prior to this offering
|
|
|
|
|
6,468,750 |
|
|
|
|
|
6,468,750 |
|
|
|
Class B common stock forfeited if over-allotment is not exercised
|
|
|
|
|
(843,750) |
|
|
|
|
|
— |
|
|
|
Class A common stock included in the private units
|
|
|
|
|
462,500 |
|
|
|
|
|
462,500 |
|
|
|
Class A common stock included in the units offered
|
|
|
|
|
22,500,000 |
|
|
|
|
|
25,875,000 |
|
|
|
Class A common stock included in the Underwriter Units
|
|
|
|
|
112,500 |
|
|
|
|
|
129,375 |
|
|
|
Less: Shares subject to redemption
|
|
|
|
|
(22,207,899) |
|
|
|
|
|
(25,582,899) |
|
|
| |
|
|
|
|
6,492,101 |
|
|
|
|
|
7,352,726 |
|
|
(1)
Expenses applied against gross proceeds include offering expenses of $950,000 and underwriting commissions of $1,000,000 (excluding units payable to the underwriters at the closing of this offering). See “Use of Proceeds.”
(2)
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, initial stockholders, directors, executive officers, advisors or their affiliates may purchase shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. In the event of any such purchases of our shares prior to the completion of our initial business combination, the number of shares of Class A common stock subject to redemption will be reduced by the amount of any such purchases, increasing the pro forma net tangible book value per share. See “Proposed Business — Permitted Purchases of Our Securities.”
CAPITALIZATION
The following table sets forth our capitalization at July 13, 2020, and as adjusted to give effect to the filing of our amended and restated certificate of incorporation, the sale of our units in this offering and the sale of the private placement securities and the application of the estimated net proceeds derived from the sale of such securities, assuming no exercise by the underwriters of their over-allotment option:
| |
|
|
July 13, 2020
|
|
| |
|
|
Actual
|
|
|
As Adjusted(3)
|
|
|
Notes payable to related party(1)
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
Class A common stock subject to possible redemption, 0 shares actual and 22,207,899 shares as adjusted(2)
|
|
|
|
$ |
— |
|
|
|
|
$ |
222,078,990 |
|
|
|
Preferred stock, $0.0001 par value, 1,000,000 shares authorized, none issued and outstanding, actual and as adjusted
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
Class A common stock, $0.0001 par value, 380,000,000 shares authorized, 0 and 867,101 shares issued and outstanding (excluding 0 and 22,207,899 shares subject to possible redemption), actual and as adjusted, respectively
|
|
|
|
$ |
— |
|
|
|
|
$ |
87 |
|
|
|
Class B common stock, $0.0001 par value, 20,000,000 shares authorized, 6,468,750 and 5,625,000 shares issued and outstanding, actual and as adjusted, respectively(3)
|
|
|
|
$ |
647 |
|
|
|
|
$ |
563 |
|
|
|
Additional paid-in capital
|
|
|
|
$ |
29,353 |
|
|
|
|
$ |
5,000,360 |
|
|
|
Accumulated deficit
|
|
|
|
$ |
(1,000) |
|
|
|
|
$ |
(1,000) |
|
|
|
Total shareholder’s equity
|
|
|
|
$ |
29,000 |
|
|
|
|
$ |
5,000,010 |
|
|
|
Total capitalization
|
|
|
|
$ |
29,000 |
|
|
|
|
$ |
227,079,000 |
|
|
(1)
Our sponsor may loan us up to $300,000 under an unsecured promissory note to be used for a portion of the expenses of this offering. The “as adjusted” information gives effect to the repayment of any loans made under this note out of the proceeds from this offering and the sale of the private placement securities. As of July 13, 2020, we had borrowed $0 under the promissory note.
(2)
Upon the completion of our initial business combination, we will provide our public stockholders with the opportunity to redeem their public shares for cash at a per share price equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account (which interest shall be net of taxes payable), divided by the number of then outstanding public shares, subject to the limitations described herein whereby redemptions cannot cause our net tangible assets to be less than $5,000,001.
(3)
Actual share amount is prior to any forfeiture of founder shares and as adjusted amount assumes no exercise of the underwriters’ over-allotment option and forfeiture of an aggregate of 843,750 founder shares.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a blank check company incorporated on June 24, 2020 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 may pursue an initial business combination target in any industry or geographic region. We intend to focus our search for an initial business combination on companies within the insurance and financial services industry. We intend to effectuate our initial business combination using cash from the proceeds of this offering and the private placement of the private placement securities, the proceeds of the sale of our shares in connection with our initial business combination (pursuant to forward purchase agreements or backstop agreements we may enter into following the consummation of this offering or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.
The issuance of additional shares in connection with a business combination to the owners of the target or other investors:
•
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 common stock on a greater than one-to-one basis upon conversion of the Class B common stock;
•
may subordinate the rights of holders of Class A common stock if shares of preferred stock are issued with rights senior to those afforded our Class A common stock;
•
could cause a change in control if a substantial number of shares of our Class A 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 share ownership or voting rights of a person seeking to obtain control of us; and
•
may adversely affect prevailing market prices for our Class A common stock and/or warrants.
Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, 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 Class A 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 Class A 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 indicated in the accompanying financial statements, at July 13, 2020, we had deferred offering costs of $44,000. Further, we expect to incur significant costs in the pursuit of our initial business combination. 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 the payment by our sponsor of $30,000 to cover certain of our offering costs in exchange for the issuance of the founder shares to our sponsor and up to $300,000 in loans available from our sponsor.
We estimate that the net proceeds from the sale of the units in this offering, the sale of the private units for an aggregate purchase price of $4,625,000 and the sale of the founder warrants and $15 Exercise Price Warrants for an aggregate purchase price of $4,000,000, after deducting offering expenses of approximately $950,000 and underwriting commissions of $1,000,000, will be $231,675,000 (or $265,425,000 if the underwriters’ over-allotment option is exercised in full). $230,625,000 (or $264,375,000 if the underwriters’ over-allotment option is exercised in full) will be held in the trust account. The proceeds held in the trust account will be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. The remaining approximately $1,050,000 will not be held in the trust account. In the event that our offering expenses exceed our estimate of $950,000, we may fund such excess with funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $950,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount.
We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account to complete our initial business combination. We may withdraw interest to pay our taxes. We estimate our annual franchise tax obligations, based on the number of shares of our common stock authorized and outstanding after the completion of this offering, to be $200,000, which is the maximum amount of annual franchise taxes payable by us as a Delaware corporation per annum, which we may pay from funds from this offering held outside of the trust account or from interest earned on the funds held in the trust account and released to us for this purpose. 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 interest earned on the amount in the trust account will be sufficient to pay our income taxes. To the extent that our equity 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, we will have available to us the approximately $1,050,000 of proceeds held outside the trust account. We will use these funds to primarily identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination.
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 prior to our initial business combination. 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. 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. If we complete our initial business combination, we would repay such loaned amounts. 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 founder warrants at a price of $1.00 per warrant at the option of the lender. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor 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 expect our primary liquidity requirements during that period to include approximately $500,000 for legal, accounting, due diligence, travel and other expenses associated with structuring, negotiating and documenting successful business combinations; $75,000 for legal and accounting fees related to regulatory reporting requirements; $85,000 for the NYSE listing and filing fees; $75,000 for consulting, travel and miscellaneous expenses incurred during the search for a business combination target; and approximately $75,000 for general working capital that will be used for miscellaneous expenses and reserves. We will also pay our sponsor $10,000 per month for office space, secretarial and administrative services provided to members of our management team subsequent to the closing of this offering.
These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not being placed in trust to 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.
Moreover, we may need to obtain additional financing to complete our initial business combination, either because the transaction requires more cash than is available from the proceeds held in our trust account or because we become obligated to redeem a significant number of our public shares upon completion of the business combination, 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 Underwriter Units, and, as a result, if the cash portion of the purchase price exceeds the amount available from the trust account, net of amounts needed to satisfy any redemptions by public shareholders, 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 agreements we may enter into following consummation of this offering. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the 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 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, 2021. 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:
•
staffing for financial, accounting and external reporting areas, including segregation of duties;
•
reconciliation of accounts;
•
proper recording of expenses and liabilities in the period to which they relate;
•
evidence of internal review and approval of accounting transactions;
•
documentation of processes, assumptions and conclusions underlying significant estimates; and
•
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 registered public accounting firm to audit and render an opinion on such report when required by Section 404 of the Sarbanes-Oxley Act. The independent registered public accounting firm 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 securities held in the trust account will be invested in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury 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; Quarterly Results
As of July 13, 2020, 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. No unaudited quarterly operating data is included in this prospectus as we have not conducted any operations to date.
JOBS Act
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, (i) provide an independent registered public accounting firm’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) 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, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the independent registered public accounting firm’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) 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 this offering or until we are no longer an “emerging growth company,” whichever is earlier.
PROPOSED BUSINESS
General
We are a newly organized blank check company formed as a Delaware corporation for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Throughout this prospectus we will refer to this 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.
While we may pursue an acquisition in any business industry or sector, we intend to concentrate our efforts identifying businesses in the insurance and financial services industry with an enterprise value of approximately $300 million to $600 million, with particular emphasis on businesses that are providing or changing technology for traditional financial services (“FinTech”), insurance (“InsureTech”), or other sectors where disruptive and/or adaptive technology or other factors are driving changes in a new era in the American business landscape. In addition, we intend to capitalize on the ability of our management team to identify, acquire, and manage a business in the insurance and financial services industry that can benefit from their experience and differentiated global network.
Business Strategy
We believe that there have been significant changes in the business landscape over the past several years that have accelerated in recent months. Those changes include disruption of several industries caused by technology, need to adapt to implications of global supply chain, change in consumer behavior and other reactions of pandemic realities, and changes in acceptance of combinations with companies such as FG New America Acquisition Corp. Innovative technology within insurance and financial services has contributed to increased consolidation and opportunities. We believe there are many potential targets within the InsureTech, FinTech, broader financial services and insurance sectors along with other sectors such as retail and consumer goods that could become attractive public companies. These potential targets exhibit a broad range of business models and financial characteristics from high growth innovative and/or disruptive companies to mature businesses with recurring revenues and profitability with strong cash flows.
While we will not limit our search to any business segment, we will focus on a wide variety of companies across the InsureTech, FinTech, insurance (including insurance companies, insurance services, reinsurance, agents, insurance brokers, managing agencies, etc.), financial services, wealth, financial advisory, investment and asset management sectors.
With increased adoption of technology solutions by consumers and businesses alike, we believe that all components of industry, including both mature and innovative newcomers, are poised for continued growth in overall market size and penetration. Key industry characteristics include potential or historical long-term organic growth, growth through consolidation, and attractive competitive dynamics. Key business characteristics include high barriers to entry, competitive moat from technology, and public market-ready scale. Key financial metrics include revenue growth, recurring revenues, and strong cash flow conversion. We will seek to acquire established businesses that we believe are fundamentally sound, but would benefit from the financial, operational, technological, strategic or managerial improvements our Company and management team can provide to maximize value. We will also look at earlier-stage companies that exhibit the potential to change the industries in which they participate, and which offer the potential of sustained high levels of revenue growth with an articulated path to profitability. We will also look for opportunities in a broader group of sectors that are experiencing changes in this new era of the American business landscape.
Consistent with our focus, we intend to target InsureTech, FinTech, insurance and financial services businesses that have strong management teams, differentiated products or services, potential or historical growth and an identified path to profitability. We believe that the extensive networks of our management team, board of directors and advisors will deliver access to a broad spectrum of opportunities across the insurance, financial services, retail, consumer, manufacturing and other sectors. In addition to any potential business candidates we may identify on our own, we anticipate that other target business
candidates will be brought to our attention from various unaffiliated sources, including investment market participants, private equity funds and large business enterprises seeking to divest non-core assets or divisions.
Our Management Team
We will seek to capitalize on the financial services experience and contacts of the members of our management team. Our management team is comprised of finance, technology and investment and merchant banking leaders with senior level, multi-national operational and transactional experience drawn from top global institutions, including TD Ameritrade Holding Corporation (Nasdaq: AMTD), Merrill Lynch, AXA Financial (OTCMKTS: AXAHY) Chicago Board Options Exchange and T. Rowe Price (Nasdaq: TROW). Furthermore, the members of our management have a variety of experience and expertise in capital markets, asset management, financial product development, FinTech, insurance, InsureTech, sports and entertainment, real estate, and data and analytics as well as experience as investors and entrepreneurs. We have completed numerous going-public, mergers and acquisitions and financing transactions with billions of dollars of deal value, including in the financial services and technology industry. Our management team also has extensive experience in operating public and private financial services companies, serving on both public and private company boards of directors, including financial institutions, FinTech, insurance, and InsureTech companies, strong knowledge and experience in financial, legal and regulatory matters, initial public offerings and private equity and venture capital.
We will seek to capitalize on the significant contacts and experience of our management team, including Joseph Moglia, our Chairman, Larry Swets, Jr., our Chief Executive Officer and Director, D. Kyle Cerminara, our President and Director, Robert Weeks and Nicholas Rudd, members of our board of directors, and Hassan Baqar, our Chief Financial Officer. In addition, Allan Tessler will serve as our Senior Advisor.
We believe that these networks of contacts and relationships will provide us with an important source of potential initial business combination targets. In addition, we anticipate that target business candidates may be brought to our attention from various unaffiliated sources, including investment market participants, private equity groups, investment banking firms, consultants, accounting firms and large business enterprises. Upon completion of this offering, members of our management team will communicate with these networks of relationships to articulate the parameters for our search for a target business and a potential business combination and begin the process of pursuing and reviewing promising leads.
Joseph Moglia has served as our Chairman since July 2020. Mr. Moglia is the Chairman of the Board at TD Ameritrade, Chairman of Fundamental Global Investors and Capital Wealth Advisors and Chair of Athletics and Executive Advisor to the President at Coastal Carolina University.
In 1984 Mr. Moglia entered the MBA Training Program at Merrill Lynch, where there were 26 people. 25 MBA’s and 1 football coach. By 1988, he was Merrill Lynch’s Number One Producer in the World. By the time he left, he had been a member of both the Institutional and Private Client Executive Committees, and his final responsibilities were all Investment Products, the Insurance Company, the 401(k) Business and the Middle Market Business. Prior to that, he was head of Global Fixed Income Institutional Sales and ran the firm’s Municipal division.
Mr. Moglia became the CEO of TD Ameritrade in 2001, and when he stepped down in 2008, shareholders had enjoyed a 500% return. In 2009 he became Chairman of the Board. TD Ameritrade just announced that they would be acquired by Charles Schwab. The combined company with synergies should be worth $100 BILLION and has client assets of $5 TRILLION. When Mr. Moglia arrived, these numbers were $700 million and $24 Billion.
He has served on the Boards of AXA Financial (2002 – 2011) and the Chicago Board Options Exchange (1997 – 2002).
Mr. Moglia has also been a Football Coach for 25 years, but it’s not been a traditional 25 years. He began his career as a coach for 16 years, moved to the business world for over 20, and back to coaching in 2009. In his last 11 years of college coaching, he has been a part of 8 championship teams, and as a head coach has a winning percentage of .718. In 2020, he was named to the 2010 – 2019 Big South Football All-Decade Team, one of 10 Coastal Carolina Chanticleers — the most by any school on the All-Decade
Team. He was the fastest coach in Big South history to 30 overall wins (30-8) and 40 overall wins (40-11) and has the most FCS Playoff appearances by a head coach in Big South history. He has also received multiple Coach of the Year honors, including the Eddie Robinson National Coach of the Year award, was a recipient of the Vince Lombardi Award, and was also inducted into the Lombardi Hall of Fame.Mr. Moglia has received the Ellis Island Medal of Honor and the Sharp Trophy for Leadership. He has been honored by the National Italian American Foundation, the Columbus Citizens Foundation, the American Institute for Stuttering and the Stuttering Association for the Young. He has been inducted into seven Halls of Fame, is a member of the National Economics Society and is the recipient of three Honorary Doctorates. Mr. Moglia has already had a book written about his life, and he is the only author in the world that has written two books published on both investing and football.
He earned his degree of economics from Fordham University and his masters from the University of Delaware.
Larry G. Swets, Jr. has served as our Chief Executive Officer and Director since July 2020. Mr. Swets has over 25 years of experience within financial services encompassing both non-executive and executive roles. Mr. Swets founded Itasca Financial LLC, an advisory and investment firm, in 2005 and has served as its managing member since inception. Mr. Swets also founded and is also the President of Itasca Golf Managers, Inc., a management services and advisory firm focused on the real estate and hospitality industries, in August 2018. Mr. Swets has served as a director and the Chief Executive Officer of Itasca Capital Ltd. (TSXV: ICL) (formerly Kobex Capital Corp.), a publicly-traded investment firm since June 2016. In June 2020, Mr. Swets began serving as interim Chief Executive Officer of 1347 Property Insurance Holdings, Inc. (Nasdaq: PIH), which intends to operate as a diversified reinsurance, investment management and real estate holding company. Previously, he served as the Chief Executive Officer of Kingsway Financial Services Inc. (NYSE: KFS) from July 2010 to September 2018, including as its President from July 2010 to March 2017. Prior to founding Itasca Financial LLC, Mr. Swets served as an insurance company executive and advisor, including the role of director of investments and fixed income portfolio manager for Lumbermens Mutual Casualty Company, a/k/a Kemper Insurance Companies. Mr. Swets began his career in insurance as an intern in the Kemper Scholar program in 1994. Mr. Swets has also served as a member of the board of directors of 1347 Property Insurance Holdings, Inc. since November 2013, Limbach Holdings, Inc. (Nasdaq: LMB), a company which provides building infrastructure services since July 2016, Insurance Income Strategies Ltd. since October 2017, Harbor Custom Development, Inc. since February 2020, Alexian Brothers Foundation since March 2018, and Unbounded Media Corporation since June 2019. Previously, he served as a member of the board of directors of Kingsway Financial Services Inc. from September 2013 to December 2018, Atlas Financial Holdings, Inc. (Nasdaq: AFH) from December 2010 to January 2018, FMG Acquisition Corp. (Nasdaq: FMGQ) from May 2007 to September 2008, United Insurance Holdings Corp. from 2008 to March 2012, and Risk Enterprise Management Ltd. from November 2007 to May 2012. He is a member of the Young Presidents’ Organization. Mr. Swets earned a Master’s Degree in Finance from DePaul University in 1999 and a Bachelor’s Degree from Valparaiso University in 1997. He also holds the Chartered Financial Analyst (CFA) designation.
D. Kyle Cerminara has served as our President and Director since July 2020. Mr. Cerminara has over 20 years’ experience as an institutional investor, asset manager, director, chief executive, founder and operator of multiple financial services and technology businesses. Mr. Cerminara co-founded Fundamental Global Investors, LLC, an SEC registered investment advisor that manages alternative investment funds, in 2012 and serves as its chief executive officer. Mr. Cerminara is also the co-chief investment officer of CWA Asset Management Group, LLC, a wealth advisor and multi-family office affiliated with Fundamental Global Investors, LLC, which position he has held since January 2013. Mr. Cerminara is a member of the board of directors of a number of companies focused in the reinsurance, investment management, real estate, technology and communication sectors, including BK Technologies Corporation (NYSE American: BKTI), a provider of two-way radio communications equipment, since July 2015, Ballantyne Strong, Inc. (NYSE American: BTN), a holding company with diverse business activities focused on serving the cinema, retail, financial and government markets, since February 2015, 1347 Property Insurance Holdings, Inc. (Nasdaq: PIH), which intends to operate as a diversified reinsurance, investment management and real estate holding company, since December 2016, Itasca Capital Ltd. (TSXV: ICL) (formerly Kobex Capital Corp.), a publicly-traded investment firm, since June 2016, and Firefly Systems
Inc., a venture-backed digital advertising company, since August 2020. He was appointed chairman of 1347 Property Insurance Holdings, Inc. in May 2018 and served as its principal executive officer from March 2020 to June 2020. He was also appointed chairman of Itasca Capital Ltd. in June 2018. Mr. Cerminara has served as the chairman of Ballantyne Strong, Inc. since May 2015. He also previously served as its chief executive officer from November 2015 through April 2020. Mr. Cerminara was also the chairman of BK Technologies Corporation from March 2017 until April 2020. He also served on the board of directors of Limbach Holdings, Inc. (Nasdaq: LMB), a company which provides building infrastructure services, from March 2019 to March 2020; Iteris, Inc. (Nasdaq: ITI), a publicly-traded, applied informatics company, from August 2016 to November 2017; and Magnetek, Inc., a publicly-traded manufacturer, in 2015. He serves as a Trustee and President of StrongVest ETF Trust, which was an open-end management investment company that is in the process of being dissolved, since July 2016. He previously served on the board of directors of blueharbor bank, a community bank, from October 2013 to January 2020. Prior to these roles, Mr. Cerminara was a portfolio manager at Sigma Capital Management, an independent financial adviser, from 2011 to 2012, a director and sector head of the Financials Industry at Highside Capital Management from 2009 to 2011, and a portfolio manager and director at CR Intrinsic Investors from 2007 to 2009. Before joining CR Intrinsic Investors, Mr. Cerminara was a vice president, associate portfolio manager and analyst at T. Rowe Price (Nasdaq: TROW) from 2001 to 2007, where he was named amongst Institutional Investor’s Best of the Buy Side Analysts in November 2006, and an analyst at Legg Mason (NYSE: LM) from 2000 to 2001. Mr. Cerminara received an MBA degree from the Darden Graduate School of Business at the University of Virginia and a B.S. in Finance and Accounting from the Smith School of Business at the University of Maryland, where he was a member of Omicron Delta Kappa, an NCAA Academic All American and Co-Captain of the men’s varsity tennis team. He also completed a China Executive Residency at the Cheung Kong Graduate School of Business in Beijing, China. Mr. Cerminara holds the Chartered Financial Analyst (CFA) designation.
Hassan R. Baqar has served as our Chief Financial Officer since July 2020. Mr. Baqar has over 20 years of experience within financial services focused on corporate development, mergers & acquisitions, capital raising, investments and real estate transactions. Mr. Baqar has served as the founder and managing member of Sequoia Financial LLC, a financial services and advisory firm, since January 2019. Mr. Baqar has also served as Chief Financial Officer of Insurance Income Strategies Ltd., a Bermuda based reinsurance company since October 2017, as a director and Chief Financial Officer of Itasca Capital Ltd. (TSXV: ICL) (formerly Kobex Capital Corp.), a publicly-traded investment firm since June 2016, as a director of Fundamental Global Reinsurance Ltd., a Cayman Islands reinsurance company since June 2020, and as a director and Chief Financial Officer of Unbounded Media Corporation since June 2019. Previously, he served as Vice President of Kingsway Financial Services Inc. (NYSE: KFS) (“Kingsway”) from January 2014 to January 2019 and as a Vice President of Kingsway’s subsidiary Kingsway America Inc. from January 2010 to January 2019. Mr. Baqar also served as Chief Financial Officer and director of 1347 Capital Corp., a special purpose acquisition company, from April 2014 to July 2016 when the company completed its initial business combination to form Limbach Holdings, Inc. (Nasdaq: LMB). Mr. Baqar served as a member of the board of directors of 1347 Property Insurance Holdings, Inc. (Nasdaq: PIH) from October 2012 to May 2015. By virtue of a management services agreement between 1347 Advisors LLC, a wholly owned subsidiary of Kingsway, and United Insurance Management, L.C., he also served as the Chief Financial Officer of United Insurance Holdings Corp. (Nasdaq: UIHC), a publicly held property and casualty insurance holding company, from August 2011 to April 2012. His previous experience also includes director of finance at Itasca Financial, LLC from 2008 to 2009 and positions held at Lumbermens Mutual Casualty Company, a/k/a Kemper Insurance Companies, a diversified mutual property-casualty insurance provider, from June 2000 to April 2008, where he most recently served as a senior analyst. Mr. Baqar earned a Master’s Degree in Business Administration from Northeastern Illinois University in 2009 and a Bachelor’s Degree in Accounting and Business Administration from Monmouth College in 2000. He also holds a Certified Public Accountant designation.
Nicholas Rudd has served on our board of directors since July 2020. Mr. Rudd is a financial services executive with a broad background in capital markets, insurance and insurance technology, investing, digital product development, and sports entertainment. Mr. Rudd has spent the past five years with a deep focus on the digital economy. Mr. Rudd worked at Two Sigma Insurance Quantified (“TSIQ”) from September 2017 to August 2020. During his time at TSIQ, he worked in partnerships, business operations, corporate development and business development. From February 2017 to September 2017, he was the
business lead for Chubb’s Innovation Center. Mr. Rudd started his career at Banc of America Securities, the predecessor to BofA Securities, in July 2005. From BofA, Mr. Rudd moved into the sports and entertainment space, where he worked in a variety of functions for the executive leadership team of the United Football League (“UFL”) from August 2009 to April 2011. In April 2011, Mr. Rudd joined TD Ameritrade as the Chief of Staff to the Chairman, Joseph Moglia. Mr. Rudd has been a member of the board of managers of Brightline Partners, an advertising technology business, since September 2016. He also serves on the board of trustees of Madison Square Boys & Girls Club, which provides after-school programming for young people ages 6 to 18 across six clubhouses (located in the Bronx, Brooklyn, and Harlem). Mr. Rudd earned his B.A. in History from Columbia University’s Columbia College, and was an inaugural member of Cornell University’s Cornell Tech MBA program.
Robert Weeks, has served on our board of directors since July 2020. Mr. Weeks has a background in investing, capital markets, investment banking and financial product development. Mr. Weeks has served as Chief of Staff to the Chairman of the board at TD Ameritrade Holding Corporation (Nasdaq: AMTD) since May 2014. Mr. Weeks has also served as an advisor to a private charitable foundation, where he has responsibility for all aspects of the foundation’s endowment and charitable operations since May 2014. Previously, from February 2010 to May 2014, Mr. Weeks worked at Merrill Lynch, where he developed financial products using commodity, equity, foreign exchange and interest rate derivatives. Mr. Weeks began his career at Merrill Lynch as an investment banker focused on capital markets where he completed debt financings for companies in the technology, real estate, transportation and electric utility sectors. He also represented international financial institutions on structured note offerings. Mr. Weeks has served on the board of managers of Brightline Partners, an advertising technology business since September 2016. He has also served as a board observer at aWhere, Inc., an agronomic big data analytics company, since April 2017. He has also served on the board of directors of the Olympic Club Foundation since January 2020. Mr. Weeks earned a B.A. in Economics and M.S. in Finance from Washington University in St. Louis.
Allan Tessler will serve as our Senior Advisor effective as of the closing of this offering. Mr. Tessler has been the chief executive officer of International Financial Group, Inc., an international merchant banking firm, since 1987. Mr. Tessler was the chairman of Epoch Holding Corporation, an investment management firm that was sold to Toronto Dominion Bank. With a specialization in the area of turnaround financing, Mr. Tessler combines extensive management experience with proficiency in corporate and securities legal matters. Mr. Tessler served as co-chief executive officer and chairman of Data Broadcasting Corporation, now known as Interactive Data Corporation, and formerly served as chairman of Enhance Financial Services Group, Inc., an insurance holding company he co-founded which was merged into Radian Group (NYSE: RDN). Mr. Tessler was also Chairman and a principal shareholder of Great Dane Holdings, a company that manufactured tractor trailers and automobile stampings, as well as, controlling a property casualty insurer and transportation companies. Mr. Tessler started his career in the law firm of Cleary, Gottlieb, Steen & Hamilton LLP. In the legal arena he has also served as counsel to Spengler, Carlson, Gubar & Churchill, and was senior managing partner of Shea & Gould. He is admitted to the Federal and State of New York Bar, in retired status. In the investment banking arena, Mr. Tessler has held top management and leadership positions with Ladenburg, Thalman & Co., Devon Securities and Loeb, Rhoades & Co. He was also the president of Slater, Walker of America, a real estate and retail operating company, Ameriscribe, Inc., a back office out sourcing firm and Fifth Ave Coach Lines, an investment company. In addition, Mr. Tessler is also a director of TD Ameritrade (NYSE: AMTD). He formerly sat as the lead director and chairman of the finance committee of L Brands, Inc. (NYSE: LB), sat on the board of directors of Steel Partners Holding GP, Inc. (NYSE: SPLP) where he held a position from 2010-2018. He joined the board of Imperva, Inc. (NYSE: IMPV) in February 2014 and was elected Chairman. In February 2012 he became the chairman and chief executive officer of Teton Financial Services and chairman of Rocky Mountain Bank as a result of the acquisition and recapitalization of that troubled bank located in Jackson, Wyoming. He is chairman emeritus of the Board of the Hudson Institute and the former president and trustee of the Jackson Hole Land Trust. He is a member of the board of governors of the Boys & Girls Clubs of America. He is a past president of the Grand Teton Music Festival. He served in the United States Navy, where he attained the rank of Lieutenant, Junior Grade. Mr. Tessler received his undergraduate degree from Cornell University and his L.L.B. from Cornell University Law School. He was editor-in-chief of the Cornell Law Quarterly and was elected to Phi Kappa Phi and the Order of the Coif. Mr. Tessler has continued actively to support his alma mater as a member of the
Cornell Law School Fund from 1983 to 1985, the co-chairman of the Cornell Law School Capital Campaign, and is a trustee emeritus and presidential counselor of Cornell University.
The past performance of our management team or their respective affiliates is not a guarantee of either: (i) success with respect to any business combination we may consummate; or (ii) that we will be able to identify a suitable candidate for our initial business combination. You should not rely on the historical record of our management team’s or their respective affiliates’ performance as indicative of any future performance.
For more information on the experience and background of our management team, see the section entitled “Management.”
Business Combination Criteria
Consistent with our business strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will use these criteria and guidelines in evaluating initial business combination opportunities, but we may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines. We intend to seek to acquire companies within industries that exhibit strong characteristics including, but not limited to, the following:
•
Low risk of technological obsolescence;
•
Public market-ready scale;
•
Strong management team;
•
Differentiated products or services;
•
Recurring revenues;
•
Strong cash flow conversion.
•
Long-term organic growth;
•
Attractive competitive dynamics;
•
Consolidation opportunities to scale; and
•
High barrier to entry.
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 other considerations, factors and criteria that our management team 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 proxy solicitation materials or tender offer documents, as applicable, that we would file with the SEC. In evaluating a prospective target business, we expect to conduct a due diligence review which may encompass, among other things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspections of facilities, as well as reviewing financial and other information which will be made available to us.
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, and negotiation with, 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. The company will not pay any consulting fees to members of our management team, or any of their respective affiliates, for services rendered to or in connection with our initial business combination.
Initial Business Combination
NYSE rules and our amended and restated certificate of incorporation require that we must consummate an initial business combination 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 permitted). Our board of directors will make the determination as to the fair market value of our initial business combination. If our board of directors is not able to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of the target’s assets or prospects.
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 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 sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or 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 the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the 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 taken into account for purposes of the 80% of net assets test described above. If the 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.
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 private placement of the private placement securities, the proceeds of the sale of our shares in connection with our initial business combination (pursuant to forward purchase agreements or backstop agreements we may enter into following the consummation of this offering or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing. 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 redemptions of our Class A common stock, 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 the post-transaction company, 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.
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. Accordingly, there is no current basis for investors in this offering to evaluate the possible merits or risks of the target business with which we may ultimately complete our initial business combination. Although our management will assess the risks inherent in a particular target business with which we may combine, we cannot assure you that this assessment will result in our identifying all risks that a target business may encounter. Furthermore, some
of those risks may be outside of our control, meaning that we can do nothing to control or reduce the chances that those risks will adversely affect a target business.
We may need to obtain additional financing to complete our initial business combination, either because the transaction requires more cash than is available from the proceeds held in our trust account or because we become obligated to redeem a significant number of our public shares upon completion of the business combination, in which case we may issue additional securities or incur debt in connection with such business combination. There are no prohibitions on our ability to issue securities or incur debt in connection with our initial business combination. We are not currently a party to any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities, the incurrence of debt or otherwise.
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 Securities Exchange Act of 1934, as amended, or 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.
Sourcing of Potential Initial Business Combination Targets
We believe our management team’s significant operating and transaction experience and relationships will provide us with a substantial number of potential initial business combination targets. Over the course of their careers, the members of our management team and our directors and advisors have developed a broad network of contacts and corporate relationships around the world, which includes private equity firms, venture capitalists and entrepreneurs. This network has grown through the activities of our management team sourcing, acquiring and financing businesses, the reputation of our management team for integrity and fair dealing with sellers, financing sources and target management teams and the experience of our management team in executing transactions under varying economic and financial market conditions. In addition, members of our management team have developed contacts derived directly from serving on the boards of directors of several public and private companies.
This network has provided our management team with a flow of referrals, which in the past has resulted in numerous transactions which were proprietary or where a limited group of investors were invited to participate in the sale process. We believe that this network will provide us with multiple investment opportunities. In addition, we anticipate that target business combination candidates will be brought to our attention by various unaffiliated sources, including participants in our targeted markets and their advisors, private equity funds and large business enterprises seeking to divest non-core assets or divisions.
While we do not presently anticipate engaging the services of professional firms or other individuals that specialize in business acquisitions on any formal basis, we may engage these firms or other individuals in the future, in which event we may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction. We will engage a finder only to the extent our management determines that the use of a finder may bring opportunities to us that may not otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction that our management determines is in our best interest to pursue. Payment of a finder’s fee is customarily tied to completion of a transaction, in which case any such fee will be paid out of the funds held in the trust account. In no event, however, will our sponsor or any of our existing officers or directors, or any entity with which they are affiliated, be paid any finder’s fee, consulting fee or other compensation by the company prior to, or for any services they render in order to effectuate, the completion of our initial business combination (regardless of the type of transaction that it is). In addition, commencing on the date of this prospectus, we will pay our sponsor $10,000 per month for office space, secretarial and administrative services provided to members of our management team. Any such payments prior to our initial business combination will be made from funds held outside the trust account. Other than the foregoing, 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 any affiliate of our sponsor or officers prior to, or in connection with any services rendered in order to effectuate, the consummation of our initial business combination (regardless of the type of transaction that it is).
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, executive officers or directors, or completing the business combination through a joint
venture or other form of shared ownership with our sponsor, executive officers or directors. In the event we seek to complete an initial business combination with a target that is affiliated with our sponsor, executive officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm stating that such an initial business combination is fair to our company from a financial point of view.
Members of our management team and our independent directors will directly or indirectly own founder shares and/or private placement securities following this offering and, accordingly, 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.
Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such other entity. 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 such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our initial business combination.
In addition, our sponsor and our officers and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue other business or investment ventures during the period in which we are seeking an initial business combination. Any such companies, businesses or investments may present additional conflicts of interest in pursuing an initial business combination. However, we do not believe that any such potential conflicts would materially affect our ability to complete our initial business combination.
Financial Position
With funds available for a business combination initially in the amount of $225,000,000 (assuming no redemptions) (or $258,750,000 (assuming no redemptions) if the underwriters’ over-allotment option 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.
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. The determination as to whether any of the members of our management team will remain with the combined company will be made at the time of our initial business combination. 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 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 a 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 subject to the provisions of our amended and restated certificate of incorporation. However, we will seek stockholder approval if it is required by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business or other legal 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 Transaction
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|
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Whether
Stockholder
Approval is
Required
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| Purchase of assets |
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|
|
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No |
|
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| Purchase of stock of target not involving a merger with the company. |
|
|
|
|
No |
|
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| Merger of target into a subsidiary of the company. |
|
|
|
|
No |
|
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| Merger of the company with a target |
|
|
|
|
Yes |
|
|
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 our 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 stockholders (as defined by 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 in 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 and (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 securityholder; or
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The issuance or potential issuance of common stock will result in our undergoing a change of control.
Permitted Purchases of Our Securities
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, initial stockholders, directors, executive officers, advisors or their affiliates may purchase shares or public warrants 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 our initial stockholders, directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law and NYSE rules. 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. None of the funds in the trust account will be used to purchase shares or public warrants 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.
In the event that our sponsor, initial stockholders, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. 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 any such purchases of shares could be to (i) vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of the business combination or (ii) 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 any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrantholders for approval in connection with our initial business combination. 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 Class A common stock or public warrants 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, initial stockholders, officers, directors and/or their affiliates anticipate that they may identify the stockholders with whom our initial stockholders, officers, directors or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests submitted by stockholders (in the case of Class A common stock) following our mailing of proxy materials in connection with our initial business combination. To the extent that our sponsor, officers, directors, advisors or their 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, whether or not such stockholder has already submitted a proxy with respect to our initial business combination but only if such shares have not already been voted at the stockholder meeting related to our initial business combination. Our sponsor, executive officers, directors, advisors or any of their affiliates will select which stockholders to purchase shares from based on a negotiated price and number of shares and any other factors that they may deem relevant, and will only purchase shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws. Our sponsor, officers, directors and/or their affiliates will be restricted from making purchases of shares if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act. We expect any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchases are subject to such reporting requirements.
Redemption Rights for Public Stockholders upon 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 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 calculated as of two business days prior to the consummation of the initial business combination, including interest earned on the funds held in the trust account (which interest shall be net of taxes payable), divided by the number of then outstanding public shares, subject to the limitations and on the conditions described herein. The amount in the trust account is initially anticipated to be $10.25 (or $10.217 if the underwriters’ over-allotment option is exercised in full) per public share. Our initial stockholders, sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares and public shares they may hold in connection with the completion of our initial business combination.
Limitations on Redemptions
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. In addition, our proposed initial business combination may impose a minimum cash requirement for: (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. 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 initial business combination exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem any shares in connection with such initial business combination, and all shares of Class A common stock submitted for redemption will be returned to the holders thereof. We may, however, raise funds through the issuance of 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 consummation of this offering, in order to, among other reasons, satisfy such net tangible assets or minimum cash requirements.
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 (i) in connection with a stockholder meeting called to approve the initial business combination or (ii) without a stockholder vote by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed initial 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 requirements. 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 require stockholder approval. So long as we obtain and maintain a listing for our securities on NYSE, we will be required to comply with NYSE’s stockholder approval rules.
The requirement that we provide our public stockholders with the opportunity to redeem their public shares by one of the two methods listed above will be contained in provisions of our amended and restated certificate of incorporation and will apply whether or not we maintain our registration under the Exchange Act or our listing on NYSE. Such provisions may be amended if approved by holders of 65% of our common stock entitled to vote thereon. If we amend such provisions of our amended and restated certificate of incorporation, we will provide our public stockholders with the opportunity to redeem their public shares in connection with a stockholder meeting.
If we provide our public stockholders with the opportunity to redeem their public shares in connection with a stockholder meeting, we will:
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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.
If we seek stockholder approval, 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 initial 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 will count towards this quorum and our sponsor, officers and directors and the underwriters have agreed to vote any founder shares and Underwriter Shares they hold and any public shares purchased during or after this offering (including in open market and privately-negotiated transactions) in favor of our initial business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained. As a result, in addition to our initial stockholders’ founder shares and private shares and the underwriters’ Underwriter Shares, we would need only 8,150,001, or approximately 36.22%, of the 22,500,000 public shares sold in this offering to be voted in favor of an initial business combination (assuming all outstanding shares are voted and the Underwriter Shares are voted in favor of the transaction) in order to have our initial business combination approved (assuming the over-allotment option is not exercised). Further, assuming that the over-allotment option is not exercised, a quorum of 14,350,001 shares of our common stock present in person or by proxy would be required to hold the stockholder meeting to approve our initial business combination, and, assuming only the minimum number of shares representing a quorum are voted, such approval would require the affirmative vote of 7,175,002 shares of our common stock, which means that, in addition to our initial stockholders’ founder shares and private shares and the underwriters’ Underwriter Shares, we would need only 975,002, or approximately 4.3%, of the 22,500,000 public shares sold in this offering to be voted in favor of an initial business combination in order to have our initial business combination approved. These quorum and voting thresholds, and the voting agreements of our initial stockholders, 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.
If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will:
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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.
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 to be less than $5,000,001. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
Upon the public announcement of our initial business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we or 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.
We intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent or deliver their shares to our transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) system, prior to the date set forth
in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up to two business days prior to the vote on the proposal to approve the initial business combination. In addition, if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its public shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial owner of such shares is included. The proxy materials or tender offer documents, 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. We believe that this will allow our transfer agent to efficiently process any redemptions without the need for further communication or action from the redeeming public stockholders, which could delay redemptions and result in additional administrative cost. If the proposed initial business combination is not approved and we continue to search for a target company, we will promptly return any certificates or shares delivered by public stockholders who elected to redeem their shares.
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. In addition, our proposed initial business combination may impose a minimum cash requirement for: (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. 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 initial business combination exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem any shares in connection with such initial business combination, and all shares of Class A common stock submitted for redemption will be returned to the holders thereof. We may, however, raise funds through the issuance of 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 consummation of this offering, in order to, among other reasons, satisfy such net tangible assets or minimum cash requirements.
Limitation on Redemption Upon Completion of Our Initial Business Combination If We Seek Stockholder Approval
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 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 Exchange Act), will be restricted from seeking redemption rights with respect to Excess Shares, without our prior consent. 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 management 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, our sponsor or our management 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 without our prior consent, 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.
Delivering Stock Certificates in Connection with the Exercise of Redemption Rights
As described above, we intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent or deliver their shares to our transfer agent
electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) system, prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up to two business days prior to the vote on the proposal to approve the initial business combination. In addition, if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its public shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial owner of such shares is included. The proxy materials or tender offer documents, 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. Accordingly, a public stockholder would have up to two business days prior to the vote on the initial business combination if we distribute proxy materials, or from the time we send out our tender offer materials until the close of the tender offer period, as applicable, to submit or tender its shares if it wishes to seek to exercise its redemption rights. In the event that a stockholder fails to comply with these or any other procedures disclosed in the proxy or tender offer materials, as applicable, its shares may not be redeemed. 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 process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the broker submitting or tendering shares a fee of approximately $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 submit or 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.
Any request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the proxy materials or tender offer documents, 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 initial business combination is not completed, we may continue to try to complete an initial business combination with a different target until 24 months from the closing of this offering.
Redemption of Public Shares and Liquidation if No Initial Business Combination
Our amended and restated certificate of incorporation provides that we will have only 24 months from the closing of this offering to complete our initial business combination. If we are unable to complete our initial business combination within such 24-month period, we 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 earned on the funds held in the trust account (which interest shall be net of taxes payable 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), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our initial business combination within the 24-month time period.
Our initial stockholders, sponsor, officers and directors have 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 they hold if we fail to complete our initial business combination within 24 months from the closing of this offering or any extended period of time that we may have to consummate an initial business combination as a result of an amendment to our amended and restated certificate of incorporation. However, if our initial stockholders, sponsor or management team 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 complete our initial business combination within the allotted 24-month time period.
Our initial stockholders, sponsor, officers and directors have agreed, pursuant to a letter 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 redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their public 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 earned on the funds held in the trust account (which interest shall be net of taxes payable), 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. If this optional redemption right is exercised with respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement, we would not proceed with the amendment or the related redemption of our public shares at such time.
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 remaining out of the approximately $2,050,000 of proceeds 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, 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 securities, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account and any tax payments or expenses for the dissolution of the trust, the per-share redemption amount received by stockholders upon our dissolution would be approximately $10.25 (assuming no exercise of the underwriters’ over-allotment option). 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 $10.25 (assuming no exercise of the underwriters’ over-allotment option). 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 and 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 consider whether competitive alternatives are reasonably available to us and will only enter into an agreement with such third party if management believes that such third party’s engagement would be in the best interests of the company under the
circumstances. 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 management is unable to find a service provider willing to execute a waiver. The underwriters of this offering and our independent registered public accounting firm will not execute agreements with us waiving such claims to the monies held in the trust account. 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 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 other similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.25 (or $10.217 if the underwriters’ over-allotment option is exercised in full) per public share and (ii) 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 $10.25 (or $10.217 if the underwriters’ over-allotment option is exercised in full) per public share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and we believe that our sponsor’s only assets are securities of our company. 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 $10.25 (or $10.217 if the underwriters’ over-allotment option is exercised in full) 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.
In the event that the proceeds in the trust account are reduced below the lesser of (i) $10.25 (or $10.217 if the underwriters’ over-allotment option is exercised in full) per public share and (ii) 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 $10.25 (or $10.217 if the underwriters’ over-allotment option is exercised in full) per share due to reductions in the value of the trust assets, in each case less taxes payable, 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 any particular instance. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be less than $10.25 (or $10.217 if the underwriters’ over-allotment option is exercised in full) per share.
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, 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. We will have access to up to approximately $1,050,000 from the proceeds of this offering with which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately $100,000). 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. In the event that our offering expenses exceed our estimate of $950,000, we may fund such excess with funds from the funds not to be held in the trust account. In such case, the amount of funds we
intend to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $950,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount.
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 24 months from the closing of this offering 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 24 months from the closing of this offering, is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), 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 24 months from the closing of this offering, we 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 earned on the funds held in the trust account (which interest shall be net of taxes payable 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) and (iii) 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 our 24th month 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 10 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, 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 (i) $10.25 (or $10.217 if the underwriters’ over-allotment option is exercised in full) per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes 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. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third-party claims.
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 $10.25 (or $10.217 if the underwriters’ over-allotment option is exercised in full) 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 of directors 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.
Our public stockholders will be entitled to receive funds from the trust account only (i) in the event of the redemption of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering, (ii) 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 redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity or (iii) if they redeem their respective shares for cash upon the completion of 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 the 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. These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated certificate of incorporation, may be amended with a stockholder vote.
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 24 months from the closing of this offering.
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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 |
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If we seek stockholder approval of our initial business combination, our initial stockholders, directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following completion of our initial business combination. There is no limit to the prices that our initial stockholders, directors, |
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If we are unable to complete our initial business combination within 24 months from the closing of this offering, 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 (which is initially anticipated to be $10.25 (or $10.217 if the underwriters’ over-allotment option is |
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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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cash equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of the initial business combination (which is initially anticipated to be $10.25 (or $10.217 if the underwriters’ over-allotment option is exercised in full) per share), including interest earned on the funds held in the trust account (which interest shall be net of taxes payable), 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. |
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officers, advisors or their affiliates may pay in these transactions. If they engage in such transactions, they will be restricted from making any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. 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. |
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exercised in full) per share), including interest earned on the funds held in the trust account (which interest shall be net of taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares. |
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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 interest withdrawn in order to pay our taxes and working capital expenses (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 would 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 over-allotment option. 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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$230,625,000 of the net proceeds of this offering and the sale of the private placement securities will be deposited into a trust account located in the United States with Continential Stock Transfer & Trust Company acting as trustee. |
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Approximately $200,587,500 of the offering proceeds, representing the gross proceeds of this offering, 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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$230,625,000 of the net proceeds of this offering and the sale of the private placement securities held in trust will be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. |
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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 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 (i) any taxes paid or payable, and (ii) 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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We must complete one or more business combinations having an aggregate fair market value of at least 80% of our assets held in the trust account at the time of the agreement to enter into the initial business combination. |
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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 units are expected to begin trading on or promptly after the date of this prospectus. The Class A common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless ThinkEquity and Piper Sandler inform us of their decision to allow earlier separate trading, subject to our having filed the Current Report on |
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No trading of the units or the underlying Class A common stock and warrants 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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Terms of Our Offering
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Terms Under a Rule 419 Offering
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Form 8-K described below and having issued a press release announcing when such separate trading will begin. We will file the Current Report on Form 8-K promptly after the closing of this offering, which closing is anticipated to take place three business days from the date of this prospectus. If the over-allotment option 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 over-allotment option. |
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Exercise of the warrants
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The warrants cannot be exercised until the later of 30 days after the completion of our initial business combination and 12 months from the closing of this offering. |
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The warrants could be exercised prior to the completion of a business combination, but securities received and cash paid in connection with the exercise would be deposited 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 at a per share price equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account (which interest shall be net of taxes payable), divided by the number of then outstanding public shares, upon the completion of our initial business combination, subject to the limitations described herein. We may not be required by law to hold a stockholder vote. If we are not required by law 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, |
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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 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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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, we will complete our initial business combination only if a majority of the shares of common stock voted are voted in favor of the business combination. Additionally, each public stockholder may elect to redeem their public shares 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 24 months from the closing of this offering, we 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 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 earned on the funds held in the trust account (which interest shall be net of taxes payable 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), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and in all cases subject to the requirements of other applicable law.
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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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Release of funds
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Except for the withdrawal of interest to pay our taxes, none of the funds held in trust will be released from the trust account until the earliest of (i) the completion of our initial business combination, (ii) the redemption of our public shares if we are unable to complete our initial |
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The proceeds held in the escrow account are not released until the earlier of the completion of a business combination or the failure to effect a business combination within the allotted time. |
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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business combination within 24 months from the closing of this offering, subject to applicable law, and (iii) the redemption of our public shares properly submitted 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 redeem 100% of our public shares if we have not consummated an initial business combination within 24 months from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity. |
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Delivering stock certificates in connection with the exercise of redemption rights
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We intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent or deliver their shares to our transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) system, prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up to two business days prior to the vote on the proposal to approve the initial business combination. In addition, if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its public shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial owner of such shares is included. The proxy materials or tender offer documents, 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. Accordingly, a |
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Many blank check companies provide that a stockholder can vote against a proposed business combination and check a box on the proxy card indicating that such stockholder is seeking to exercise its redemption rights. After the business combination is approved, the company would contact such stockholder to arrange for delivery of its share certificates to verify ownership. |
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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public stockholder would have up to two business days prior to the vote on the initial business combination if we distribute proxy materials, or from the time we send out our tender offer materials until the close of the tender offer period, as applicable, to submit or tender its shares if it wishes to seek to exercise its redemption rights. |
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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 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 Exchange Act), will be restricted from seeking redemption rights with respect to Excess Shares, without our prior consent. However, we would not restrict our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination. |
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Many 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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Competition
In identifying, evaluating and selecting a target business for our initial business combination, we may encounter competition from other entities having a business objective similar to ours, including other special purpose acquisition 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 and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.
Facilities
We currently utilize office space at 105 S. Maple Street, Itasca, Illinois 60143 from our sponsor and the members of our management team. We consider our current office space adequate for our current operations.
Employees
We currently have three executive officers: Larry G. Swets, Jr., D. Kyle Cerminara and Hassan R. Baqar. These individuals 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 they will devote in any time period will vary based on whether a target business has been selected for our initial business combination and the stage of the business combination process we are in. We do not intend to have any full time employees prior to the completion of our initial business combination.
Periodic Reporting and Financial Information
We will register our units, Class A common stock and warrants 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 accountants.
We will provide stockholders with audited financial statements of the prospective target business as part of the proxy solicitation materials or tender offer documents sent to stockholders to assist them in assessing the target business. In all likelihood, these financial statements will need to be prepared in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical financial statements may be required to be audited in accordance with the standards of the PCAOB. These financial statement requirements may limit the pool of potential target businesses we may conduct an initial business combination with because some targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame. We cannot assure you that any particular target business identified by us as a potential business combination candidate will have financial statements prepared in accordance with the requirements outlined above, 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, 2021 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 qualify as 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 business combination.
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 shares of Class A common stock that are held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
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.
MANAGEMENT
Officers and Directors
Our officers and directors are as follows:
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Name
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Age
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Position
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| Joseph H. Moglia |
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71 |
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Chairman |
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| Larry G. Swets, Jr. |
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45 |
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Chief Executive Officer |
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| D. Kyle Cerminara |
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43 |
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President |
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| Hassan R. Baqar |
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42 |
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Chief Financial Officer |
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| Nicholas S. Rudd |
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37 |
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Director |
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| Robert C. Weeks |
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36 |
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Director |
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Joseph Moglia, 71, has served as our Chairman since July 2020. Mr. Moglia is the Chairman of the Board at TD Ameritrade, Chairman of Fundamental Global Investors and Capital Wealth Advisors and Chair of Athletics and Executive Advisor to the President at Coastal Carolina University.
In 1984 Mr. Moglia entered the MBA Training Program at Merrill Lynch, where there were 26 people. 25 MBA’s and 1 football coach. By 1988, he was Merrill Lynch’s Number One Producer in the World. By the time he left, he had been a member of both the Institutional and Private Client Executive Committees, and his final responsibilities were all Investment Products, the Insurance Company, the 401(k) Business and the Middle Market Business. Prior to that, he was head of Global Fixed Income Institutional Sales and ran the firm’s Municipal division.
Mr. Moglia became the CEO of TD Ameritrade in 2001, and when he stepped down in 2008, shareholders had enjoyed a 500% return. In 2009 he became Chairman of the Board. TD Ameritrade just announced that they would be acquired by Charles Schwab. The combined company with synergies should be worth $100 BILLION and has client assets of $5 TRILLION. When Mr. Moglia arrived, these numbers were $700 million and $24 Billion.
He has served on the Boards of AXA Financial (2002 – 2011) and the Chicago Board Options Exchange (1997 – 2002).
Mr. Moglia has also been a Football Coach for 25 years, but it’s not been a traditional 25 years. He began his career as a coach for 16 years, moved to the business world for over 20, and back to coaching in 2009. In his last 11 years of college coaching, he has been a part of 8 championship teams, and as a head coach has a winning percentage of .718. In 2020, he was named to the 2010 – 2019 Big South Football All-Decade Team, one of 10 Coastal Carolina Chanticleers — the most by any school on the All-Decade Team. He was the fastest coach in Big South history to 30 overall wins (30-8) and 40 overall wins (40-11) and has the most FCS Playoff appearances by a head coach in Big South history. He has also received multiple Coach of the Year honors, including the Eddie Robinson National Coach of the Year award, was a recipient of the Vince Lombardi Award, and was also inducted into the Lombardi Hall of Fame.
Mr. Moglia has received the Ellis Island Medal of Honor and the Sharp Trophy for Leadership. He has been honored by the National Italian American Foundation, the Columbus Citizens Foundation, the American Institute for Stuttering and the Stuttering Association for the Young. He has been inducted into seven Halls of Fame, is a member of the National Economics Society and is the recipient of three Honorary Doctorates. Mr. Moglia has already had a book written about his life, and he is the only author in the world that has written two books published on both investing and football.
He earned his degree of economics from Fordham University and his masters from the University of Delaware. We believe Mr. Moglia is qualified to serve on our board of directors because of his experience in the finance industry.
Larry G. Swets, Jr., 45, has served as our Chief Executive Officer and Director since July 2020. Mr. Swets has over 25 years of experience within financial services encompassing both non-executive and executive roles. Mr. Swets founded Itasca Financial LLC, an advisory and investment firm, in 2005 and has served as its managing member since inception. Mr. Swets also founded and is also the President of Itasca Golf Managers, Inc., a management services and advisory firm focused on the real estate and hospitality
industries, in August 2018. Mr. Swets has served as a director and the Chief Executive Officer of Itasca Capital Ltd. (TSXV: ICL) (formerly Kobex Capital Corp.), a publicly-traded investment firm since June 2016. In June 2020, Mr. Swets began serving as interim Chief Executive Officer of 1347 Property Insurance Holdings, Inc. (Nasdaq: PIH), which intends to operate as a diversified reinsurance, investment management and real estate holding company. Previously, he served as the Chief Executive Officer of Kingsway Financial Services Inc. (NYSE: KFS) from July 2010 to September 2018, including as its President from July 2010 to March 2017. Prior to founding Itasca Financial LLC, Mr. Swets served as an insurance company executive and advisor, including the role of director of investments and fixed income portfolio manager for Lumbermens Mutual Casualty, a/k/a Kemper Insurance. Mr. Swets began his career in insurance as an intern in the Kemper Scholar program in 1994. Mr. Swets has also served as a member of the board of directors of 1347 Property Insurance Holdings, Inc. since November 2013, Limbach Holdings, Inc. (Nasdaq: LMB), a company which provides building infrastructure services since July 2016, Insurance Income Strategies Ltd. since October 2017, Harbor Custom Development, Inc. since February 2020, Alexian Brothers Foundation since March 2018, and Unbounded Media Corporation since June 2019 Previously, he served as a member of the board of directors of Kingsway Financial Services Inc. from September 2013 to December 2018, Atlas Financial Holdings, Inc. (Nasdaq: AFH) from December 2010 to January 2018, FMG Acquisition Corp. (Nasdaq: FMGQ) from May 2007 to September 2008, United Insurance Holdings Corp. from 2008 to March 2012, and Risk Enterprise Management Ltd. from November 2007 to May 2012. He is a member of the Young Presidents’ Organization. Mr. Swets earned a Master’s Degree in Finance from DePaul University in 1999 and a Bachelor’s Degree from Valparaiso University in 1997. He also holds the Chartered Financial Analyst (CFA) designation. We believe Mr. Swets is qualified to serve on our board of directors because of his experience with special purpose acquisition companies and in the finance and insurance industries.
D. Kyle Cerminara, 43, has served as our President and Director since July 2020. Mr. Cerminara has over 20 years’ experience as an institutional investor, asset manager, director, chief executive, founder and operator of multiple financial services and technology businesses. Mr. Cerminara co-founded Fundamental Global Investors, LLC, an SEC registered investment advisor that manages alternative investment funds, in 2012 and serves as its chief executive officer. Mr. Cerminara is also the co-chief investment officer of CWA Asset Management Group, LLC, a wealth advisor and multi-family office affiliated with Fundamental Global Investors, LLC, which position he has held since January 2013. Mr. Cerminara is a member of the board of directors of a number of companies focused in the reinsurance, investment management, real estate, technology and communication sectors, including BK Technologies Corporation (NYSE American: BKTI), a provider of two-way radio communications equipment, since July 2015, Ballantyne Strong, Inc. (NYSE American: BTN), a holding company with diverse business activities focused on serving the cinema, retail, financial and government markets, since February 2015, 1347 Property Insurance Holdings, Inc. (Nasdaq: PIH), which intends to operate as a diversified reinsurance, investment management and real estate holding company, since December 2016, Itasca Capital Ltd. (TSXV: ICL) (formerly Kobex Capital Corp.), a publicly-traded investment firm, since June 2016, and Firefly Systems Inc., a venture-backed digital advertising company, since August 2020. He was appointed chairman of 1347 Property Insurance Holdings, Inc. in May 2018 and served as its principal executive officer from March 2020 to June 2020. He was also appointed chairman of Itasca Capital Ltd. in June 2018. Mr. Cerminara has served as the chairman of Ballantyne Strong, Inc. since May 2015. He also previously served as its chief executive officer from November 2015 through April 2020. Mr. Cerminara was also the chairman of BK Technologies Corporation from March 2017 until April 2020. He also served on the board of directors of Limbach Holdings, Inc. (Nasdaq: LMB), a company which provides building infrastructure services, from March 2019 to March 2020; Iteris, Inc. (Nasdaq: ITI), a publicly-traded, applied informatics company, from August 2016 to November 2017; and Magnetek, Inc., a publicly-traded manufacturer, in 2015. He serves as a Trustee and President of StrongVest ETF Trust, which was an open-end management investment company that is in the process of being dissolved, since July 2016. He previously served on the board of directors of blueharbor bank, a community bank, from October 2013 to January 2020. Prior to these roles, Mr. Cerminara was a portfolio manager at Sigma Capital Management, an independent financial adviser, from 2011 to 2012, a director and sector head of the Financials Industry at Highside Capital Management from 2009 to 2011, and a portfolio manager and director at CR Intrinsic Investors from 2007 to 2009. Before joining CR Intrinsic Investors, Mr. Cerminara was a vice president, associate portfolio manager and analyst at T. Rowe Price (Nasdaq: TROW) from 2001 to 2007, where he was named
amongst Institutional Investor’s Best of the Buy Side Analysts in November 2006, and an analyst at Legg Mason (NYSE: LM) from 2000 to 2001. Mr. Cerminara received an MBA degree from the Darden Graduate School of Business at the University of Virginia and a B.S. in Finance and Accounting from the Smith School of Business at the University of Maryland, where he was a member of Omicron Delta Kappa, an NCAA Academic All American and Co-Captain of the men’s varsity tennis team. He also completed a China Executive Residency at the Cheung Kong Graduate School of Business in Beijing, China. Mr. Cerminara holds the Chartered Financial Analyst (CFA) designation. We believe Mr. Cerminara is qualified to serve on our board of directors because of his experience with special purpose acquisition companies and in the finance industry.
Hassan R. Baqar, 42, has served as our Chief Financial Officer since July 2020. Mr. Baqar has over 20 years of experience within financial services focused on corporate development, mergers & acquisitions, capital raising, investments and real estate transactions. Mr. Baqar has served as the founder and managing member of Sequoia Financial LLC, a financial services and advisory firm, since January 2019. Mr. Baqar has also served as Chief Financial Officer of Insurance Income Strategies Ltd., a Bermuda based reinsurance company since October 2017, as a director and Chief Financial Officer of Itasca Capital Ltd. (TSXV: ICL) (formerly Kobex Capital Corp.), a publicly-traded investment firm since June 2016, as a director of Fundamental Global Reinsurance Ltd., a Cayman Islands reinsurance company since June 2020, and as a director and Chief Financial Officer of Unbounded Media Corporation since June 2019. Previously, he served as Vice President of Kingsway Financial Services Inc. (NYSE: KFS) (“Kingsway”) from January 2014 to January 2019 and as a Vice President of Kingsway’s subsidiary Kingsway America Inc. from January 2010 to January 2019. Mr. Baqar also served as Chief Financial Officer and director of 1347 Capital Corp., a special purpose acquisition company, from April 2014 to July 2016 when the company completed its initial business combination to form Limbach Holdings, Inc. (Nasdaq: LMB). Mr. Baqar served as a member of the board of directors of 1347 Property Insurance Holdings, Inc. (Nasdaq: PIH) from October 2012 to May 2015. By virtue of a management services agreement between 1347 Advisors LLC, a wholly owned subsidiary of Kingsway, and United Insurance Management, L.C., he also served as the Chief Financial Officer of United Insurance Holdings Corp. (Nasdaq: UIHC), a publicly held property and casualty insurance holding company, from August 2011 to April 2012. His previous experience also includes director of finance at Itasca Financial, LLC from 2008 to 2009 and positions held at Lumbermens Mutual Casualty, a/k/a Kemper Insurance Companies, a diversified mutual property-casualty insurance provider, from June 2000 to April 2008, where he most recently served as a senior analyst. Mr. Baqar earned a Master’s Degree in Business Administration from Northeastern Illinois University in 2009 and a Bachelor’s Degree in Accounting and Business Administration from Monmouth College in 2000. He also holds a Certified Public Accountant designation. We believe Mr. Baqar is qualified to serve on our board of directors because of his experience with special purpose acquisition companies and his experience as chief financial officer of various other companies.
Nicholas Rudd, 37, has served on our board of directors since July 2020. Mr. Rudd is a financial services executive with a broad background in capital markets, insurance and insurance technology, investing, digital product development, and sports entertainment. Mr. Rudd has spent the past five years with a deep focus on the digital economy. From September 2017 to August 2020, Mr. Rudd worked at Two Sigma Insurance Quantified (“TSIQ”), where he was most recently responsible for partnerships. During his time at TSIQ, he worked in partnerships, business operations, corporate development and business development. From February 2017 to September 2017, he was the business lead for Chubb’s Innovation Center. Mr. Rudd started his career at Banc of America Securities, the predecessor to BofA Securities, in July 2005. From BofA, Mr. Rudd moved into the sports and entertainment space, where he worked in a variety of functions for the executive leadership team of the United Football League (“UFL”) from August 2009 to April 2011. In April 2011, Mr. Rudd joined TD Ameritrade as the Chief of Staff to the Chairman, Joseph Moglia. Mr. Rudd has been a member of the board of managers of Brightline Partners, an advertising technology business since September 2016. He also serves on the board of trustees of Madison Square Boys & Girls Club, which provides after-school programming for young people ages 6 to 18 across six clubhouses (located in the Bronx, Brooklyn, and Harlem). Mr. Rudd earned his B.A. in History from Columbia University’s Columbia College, and was an inaugural member of Cornell University’s Cornell Tech MBA program. We believe Mr. Rudd is qualified to serve on our board of directors because of his experience in capital markets.
Robert Weeks, 36, has served on our board of directors since July 2020. Mr. Weeks has a background in investing, capital markets, investment banking and financial product development. Mr. Weeks has served as Chief of Staff to the Chairman of the board at TD Ameritrade Holding Corporation (Nasdaq: AMTD) since May 2014. Mr. Weeks has also served as an advisor to a private charitable foundation, where he has responsibility for all aspects of the foundation’s endowment and charitable operations since May 2014. Previously, from February 2010 to May 2014, Mr. Weeks worked at Merrill Lynch, where he developed financial products using commodity, equity, foreign exchange and interest rate derivatives. Mr. Weeks began his career at Merrill Lynch as an investment banker focused on capital markets where he completed debt financings for companies in the technology, real estate, transportation and electric utility sectors. He also represented international financial institutions on structured note offerings. Mr. Weeks has served on the board of managers of Brightline Partners, an advertising technology business since September 2016. He has also served as a board observer at aWhere, Inc., an agronomic big data analytics company, since April 2017. He has also served on the board of directors of the Olympic Club Foundation since January 2020. Mr. Weeks earned a B.A. in Economics and M.S. in Finance from Washington University in St. Louis. We believe Mr. Weeks is qualified to serve on our board of directors because of his experience in the finance industry.
Number and Terms of Office of Officers and Directors
Our board of directors consists of three members is divided into three classes with only one class of directors being elected in each year, and with each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a three-year term. In accordance with NYSE corporate governance requirements, we are not required to hold an annual meeting until one year after our first fiscal year end following our listing on NYSE. The term of office of the first class of directors, consisting of Joseph Moglia and Robert Weeks, will expire at our first annual meeting of stockholders. The term of office of the second class of directors, consisting of Larry Swets, Jr. and Nicholas Rudd, will expire at the second annual meeting of stockholders. The term of office of the third class of directors, consisting of D. Kyle Cerminara, will expire at the third annual meeting of stockholders.
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 officers as it deems appropriate pursuant to our amended and restated certificate of incorporation.
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. Our board of directors has determined that Joseph Hugh Moglia, Nicholas Spencer Rudd and Robert Christopher Weeks are “independent directors” as defined in the NYSE rules and applicable SEC rules. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Executive Officer and Director Compensation
None of our directors have received any cash compensation for services rendered to us. Commencing on the date that our securities are first listed on the NYSE through the earlier of consummation of our initial business combination and our liquidation, we will pay our sponsor $10,000 per month for office space, secretarial and administrative services provided to members of our management team. In addition, our sponsor, executive 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 to our sponsor, executive officers or directors, or our or their affiliates. Any such payments prior to an initial business combination will be made from funds held outside the trust account. Other than quarterly audit committee review of such reimbursements, we do not expect to have any additional controls in place governing our reimbursement payments to our directors and executive officers for their out-of-pocket expenses incurred in connection with our activities on our behalf in connection with identifying and consummating an initial business combination. Other than these payments and reimbursements, no compensation of any kind, including finder’s and consulting fees, will be paid by the company to our sponsor, executive officers and directors, or any of their respective affiliates, prior to completion of our initial business combination.
After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting or management fees from the combined company. All of these fees will be fully disclosed to stockholders, to the extent then known, in the proxy solicitation materials or tender offer materials furnished to our stockholders in connection with a proposed business combination. We have not established any limit on the amount of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such compensation will be known at the time of the proposed business combination, 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 executive officers will be determined, or recommended to the board of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on our board of directors.
We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial business combination, although it is possible that some or all of our executive officers and directors may negotiate employment or consulting arrangements to remain with us after our initial business combination. The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the consummation of our initial business combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to any agreements with our executive officers and directors that provide for benefits upon termination of employment.
Committees of the Board of Directors
Upon the effectiveness 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. Subject to phase-in rules and a limited exception, 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. Subject to phase-in rules and a limited exception, the rules of NYSE require that the compensation committee of a listed company be comprised solely of independent directors.
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. Joseph Moglia, Nicholas Rudd and Robert Weeks will serve as members of our audit committee, and Mr. Weeks will chair the audit committee. We expect all of the members of our audit committee to be independent.
Each member of the audit committee is financially literate and our board of directors has determined that Mr. Weeks 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 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 registered public accounting firm’s qualifications and independence, and (4) the performance of our internal audit function and independent registered public accounting firm; 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 registered public accounting firm all relationships the auditors have with us in order to evaluate their continued independence;
•
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 registered public
accounting firm describing (1) the independent registered public accounting firm’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, 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. Joseph Moglia, Nicholas Rudd and Robert Weeks will serve as members of our compensation committee. Joseph Moglia will chair the compensation committee.
We will adopt a compensation committee charter, which will detail the principal functions of the compensation committee, including:
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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 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;
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implementing and administering our incentive compensation equity-based remuneration plans;
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assisting management in complying with our proxy statement and annual report disclosure requirements;
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approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;
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producing a report on executive compensation to be included in our annual proxy statement; and
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reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
Notwithstanding the foregoing, as indicated above, other than the payment to our sponsor of $10,000 per month, for up to 24 months, for office space, utilities and secretarial and administrative support and reimbursement of expenses, no compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing stockholders, officers, directors or any of their respective affiliates, prior to, or for any services they render in order to effectuate the consummation of an initial business combination. Accordingly, it is likely that prior to the consummation of an initial business combination, the compensation committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into in connection with such initial business combination.
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 initial members of our nominating and corporate governance will be Joseph Moglia, Nicholas Rudd and Robert Weeks. Mr. Rudd will serve as chair of the nominating and corporate governance committee.
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:
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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;
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developing and recommending to the board of directors and overseeing implementation of our corporate governance guidelines;
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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
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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 executive officers currently serves, and in the past year has not served, as a member of the compensation committee of any entity that has one or more executive officers serving on our board of directors.
Senior Advisor to the Board of Directors
We intend to appoint Allan R. Tessler as a senior advisor, which appointment shall take effect upon the closing of this offering. Mr. Tessler will assist our management team with sourcing and evaluating business opportunities and devising plans and strategies to optimize any business that we acquire following the consummation of this offering. Mr. Tessler is neither paid nor reimbursed for any out-of-pocket expenses in connection with the search of acquisition targets before or after the consummation of our initial business combination. We have not currently entered into any formal arrangements or agreements with Mr. Tessler to provide services to us and he will have no fiduciary obligations to present business opportunities to us.
Mr. Tessler has been the chief executive officer of International Financial Group, Inc., an international merchant banking firm, since 1987. Mr. Tessler was the chairman of Epoch Holding Corporation, an investment management firm that was sold to Toronto Dominion Bank. With a specialization in the area of turnaround financing, Mr. Tessler combines extensive management experience with proficiency in corporate and securities legal matters. Mr. Tessler served as co-chief executive officer and chairman of
Data Broadcasting Corporation, now known as Interactive Data Corporation, and formerly served as chairman of Enhance Financial Services Group, Inc., an insurance holding company he co-founded which was merged into Radian Group (NYSE: RDN). Mr. Tessler was also Chairman and a principal shareholder of Great Dane Holdings, a company that manufactured tractor trailers and automobile stampings, as well as, controlling a property casualty insurer and transportation companies. Mr. Tessler started his career in the law firm of Cleary, Gottlieb, Steen & Hamilton LLP. In the legal arena he has also served as counsel to Spengler, Carlson, Gubar & Churchill, and was senior managing partner of Shea & Gould. He is admitted to the Federal and State of New York Bar, in retired status. In the investment banking arena, Mr. Tessler has held top management and leadership positions with Ladenburg, Thalman & Co., Devon Securities and Loeb, Rhoades & Co. He was also the president of Slater, Walker of America, a real estate and retail operating company, Ameriscribe, Inc., a back office out sourcing firm and Fifth Ave Coach Lines, an investment company. In addition, Mr. Tessler is also a director of TD Ameritrade (NYSE: AMTD). He formerly sat as the lead director and chairman of the finance committee of L Brands, Inc. (NYSE: LB), sat on the board of directors of Steel Partners Holding GP, Inc. (NYSE: SPLP) where he held a position from 2010-2018. He joined the board of Imperva, Inc. (NYSE: IMPV) in February 2014. In February 2012 he became the chairman and chief executive officer of Teton Financial Services and chairman of Rocky Mountain Bank as a result of the acquisition and recapitalization of that troubled bank located in Jackson, Wyoming. He is chairman emeritus of the Board of the Hudson Institute and the former president and trustee of the Jackson Hole Land Trust. He is a member of the board of governors of the Boys & Girls Clubs of America. He is a past president of the Grand Teton Music Festival. He served in the United States Navy, where he attained the rank of Lieutenant, Junior Grade. Mr. Tessler received his undergraduate degree from Cornell University and his L.L.B. from Cornell University Law School. He was editor-in-chief of the Cornell Law Quarterly and was elected to Phi Kappa Phi and the Order of the Coif. Mr. Tessler has continued actively to support his alma mater as a member of the Cornell Law School Fund from 1983 to 1985, the co-chairman of the Cornell Law School Capital Campaign, and is a trustee emeritus and presidential counselor of Cornell University.
Code of Business Conduct and Ethics
Prior to the consummation of this offering, we will adopt a Code of Business Conduct and Ethics applicable to our directors, officers and employees. We have filed a copy of our form of the Code of Business Conduct and Ethics and our audit committee and compensation committee charters as exhibits to the registration statement of which this prospectus is a part. You will be able to review this document by accessing our public filings at the SEC’s web site at www.sec.gov. In addition, a copy of the Code of Business Conduct and Ethics and the charters of the committees will be provided without charge upon request from us. See the section of this prospectus entitled “Where You Can Find Additional Information.” If we make any amendments to our Code of Business Conduct and Ethics other than technical, administrative or other non-substantive amendments, or grant any waiver, including any implicit waiver, from a provision of the Code of Business Conduct and Ethics applicable to our principal executive officer, principal financial officer principal accounting officer or controller or persons performing similar functions requiring disclosure under applicable SEC or NYSE rules, we will disclose the nature of such amendment or waiver on our website. The information included on our website is not incorporated by reference into this Form S-1 or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only.
Conflicts of Interest
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:
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the corporation could financially undertake the opportunity;
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the opportunity is within the corporation’s line of business; and
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it would not be fair to our company and its stockholders for the opportunity not to be brought to the attention of the corporation.
Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our
officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such entity. 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 such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our initial business combination.
Below is a table summarizing the entities to which our executive officers and directors currently have fiduciary duties or contractual obligations:
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Individual
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Entity
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Entity’s Business
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Affiliation
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Joseph Moglia
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TD Ameritrade Holding Corporation
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Online Stock Brokerage
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Chairman
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| Larry G. Swets, Jr. |
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1347 Property Insurance Holdings, Inc.
Harbor Custom Development, Inc.
Insurance Income Strategies Ltd.
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Insurance, Asset Management and
Real Estate
Real Estate Developer
Reinsurance
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Director and Interim
Chief Executive Officer
Director
Chairman
|
|
| |
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Itasca Capital Ltd.
Itasca Golf Managers, Inc.
Limbach Holdings, Inc.
Unbounded Media Corporation
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Strategic Investments
Real Estate and Hospitality
Building Infrastructure Services
Media Distribution
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|
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Director and Chief Executive Officer
President
Director
Chairman
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| D. Kyle Cerminara |
|
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CWA FGI Special Opportunities
Fund GP, LLC
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Fund GP
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Manager
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| |
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CWA FGI Special Opportunities Fund II
GP, LLC
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Fund GP
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Manager
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FG Partners GP, LLC
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Fund GP
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Manager
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FGI 1347 GP, LLC
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Fund GP
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Manager
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FGI Funds
Management, LLC
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Investment Advisor
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Manager
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FGI Global Asset Allocation GP, LLC
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Fund GP
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Manager
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FGI Holdings GP, LLC
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Fund GP
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Manager
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FGI International
USVI, LLC
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Investment Advisor
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Manager
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FGI Metrolina GP, LLC
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Fund GP
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Manager
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Fundamental Activist Fund I GP, LLC
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Fund GP
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Manager
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Fundamental Global Investors, LLC
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Investment Advisor
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Member & Manager
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Individual
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Entity
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Entity’s Business
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Affiliation
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Fundamental Global Partners GP, LLC
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Fund GP
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Member & Manager
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Fundamental Global Venture Partners GP, LLC
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Fund GP
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Manager
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Fundamental Global Management, LLC
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Managed Services
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Manager
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|
|
Fundamental Global Partners Offshore
Fund, Ltd.
|
|
|
Offshore Feeder
|
|
|
Director
|
|
| |
|
|
FGI Global Asset Allocation Offshore
Fund, Ltd.
|
|
|
Offshore Feeder
|
|
|
Director
|
|
| |
|
|
FGI Global Asset Allocation Fund, Ltd.
|
|
|
Offshore Fund
|
|
|
Director
|
|
| |
|
|
Fundamental Global Capital Appreciation
GP, LLC
|
|
|
Fund GP
|
|
|
Manager
|
|
| |
|
|
Ballantyne Strong, Inc.
|
|
|
Entertainment, Digital Signage and Advertising
|
|
|
Chairman
|
|
| |
|
|
Firefly Systems
|
|
|
Entertainment, Digital Signage and Advertising
|
|
|
Director
|
|
| |
|
|
BK Technologies Corporation
|
|
|
Radio Communications
|
|
|
Director
|
|
| |
|
|
1347 Property Insurance Holdings Inc.
|
|
|
Insurance, Asset Management and Real Estate
|
|
|
Chairman
|
|
| |
|
|
Itasca Capital, Ltd.
|
|
|
Strategic Investments
|
|
|
Chairman
|
|
| |
|
|
CWA Asset Management Group, LLC
|
|
|
Investment Advisor
|
|
|
Manager
|
|
| |
|
|
StrongVest ETF Trust
|
|
|
ETF Trust
|
|
|
Trustee and President
|
|
| |
|
|
CWA Naples LLC
|
|
|
Investment Advisor
|
|
|
Manager
|
|
| |
|
|
Fundamental Global Asset Management, LLC
|
|
|
Joint Venture Sponsoring Investment Advisors
|
|
|
Manager
|
|
| |
|
|
Fundamental Global Capital Appreciation Advisor, LLC
|
|
|
Investment Advisor
|
|
|
Manager
|
|
| |
|
|
FG Special Situations Fund GP, LLC
|
|
|
Fund GP
|
|
|
Manager
|
|
| |
|
|
FG Special Situations Fund Advisor, LLC
|
|
|
Investment Advisor
|
|
|
Manager
|
|
| |
|
|
CWA Carolinas LLC
|
|
|
Solicitor
|
|
|
Manager
|
|
| Nicholas Rudd |
|
|
Brightline Partners
|
|
|
Advertising Technology
|
|
|
Board of Managers
|
|
| Robert Weeks |
|
|
Brightline Partners
|
|
|
Advertising Technology
|
|
|
Board of Managers
|
|
| Hassan Baqar |
|
|
Itasca Capital Ltd.
Insurance Income Strategies Ltd.
|
|
|
Strategic Investments
Reinsurance
|
|
|
Director &
Chief Financial Officer
Chief Financial Officer
|
|
| |
|
|
Fundamental Global Reinsurance Ltd.
|
|
|
Reinsurance
|
|
|
Chief Financial Officer
|
|
| |
|
|
Unbounded Media Corporation
|
|
|
Media Distribution
|
|
|
Director &
Chief Financial Officer
|
|
Potential investors should also be aware of the following other potential conflicts of interest:
•
Our executive 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 businesses. We do not intend to have any full-time employees prior to the completion of our initial business combination. Each of our executive officers is engaged in several other business endeavors for which he may be entitled to substantial compensation, and our executive officers are not obligated to contribute any specific number of hours per week to our affairs.
•
Our initial stockholders purchased founder shares prior to the date of this prospectus and will purchase private placement securities in a transaction that will close simultaneously with the closing of this offering. Our initial stockholders have entered into agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and any public shares they hold in connection with the completion of our initial business combination. The other members of our management team have entered into agreements similar to the one entered into by our initial stockholders with respect to any public shares acquired by them in or after this offering. Additionally, our initial stockholders have agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within the prescribed time frame or any extended period of time that we may have to consummate an initial business combination as a result of an amendment to our amended and restated certificate of incorporation. If we do not complete our initial business combination within the prescribed time frame, the private placement securities will expire worthless. Furthermore, our initial stockholders have agreed not to transfer, assign or sell any of their founder shares until: (i) with respect to 50% of the founder shares, the earlier of (x) twelve months after the date of the consummation of an initial business combination or (y) the date on which the closing price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination and (ii) with respect to the remaining 50% of the founder shares, twelve months after the date of the consummation of our initial business combination. Any permitted transferees will be subject to the same restrictions and other agreements of our initial stockholders with respect to any founder shares. We refer to such transfer restrictions throughout this prospectus as the lock-up. Notwithstanding the foregoing, if we consummate a transaction after our initial business combination which results in our stockholders having the right to exchange their shares for cash, securities or other property, the founder shares will be released from the lock-up. Subject to certain limited exceptions, the private placement warrants will not be transferable until 30 days following the completion of our initial business combination. Because each of our executive officers and directors will own common stock or warrants directly or indirectly, 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.
•
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.
We are not prohibited from pursuing an initial business combination with a business combination target that is affiliated with our sponsor, officers or directors or completing the business combination through a joint venture or other form of shared ownership with our sponsor, officers or directors. In the event we seek to complete our initial business combination with an business combination target that is affiliated with our sponsor, executive officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking which is a member of FINRA or a valuation or appraisal 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. Furthermore, in no event will our sponsor or any of our existing officers or directors, or any of their respective affiliates, be paid by the company any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the completion of our initial business combination. Further, commencing on the date
our securities are first listed on NYSE, we will also pay our sponsor $10,000 per month for office space, secretarial and administrative services provided to members of our management team.
We cannot assure you that any of the above mentioned conflicts will be resolved in our favor.
In the event that we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed to vote their founder shares, and they and the other members of our management team have agreed to vote any founder shares they hold and any shares purchased during or after the 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 our stockholders for breaches of their fiduciary duty as directors, unless they violated their duty of loyalty to us or our stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived an improper personal benefit from their actions as directors.
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 will permit us to secure 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 purchase 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. Except with respect to any public shares they may acquire in this offering or thereafter (in the event we do not consummate an initial business combination), our officers and directors have agreed to waive (and any other persons who may become an officer or director prior to the initial business combination will also be required to waive) any right, title, interest or claim of any kind in or to any monies in the trust account, and not to seek recourse against the trust account for any reason whatsoever, including with respect to such indemnification.
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 officers and directors, 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 directors’ and officers’ liability insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial ownership of our common stock as of the date of this prospectus, and as adjusted to reflect the sale of our Class A common stock included in the units offered by this prospectus, and assuming no purchase of units 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 and directors; and
•
all our executive officers and directors 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 of our common stock beneficially owned by them. The following table does not reflect record or beneficial ownership of the private placement warrants as these warrants are not exercisable within 60 days of the date of this prospectus.
On July 13, 2020, our sponsor paid $30,000 to cover certain of our offering costs in exchange for 6,468,750 founder shares, or approximately $0.005 per share. On August 7, 2020, our sponsor transferred an aggregate of 1,250,000 founder shares to members of our management and our board of directors, resulting in our sponsor holding 5,218,750 founder shares. Prior to the initial investment in the company of $30,000 by the 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 the company by the number of founder shares issued. The number of founder shares outstanding was determined based on the expectation that the total size of this offering would be a maximum of 25,875,000 units if the underwriters’ over-allotment option is exercised in full, and therefore that such founder shares would represent 20% of the outstanding shares after this offering (not including the shares of Class A common stock underlying the Underwriter Units). Up to 843,750 of the founder shares will be forfeited depending on the extent to which the underwriters’ over-allotment is exercised. The post-offering percentages in the following table assume that the underwriters do not exercise their over-allotment option, that our initial stockholders have forfeited 843,750 founder shares, and that there are 28,700,000 shares of common stock, including 462,500 private shares and 112,500 Underwriter Shares, issued and outstanding after this offering.
| |
|
|
Before Offering
|
|
|
After Offering
|
|
|
Name and Address of Beneficial Owner(1)
|
|
|
Number of
Shares
Beneficially
Owned(2)
|
|
|
Approximate
Percentage of
Outstanding
Common Stock
|
|
|
Number of
Shares
Beneficially
Owned(2)
|
|
|
Approximate
Percentage of
Outstanding
Common Stock
|
|
|
FG New America Investors LLC (our
sponsor)(3)
|
|
|
|
|
5,218,750(4) |
|
|
|
|
|
80.7% |
|
|
|
|
|
4,837,500 |
|
|
|
|
|
16.9% |
|
|
|
Larry G. Swets, Jr.(3)
|
|
|
|
|
5,518,750(4) |
|
|
|
|
|
85.3% |
|
|
|
|
|
5,137,500 |
|
|
|
|
|
17.9% |
|
|
|
D. Kyle Cerminara(3)
|
|
|
|
|
5,468,750(4) |
|
|
|
|
|
84.5% |
|
|
|
|
|
5,087,500 |
|
|
|
|
|
17.7% |
|
|
|
Hassan R. Baqar
|
|
|
|
|
200,000 |
|
|
|
|
|
3.1% |
|
|
|
|
|
200,000 |
|
|
|
|
|
* |
|
|
|
Joseph Hugh Moglia(3)
|
|
|
|
|
5,518,750(4) |
|
|
|
|
|
85.3% |
|
|
|
|
|
5,137,500 |
|
|
|
|
|
17.9% |
|
|
|
Nicholas Spencer Rudd
|
|
|
|
|
100,000 |
|
|
|
|
|
1.5% |
|
|
|
|
|
100,000 |
|
|
|
|
|
*% |
|
|
|
Robert Christopher Weeks
|
|
|
|
|
100,000 |
|
|
|
|
|
1.5% |
|
|
|
|
|
100,000 |
|
|
|
|
|
*% |
|
|
|
All executive officers and directors as a group (6 individuals)
|
|
|
|
|
6,468,750(4) |
|
|
|
|
|
100.0% |
|
|
|
|
|
6,087,500 |
|
|
|
|
|
21.2% |
|
|
* Less than one percent.
(1)
Unless otherwise noted, the business address of each of the following is 105 S. Maple Street, Itasca, Illinois 60143.
(2)
Interests shown consist solely of founder shares, classified as Class B common stock. Such shares will automatically convert into shares of Class A common stock concurrently with or immediately following the consummation of our initial business combination on a one-for-one basis, subject to adjustment, as described in the section entitled “Description of Securities.”
(3)
Includes shares held by FG New America Investors LLC. Larry G. Swets, Jr., D. Kyle Cerminara and Joseph Hugh Moglia are managers of FG New America Investors LLC. Messrs. Swets, Cerminara and Moglia have voting and investment discretion with
respect to the common stock held of record by FG New America Investors LLC. Each of our officers and directors other than Messrs. Swets, Cerminara and Moglia disclaims any beneficial ownership of any shares held by FG New America Investors LLC.
(4)
Includes up to 843,750 founder shares that will be forfeited depending on the extent to which the underwriters’ over-allotment option is exercised.
Immediately after this offering, our initial stockholders will beneficially own 20.0% of the then issued and outstanding common stock (assuming they do not purchase any units in this offering and excluding the shares of Class A common stock underlying the Underwriter Units). Because of this ownership block, our initial stockholders may be able to effectively influence the outcome of all other matters requiring approval by our stockholders, including amendments to our amended and restated certificate of incorporation and approval of significant corporate transactions including our initial business combination.
Our insiders (and/or their designees) have committed, pursuant to written agreements, to purchase an aggregate of 5,361,250 private placement warrants, consisting of (i) 3,848,750 founder warrants and (ii) 1,512,500 $15 Exercise Price Warrants, exercisable for one share of Class A common stock at $11.50 per share and $15.00 per share, respectively, for an aggregate purchase price of $3,848,750, or $1.00 per founder warrant, and $151,250, or $0.10 per $15 Exercise Price Warrant, in private placements that will occur simultaneously with the closing of this offering. In addition, our insiders (and/or their designees) have committed, pursuant to a written agreement, to purchase an aggregate of 462,500 private units at $10.00 per unit, or $4,625,000 in the aggregate. A portion of the purchase price of the private placement warrants and the private units will be added to the proceeds from this offering to be held in the trust account such that at the time of closing of this offering $230.625 million (or $264.375 million if the underwriters exercise their over-allotment option in full) will be held in the trust account. If we do not complete our initial business combination within 24 months from the closing of this offering, the private units and the private placement warrants will expire worthless. The private placement warrants are subject to the transfer restrictions described below. The private placement warrants will not be redeemable by us so long as they are held by the initial purchasers or their permitted transferees. The initial purchasers, or their permitted transferees, have the option to exercise the private placement warrants on a cashless basis. If the private placement warrants are held by holders other than initial purchasers or their permitted transferees, the private placement warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. In addition, the $15 Exercise Price Warrants will expire at 5:00 p.m. New York City Time ten years after the consummation our initial business combination. Otherwise, the private placement warrants have terms and provisions that are identical to those of the warrants being sold as part of the units in this offering.
FG New America Investors LLC, our sponsor, and our executive officers and directors are deemed to be our “promoters” as such term is defined under the federal securities laws.
Transfers of Founder Shares and Private Placement Securities
The founder shares, private units, private placement warrants 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 agreements entered into by our initial stockholders and management team. Those lock-up provisions provide that such securities are not transferable or salable (i) in the case of the founder shares, (a) with respect to 50% of the founder shares, the earlier of (x) twelve months after the date of the consummation of an initial business combination or (y) the date on which the closing price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination and (b) with respect to the remaining 50% of the founder shares, twelve months after the date of the consummation of our initial business combination, provided, if we consummate a transaction after our initial business combination which results in our stockholders having the right to exchange their shares for cash, securities or other property, the founder shares will be released from the lock-up and (ii) in the case of the private placement warrants and the respective shares of Class A common stock underlying such warrants, until 30 days after the completion of our initial business combination except in each case (a) to our officers or directors, any affiliate or family member of any of our officers or directors, any affiliate of our sponsor or to any member of the sponsor or any of their affiliates, (b) in the case of an individual, as a gift to such person’s immediate family or to a trust, the beneficiary of which is a member of such person’s immediate family, 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 such person; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) by private sales or transfers made in connection with any forward purchase agreement or similar arrangement or in connection with the consummation of a business combination at prices no greater than the price at which the shares or warrants were originally purchased; (f) by virtue of the laws of the State of Delaware or our Sponsor’s limited liability company agreement upon dissolution of our Sponsor, (g) in the event of our liquidation prior to our consummation of our initial business combination; or (h) in the event that, subsequent to our consummation of an initial business combination, we complete a liquidation, merger, capital stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their Class A common stock for cash, securities or other property; provided, however, that in the case of clauses (a) through (f) 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 agreement.
Registration Rights
The holders of the (i) founder shares, which were issued in a private placement prior to the closing of this offering, (ii) private placement warrants, which will be issued in a private placement simultaneously with the closing of this offering and the shares of Class A common stock underlying such private placement warrants, (iii) Underwriter Shares and Underwriter Warrants (and the shares of Class A common stock underlying such Underwriter Warrants), which will be issued as part of the Underwriter Units in a private placement simultaneously with the closing of this offering, (iv) private shares and (v) founder warrants that may be issued upon conversion of working capital loans will have registration rights to require us to register a sale of any of our securities held by them pursuant to a registration rights agreement to be signed prior to or on the effective date of this offering. Pursuant to the registration rights agreement and assuming the underwriters exercise their over-allotment option in full and $1.5 million of working capital loans are converted into founder warrants, we will be obligated to register up to 14,217,812 shares of Class A common stock and 7,157,187 warrants. The number of shares of Class A common stock includes (i) 6,468,750 shares of Class A common stock to be issued upon conversion of the founder shares, (ii) 5,361,250 shares of Class A common stock underlying the founder warrants and $15 Exercise Price Warrants, (iii) 129,375 Underwriter Shares, (iv) 64,687 shares of Class A common stock underlying the Underwriter Warrants, (v) 462,500 private shares, (vi) 231,250 shares of Class A common stock underlying the private warrants and (vii) 1,500,000 shares of Class A common stock underlying the founder warrants issued upon conversion of working capital loans. The number of warrants includes (i) 5,592,500 private placement warrants, (ii) 64,687 Underwriter Warrants, and (iii) 1,500,000 founder warrants issued upon conversion of working capital loans. The holders of these securities are entitled to make up to three demands, excluding short form 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. We will bear the expenses incurred in connection with the filing of any such registration statements.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
On July 13, 2020, our sponsor paid $30,000 to cover certain of our offering costs in exchange for 6,468,750 founder shares, or approximately $0.005 per share. On August 7, 2020, our sponsor transferred an aggregate of 1,250,000 founder shares to members of our management and our board of directors, resulting in our sponsor holding 5,218,750 founder shares. The number of founder shares outstanding was determined based on the expectation that the total size of this offering would be a maximum of 25,875,000 units if the underwriters’ over-allotment option is exercised in full, and therefore that such founder shares would represent 20% of the outstanding shares after this offering (not including the shares of Class A common stock underlying the Underwriter Units). Up to 843,750 of the founder shares will be forfeited depending on the extent to which the underwriters’ over-allotment is exercised. If we increase or decrease the size of the offering, we will effect a stock dividend or 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 number of founder shares at 20.0% of our issued and outstanding common stock upon the consummation of this offering (not including the shares of Class A common stock underlying the Underwriter Units).
Our insiders (and/or their designees) have committed, pursuant to written agreements, have committed to purchase an aggregate of 5,361,250 warrants, consisting of (i) 3,848,750 founder warrants and (ii) 1,512,500 $15 Exercise Price Warrants, exercisable for one share of Class A common stock at $11.50 per share and $15.00 per share, respectively, for an aggregate purchase price of $3,848,750, or $1.00 per founder warrant, and $151,250, or $0.10 per $15 Exercise Price Warrant, in private placements that will occur simultaneously with the closing of this offering. In addition, our insiders (and/or their designees) have committed, pursuant to a written agreement, to purchase an aggregate of 462,500 private units at $10.00 per unit for an aggregate purchase price of $4,625,000. The private placement securities, including the shares of Class A common stock underlying warrants included therein, may not, subject to certain limited exceptions, be transferred, assigned or sold until 30 days after the completion of our initial business combination.
We currently utilize office space at 105 S. Maple Street, Itasca, Illinois 60143 from our sponsor. Subsequent to the closing of this offering, we will pay our sponsor $10,000 per month for office space, secretarial and administrative services provided to members of our management team. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
Except as otherwise disclosed in this prospectus, no compensation of any kind, including finder’s and consulting fees, will be paid by the company to our sponsor, executive officers and directors, or any of their respective affiliates, for services rendered prior to or in connection with the completion of an initial business combination. However, these individuals 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 to our sponsor, officers, directors or our or their affiliates.
Prior to the closing of this offering, our sponsor may loan us funds to be used for a portion of the expenses of this offering. These loans would be non-interest bearing, unsecured and are due at the earlier of December 31, 2020 or the closing of this offering.
In addition, in order to 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 on a non-interest basis. If we complete an initial business combination, we would repay such loaned amounts. In the event that the 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 founder warrants at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the Founder Warrants. Except as set forth above, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor 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.
Any of the foregoing payments to our sponsor, repayments of loans from our sponsor or repayments of working capital loans prior to our initial business combination will be made using funds held outside the trust account.
After our initial business combination, members of our management team who remain with us 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 proxy solicitation or tender offer 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 and director compensation.
We have entered into a registration rights agreement with respect to the founder shares and private placement securities which is described under the heading “Principal Stockholders — Registration Rights.”
Policy for Approval of Related Party Transactions
The audit committee of our board of directors will adopt a policy setting forth the policies and procedures for its review and approval or ratification of “related party transactions.” A “related party transaction” is any consummated or proposed transaction or series of transactions: (i) in which the company was or is to be a participant; (ii) the amount of which exceeds (or is reasonably expected to exceed) the lesser of $120,000 or 1% of the average of the company’s total assets at year end for the prior two completed fiscal years in the aggregate over the duration of the transaction (without regard to profit or loss); and (iii) in which a “related party” had, has or will have a direct or indirect material interest. “Related parties” under this policy will include: (i) our directors, nominees for director or executive officers; (ii) any record or beneficial owner of more than 5% of any class of our voting securities; (iii) any immediate family member of any of the foregoing if the foregoing person is a natural person; and (iv) any other person who maybe a “related person” pursuant to Item 404 of Regulation S-K under the Exchange Act. Pursuant to the policy, the audit committee will consider (i) the relevant facts and circumstances of each related party transaction, including if the transaction is on terms comparable to those that could be obtained in arm’s-length dealings with an unrelated third party, (ii) the extent of the related party’s interest in the transaction, (iii) whether the transaction contravenes our code of ethics or other policies, (iv) whether the audit committee believes the relationship underlying the transaction to be in the best interests of the company and its stockholders and (v) the effect that the transaction may have on a director’s status as an independent member of the board and on his or her eligibility to serve on the board’s committees. Management will present to the audit committee each proposed related party transaction, including all relevant facts and circumstances relating thereto. Under the policy, we may consummate related party transactions only if our audit committee approves or ratifies the transaction in accordance with the guidelines set forth in the policy. The policy will not permit any director or executive officer to participate in the discussion of, or decision concerning, a related person transaction in which he or she is the related party.
DESCRIPTION OF SECURITIES
We are a Delaware corporation and our affairs are governed by our amended and restated certificate of incorporation and the DGCL. Pursuant to our amended and restated certificate of incorporation which will be adopted prior to the consummation of this offering, we will be authorized to issue 400,000,000 shares of common stock, $0.0001 par value each, including 380,000,000 shares of Class A common stock and 20,000,000 shares of Class B common stock, as well as 1,000,000 shares of preferred stock, $0.0001 par value each. The following description summarizes certain terms of our capital stock as set out more particularly in our amended and restated certificate of incorporation. Because it is only a summary, it may not contain all the information that is important to you.
Units
Public Units
Each unit has an offering price of $10.00 and consists of one share of Class A common stock and one-half of one redeemable warrant. Each whole warrant entitles the holder thereof to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment as described in this prospectus. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of the shares of Company’s Class A common stock. This means only a whole warrant may be exercised at any given time by a warrant holder. For example, if a warrant holder holds one-half of one warrant to purchase a share of Class A common stock, such warrant will not be exercisable. If a warrant holder holds two-halves of one warrant, such whole warrant will be exercisable for one share of Class A common stock at a price of $11.50 per share. The Class A common stock and warrants comprising the units are expected to begin separate trading on the 52nd day following the date of this prospectus unless ThinkEquity and Piper Sandler inform us of their decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Once the shares of Class A common stock and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component securities. Holders will need to have their brokers contact our transfer agent in order to separate the units into Class A common stock and warrants. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least two units, you will not be able to receive or trade a whole warrant.
In no event will the Class A common stock and warrants be traded separately until we have filed with the SEC a Current Report on Form 8-K which includes an audited balance sheet reflecting our receipt of the gross proceeds at closing of this offering. We will file a Current Report on Form 8-K which includes this audited balance sheet promptly after the completion of this offering, which closing is anticipated to take place three business days after the date of this prospectus. If the underwriters’ over-allotment option 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’ over-allotment option.
Underwriter Units
The Underwriter Units (including the Underwriter Warrants or Underwriter Shares issuable upon exercise of such warrants) will not be transferable, assignable or salable until after the completion of our initial business combination. Otherwise, the Underwriter Units are identical to the units sold in this offering except that the Underwriter Warrants, so long as they are held by the underwriters or their permitted transferees, (i) will not be redeemable by us, (ii) may not (including the Class A common stock issuable upon exercise of these warrants), subject to certain limited exceptions, be transferred, assigned or sold by the holders until after the completion of our initial business combination, (iii) may be exercised by the holders on a cashless basis, (iv) will be entitled to registration rights and (v) for so long as they are held by the underwriters, will not be exercisable more than five years from the effective date of the registration statement of which this prospectus forms a part in accordance with FINRA Rule 5110(f)(2)(G)(i), as described below under “— Warrants — Underwriter Warrants”.
Private Units
The private units (including the private warrants or private shares issuable upon exercise of such warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business
combination (except, among other limited exceptions as described under “Principal Stockholders — Restrictions on Transfers of Founder Shares and Private Placement Securities,” to our officers and directors and other persons or entities affiliated with our sponsor). Otherwise, the private units are identical to the units sold in this offering except that the private warrants, so long as they are held by our sponsor (and/or our designees) or their permitted transferees, (i) will not be redeemable by us (except as described below under “Principal Stockholders — Transfers of Founder Shares and Private Placement Securities”), (ii) may be exercised by the holders on a cashless basis and (iii) will be entitled to registration rights.
Additionally, the units that have not already been separated will automatically separate into their component parts in connection with the completion of our initial business combination and will no longer be listed thereafter.
Common Stock
Prior to the date of this prospectus, there were 6,468,750 shares of Class B common stock outstanding, all of which were held of record by our initial stockholders, so that our initial stockholders will own 20% of our issued and outstanding shares after this offering (assuming our initial stockholders do not purchase any units in this offering and excluding the shares of Class A common stock underlying the Underwriter Units and the private units). Up to 843,750 of the founder shares will be forfeited by our initial stockholders depending on the extent to which the underwriters’ over-allotment is exercised. Upon the closing of this offering, 28,700,000 of our shares of common stock will be outstanding (assuming no exercise of the underwriters’ over-allotment option and the corresponding forfeiture of 843,750 founder shares by our initial stockholders) including:
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22,500,000 shares of Class A common stock underlying units issued as part of this offering;
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112,500 shares of Class A common stock underlying the Underwriter Units;
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112,500 shares of Class A common stock underlying the private units; and
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5,625,000 shares of Class B common stock held by our initial stockholders.
If we increase or decrease the size of this offering, we will effect a stock dividend or 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 the offering in such amount as to maintain the ownership of our initial stockholders at 20.0% of our issued and outstanding common stock upon the consummation of this offering (not including the shares of Class A common stock underlying the Underwriter Units and the private units).
Stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Holders of Class A common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of our stockholders except as required by law. Unless specified in our amended and restated certificate of incorporation, or as required by applicable provisions of the DGCL or applicable 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. Our board of directors is divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors. 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 authorizes the issuance of up to 380,000,000 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 Class A 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. Our board of directors is 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.
In accordance with NYSE corporate governance requirements, we are not required to hold an annual meeting until no later than one year after our first fiscal year end following our listing on 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 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 calculated as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account (which interest shall be net of taxes payable), 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 $10.25 per public share (assuming the underwriters do not exercise their over-allotment option). Our initial stockholders, sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares and public shares they hold in connection with the completion of our initial business combination. In addition, the underwriters have agreed to (i) waive their redemption rights with respect to their Underwriter Shares in connection with the completion of our initial business combination, (ii) waive their redemption rights with respect to their Underwriter Shares in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity and (iii) waive their rights to liquidating distributions from the trust account with respect to their Underwriter Shares if we fail to complete our initial business combination within 24 months from the closing of this offering. In addition, the underwriters have agreed to vote any Underwriter Shares held by them in favor of our initial business combination. Unlike many special purpose acquisition companies that hold stockholder votes and conduct proxy solicitations in conjunction with their initial business combinations and provide for related redemptions of public shares for cash upon completion of such initial business combinations even when a vote is not required by law, if a stockholder vote is not required by law and we do not decide to hold a stockholder vote for business or other legal 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 requires these tender offer documents to contain substantially the same financial and other information about our 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 law, or we decide to obtain stockholder approval for business or other legal reasons, we will, like many special purpose acquisition 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, we will complete our initial business combination only if a majority of the shares of common stock voted are voted in favor of our initial business combination. However, the participation of our sponsor, officers, directors, advisors or their 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 initial 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.
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 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 Exchange Act), will be restricted from redeeming its shares with respect
to Excess Shares, without our prior consent. 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 our initial 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 shares in open market transactions, potentially at a loss.
If we seek stockholder approval in connection with our initial business combination, our initial stockholders, sponsor, officers and directors and the underwriters have agreed to vote any founder shares and Underwriter Shares they hold and any public shares purchased during or after this offering in favor of our initial business combination. As a result, in addition to our initial stockholders’ founder shares and private shares and the underwriter’s Underwriting Shares, we would need only 8,150,001, or approximately 36.22%, of the 22,500,000 public shares sold in this offering to be voted in favor of an initial business combination (assuming all outstanding shares are voted and the shares underlying the Underwriter Units and the private units are voted in favor of the transaction) in order to have our initial business combination approved (assuming the over-allotment option is not exercised). Further, assuming that the over-allotment option is not exercised, a quorum of 14,350,001 shares of our common stock present in person or by proxy would be required to hold the stockholder meeting to approve our initial business combination, and, assuming only the minimum number of shares representing a quorum are voted, such approval would require the affirmative vote of 7,175,002 shares of our common stock, which means that, in addition to our initial stockholders’ founder shares and private shares and the underwriters’ Underwriter Shares, we would need only 975,002, or approximately 4.3%, of the 22,500,000 public shares sold in this offering to be voted in favor of an initial business combination in order to have our initial business combination approved. Additionally, each public stockholder may elect to redeem their public shares 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 24 months from the closing of this offering, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no 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 earned on the funds held in the trust account (which interest shall be net of taxes payable 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), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, 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 and the underwriters have entered into agreements with us, pursuant to which they have agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares and Underwriter Shares if we fail to complete our initial business combination within 24 months from the closing of this offering or any extended period of time that we may have to consummate an initial business combination as a result of an amendment to our amended and restated certificate of incorporation. However, if our initial stockholders or management team 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 complete our initial business combination within the prescribed time period.
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 shares, 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 we will provide our public stockholders with the opportunity to redeem their public shares for cash at a per share price equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account (which
interest shall be net of taxes payable), divided by the number of then outstanding public shares, upon the completion of our initial business combination, subject to the limitations described herein.
Founder Shares
The founder shares are designated as Class B common stock and, except as described below, are identical to the shares of Class A common stock included in the units being sold in this offering, and holders of founder shares have the same stockholder rights as public stockholders, except that (i) the founder shares are subject to certain transfer restrictions, as described in more detail below, (ii) our initial stockholders, sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed (A) to waive their redemption rights with respect to any founder shares and public shares they hold in connection with the completion of our initial business combination, (B) to waive their redemption rights with respect to any founder shares and public shares they hold 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 redeem 100% of our public shares if we have not consummated an initial business combination within 24 months from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity and (C) 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 24 months from the closing of this offering or any extended period of time that we may have to consummate an initial business combination as a result of an amendment to our amended and restated certificate of incorporation, 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 such time period, and (iii) the founder shares are automatically convertible into Class A common stock concurrently with or immediately following the consummation of our initial business combination on a one-for-one basis, subject to adjustment as described herein and in our amended and restated certificate of incorporation. If we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination.
The founder shares will automatically convert into shares of Class A common stock concurrently with or immediately following the consummation of our initial business combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further 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 connection with our initial business combination, the number of shares of Class A common stock issuable upon conversion of all founder shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by public stockholders and excluding the shares of Class A common stock underlying the Underwriter Units), including 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, by the Company in connection with or in relation to the consummation of the initial business combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in the initial business combination and any private placement warrants issued to our sponsor, officers or directors upon conversion of working capital loans, provided that such conversion of founder shares will never occur on a less than one-for-one basis.
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, each of whom will be subject to the same transfer restrictions) until the earlier of: (i) with respect to 50% of the founder shares, the earlier of (x) twelve months after the date of the consummation of an initial business combination or (y) the date on which the closing price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination and (ii) with respect to the remaining 50% of the founder shares, twelve months after the date of the consummation of our initial business combination, provided, if we consummate a transaction after our initial business combination which results in our stockholders having the right to exchange their shares for
cash, securities or other property, the founder shares will be released from the lock-up. Up to 843,750 founder shares will be forfeited by our initial stockholders depending on the exercise of the over-allotment option.
Underwriter Shares
The Underwriter Shares will not be transferable, assignable or salable until after the completion of our initial business combination. ThinkEquity and Piper Sandler have agreed to (i) waive their redemption rights with respect to their Underwriter Shares in connection with the completion of our initial business combination, (ii) waive their redemption rights with respect to their Underwriter Shares in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity and (iii) waive their rights to liquidating distributions from the trust account with respect to their Underwriter Shares if we fail to complete our initial business combination within 24 months from the closing of this offering. The shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the date of the effectiveness of the registration statement of which this prospectus forms a part pursuant to Rule 5110(g)(1) of FINRA’s Conduct Rules. Pursuant to FINRA Rule 5110(g)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the registration statement of which this prospectus forms a part, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days immediately following the effective date of the registration statement of which this prospectus forms a part except to any underwriter and selected dealer participating in the offering and their bona fide officers or partners. Otherwise, the Underwriter Shares are identical to the shares of Class A common stock underlying the units sold in this offering.
Preferred Stock
Our amended and restated certificate of incorporation authorizes 1,000,000 shares of preferred stock and provides 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 shares of 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 shares of 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 shares 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.
Warrants
Public Stockholders’ Warrants
Each whole warrant entitles the registered holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing on the later of 12 months from the closing of this offering and 30 days after the completion of our initial business combination, provided in each case that we have an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating to them is available (or we permit holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement) and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares of Class A common stock. This means only a whole warrant may be exercised at a given time by a warrant holder. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least two units, you will not be able to receive or
trade a whole warrant. The warrants will expire five years after the completion of our initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
We will not be obligated to deliver any Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to our satisfying our obligations described below with respect to registration. No warrant will be exercisable and we will not be obligated to issue a share of Class A common stock upon exercise of a warrant unless the share of Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no event will we be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the share of Class A common stock underlying such unit.
We have agreed that as soon as practicable, but in no event later than fifteen (15) business days after the closing of our initial business combination, we will use our best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A common stock issuable upon exercise of the warrants. We will use our best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the sixtieth (60th) business day after the closing of our initial business combination, warrant holders may, until such time as there is an effective registration statement and during any period when we will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if our Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, and in the event we do not so elect, we will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption of warrants
Once the warrants become exercisable, we may call the warrants for redemption for cash:
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in whole and not in part;
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at a price of $0.01 per warrant;
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upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and
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if, and only if, the closing price of the common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like and for certain issuances of Class A common stock and equity-linked securities for capital raising purposes in connection with the closing of our initial business combination as described elsewhere in this prospectus) for any 20 trading days within a 30-trading day period ending three business days before we send to the notice of redemption to the warrant holders.
If and when the warrants become redeemable by us for cash, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
We have established the last of the redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and we issue a notice of redemption of the warrants, each warrant holder will be
entitled to exercise his, her or its warrant prior to the scheduled redemption date. However, the price of the Class A common stock may fall below the $18.00 redemption trigger price (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like and for certain issuances of Class A common stock and equity-linked securities for capital raising purposes in connection with the closing of our initial business combination as described elsewhere in this prospectus) as well as the $11.50 warrant exercise price after the redemption notice is issued.
If we call the warrants for redemption, our management will have the option to require any holder that wishes to exercise his, her or its warrant to do so on a “cashless basis.” In determining whether to require all holders to exercise their warrants on a “cashless basis,” our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of Class A common stock issuable upon the exercise of our warrants. If our management takes advantage of this option, all holders of warrants would pay the exercise price by surrendering their warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of Class A common stock underlying the warrants, multiplied by the excess of the “fair market value” of our Class A common stock (defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” will mean the average closing price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. If our management takes advantage of this option, the notice of redemption will contain the information necessary to calculate the number of shares of Class A common stock to be received upon exercise of the warrants, including the “fair market value” in such case. Requiring a cashless exercise in this manner will reduce the number of shares to be issued and thereby lessen the dilutive effect of a warrant redemption. We believe this feature is an attractive option to us if we do not need the cash from the exercise of the warrants after our initial business combination. If we call our warrants for redemption and our management does not take advantage of this option, the holders of the private placement warrants and their permitted transferees would still be entitled to exercise their private placement warrants for cash or on a cashless basis using the same formula described above that other warrant holders would have been required to use had all warrant holders been required to exercise their warrants on a cashless basis, as described in more detail below.
A holder of a warrant may notify us in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such warrant, to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the warrant agent’s actual knowledge, would beneficially own in excess of 4.9% or 9.8% (as specified by the holder) of the Class A common stock outstanding immediately after giving effect to such exercise.
If the number of outstanding shares of Class A common stock is increased by a share capitalization payable in shares of Class A common stock, or by a split-up of common stock or other similar event, then, on the effective date of such share capitalization, split-up or similar event, the number of shares of Class A common stock issuable on exercise of each warrant will be increased in proportion to such increase in the outstanding shares of common stock. A rights offering to holders of common stock entitling holders to purchase Class A common stock at a price less than the fair market value will be deemed a share capitalization of a number of shares of Class A common stock equal to the product of (i) the number of shares of Class A common stock actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for Class A common stock) multiplied by (ii) one (1) minus the quotient of (x) the price per share of Class A common stock paid in such rights offering and divided by (y) the fair market value. For these purposes (i) if the rights offering is for securities convertible into or exercisable for shares of Class A common stock, in determining the price payable for Class A common stock, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) fair market value means the volume weighted average price of shares of Class A common stock as reported during the ten (10) trading day period ending on the trading day prior to the first date on which the Class A common stock trades on the applicable exchange or in the applicable market, regular way, without the right to receive such rights.
In addition, if we, at any time while the warrants are outstanding and unexpired, pay a dividend or make a distribution in cash, securities or other assets to the holders of Class A common stock on account of
such Class A common stock (or other securities into which the warrants are convertible), other than (a) as described above, (b) certain ordinary cash dividends, (c) to satisfy the redemption rights of the holders of Class A common stock in connection with a proposed initial business combination, or (d) in connection with the redemption of our public shares upon our failure to complete our initial business combination, then the warrant exercise price will be decreased, effective immediately after the effective date of such event, by the amount of cash and/or the fair market value of any securities or other assets paid on each share of Class A common stock in respect of such event.
If the number of outstanding shares of Class A common stock is decreased by a consolidation, combination, reverse share split or reclassification of Class A common stock or other similar event, then, on the effective date of such consolidation, combination, reverse share split, reclassification or similar event, the number of shares of Class A common stock issuable on exercise of each warrant will be decreased in proportion to such decrease in outstanding share of Class A common stock.
Whenever the number of shares of Class A common stock purchasable upon the exercise of the warrants is adjusted, as described above, the warrant exercise price will be adjusted by multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number of shares of Class A common stock purchasable upon the exercise of the warrants immediately prior to such adjustment, and (y) the denominator of which will be the number of shares of Class A common stock so purchasable immediately thereafter.
In addition, if (x) we issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by our board of directors and, in the case of any such issuance to our initial stockholders or their affiliates, without taking into account any founder shares held by our initial stockholders or such affiliates, as applicable, prior to such issuance), (the “Newly Issued Price”) (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date of the consummation of our initial business combination (net of redemptions), and (z) the volume weighted average trading price of our Class A common stock during the 20 trading day period starting on the trading day after the day on which we consummate our initial business combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described under “— Redemption of warrants” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
In case of any reclassification or reorganization of the outstanding Class A common stock (other than those described above or that solely affects the par value of such Class A common stock), or in the case of any merger or consolidation of us with or into another corporation (other than a consolidation or merger in which we are the continuing corporation and that does not result in any reclassification or reorganization of our outstanding Class A common stock), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of us as an entirety or substantially as an entirety in connection with which we are dissolved, the holders of the warrants will thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the warrants and in lieu of the Class A common stock immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of Class A common stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the warrants would have received if such holder had exercised their warrants immediately prior to such event. If less than 70% of the consideration receivable by the holders of Class A common stock in such a transaction is payable in the form of Class A common stock in the successor entity that is listed for trading on a national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately following such event, and if the registered holder of the warrant properly exercises the warrant within thirty days following public disclosure of such transaction, the warrant exercise price will be reduced as specified in the warrant agreement based on the Black-Scholes Warrant Value (as defined in the warrant agreement) of the warrant. The purpose of such exercise price reduction is to provide additional value to holders of the warrants when an extraordinary transaction occurs during the
exercise period of the warrants pursuant to which the holders of the warrants otherwise do not receive the full potential value of the warrants.
The warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, and that all other modifications or amendments will require the vote or written consent of the holders of at least 50% of the then outstanding public warrants, and, solely with respect to any amendment to the terms of the private placement warrants, a majority of the then outstanding private placement warrants. You should review a copy of the warrant agreement, which will be filed as an exhibit to the registration statement of which this prospectus is a part, for a complete description of the terms and conditions applicable to the warrants.
The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price (or on a cashless basis, if applicable), by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of common stock and any voting rights until they exercise their warrants and receive Class A common stock. After the issuance of Class A common stock upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.
No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number the number of shares of Class A common stock to be issued to the warrant holder.
Private Placement Warrants
The private placement warrants (including the Class A common stock issuable upon exercise of the private placement warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination (except, among other limited exceptions as described under “Principal Stockholders — Transfers of Founder Shares and Private Placement Warrants,” to our officers and directors and other persons or entities affiliated with the initial purchasers of the private placement warrants) and they will not be redeemable by us so long as they are held by the initial stockholders or their permitted transferees. The initial purchasers, or their permitted transferees, have the option to exercise the private placement warrants on a cashless basis. Except as described in this section, the private placement warrants have terms and provisions that are identical to those of the warrants being sold as part of the units in this offering. If the private placement warrants are held by holders other than the initial purchasers or their permitted transferees, the private placement warrants will be redeemable by us for cash and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. In addition, the $15 Exercise Price Warrants will expire at 5:00 p.m. New York City Time ten years after the consummation our initial business combination.
If holders of the private placement warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering his, her or its warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the excess of the “fair market value” of our Class A common stock (defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” will mean the average closing price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent. The reason that we have agreed that these warrants will be exercisable on a cashless basis so long as they are held by the initial purchasers or their permitted transferees is because it is not known at this time whether they will be affiliated with us following a business combination. If they remain affiliated with us, their ability to sell our securities in the open market will be significantly limited. We expect to have policies in place that prohibit insiders from selling our securities except during specific periods of time. Even during such periods of time when insiders will be permitted to sell our securities, an insider cannot trade in our securities if he or she is in possession of material non-public information. Accordingly, unlike public stockholders who could exercise their warrants and sell the shares of Class A
common stock received upon such exercise freely in the open market in order to recoup the cost of such exercise, the insiders could be significantly restricted from selling such securities. As a result, we believe that allowing the holders to exercise such warrants on a cashless basis is appropriate.
In order to 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 founder warrants at a price of $1.00 per warrant at the option of the lender.
Our initial stockholders have agreed not to transfer, assign or sell any of the private placement warrants (including the Class A common stock issuable upon exercise of any of these warrants) until the date that is 30 days after the date we complete our initial business combination, except that, among other limited exceptions as described under “Principal Stockholders — Transfers of Founder Shares and Private Placement Warrants,” transfers can be made to our officers and directors and other persons or entities affiliated with the sponsor.
Underwriter Warrants
The Underwriter Warrants are identical to the warrants included in the units sold in this offering, except that the Underwriter Warrants (i) will not be redeemable by us, (ii) may not (including the Class A common stock issuable upon exercise of the Underwriter Warrants), subject to certain limited exceptions, be transferred, assigned or sold by the holders until after the completion of our initial business combination, (iii) may be exercised by the holders on a cashless basis, (iv) will be entitled to registration rights and (v) for so long as they are held by the underwriters, will not be exercisable more than five years from the effective date of the registration statement of which this prospectus forms a part in accordance with FINRA Rule 5110(f)(2)(G)(i).
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 a 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 a 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. If we increase or decrease the size of this offering, then we will effect a stock dividend or share contribution back to capital or other appropriate mechanism, as applicable, with respect to our founder shares immediately prior to the consummation of the offering in such amount as to maintain the number of founder shares at 20.0% of our issued and outstanding common stock upon the consummation of this offering (not including the shares of Class A common stock underlying the Underwriter Units). 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 and Warrant Agent
The transfer agent for our common stock and warrant agent for our warrants is Continental Stock Transfer & Trust Company. We have agreed to indemnify Continental Stock Transfer & Trust Company in its roles as transfer agent and warrant agent, its agents and each of its stockholders, directors, officers and employees against all claims and losses that may arise out of acts performed or omitted for its activities in that capacity, except for any liability due to any gross negligence or intentional misconduct of the indemnified person or entity. Continental Stock Transfer & Trust Company has agreed that it has no right of set-off or any right, title, interest or claim of any kind to, or to any monies in, the trust account, and has irrevocably waived any right, title, interest or claim of any kind to, or to any monies in, the trust account that it may have now or in the future. Accordingly, any indemnification provided will only be able to be satisfied, or a claim will only be able to be pursued, solely against us and our assets outside the trust account and not against the any monies in the trust account or interest earned thereon.
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 cannot be amended without the approval of the holders of 65% of our common stock. Our
initial stockholders, who will collectively beneficially own 20% of our common stock upon the closing of this offering (assuming they do not purchase any units in this offering and excluding the shares of Class A common stock underlying the Underwriter Units), 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. Specifically, our amended and restated certificate of incorporation provides, among other things, that:
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If we are unable to complete our initial business combination within 24 months from the closing of this offering, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no 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 earned on the funds held in the trust account (which interest shall be net of taxes payable 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), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and in all cases subject to the requirements of other applicable law;
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Prior to our initial business combination, we may not issue additional securities that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote as a class with our public shares (a) on our initial business combination or (b) to approve an amendment to our amended and restated certificate of incorporation to (x) extend the time we have to consummate a business combination beyond 24 months from the closing of this offering or (y) amend the foregoing provisions;
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Although we do not intend to enter into a business combination with a target business that is affiliated with our sponsor, our directors or our executive officers, we are not prohibited from doing so. In the event we enter into such a transaction, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation or appraisal 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 law and we do not decide to hold a stockholder vote for business or other legal 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. Whether or not we maintain our registration under the Exchange Act or our listing on NYSE, we will provide our public stockholders with the opportunity to redeem their public shares by one of the two methods listed above;
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So long as we obtain and maintain a listing for our securities on the NYSE, the NYSE rules require that we must not consummate an initial business combination with one or more operating businesses or assets with a fair market value of at least 80% of the assets held in the trust account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount of any deferred underwriting commissions) at the time of the agreement to enter into the initial business combination;
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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 redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering, or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, we will provide our public stockholders with the opportunity to redeem all or a portion of their Class A 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 earned on the funds held in the trust account (which interest shall be net of taxes payable), divided by the number of then outstanding public shares, subject to the limitations described herein; 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 provides 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.
Certain Anti-Takeover Provisions of Delaware Law and our Amended and Restated Certificate of Incorporation and Bylaws
We will be subject to the provisions of Section 203 of the DGCL regulating corporate takeovers upon completion of this offering. This statute prevents certain Delaware corporations, under certain circumstances, from engaging in a “business combination” with:
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a stockholder who owns 15% or more of our outstanding voting stock (otherwise known as an “interested stockholder”);
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an affiliate of an interested stockholder; or
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an associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder.
A “business combination” includes a merger or sale of more than 10% of our assets. However, the above provisions of Section 203 do not apply if:
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our board of directors approves the transaction that made the stockholder an “interested stockholder,” prior to the date of the transaction;
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after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common stock; or
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on or subsequent to the date of the transaction, the initial business combination is approved by our board of directors and authorized at a meeting of our stockholders, and not by written consent, by an affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.
Our amended and restated certificate of incorporation will provide that our board of directors will be classified into three classes of directors. As a result, in most circumstances, a person can gain control of our board only by successfully engaging in a proxy contest at two or more annual meetings.
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, unless we consent in writing to the selection of an alternative forum, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee to us or our stockholders, (iii) any action asserting a claim against us, our directors, officers or employees arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or bylaws, or (iv) any action asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine may be brought only in the Court of Chancery in the State of Delaware, except any claim (A) as to which the Court of Chancery of the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such
determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery or (C) for which the Court of Chancery does not have subject matter jurisdiction, as to which the Court of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction. 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.
Notwithstanding the foregoing, our amended and restated certificate of incorporation will provide that the exclusive forum provision will not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. 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. Additionally, unless we consent in writing to the selection of an alternative forum, the federal courts shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act against us or any of our directors, officers, other employees or agents. Any person or entity purchasing or otherwise acquiring any interest in our securities shall be deemed to have notice of and consented to these provisions. We note, however, that there is uncertainty as to whether a court would enforce this provision and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by the Securities Act or 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.
Advance notice requirements for stockholder proposals and director nominations
Our bylaws provide that stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual meeting of stockholders, must provide timely notice of their intent in writing. To be timely, a stockholder’s notice will need to be received by the company secretary at our principal executive offices not later than the close of business on the 90th day nor earlier than the opening of business on the 120th day prior to the 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 also specify certain requirements as to the form and content of a stockholders’ meeting. These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders.
Action by written consent
Subsequent to the consummation of the offering, any action required or permitted to be taken by our common 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, but only for cause and only by the affirmative vote of holders of a majority of the voting power of all then outstanding shares of our capital 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 28,700,000 (or 32,935,625 if the underwriters’ over-allotment option is exercised in full) shares of common stock outstanding. Of these shares, the shares of Class A common stock sold in this offering (22,500,000 Class A common stock if the underwriters’ over-allotment option is not exercised and 25,875,000 shares if the underwriters’ over-allotment option is exercised in full) will be freely tradable without restriction or further registration under the Securities Act, except for any Class A common stock purchased by one of our affiliates within the meaning of Rule 144 under the Securities Act. All of the outstanding founder shares (5,625,000 founder shares if the underwriters’ over-allotment option is not exercised and 6,468,750 founder shares if the underwriters’ over-allotment option is exercised in full), all of the outstanding Underwriter Units (112,500 Underwriter Units if the underwriters’ over-allotment option is not exercised and 129,375 Underwriter Units if the underwriters’ over-allotment option is exercised in full), all of the private shares (462,500 private shares regardless of whether the underwriters exercise their over-allotment option) and all of the outstanding private placement warrants (5,592,500 warrants regardless of whether the underwriters’ over-allotment option is exercised) will be restricted securities under Rule 144, in that they were issued in private transactions not involving a public offering.
Rule 144
Pursuant to Rule 144, a person who has beneficially owned restricted shares or warrants for at least six months would be entitled to sell their securities provided that (i) 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 (ii) 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 or warrants 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 158,750 shares immediately after this offering (or 260,506 if the underwriters exercise in full their over-allotment option); or
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the average weekly reported trading volume of the Class A 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 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 Form 8-K reports; 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, private units and private placement warrants, as applicable, pursuant to Rule 144 without registration one year after we have completed our initial business combination.
Registration Rights
The holders of the (i) founder shares, which were issued in a private placement prior to the closing of this offering, (ii) private placement warrants, which will be issued in a private placement simultaneously with the closing of this offering and the shares of Class A common stock underlying such private placement warrants, (iii) Underwriter Shares and Underwriter Warrants (and the shares of Class A common stock underlying such Underwriter Warrants), which will be issued as part of the Underwriter Units in a private placement simultaneously with the closing of this offering, (iv) private shares and private warrants (and the shares of Class A common stock underlying such private warrants) and (v) founder warrants that may be issued upon conversion of working capital loans will have registration rights to require us to register a sale of any of our securities held by them pursuant to a registration rights agreement to be signed prior to or on the effective date of this offering. Pursuant to the registration rights agreement and assuming the underwriters exercise their over-allotment option in full and $1.5 million of working capital loans are converted into founder warrants, we will be obligated to register up to 14,217,812 shares of Class A common stock and 7,157,187 warrants. The number of shares of Class A common stock includes (i) 6,468,750 shares of Class A common stock to be issued upon conversion of the founder shares, (ii) 5,361,250 shares of Class A common stock underlying the founder warrants and $15 Exercise Price Warrants, (iii) 129,375 Underwriter Shares, (iv) 64,687 shares of Class A common stock underlying the Underwriter Warrants, (v) 462,500 private shares, (vi) 231,250 shares of Class A common stock underlying the private warrants and (vii) 1,500,000 shares of Class A common stock underlying the founder warrants issued upon conversion of working capital loans. The number of warrants includes (i) 5,592,500 private placement warrants, (ii) 64,687 Underwriter Warrants, and (iii) 1,500,000 founder warrants issued upon conversion of working capital loans. The holders of these securities are entitled to make up to three demands, excluding short form 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. We will bear the expenses incurred in connection with the filing of any such registration statements.
Listing of Securities
We have applied to have our units listed on NYSE under the symbol “FGNA.U” commencing on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for listing on NYSE. Once the securities comprising the units begin separate trading, we expect that the Class A common stock and warrants will be listed on NYSE under the symbols “FGNA” and “FGNA WS,” respectively.
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of certain material U.S. federal income tax consequences of the acquisition, ownership and disposition of our units, shares of Class A common stock and warrants, which we refer to collectively as our securities. Because the components of a unit are separable at the option of the holder, the holder of a unit generally should be treated, for U.S. federal income tax purposes, as the owner of the underlying Class A common stock and one-half of one redeemable warrant components of the unit, as the case may be. As a result, the discussion below with respect to actual holders of Class A common stock and warrants should also apply to holders of units (as the deemed owners of the underlying Class A common stock and warrants that comprise the units). This discussion applies only to securities that are held as capital assets for U.S. federal income tax purposes and is applicable only to holders who purchased units in this offering.
This discussion is a summary only and does not describe all of the tax consequences that may be relevant to you in light of your particular circumstances, including but not limited to the alternative minimum tax, the Medicare tax on certain investment income and the different consequences that may apply if you are subject to special rules that apply to certain types of investors, including but not limited to:
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financial institutions or financial services entities;
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broker-dealers;
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governments or agencies or instrumentalities thereof;
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regulated investment companies;
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real estate investment trusts;
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expatriates or former long-term residents of the U.S.;
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persons that actually or constructively own five percent or more of our voting shares;
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insurance companies;
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dealers or traders subject to a mark-to-market method of accounting with respect to the securities;
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persons holding the securities as part of a “straddle,” hedge, integrated transaction or similar transaction;
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U.S. holders (as defined below) whose functional currency is not the U.S. dollar;
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partnerships or other pass-through entities for U.S. federal income tax purposes and any beneficial owners of such entities; and
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tax-exempt entities.
If you are a partnership for U.S. federal income tax purposes, the U.S. federal income tax treatment of your partners will generally depend on the status of the partners and your activities.
This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), and administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations as of the date hereof, which are subject to change, possibly on a retroactive basis, and changes to any of which subsequent to the date of this prospectus may affect the tax consequences described herein. This discussion does not address any aspect of state, local or non-U.S. taxation, or any U.S. federal taxes other than income taxes (such as gift and estate taxes).
We have not sought, and will not seek, a ruling from the IRS as to any U.S. federal income tax consequence described herein. The IRS may disagree with the discussion herein, and its determination may be upheld by a court. 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. You are urged to consult your tax advisor with respect to the application of U.S. federal tax laws to your particular situation, as well as any tax consequences arising under the laws of any state, local or foreign jurisdiction.
Personal Holding Company Status
We could 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 generally will be classified as a PHC for U.S. federal income tax purposes in a given taxable year if (i) 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) more than 50% of the stock of the corporation by value and (ii) 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).
At least 60% of our adjusted ordinary gross income may consist of PHC income, depending on the date and size of our initial business combination. 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, more than 50% of our stock may be owned or deemed owned (pursuant to the constructive ownership rules) by such persons during the last half of a taxable year. Thus, no assurance can be given that we will not be 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.
Allocation of Purchase Price and Characterization of a Unit
No statutory, administrative or judicial authority directly addresses the treatment of a unit or instruments similar to a unit for U.S. federal income tax purposes and, therefore, that treatment is not entirely clear. The acquisition of a unit should be treated for U.S. federal income tax purposes as the acquisition of one share of our Class A common stock and one-half of one warrant to acquire one share of our Class A common stock. For U.S. federal income tax purposes, each holder of a unit must allocate the purchase price paid by such holder for such unit between the one share of Class A common stock and the one-half of one warrant based on the relative fair market value of each at the time of issuance. Under U.S. federal income tax law, each investor must make his or her own determination of such value based on all the relevant facts and circumstances. Therefore, we strongly urge each investor to consult his or her tax adviser regarding the determination of value for these purposes. The price allocated to each share of Class A common stock and the one-half of one warrant should be the stockholder’s tax basis in such share or warrant, as the case may be. Any disposition of a unit should be treated for U.S. federal income tax purposes as a disposition of the share of Class A common stock and one-half of one warrant comprising the unit, and the amount realized on the disposition should be allocated between the Class A common stock and the one-half of one warrant based on their respective relative fair market values (as determined by each such unit holder on all the relevant facts and circumstances) at the time of disposition. The separation of shares of Class A common stock and warrants comprising units should not be a taxable event for U.S. federal income tax purposes.
The foregoing treatment of the shares of Class A common stock and warrants and a holder’s purchase price allocation are not binding on the Internal Revenue Service (“IRS”) or the courts. Because there are no authorities that directly address instruments that are similar to the units, no assurance can be given that the IRS or the courts will agree with the characterization described above or the discussion below. Accordingly, each prospective investor is urged to consult its own tax advisors regarding the tax consequences of an investment in a unit (including alternative characterizations of a unit). The balance of this discussion assumes that the characterization of the units described above is respected for U.S. federal income tax purposes.
U.S. Holders
This section applies to you if you are a “U.S. holder.” A U.S. holder is a beneficial owner of our units, shares of Class A common stock or warrants who or that is, for U.S. federal income tax purposes:
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an individual who is a citizen or resident of the United States;
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a corporation (or other entity taxable as a corporation) organized in or under the laws of the United States, any state thereof or the District of Columbia; or
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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, if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons (as defined in the Code) have authority to control all substantial decisions of the trust or (ii) it has a valid election in effect under Treasury Regulations to be treated as a U.S. person.
Taxation of Distributions. If we pay distributions in cash or other property (other than certain distributions of our stock or rights to acquire our stock) to U.S. holders of shares of our Class A common stock, such distributions generally 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 and Warrants” 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 may constitute “qualified dividends” 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. If the holding period requirements are not satisfied, then a corporation may not be able to qualify for the dividends received deduction and would have taxable income equal to the entire dividend amount, and non-corporate holders may be subject to tax on such dividend at regular ordinary income tax rates instead of the preferential rate that applies to qualified dividend income.
Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants. Upon a sale or other taxable disposition of our Class A common stock or warrants which, in general, would include a redemption of Class A common stock or warrants that is treated as a sale of such securities as described below, and including as a result of a dissolution and liquidation in the event we do not consummate an initial business combination within the required time period, a U.S. holder generally will recognize capital gain or loss in an amount equal to the difference between the amount realized and the U.S. holder’s adjusted tax basis in the Class A common stock or warrants. Any such capital gain or loss generally will be long-term capital gain or loss if the U.S. holder’s holding period for the Class A common stock or warrants 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 suspend the running of the applicable holding period for this purpose. If the running of the holding period for the Class A common stock is suspended, then non-corporate U.S. holders may not be able to satisfy the one-year holding period requirement for long-term capital gain treatment, in which case any gain on a sale or taxable disposition of the shares or warrants would be subject to short-term capital gain treatment and would be taxed at regular ordinary income tax rates. Long-term capital gains recognized by non-corporate U.S. holders will be eligible to be taxed at reduced rates. The deductibility of capital losses is subject to limitations.
Generally, the amount of gain or loss recognized by a U.S. holder is an amount equal to the difference between (i) the sum of the amount of cash and the fair market value of any property received in such disposition (or, if the Class A common stock or warrants are held as part of units at the time of the disposition, the portion of the amount realized on such disposition that is allocated to the Class A common stock or the warrants based upon the then fair market values of the Class A common stock and the warrants included in the units) and (ii) the U.S. holder’s adjusted tax basis in its Class A common stock or warrants so disposed of. A U.S. holder’s adjusted tax basis in its Class A common stock or warrants generally will equal the U.S. holder’s acquisition cost (that is, as discussed above, the portion of the purchase price of a unit allocated to a share of Class A common stock or one-half of one warrant or, as discussed
below, the U.S. holder’s initial basis for Class A common stock received upon exercise of warrants) less, in the case of a share of Class A common stock, any prior distributions treated as a return of capital.
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 the section of this prospectus entitled “Description of Securities — Common Stock” or if we purchase a U.S. holder’s Class A common stock in an open market transaction, the treatment of the transaction for U.S. federal income tax purposes will depend on whether the redemption or purchase by us qualifies as a sale of the Class A common stock under Section 302 of the Code. If the redemption or purchase by us qualifies as a sale of common stock, the U.S. holder 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 and Warrants” above. If the redemption or purchase by us does not qualify as a sale of common stock, the U.S. holder will be treated as receiving a corporate distribution with the tax consequences described above under “U.S. Holders — Taxation of Distributions”. Whether a redemption or purchase by us qualifies for sale treatment will depend largely 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 a result of owning warrants) relative to all of our shares outstanding both before and after the redemption or purchase by us. The redemption or purchase by us of Class A common stock generally will be treated as a sale of the Class A common stock (rather than as a corporate distribution) if the redemption or purchase by us (i) is “substantially disproportionate” with respect to the U.S. holder, (ii) results in a “complete termination” of the U.S. holder’s interest in us or (iii) 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, which would generally include Class A common stock which could be acquired pursuant to the exercise of the warrants. In order to meet the substantially disproportionate test, the percentage of our outstanding voting stock actually and constructively owned by the U.S. holder immediately following the redemption of Class A common stock must, among other requirements, be less than 80% of the percentage of our outstanding voting stock actually and constructively owned by the U.S. holder immediately before the redemption. There will be a complete termination of a U.S. holder’s interest if either (i) all of the shares of our stock actually and constructively owned by the U.S. holder are redeemed or (ii) 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 shares of our stock. The redemption of the Class A common stock will not be essentially equivalent to a dividend if a U.S. holder’s conversion 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. However, 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.” A U.S. holder should consult with its own tax advisors as to the tax consequences of a redemption.
If none of the foregoing tests is satisfied, then the redemption will be treated as a corporate distribution and the tax effects will be as 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 will be added to the U.S. holder’s adjusted tax basis in its remaining stock, or, if it has none, to the U.S. holder’s adjusted tax basis in its warrants or possibly in other stock constructively owned by it.
Exercise, Lapse or Redemption of a Warrant. Except as discussed below with respect to the cashless exercise of a warrant, a U.S. holder generally will not recognize taxable gain or loss on the acquisition of common stock upon exercise of a warrant for cash. The U.S. holder’s tax basis in the share of our Class A common stock received upon exercise of the warrant generally will be an amount equal to the sum of the U.S. holder’s initial investment in the warrant (i.e., the portion of the U.S. holder’s purchase price for units that is allocated to the warrant, as described above under “— Allocation of Purchase Price and
Characterization of a Unit”) and the exercise price. It is unclear whether the U.S. holder’s holding period for the Class A common stock received upon exercise of the warrants will begin on the date following the date of exercise or on the date of exercise of the warrants; in either case, the holding period will not include the period during which the U.S. holder held the warrants. If a warrant is allowed to lapse unexercised, a U.S. holder generally will recognize a capital loss equal to such holder’s tax basis in the warrant.
The tax consequences of a cashless exercise of a warrant are not clear under current tax law. A cashless exercise may be tax-free, either because the exercise is not a realization event or because the exercise is treated as a recapitalization for U.S. federal income tax purposes. In either tax-free situation, a U.S. holder’s basis in the Class A common stock received would equal the holder’s basis in the warrants exercised therefor. If the cashless exercise were treated as not being a realization event, it is unclear whether a U.S. holder’s holding period in the Class A common stock would be treated as commencing on the date following the date of exercise or on the date of exercise of the warrant; in either case, the holding period would not include the period during which the U.S. holder held the warrants. If the cashless exercise were treated as a recapitalization, the holding period of the Class A common stock would include the holding period of the warrants exercised therefor.
It is also possible that a cashless exercise could be treated in part as a taxable exchange in which gain or loss would be recognized. In such event, a U.S. holder could be deemed to have surrendered warrants equal to the number of shares of Class A common stock having a value equal to the exercise price for the total number of warrants to be exercised. The U.S. holder would recognize capital gain or loss in an amount equal to the difference between the fair market value of the Class A common stock received in respect of the warrants deemed surrendered and the U.S. holder’s tax basis in the warrants deemed surrendered. In this case, a U.S. holder’s tax basis in the Class A common stock received would equal the sum of the fair market value of the Class A common stock received in respect of the warrants deemed surrendered and the U.S. holder’s tax basis in the warrants exercised. It is unclear whether a U.S. holder’s holding period for the Class A common stock would commence on the date following the date of exercise or on the date of exercise of the warrant; in either case, the holding period would not include the period during which the U.S. holder held the warrant.
Due to the absence of authority on the U.S. federal income tax treatment of a cashless exercise, including when a U.S. holder’s holding period would commence with respect to the Class A common stock received, there can be no assurance which, if any, of the alternative tax consequences and holding periods described above would be adopted by the IRS or a court of law. Accordingly, U.S. holders should consult their tax advisors regarding the tax consequences of a cashless exercise.
If we redeem warrants pursuant to the redemption provisions described in the section of this prospectus entitled “Description of Securities — Warrants — Redemption of warrants” or if we purchase warrants in an open market transaction, such redemption or purchase generally will be treated as a taxable disposition to the U.S. holder, taxed as described above under “— Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants.”
Possible Constructive Distributions. The terms of each warrant provide for an adjustment to the number of shares of common stock for which the warrant may be exercised or to the exercise price of the warrant in certain events, as discussed in the section of this prospectus entitled “Description of Securities — Redeemable Warrants — Public Stockholders’ Warrants.” An adjustment which has the effect of preventing dilution generally is not taxable. The U.S. holders of the warrants would, however, be treated as receiving a constructive distribution from us if, for example, the adjustment to the number of such shares or to such exercise price increases the warrantholders’ proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of shares of common stock that would be obtained upon exercise or through a decrease in the exercise price of the warrant) as a result of a distribution of cash or other property, such as other securities, to the holders of shares of our common stock, or as a result of the issuance of a stock dividend to holders of shares of our common stock, in each case which is taxable to the holders of such shares as a distribution. Such constructive distribution would be subject to tax as described under that section in the same manner as if the U.S. holders of the warrants received a cash distribution from us equal to the fair market value of such increased interest.
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 units, shares of Class A common stock and warrants, unless the U.S. holder is an exempt recipient. 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).
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
This section applies to you if you are a “Non-U.S. holder.” As used herein, the term “Non-U.S. holder” means a beneficial owner of our units, Class A common stock or warrants who or that is for U.S. federal income tax purposes:
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a non-resident alien individual (other than certain former citizens and residents of the U.S. subject to U.S. tax as expatriates);
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a foreign corporation or
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an estate or trust that is not a U.S. holder;
but generally does not include an individual who is present in the U.S. for 183 days or more in the taxable year of disposition. If you are such an individual, you should consult your tax advisor regarding the U.S. federal income tax consequences of the acquisition, ownership or sale or other disposition of our securities.
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). 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, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants” below. In addition, if we determine that we are likely to be classified as a “U.S. real property holding corporation” (see “Non-U.S. Holders — Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants” below), we will withhold 15% of any distribution that exceeds our current and accumulated earnings and profits.
The withholding tax does not apply to dividends paid to a Non-U.S. holder who provides a Form W-8ECI, certifying that the dividends are effectively connected with the Non-U.S. holder’s conduct of a trade or business within the United States. Instead, the effectively connected dividends will be subject to regular U.S. income tax as if the Non-U.S. holder were a U.S. resident, subject to an applicable income tax treaty providing otherwise. A Non-U.S. corporation receiving effectively connected dividends may also be subject to an additional “branch profits tax” imposed at a rate of 30% (or a lower treaty rate).
Exercise, Lapse or Redemption of a Warrant. The U.S. federal income tax treatment of a Non-U.S. holder’s exercise of a warrant, or the lapse of a warrant held by a Non-U.S. holder, generally will correspond to the U.S. federal income tax treatment of the exercise or lapse of a warrant by a U.S. holder, as described under “U.S. holders — Exercise or Lapse of a Warrant” above, although to the extent a cashless exercise results in a taxable exchange, the consequences would be similar to those described below in “Non-U.S. Holders — Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants.” The U.S. federal income tax treatment for a Non-U.S. holder of a
redemption of warrants for cash described in the section of this prospectus entitled “Description of Securities — Warrants — Public Stockholders’ Warrants — Redemption of warrants” (or if we purchase warrants in an open market transaction) would be similar to that described below in Non-U.S. Holders — Gain or Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants.”
Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants. A Non-U.S. holder generally will 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 24 months from the closing of this offering, or warrants (including an expiration or redemption of our warrants), in each case without regard to whether those securities were held as part of a unit, unless:
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the gain is effectively connected with the conduct of a trade or business by the Non-U.S. holder within the United States (and, under certain income tax treaties, is attributable to a United States permanent establishment or fixed base maintained by the Non-U.S. holder); or
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we are or have been a “U.S. 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.
Unless an applicable treaty provides otherwise, gain described in the first bullet point above will be subject to tax at generally applicable U.S. federal income tax rates as if the Non-U.S. holder were a U.S. resident. 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 treaty rate).
If the second 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 or warrants will be subject to tax at generally applicable U.S. federal income tax rates. In addition, a buyer of our Class A common stock or warrants from such holder may be required to withhold U.S. federal 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 U.S. real property holding corporation if the fair market value of our “United States real property interests” equals or exceeds 50 percent 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.
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 the section of this prospectus entitled “Description of Securities — Common Stock” generally will 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, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants,” as applicable.
Possible Constructive Distributions. The terms of each warrant provide for an adjustment to the number of shares of Class A common stock for which the warrant may be exercised or to the exercise price of the warrant in certain events, as discussed in the section of this prospectus captioned “Description of Securities — Warrants — Public Stockholders’ Warrants.” An adjustment which has the effect of preventing dilution is generally not a taxable event. Nevertheless, a Non-U.S. holder of warrants would be treated as receiving a constructive distribution from us if, for example, the adjustment increases the holder’s
proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of shares of Class A common stock that would be obtained upon exercise) as a result of a distribution of cash or other property, such as other securities, to the holders of shares of our Class A common stock which is taxable to such holders as a distribution. Any constructive distribution received by a Non-U.S. holder would be subject to U.S. federal income tax (including any applicable withholding) in the same manner as if such Non-U.S. holder received a cash distribution from us equal to the fair market value of such increased interest without any corresponding receipt of cash.
Information Reporting and Backup Withholding. Information returns will be filed with the IRS in connection with payments of dividends and the proceeds from a sale or other disposition of our units, shares of Class A common stock and warrants. A Non-U.S. holder may have to comply with certification procedures to establish that it is not a United States person in order to avoid information reporting and backup withholding requirements. The certification procedures required to claim a reduced rate of withholding under a treaty will satisfy the certification requirements necessary to avoid the backup withholding as well. The amount of any backup withholding from a payment to a Non-U.S. holder will be allowed as a credit against such holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is timely furnished to the IRS.
FATCA Withholding Taxes. Provisions commonly referred to as “FATCA” impose withholding of 30% on payments of dividends (including constructive dividends) on our Class A common stock to “foreign financial institutions” (which is broadly defined for this purpose and in general includes investment vehicles) and certain other Non-U.S. entities unless various U.S. information reporting and due diligence requirements (generally relating to ownership by U.S. persons of interests in or accounts with those entities) have been satisfied by, or an exemption applies to, the payee (typically certified as to by the delivery of a properly completed IRS Form W-8BEN-E). Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules. Under certain circumstances, a Non-U.S. holder might be eligible for refunds or credits of such withholding taxes, and a Non-U.S. holder might be required to file a U.S. federal income tax return to claim such refunds or credits. Prospective investors should consult their tax advisers regarding the effects of FATCA on their investment in our securities.
UNDERWRITING
The company and the underwriters named below have entered into an underwriting agreement with respect to the units being offered. Subject to certain conditions, the underwriters have agreed to purchase the number of units indicated in the following table.
|
Underwriters
|
|
|
Number of Units
|
|
|
ThinkEquity, a division of Fordham Financial Management, Inc.
|
|
|
|
|
|
|
|
|
Piper Sandler & Co.
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
22,500,000 |
|
|
The underwriters are committed to take and pay for all of the units being offered, if any are taken, other than the units covered by the option described below unless and until this option is exercised.
The company granted to the underwriters an option to purchase, from time to time, in whole or in part, up to an aggregate additional 3,375,000 units at the public offering price set forth on the cover page of this prospectus less underwriting discounts and commissions from the company to cover sales by the underwriters of a greater number of units than the total number set forth in the table above. They may exercise that option for 45 days.
The following table shows the total underwriting discounts and commissions to be paid to the underwriters by the company. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase 3,375,000 additional units.
| |
Public offering price
|
|
|
|
$ |
10.00 |
|
|
|
|
$ |
225,000,000 |
|
|
| |
Underwriting commissions(1)
|
|
|
|
|
0.04 |
|
|
|
|
$ |
1,000,000 |
|
|
| |
Proceeds, before expenses, to us
|
|
|
|
$ |
9.96 |
|
|
|
|
$ |
224,000,000 |
|
|
(1)
In addition to the cash compensation set forth herein, we have agreed to issue to the underwriters 112,500 units, or up to 129,375 units if the underwriters’ over-allotment option is exercised in full, each consisting of one share of common stock and one-half of one redeemable warrant (the “Underwriter Units”), in a private placement to be completed concurrently with the consummation of this offering. Except with respect to certain registration rights and transfer restrictions, the Underwriter Units will be identical to the public units sold in this offering.
The company estimates expenses payable in connection with this offering, other than the underwriting discounts and commissions referred to above, will be approximately $950,000. The company has agreed to pay certain out-of-pocket expenses of the underwriters, including background checks up to $10,000 in the aggregate, accountable road show expenses up to $15,000, and fees and expenses of the underwriters’ legal counsel in an amount not to exceed $90,000. Accountable expenses for the underwriters will not exceed $135,000 in the aggregate.
Units 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. After the initial offering of the units, the representatives may change the offering price and the other selling terms. The offering of the units by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.
The company and its sponsors, officers, and directors have agreed with the underwriters, subject to certain exceptions, not to, except with the prior written consent of the underwriters, offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any units, warrants, shares of Class A common stock or any other securities convertible into, or exercisable, or exchangeable for, shares of Class A common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus; provided, however, that the company may (1) issue and sell the private placement warrants, (2) issue and sell the additional units to cover the underwriters’ over-allotment option (if any), (3) register with the SEC pursuant to an agreement to be entered into concurrently with the issuance and sale of the securities in this offering, the resale of the founder shares and the private placement warrants or the warrants and shares of Class A common stock issuable upon exercise of the warrants and (4) issue securities in connection with a Business Combination. The underwriters in their sole discretion may release any of the securities subject to these lock-up agreements at any time without notice.
The company’s initial stockholders have agreed not to transfer, assign or sell any of their founder shares until: (i) with respect to 50% of the founder shares, the earlier of (x) twelve months after the date of the
consummation of an initial business combination or (y) the date on which the closing price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination and (ii) with respect to the remaining 50% of the founder shares, twelve months after the date of the consummation of our initial business combination; except to certain permitted transferees and under certain circumstances as described herein under “Principal Stockholders — Transfers of Founder Shares and Private Placement Securities”. Any permitted transferees will be subject to the same restrictions and other agreements of our initial stockholders with respect to any founder shares. We refer to such transfer restrictions throughout this prospectus as the lock-up. Notwithstanding the foregoing, if we consummate a transaction after our initial business combination which results in our stockholders having the right to exchange their shares for cash, securities or other property, the founder shares will be released from the lock-up. Any permitted transferees will be subject to the same restrictions and other agreements of the company’s initial stockholders with respect to any founder shares. The company refers to such transfer restrictions throughout this prospectus as the lock-up.
The private placement warrants (including the shares of Class A common stock issuable upon exercise of the private placement warrants and the shares of Class A common stock underlying the private units) will not be transferable, assignable or salable until 30 days after the completion of the company’s initial business combination (except with respect to permitted transferees as described herein under “Principal Stockholders — Transfers of Founder Shares and Private Placement Securities”).
We have agreed to issue to ThinkEquity and Piper Sandler and/or their designees 112,500 Underwriter Units (or 129,375 Underwriter Units if the underwriter’s over-allotment option is exercised in full) upon the consummation of this offering. ThinkEquity and Piper Sandler have agreed not to transfer, assign or sell any such Underwriter Units until the completion of our initial business combination. The Underwriter Units are identical to the units sold in this offering except that the Underwriter Warrants, so long as they are held by the underwriter or its permitted transferees, (i) will not be redeemable by us, (ii) may not (including the Class A common stock issuable upon exercise of these warrants), subject to certain limited exceptions, be transferred, assigned or sold by the holders until after the completion of our initial business combination, (iii) may be exercised by the holders on a cashless basis, (iv) will be entitled to registration rights and (v) for so long as they are held by the underwriters, will not be exercisable more than five years from the effective date of the registration statement of which this prospectus forms a part in accordance with FINRA Rule 5110(f)(2)(G)(i). If the Underwriter Warrants are held by holders other than the underwriter or its permitted transferees, the Underwriter Warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering.
In addition, ThinkEquity and Piper Sandler have agreed (i) waive their redemption rights with respect to their Underwriter Shares in connection with the completion of our initial business combination, (ii) waive their redemption rights with respect to their Underwriter Shares in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity and (iii) waive their rights to liquidating distributions from the trust account with respect to their Underwriter Shares if we fail to complete our initial business combination within 24 months from the closing of this offering. The shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the date of the effectiveness of the registration statement of which this prospectus forms a part pursuant to Rule 5110(g)(1) of FINRA’s Conduct Rules. Pursuant to FINRA Rule 5110(g)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the registration statement of which this prospectus forms a part, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days immediately following the effective date of the registration statement of which this prospectus forms a part except to any underwriter and selected dealer participating in the offering and their bona fide officers or partners.
Subject to certain conditions, we granted ThinkEquity and Piper Sandler for a period beginning on the closing of this offering and ending on the later of 24 months after the closing of this offering and 12 months after the consummation of our business combination, a right of first refusal to act as (i) exclusive financial advisor in connection with all of our proposed business combinations for a fee of up to 3.5% of the proceeds of this offering (subject to our right to allocate up to 50% of such fee to another financial institution or extinguish such amount in our sole discretion), and (ii) sole investment banker, sole book-runner and/or sole placement agent, at ThinkEquity’s and Piper Sandler’s sole discretion, for each and every future public and private equity and debt offering, including all equity linked financings, during such period for us or any successor to us or any of our subsidiaries, on terms agreed to by both us and ThinkEquity and Piper Sandler in good faith. In accordance with FINRA Rule 5110(f)(2)(E)(i), such right of first refusal shall not have a duration of more than three years from the effective date of the registration statement of which this prospectus forms a part.
Prior to the offering, there has been no public market for the units. The initial public offering price has been negotiated among the company and the underwriters. The determination of the per unit offering price was more arbitrary than would typically be the case if the company was an operating company. Among the factors considered in determining 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, the company’s management, the company’s capital structure, and currently prevailing general conditions in equity securities markets, including current market valuations of publicly traded companies considered comparable to the company.
An application will be made to quote the units, common stock and warrants on NYSE under the symbol “FGNA.U”, “FGNA” and “FGNA WS”, respectively.
In connection with the offering, the underwriters may purchase and sell units in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of units than they are required to purchase in the offering, and a short position represents the amount of such sales that have not been covered by subsequent purchases. A “covered short position” is a short position that is not greater than the amount of additional units for which the underwriters’ option described above may be exercised. The underwriters may cover any covered short position by either exercising their option to purchase additional units or purchasing units in the open market. In determining the source of units to cover the covered short position, the underwriters will consider, among other things, the price of units available for purchase in the open market as compared to the price at which they may purchase additional units pursuant to the option described above. “Naked” short sales are any short sales that create a short position greater than the amount of additional units for which the option described above may be exercised. The underwriters must cover any such naked short position by purchasing units in the open market. 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 units in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of units made by the underwriters in the open market prior to the completion of the offering.
The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased units sold by or for the account of such underwriter in stabilizing or short covering transactions.
Purchases to cover a short position and stabilizing transactions, 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 company’s units, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the units. As a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. The underwriters are not required to engage in these activities and may end any of these activities at any time. These transactions may be effected on NYSE in the over-the-counter market or otherwise.
European Economic Area
In relation to each Member State of the European Economic Area (each a “Member State”), no units have been offered or will be offered pursuant to the offering to the public in that Member State prior to
the publication of a prospectus in relation to the units which has been approved by the competent authority in that Member State or, where appropriate, approved in another Member State and notified to the competent authority in that Member State, all in accordance with the Prospectus Regulation), except that offers of units may be made to the public in that Member State at any time under the following exemptions under the Prospectus Regulation:
(a)
to any legal entity which is a qualified investor as defined under the Prospectus Regulation;
(b)
to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus Regulation), subject to obtaining the prior consent of the Representatives for any such offer; or
(c)
in any other circumstances falling within Article 1(4) of the Prospectus Regulation,
provided that no such offer of units shall require the company or any Representative to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.
For the purposes of this provision, the expression an “offer to the public” in relation to any units in any Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any units to be offered so as to enable an investor to decide to purchase or subscribe for any units, and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129.
United Kingdom
The underwriters have represented and agreed that:
(a)
they have 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 Financial Services and Markets Act 2000 (FSMA)) received by it in connection with the issue or sale of the units in circumstances in which Section 21(1) of the FSMA does not apply to the company; and
(b)
they have complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the units in, from or otherwise involving the United Kingdom.
Canada
The securities 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 securities must be made in accordance with an exemption form, 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 offering memorandum (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 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.
Hong Kong
The units 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 (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong Kong) (“Companies (Winding Up and Miscellaneous Provisions) Ordinance”) or which do not constitute an invitation to the public within the meaning of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong)
(“Securities and Futures Ordinance”), or (ii) to “professional investors” as defined in the Securities and Futures Ordinance and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance, and no advertisement, invitation or document relating to the units 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 securities laws of Hong Kong) other than with respect to units which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” in Hong Kong as defined in the Securities and Futures Ordinance and any rules made thereunder.
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 units may not be circulated or distributed, nor may the units 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 (as defined under Section 4A of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”)) under Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, 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 conditions set forth in the SFA.
Where the units are subscribed or purchased under Section 275 of the SFA by a relevant person which is 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, the securities (as defined in Section 239(1) of the SFA) of that corporation shall not be transferable for 6 months after that corporation has acquired the shares under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), (2) where such transfer arises from an offer in that corporation’s securities pursuant to Section 275(1A) of the SFA, (3) where no consideration is or will be given for the transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore (“Regulation 32”).
Where the units are subscribed or purchased under Section 275 of the SFA by a relevant person which is a trust (where the trustee is not an accredited investor (as defined in Section 4A of the SFA)) whose sole purpose is to hold investments and each beneficiary of the trust is an accredited investor, the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferable for 6 months after that trust has acquired the shares under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), (2) where such transfer arises from an offer that is made on terms that such rights or interest are acquired at a consideration of not less than S$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), (3) where no consideration is or will be given for the transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32.
Japan
The securities have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended), or the FIEA. The securities may not be offered or sold, directly or indirectly, in Japan or to or for the benefit of any resident of Japan (including any person resident in Japan or any corporation or other entity organized under the laws of Japan) or to others for reoffering or resale, directly or indirectly, in Japan or to or for the benefit of any resident of Japan, except pursuant to an exemption from the registration requirements of the FIEA and otherwise in compliance with any relevant laws and regulations of Japan.
The company has agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933.
The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to the issuer and to persons and entities with relationships with the issuer, for which they received or will receive customary fees and expenses.
In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the issuer (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the issuer. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.
LEGAL MATTERS
White & Case LLP, New York, New York, is acting as counsel in connection with the registration of our securities under the Securities Act, and as such, will pass upon the validity of the securities offered in this prospectus. Loeb & Loeb LLP advised the underwriters in connection with the offering of the securities.
EXPERTS
The balance sheet of FG New America Acquisition Corp. as of July 13, 2020 and the related statements of operations, changes in stockholder’s equity and cash flows for the period from June 24, 2020 (inception) through July 13, 2020 appearing in this prospectus have been audited by Plante & Moran, PLLC, independent registered public accounting firm, as set forth in their report thereon, appearing elsewhere in this prospectus, and are included in reliance upon such report given on the authority of such firm 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 www.sec.gov.
INDEX TO FINANCIAL STATEMENTS
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Page
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| Audited Financial Statements of FG New America Acquisition Corp.: |
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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 Stockholders and Board of Directors
FG New America Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of FG New America Acquisition Corp. (the “Company”) as of July 13, 2020, the related statements of operations, changes in stockholders’ equity, and cash flows for the period from June 24, 2020 (inception) to July 13, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of July 13, 2020 and the results of its operations and its cash flows for the period from June 24, 2020 (inception) to July 13, 2020, 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 ability to execute its business plan is dependent upon its completion of the proposed initial public offering described in Note 3 to the financial statements. The Company has a working capital deficit of $15,000 as of July 13, 2020 and lacks the financial resources needed 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. 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
The Company’s management is responsible for these financial statements. 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/ Plante & Moran, PLLC
Plante & Moran, PLLC
We have served as the Company’s auditor since 2020.
Chicago, Illinois
September 28, 2020
FG New America Acquisition Corp.
Balance Sheet
July 13, 2020
| |
ASSETS |
|
|
|
|
|
|
|
| |
Current assets |
|
|
|
|
|
|
|
| |
Cash
|
|
|
|
$ |
— |
|
|
| |
Deferred offering costs
|
|
|
|
|
44,000 |
|
|
| |
Total assets
|
|
|
|
$ |
44,000 |
|
|
| |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
| |
Current liabilities |
|
|
|
|
|
|
|
| |
Accounts payable
|
|
|
|
$ |
1,000 |
|
|
| |
Accrued offering costs
|
|
|
|
|
14,000 |
|
|
| |
Total liabilities
|
|
|
|
$ |
15,000 |
|
|
| |
Stockholders’ equity |
|
|
|
|
|
|
|
| |
Preferred stock, $.0001 par value; 1,000,000 shares authorized; none issued and
outstanding
|
|
|
|
$ |
— |
|
|
| |
Class A Common stock, $.0001 par value; 380,000,000 shares authorized; none issued and outstanding
|
|
|
|
|
— |
|
|
| |
Class B Common stock, $.0001 par value; 20,000,000 shares authorized; 6,468,750 issued and outstanding
|
|
|
|
|
647 |
|
|
| |
Additional paid-in capital
|
|
|
|
|
29,353 |
|
|
| |
Accumulated deficit
|
|
|
|
|
(1,000) |
|
|
| |
Total stockholders’ equity
|
|
|
|
|
29,000 |
|
|
| |
Total liabilities and stockholders’ equity
|
|
|
|
$ |
44,000 |
|
|
FG New America Acquisition Corp.
Statement of Operations
For the period from June 24, 2020 (inception) to July 13, 2020
| |
Formation costs
|
|
|
|
$ |
1,000 |
|
|
| |
General and administrative expenses
|
|
|
|
|
— |
|
|
| |
Net loss
|
|
|
|
$ |
(1,000) |
|
|
| |
Weighted average common shares outstanding |
|
|
|
|
|
|
|
| |
Basic and diluted(1)
|
|
|
|
|
281,250 |
|
|
| |
Basic and diluted net loss per share
|
|
|
|
$ |
(0.004) |
|
|
(1)
Excludes 843,750 shares that are subject to forfeiture to the extent the underwriters’ over-allotment is not exercised in full.
FG New America Acquisition Corp.
Statement of Changes in Stockholders’ Equity
For the period from June 24, 2020 (inception) to July 13, 2020
| |
|
|
Class B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Common
Stock
Shares
|
|
|
Common
Stock
Amount
|
|
|
Additional
Paid-in
Capital
|
|
|
Accumulated
Deficit
|
|
|
Total
Stockholders’
Equity
|
|
|
Balance at June 24, 2020
(inception)
|
|
|
|
|
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
Common shares issued to initial
shareholder
|
|
|
|
|
6,468,750 |
|
|
|
|
|
647 |
|
|
|
|
|
29,353 |
|
|
|
|
|
— |
|
|
|
|
|
30,000 |
|
|
|
Net loss
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
(1,000) |
|
|
|
|
|
(1,000) |
|
|
|
Balance at July 13, 2020
|
|
|
|
|
6,468,750 |
|
|
|
|
$ |
647 |
|
|
|
|
$ |
29,353 |
|
|
|
|
$ |
(1,000) |
|
|
|
|
$ |
29,000 |
|
|
FG New America Acquisition Corp.
Statement of Cash Flows
For the period from June 24, 2020 (inception) to July 13, 2020
| |
Cash flows from operating activities |
|
|
|
|
|
|
|
| |
Net loss
|
|
|
|
$ |
(1,000) |
|
|
| |
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
| |
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
| |
Accounts payable
|
|
|
|
|
1,000 |
|
|
| |
Net cash provided by operating activities
|
|
|
|
$ |
— |
|
|
| |
Cash flows from financing activities |
|
|
|
|
|
|
|
| |
Proceeds from sale of shares of common stock to initial shareholder
|
|
|
|
$ |
30,000 |
|
|
| |
Payment of offering costs
|
|
|
|
|
(30,000) |
|
|
| |
Net Cash provided by financing activities
|
|
|
|
$ |
— |
|
|
| |
Net increase in cash
|
|
|
|
$ |
— |
|
|
| |
Cash at beginning of period
|
|
|
|
|
— |
|
|
| |
Cash at end of period
|
|
|
|
$ |
— |
|
|
| |
Supplemental diclosure for non-cash financing activities |
|
|
|
|
|
|
|
| |
Accrual of offering costs
|
|
|
|
$ |
14,000 |
|
|
FG NEW AMERICA ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
FG New America Acquisition Corp. (the “Company”) is a blank check company incorporated in Delaware on June 24, 2020. The Company was formed for the purpose of merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (“Business Combination”).
Although the Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination, the Company intends to focus on businesses in the financial technology industry. 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 July 13, 2020, the Company had not yet commenced any operations. All activity through July 13, 2020 relates to the Company’s formation and the proposed initial public offering (“Proposed 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 nonoperating income in the form of interest income from the proceeds derived from the Proposed 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 i) the Proposed Offering of 22,500,000 units at $10.00 per unit (or 25,875,000 units if the underwriters’ over-allotment option is exercised in full) (the “Units” and, with respect to the shares of Class A common stock included in the Units being offered, the “Public Shares”) which is discussed in Note 3, ii) the sale of 3,848,750 $11.50 exercise price warrants (the “$11.50 Private Warrants”) at a price of $1.00 per $11.50 Private Warrant, iii) the sale of 1,512,500 $15.00 exercise price warrants (the “$15 Private Warrants”, and together with $11.50 Private Warrants the “Private Warrants”) at a price of $0.10 per $15 Private Warrant, and iv) the sale of 462,500 units at $10.00 per unit (the “Private Units”) in a private placement to the Company’s sponsor, FG New America Investors LLC (the “Sponsor”), directors, officers and advisors that will close simultaneously with the Proposed Offering. Each Private Unit will consist of one Class A common share and one-half of one non-redeemable warrant (“Private Unit Warrant”). Each whole Private Unit Warrant will entitle the holder to purchase one share of common stock at an exercise price of $11.50 per share. The Company intends to raise the same amount of capital in private placement from the sale of Private Warrants and Private Units regardless of whether the underwriters exercise over-allotment option or not in the Proposed Offering.
The Company intends to list the Units on the New York Stock Exchange (“NYSE”). The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Proposed Offering and sale of the Private Warrants and Private Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. NYSE rules provide that the Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the net assets held in the Trust Account (as defined below) (net of amounts disbursed to management for working capital purposes). The Company will only complete a Business Combination if the post-Business Combination 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”). There is no assurance that the Company will be able to successfully effect a Business Combination.
Upon the closing of the Proposed Offering, management has agreed that $10.25 per Unit sold in the Proposed Offering (but only $10.00 for the Units sold pursuant to the underwriters’ over-allotment option) will be held in a trust account (“Trust Account”) and invested 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 meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as described below.
FG NEW AMERICA ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS (Continued)
The Company will provide its shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. In connection with a proposed Business Combination, the Company may seek shareholder approval of a Business Combination at a meeting called for such purpose at which shareholders may seek to redeem their shares, regardless of whether they vote for or against the proposed Business Combination.
The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 upon or immediately prior to such consummation of a Business Combination and, if the Company seeks shareholder approval, a majority of the outstanding shares voted are voted in favor of the Business Combination.
If the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s amended and restated certificate of incorporation will provide that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder 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 seeking redemption rights with respect to 15% or more of the Public Shares without the Company’s prior written consent.
The holders of Public Shares will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (including any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. A portion of the Public Shares will be recorded at a redemption value and classified as temporary equity upon the completion of the Proposed Offering, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity” in order for the Company to maintain net tangible assets of at least $5,000,001.
If a shareholder vote is not required and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its amended and restated certificate of incorporation, offer such redemption pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination.
The Sponsor, officers, directors and advisors (the “Initial Shareholders”) have agreed (a) to vote their Founder Shares (as defined in Note 5) as well as any common shares underlying the Private Units, and any Public Shares purchased during or after the Proposed Offering in favor of a Business Combination, (b) not to propose an amendment to the Company’s amended and restated certificate of incorporation with respect to the Company’s pre-Business Combination activities prior to the consummation of a Business Combination unless the Company provides dissenting public shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment; (c) not to redeem any shares (including the Founder Shares as well as any common shares underlying the Private Units) into the right to receive cash from the Trust Account in connection with a shareholder vote to approve a Business Combination (or to sell any shares in a tender offer in connection with a Business Combination if the Company does not seek shareholder approval in connection therewith) or a vote to amend the provisions of the amended and restated certificate of incorporation relating to shareholders’ rights of pre-Business Combination activity and (d) that the Founder Shares, the Private Units and Private Warrants (including underlying securities) shall not participate in any liquidating distributions upon winding up if a Business Combination is not consummated. However, the Initial Shareholders will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares purchased during or after the Proposed Offering if the Company fails to complete its Business Combination.
The Company will have until 24 months from the closing of the Proposed Offering to consummate a Business Combination (as such period may be extended pursuant to the amended and restated certificate of incorporation, the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of
FG NEW AMERICA ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS (Continued)
winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter, redeem 100% of the outstanding Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned (net of taxes payable and less interest to pay dissolution expenses up to $100,000), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders (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 remaining shareholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations to provide for claims of creditors and the requirements of applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete its initial Business Combination within the Combination Period.
The Sponsor has agreed that it will be liable to the Company, if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amounts in the Trust Account to below $10.25 per share (but only $10.00 per share for the Units sold pursuant to the underwriters’ over-allotment option), except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the Proposed Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). 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 Trust Account 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 July 13, 2020, the Company had no cash and working capital deficit of $15,000. The Company has incurred and expects to continue to incur significant costs in pursuit of its Proposed Offering and Business Combination 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 Offering as discussed in Note 3, as well as sale of Private Warrants and Private Units as discussed above. There is no assurance that the Company’s plans to raise capital or to consummate a Business Combination will be successful or successful within the Combination Period. The Sponsor has agreed to loan the Company up to an aggregate amount of $300,000 to be used, in part, for transaction costs incurred in connection with the Proposed Offering (the “Promissory Note”). As of July 13, 2020, there was not any balance outstanding under the Promissory Note (see Note 5). 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 U.S. Dollars and 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
FG NEW AMERICA ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS (Continued)
the auditor 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 shareholder 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 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 revenues and expenses during the reporting periods.
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.
Cash and cash equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash or cash equivalents as of July 13, 2020.
Deferred offering costs
Deferred offering costs consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the Proposed Offering and that will be charged to shareholders equity upon the completion of the Proposed Offering. Should the Proposed Offering prove to be unsuccessful, these deferred costs, as well as additional expenses incurred, will be charged to operations.
Income taxes
The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
FG NEW AMERICA ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS (Continued)
ASC Topic 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, if any, as income tax expense. There were no unrecognized tax benefits as of July 13, 2020 and no amounts accrued for interest and penalties. 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.
There was no provision for income taxes for the period from June 24, 2020 (inception) to July 13, 2020.
Net loss per 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 by the Initial Shareholders. Weighted average shares were reduced for the effect of an aggregate of 843,750 shares that are subject to forfeiture by Initial Shareholders if the over-allotment option is not exercised by the underwriters (see Note 7). At July 13, 2020, 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.
Fair value of financial instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying balance sheets, primarily due to their short-term nature.
Recently issued accounting standards
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. PROPOSED OFFERING
Pursuant to the Proposed Offering, the Company will offer for sale up to 22,500,000 Units (or 25,875,000 Units if the underwriters’ overallotment option is exercised in full) at a purchase price of $10.00 per Unit. Each Unit will consist of one Class A common share and one-half of one redeemable warrant (“Public Warrant”). Each whole Public Warrant will entitle the holder to purchase one share of common stock at an exercise price of $11.50 per share (see Note 7).
NOTE 4. PRIVATE PLACEMENT
The Sponsor, directors, officers and advisors of the Company have committed to purchase an aggregate of 3,848,750 $11.50 Private Warrants at a price of $1.00 per $11.50 Private Warrant, 1,512,500 $15 Private Warrants at a price of $0.10 per $15 Private Warrant, and 462,500 Private Units at a price of $10.00 per Private Unit, in each case, from the Company in a private placement that will occur simultaneously with the closing of the Proposed Offering. The aggregate gross proceeds from the sale of Private Warrants and Private Units will be $8,625,000. If the Company does not complete a Business Combination within the Combination Period, the Private Warrants and the Private Unit Warrants will expire worthless. The Private Warrants and the Private Unit Warrants will be non-redeemable for cash and exercisable on a cashless basis so long as they are held by the Initial Shareholders or the permitted transferees. Each Private Warrant and the Private Unit Warrant will entitle the holder to purchase one share of common stock at its respective exercise price.
FG NEW AMERICA ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On July 13, 2020, the Company issued an aggregate of 6,468,750 shares of Class B common stock (the “Founder Shares”) to the Initial Shareholders for an aggregate purchase price of $30,000 in cash. On August 7, 2020, the Sponsor transferred an aggregate of 1,250,000 Founder Shares to members of the Company's management and board of directors, resulting in the Sponsor holding 5,218,750 Founder Shares. The Founder Shares include an aggregate of up to 843,750 shares subject to forfeiture by the Initial Shareholders to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the Initial Shareholders will collectively own 20% of the Company’s issued and outstanding shares after the Proposed Offering (assuming the Initial Shareholders do not purchase any Public Shares in the Proposed Offering and excluding the securities underlying the Private Warrants, the Private Units and the Units issued to underwriters).
The Initial Shareholders have agreed not to transfer, assign or sell any of the Founder Shares (except to certain permitted transferees) until, with respect to 50% of the Founder Shares, the earlier of (i) twelve months after the date of the consummation of a Business Combination, or (ii) the date on which the closing price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after a Business Combination, with respect to the remaining 50% of the Founder Shares, 12 months after the date of the consummation of a Business Combination, or earlier, in each case, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s shareholders having the right to exchange their Public Shares for cash, securities or other property.
Promissory Note
On July 13, 2020, the Company issued an unsecured Promissory Note to the Sponsor, pursuant to which the Company may borrow up to an aggregate principal amount of $300,000 from time to time. As of July 13, 2020, there was no balance outstanding under the Promissory Note. The Promissory Note is non-interest bearing and payable on the earlier of (i) December 31, 2020 or (ii) the consummation of the Proposed Offering.
Administrative Services Agreement
The Company intends to enter into an administrative services agreement (the “Administrative Services Agreement”) with the Sponsor whereby the Sponsor will perform certain services for the Company for a monthly fee of $10,000.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the Founder Shares, the Private Units and Private Warrants (and their underlying securities) 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 Offering. The Company will bear the expenses incurred in connection with the filing of any registration statements pursuant to such registration rights.
Underwriting Agreement
The Company will grant the underwriters a 45-day option to purchase up to 3,375,000 additional Units to cover over-allotments at the Proposed Offering price.
The underwriters will be entitled to a fixed cash underwriting discount of $1,000,000 regardless of whether the underwriters’ over-allotment option is exercised or not. In addition, underwriters will also receive a number of Units equal to 0.5% of the Units sold in the Proposed Offering, with such Units restricted from sale until the closing of the Business Combination and with no redemption rights from the Trust Account.
FG NEW AMERICA ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 7. STOCKHOLDERS’ EQUITY
Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock, par value $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. As of July 13, 2020, there were no shares of preferred stock issued or outstanding.
Class A Common Stock — The Company is authorized to issue 380,000,000 shares of Class A common stock, par value $0.0001 per share. Holders of the Company’s Class A common stock are entitled to one vote for each share. As of July 13, 2020, there were no shares of Class A common stock issued and outstanding.
Class B Common Stock — The Company is authorized to issue 20,000,000 shares of Class B common stock, par value $0.0001 per share. On July 13, 2020, the Company issued an aggregate of 6,468,750 shares of Class B common stock as Founder Shares to the Initial Shareholders for an aggregate purchase price of $30,000 in cash. On August 7, 2020, the Sponsor transferred an aggregate of 1,250,000 Founder Shares to members of the Company's management and board of directors, resulting in the Sponsor holding 5,218,750 Founder Shares. The Founder Shares include an aggregate of up to 843,750 shares subject to forfeiture by the Initial Shareholders to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the Initial Shareholders will collectively own 20% of the Company’s issued and outstanding shares after the Proposed Offering (assuming the Initial Shareholders do not purchase any Public Shares in the Proposed Offering and excluding the securities underlying the Private Warrants, the Private Units and the Units issued to underwriters).
Holders of the Company’s Class B common stock are entitled to one vote for each share. With respect to any matter submitted to a vote of the Company’s stockholders, including any vote in connection with the Business Combination, holders of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted to a vote of the Company’s 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 the Business Combination, or earlier at the option of the holders, on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as described 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 issued in the Proposed Offering and related to the closing of the Business Combination, including pursuant to a specified future issuance, 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 then-outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance, including a specified future issuance) such that: i) the numerator shall be equal to the sum of (A) 25% of all shares of Class A common stock issued or issuable (upon the conversion or exercise of any equity-linked securities or otherwise) by the Company, related to or in connection with the consummation of the Business Combination (excluding any securities issued or issuable to any seller in the Business Combination) plus (B) the number of shares of Class B common stock issued and outstanding prior to the closing of the Business Combination; and ii) the denominator shall be the number of shares of Class B common stock issued and outstanding prior to the closing of the Business Combination.
Warrants — Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. Each whole Public Warrant will entitle the holder to purchase one share of Class A common stock at an exercise price of $11.50 per share, and will become exercisable on the later of 30 days after the completion of the Business Combination and 12 months from the closing of the Proposed Offering. The Public Warrants will expire on the fifth anniversary of the completion of the Business Combination, or earlier upon redemption or liquidation. The Company may redeem the Public Warrants i) at a redemption price of $0.01 per warrant, ii) at any time after the Public Warrants become exercisable, iii) upon a minimum of 30 days’ prior written notice of redemption, iv) if, and only if, the last sales price of Company’s Class A common stock equals or exceeds $18.00 per
FG NEW AMERICA ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS (Continued)
share for any 20 trading days within a 30 trading day period commencing after the date the Public Warrants become exercisable and ending three business days before Company sends the notice of redemption, and v) if, and only if, there is a current registration statement in effect with respect to the shares of Class A common stock underlying such Public Warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption.
The $11.50 Private Warrants will have terms similar to the Public Warrants underlying the Units being sold in the Proposed Offering, except that the $11.50 Private Warrants will be issued as a whole warrant having one common stock underlying each $11.50 Private Warrant (as compared to one-half of one Public Warrant included in each Unit being sold in the Proposed Offering), will be non-redeemable and may be exercised on a cashless basis so long as they continue to be held by the Initial Shareholders or their permitted transferees. Additionally, $11.50 Private Warrants and the shares issuable upon the exercise of the $11.50 Private Warrants will not be transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions.
The $15 Private Warrants will entitle the holder to purchase one common share at an exercise price of $15.00 per each share, will be exercisable for a period of 10 years from the date of Business Combination, will be non-redeemable, and may be exercised on a cashless basis so long as they continue to be held by the Initial Shareholders or their permitted transferees. Additionally, $15 Private Warrants and the shares issuable upon the exercise of the $15 Private Warrants will not be transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions.
The Private Unit Warrants will have terms similar to the Public Warrants underlying the Units being sold in the Proposed Offering, except that the Private Unit Warrants will be non-redeemable and may be exercised on a cashless basis so long as they continue to be held by the Initial Shareholders or their permitted transferees. Additionally, Private Unit Warrants and the shares issuable upon the exercise of the Private Unit Warrants will not be transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions.
The exercise price and number of ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described above, the warrants will not be adjusted for issuances of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such warrants. Accordingly, the warrants may expire worthless.
NOTE 8. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to September 28, 2020 the date that the financial statements were issued. On each of August 4, 2020 and August 18, 2020, the Company borrowed $50,000 pursuant to the Promissory Note issued to the Sponsor on July 13, 2020, as discussed above. On August 4, 2020 and August 25, 2020, the Company also paid $39,312 in FINRA fees and $33,585.75 in SEC fees, respectively, pertaining to the Proposed Offering. On August 7, 2020, the Sponsor transferred an aggregate of 1,250,000 Founder Shares to members of the Company’s management and board of directors.
22,500,000 Units
FG New America Acquisition Corp.
PRELIMINARY PROSPECTUS
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Joint Book-Running Managers
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Piper Sandler
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ThinkEquity
a division of Fordham Financial Management, Inc.
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Until [•], 2020 (25 days after the date of this prospectus), all dealers that buy, sell or trade 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.
You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus.
No dealer, salesperson or any other person is authorized to give any information or make any representations in connection with this offering other than those contained in this prospectus and, if given or made, the information or representations must not be relied upon as having been authorized by us. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any security other than the securities offered by this prospectus, or an offer to sell or a solicitation of an offer to buy any securities by anyone in any jurisdiction in which the offer or solicitation is not authorized or is unlawful.
, 2020
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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SEC expenses
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$ |
34,000 |
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FINRA expenses
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39,000 |
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|
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Accounting fees and expenses
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25,000 |
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Printing and engraving expenses
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45,000 |
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Travel and road show expenses
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25,000 |
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Legal fees and expenses
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345,000 |
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NYSE listing and filing fees
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85,000 |
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Director & Officers liability insurance premiums(1)
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300,000 |
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Miscellaneous
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52,000 |
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Total |
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$ |
950,000 |
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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 an initial 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).
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.
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.
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 limiting or eliminating the liability of directors, whether by our stockholders or by changes in law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise required by law) be prospective only, except to the extent such amendment or change in law permits us to further limit or eliminate the liability of directors on a retroactive basis.
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 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.
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 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 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.
On July 13, 2020, FG New America Investors LLC, our sponsor, purchased an aggregate of 6,468,750 of our Class B common stock (the "founder shares"), in exchange for a capital contribution of $30,000 at an average purchase price of approximately $0.005 per share. On August 7, 2020, our sponsor transferred an aggregate of 1,250,000 founder shares to members of our management and our board of directors, resulting in our sponsor holding 5,218,750 founder shares. 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. The number of founder shares outstanding was determined based on the expectation that the total size of this offering would be a maximum of 25,875,000 units if the underwriters’ over-allotment option is exercised in full and therefore that such founder shares would represent 20% of the outstanding shares after this offering (excluding the shares of Class A common stock underlying the units issued to the underwriters of this offering). Up to 843,750 of these shares will be forfeited depending on the extent to which the underwriters’ over-allotment is exercised.
Each of Larry G. Swets, Jr., D. Kyle Cerminara and Joseph Hugh Moglia are managers of our sponsor. Our sponsor is an accredited investor for purposes of Rule 501 of Regulation D. Each of the equity holders in our sponsor is an accredited investor under Rule 501 of Regulation D. The sole business of our sponsor is to act as the company’s sponsor in connection with this offering. The limited liability company agreement of our sponsor provides that its membership interests may only be transferred to our officers or directors or other persons affiliated with our sponsor, or in connection with estate planning transfers.
Our insiders (and/or their designees) have committed, pursuant to written agreements, to purchase an aggregate of 5,361,250 warrants, consisting of (i) 3,848,750 warrants at $1.00 per warrant and (ii) 1,512,500 warrants at $0.10 per warrant to be sold in private placements occurring simultaneously with the closing of this offering (for an aggregate purchase price of $4,000,000). In addition, our insiders (and/or their designees) have committed, pursuant to a written agreement, to purchase an aggregate of 462,500 units, each unit consisting of one share of Class A common stock and one-half of one non-redeemable warrant. These purchases will take place on a private placement basis simultaneously with the completion of our initial public offering. This issuance 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:
EXHIBIT INDEX
*
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 underwriters at the closing specified
in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriters 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)
The undersigned registrant hereby undertakes that:
(1)
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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Itasca, State of Illinois, on the 28th day of September, 2020.
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FG NEW AMERICA ACQUISITION CORP. |
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By: |
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/s/ Larry G. Swets, Jr.
Larry G. Swets, Jr.
Chief Executive Officer
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Name
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Position
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Date
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*
Larry G. Swets, Jr.
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Chief Executive Officer and Director (Principal Executive Officer) |
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September 28, 2020 |
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/s/ Hassan Baqar
Hassan Baqar
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Chief Financial Officer (Principal Financial and Accounting Officer) |
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September 28, 2020 |
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*
Joseph H. Moglia
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Chairman |
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September 28, 2020 |
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*
D. Kyle Cerminara
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President and Director |
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September 28, 2020 |
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*
Nicholas S. Rudd
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Director |
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September 28, 2020 |
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*
Robert C. Weeks
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Director |
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September 28, 2020 |
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*By: |
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/s/ Hassan Baqar |
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Attorney-in-fact |
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Exhibit 1.1
UNDERWRITING
AGREEMENT
between
FG NEW AMERICA ACQUISITION CORP.
and
THINKEQUITY,
A DIVISION OF FORDHAM FINANCIAL MANAGEMENT,
INC.
and
PIPER SANDLER &
CO.,
as Representatives of the Several
Underwriters
Dated: September [ ], 2020
FG NEW AMERICA
ACQUISITION CORP.
UNDERWRITING AGREEMENT
New York, New York
_________, 2020
ThinkEquity,
A Division of Fordham
Financial Management, Inc.
17 State Street, 22nd
Floor
New York, New York
10004
Piper Sandler &
Co.
345 Park Avenue
Suite 1200
New York, NY 10154
As Representatives
of the Underwriters
named on Schedule
A hereto
Ladies and Gentlemen:
The
undersigned, FG New America Acquisition Corp., a Delaware corporation (the “Company”), hereby confirms
its agreement with ThinkEquity, a division of Fordham Financial Management, Inc. (“ThinkEquity”) and Piper
Sandler & Co. (“Piper” and together with ThinkEquity, the “Representatives”) and with
the other underwriters named on Schedule A hereto (if any), for which the Representatives are acting as representatives
(the Representatives and such other underwriters being collectively referred to herein as the “Underwriters”
or, each underwriter individually, an “Underwriter”) as follows:
1. Purchase
and Sale of Securities.
1.1 Firm
Securities.
1.1.1
Purchase of Firm Units. On the basis of the representations and warranties contained herein, but subject to the
terms and conditions herein set forth, the Company agrees to issue and sell to the several Underwriters and the Underwriters agree
to purchase from the Company, severally and not jointly, an aggregate of 22,500,000 units (the “Firm Units”)
of the Company, as set forth opposite the respective names of the Underwriters on Schedule A hereto, at a purchase price
(net of discounts and commissions) of $9.95555555555556 per Firm Unit. The Firm Units are to be offered initially to the public
(the “Offering”) at the offering price of $10.00 per Firm Unit. Each Firm Unit consists of one share of Class
A common stock, $0.0001 par value, of the Company (the “Common Stock”), and one-half of one redeemable
warrant (the “Warrants”). The Common Stock and the Warrants included in the Firm Units will trade separately
on the fifty second (52nd) day following the date hereof unless the Representatives determine to allow earlier separate
trading. Notwithstanding the immediately preceding sentence, in no event will the Common Stock and the Warrants included in the
Firm Units trade separately until (i) the Company has filed with the Securities and Exchange Commission (the “Commission”)
a Current Report on Form 8-K that includes an audited balance sheet reflecting the Company’s receipt of the proceeds of
the Offering and the Private Placements (as defined in Section 1.4.2) and updated financial information with respect
to any proceeds the Company receives from the exercise of the Over-allotment Option (defined below) if such option is exercised
prior to the filing of such Current Report on Form 8-K, and (ii) the Company has filed with the Commission a Current Report on
Form 8-K and issued a press release announcing when such separate trading will begin. Each whole Warrant entitles its holder to
purchase one share of Common Stock for $11.50 per share, subject to adjustment, commencing on the later of twelve months from
the Closing Date (defined below) and 30 days after the consummation by the Company of a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization, or similar business combination with one or more businesses (the “Business
Combination”) and expiring on the five year anniversary of the consummation by the Company of its initial Business Combination,
or earlier upon redemption of the Common Stock or liquidation of the Company.
1.1.2
Payment and Delivery(1). Delivery and payment for the Firm Units shall be made at 9:30 a.m., New York City time,
on the second (2nd) Business Day (as defined below) following the commencement of trading of the Units (as defined
below), or at such earlier time as shall be agreed upon by the Representatives and the Company, at the offices of Loeb & Loeb
LLP, counsel to the Underwriters (“Loeb”), or at such other place as shall be agreed upon by the Representatives
and the Company (including remotely by facsimile or other electronic transmission). The hour and date of delivery and payment
for the Firm Units is called the “Closing Date.” Payment for the Firm Units shall be made on the Closing Date
by wire transfer in Federal (same day) funds, payable as follows: $230,625,000 of the proceeds received by the Company for the
Firm Units and Private Placements (as defined in Section 1.4.2) shall be deposited in the trust account (“Trust
Account”) established by the Company for the benefit of the Public Stockholders (as defined below), as described in
the Registration Statement (as defined in Section 2.1.1) pursuant to the terms of an Investment Management Trust Agreement
(the “Trust Agreement”) between the Company and Continental Stock Transfer & Trust Company (“CST”).
The remaining proceeds (less commissions and actual expense payments or other fees payable pursuant to this Agreement), if any,
shall be paid to the order of the Company upon delivery to the Representatives of the Firm Units in book-entry form through the
facilities of the Depository Trust Company (“DTC”) for the account of the Underwriters. The Firm Units shall
be registered in such name or names and in such authorized denominations as the Representatives may request in writing at least
two (2) full Business Days prior to the Closing Date. The Company shall not be obligated to sell or deliver any of the Firm Units
except upon tender of payment by the Representatives for all the Firm Units. As used herein, the term “Public Stockholders”
means the holders of shares of Common Stock sold as part of the Units in the Offering or acquired in the aftermarket, including
the Sponsor (defined below) to the extent it acquires such shares of Common Stock in the aftermarket (and solely with respect
to such shares of Common Stock). “Business Day” means 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; provided,
however, for clarification, banking institutions or trust companies shall not be deemed to be authorized or obligated by law to
remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other
similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority
so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in New York City are generally
are open for use by customers on such day.
1.2 Over-Allotment
Option.
1.2.1
Option Units. The Representatives are hereby granted an option (the “Over-allotment Option”)
to purchase up to an additional 3,375,000 units (the “Option Units”), the gross proceeds of which will be deposited
in the Trust Account, for the purposes of covering any over-allotments in connection with the distribution and sale of the Firm
Units. Such Option Units shall be identical in all respects to the Firm Units. Such Option Units shall be purchased for each account
of the several Underwriters in the same proportion as the number of Firm Units, set forth opposite such Underwriter’s name
on Schedule A hereto, bears to the total number of Firm Units (subject to adjustment by the Representative to eliminate
fractions). The Firm Units and the Option Units are hereinafter collectively referred to as the “Units,” and
the Units, the Common Stock and the Warrants included in the Units, and the Common Stock issuable upon exercise of the Warrants
are hereinafter referred to collectively as the “Public Securities.” No Option Units shall be sold or delivered
unless the Firm Units previously have been, or simultaneously are, sold and delivered. The right to purchase the Option Units,
or any portion thereof, may be exercised from time to time and to the extent not previously exercised may be surrendered and terminated
at any time upon notice by the Representatives to the Company. The purchase price to be paid for each Option Unit will be $10.00
per Option Unit. For the avoidance of doubt, the Underwriters are not entitled to receive any discounts or commissions on the
Option Units purchased by them. Furthermore, the total amount of all discounts and commissions to be received by the Underwriters
for their purchase of the Units hereunder will be equal to and will not exceed $1,000,000.
1.2.2
Exercise of Option. The Over-allotment Option granted pursuant to Section 1.2.1 hereof may be exercised by
the Representatives as to all (at any time) or any part (from time to time) of the Option Units within 45 days after the effective
date (“Effective Date”) of the Registration Statement (as defined in Section 2.1.1 hereof). The Underwriters
will not be under any obligation to purchase any Option Units prior to the exercise of the Over-allotment Option. The Over-allotment
Option granted hereby may be exercised by the giving of oral notice to the Company by the Representatives, which must be confirmed
in writing in accordance with Section 10.1 herein setting forth the number of Option Units to be purchased and the date
and time for delivery of and payment for the Option Units (each such date, an “Option Closing Date”), which
will not be later than five (5) full Business Days after the date of the notice or such other time and in such other manner as
shall be agreed upon by the Company and the Representatives, at the offices of Loeb or at such other place (including remotely
by facsimile or other electronic transmission) as shall be agreed upon by the Company and the Representatives. If such delivery
and payment for the Option Units does not occur on the Closing Date, the Option Closing Date will be as set forth in the notice.
Upon exercise of the Over-allotment Option, the Company will become obligated to convey to the Underwriters, and, subject to the
terms and conditions set forth herein, the Underwriters will become obligated to purchase, the number of Option Units specified
in such notice.
1.2.3
Payment and Delivery. Payment for the Option Units shall be made on the Option Closing Date by wire transfer in
Federal (same day) funds, payable as follows: $10.00 per Option Unit shall be deposited in the Trust Account pursuant to the Trust
Agreement upon delivery to the Representatives of the Option Units in book-entry form through the facilities of DTC for the account
of the Representatives. The Option Units to be delivered will be in such denominations and registered in such names as the Representatives
requests in writing not less than two (2) full Business Days prior to the Closing Date or the Option Closing Date, as the case
may be. The Company shall not be obligated to sell or deliver the Option Units except upon tender of payment by the Underwriters
for the applicable Option Units.
1.3 Representative’s
Securities.
1.3.1
Units. As additional consideration, the Company hereby agrees to issue to the Representatives (and/or their designees)
an aggregate of 112,500 (or up to 129,375 Units if the Over-allotment Option is exercised in full) Units (the “Representatives’
Units”). The Representatives’ Units are identical to the Firm Units, except that the Representatives’ Units
will be purchased in a private placement exempt from registration under the Securities Act of 1933, as amended (the “Act”)
and will not become freely tradable until after certain conditions are met or the resale of such Representative Units is registered
under the Act. The Representatives’ Units, the Common Stock included in the Representatives’ Units (the “Representative’s
Shares”) and the Warrants included in the Representatives’ Units (the “Representatives’ Warrants”)
and the Common Stock issuable pursuant to the terms of the Representatives’ Warrants are hereinafter referred to collectively
as the “Representatives’ Securities.”
1.3.2
Transfer and other Restrictions. The Representatives hereby agree not to transfer, assign or sell any such Representative’s
Securities until the completion of the initial Business Combination. In addition, the Representatives hereby agree (i) to waive
their redemption rights with respect to the Representative’s Shares in connection with the completion of the initial Business
Combination (ii) waive their redemption rights with respect to the Representative’s Shares in connection with a stockholder
vote to approve an amendment to the Company’s amended and restated certificate of incorporation (A) to modify the substance
or timing of the Company’s obligation to redeem 100% of the public shares if the Company does not complete its initial business
combination within 24 months from the closing of the Offering or (B) with respect to any other provision relating to stockholders’
rights or pre-initial business combination activity and (iii) to waive its rights to liquidating distributions from the trust
account with respect to the Representative’s Shares if the Company fails to complete the initial Business Combination within
24 months from the closing of the Offering. The Representatives will not sell, transfer, assign, pledge or hypothecate the Representatives’
Shares, or cause the Representatives’ Shares to be the subject of any hedging, short sale, derivative, put, or call transaction
that would result in the effective economic disposition of the Representatives’ Shares by any person, for a period of 180
days (pursuant to Rule 5110(g)(1) of the Conduct Rules of FINRA) following the Effective Date to anyone other than (i) the Representatives
or an underwriter or selected dealer in connection with the Offering, or (ii) a bona fide officer or partner of the Representatives
or of any such underwriter or selected dealer. On and after the 181st day following the Effective Date, transfers to others may
be made subject to compliance with or exemptions from applicable securities laws. The Representatives further agree to vote in
favor of any initial Business Combination presented to the Company’s stockholders.
1.3.3
Delivery and Payment. Delivery and payment for the Representatives’ Units shall be made on the Closing Date
and the Option Closing Date, as applicable. On such date, the Company shall deliver to the Representatives or their designees
upon payment therefor, the Representatives’ Units in book-entry form in the name or names and in such authorized denominations
as the Representatives may request.
1.3.4 Representations
and Warranties of the Underwriters. Each of the Representatives, severally and
not jointly, represents and warrants to the Company as follows:
1.3.4.1 Accredited
Investor. it is an “accredited investor”
as such term is defined in Rule 501(a) of Regulation D under the Act, and acknowledges that the sale contemplated hereby
is being made in reliance, among other things, on a private placement exemption to “accredited investors” under the
Act and similar exemptions under state law.
1.3.4.2 Intent.
it is purchasing the Representatives’ Units solely for investment purposes, for its own account (and/or for the account
or benefit of its members or affiliates, as permitted, pursuant to the terms hereof), and not with a view to the distribution
thereof in violation of the Act and it has no present arrangement to sell the Representatives’ Securities to or through
any person or entity except as may be permitted hereunder. It shall not engage in hedging transactions with regard to the Representatives’
Securities unless in compliance with the Act.
1.3.4.3 Restrictions
on Transfer. it acknowledges and understands that the Representatives’ Units
are being offered in a transaction not involving a public offering in the United States within the meaning of the Act. The Representatives’
Securities have not been registered under the Act and, if in the future it decides to offer, resell, pledge or otherwise transfer
the Representatives’ Securities, such Representatives’ Securities may be offered, resold, pledged or otherwise transferred
only (A) pursuant to an effective registration statement filed under the Act, (B) pursuant to an exemption from registration
under Rule 144 promulgated under the Act, if available, or (C) pursuant to any other available exemption from the registration
requirements of the Act, and in each case in accordance with any applicable Representatives’ Securities laws of any state
or any other jurisdiction. Notwithstanding the foregoing, it acknowledges and understands that the Representatives’ Securities
are subject to transfer restrictions as described in Section 1.3.2 hereof. It agrees that if any transfer of its Representatives’
Securities or any interest therein is proposed to be made, as a condition precedent to any such transfer, it may be required to
deliver to the Company an opinion of counsel satisfactory to the Company with respect to such transfer. Absent registration or
another available exemption from registration, it agrees that it will not resell the Representatives’ Securities (unless
otherwise permitted pursuant to the terms hereof). It further acknowledges that because the Company is a shell company, Rule 144
may not be available to it for the resale of the Representatives’ Securities until the one year anniversary following consummation
of the initial Business Combination of the Company, despite technical compliance with the requirements of Rule 144 and the
release or waiver of any contractual transfer restrictions.
1.3.4.4 Sophisticated
Investor.
(a) it
(a) has such knowledge, sophistication and experience in business and financial matters that it is capable of evaluating
the merits, risks and benefits of the investment in the Representatives’ Securities and (b) has been granted the opportunity
to ask questions of, and receive satisfactory answers from, representatives of the Company concerning the Company’s business
affairs and financial condition and the terms and conditions of the investment in the Representatives’ Securities and has
had the opportunity to obtain and has obtained any additional information which it deems necessary regarding such purchase.
(b) it
is aware that an investment in the Representatives’ Securities is highly speculative and subject to substantial risks because,
among other things, (a) the Representatives’ Securities are subject to transfer restrictions and have not been registered
under the Act and therefore cannot be sold unless subsequently registered under the Act or an exemption from such registration
is available and (b) each of the Underwriters has waived its redemption rights with respect to the Representatives’
Shares as set forth in Section 1.3.2 hereof, and the Representatives’ Shares held by it are not entitled to, and have
no right, interest or claim to any monies held in the Trust Account, and accordingly it may suffer a loss of a portion or all
of its investment in the Representatives’ Securities. It is able to bear the economic risk of its investment in the Representatives’
Securities for an indefinite period of time.
1.3.4.5 No
Legal Advice from Company. it acknowledges it has had the opportunity to review
this Agreement and the transactions contemplated by this Agreement and the other agreements entered into between the parties hereto
with its own legal counsel and investment and tax advisors. Except for any statements or representations of the Company made in
this Agreement and the other agreements entered into between the parties hereto, it is relying solely on such counsel and advisors
and not on any statements or representations of the Company or any of its representatives or agents for legal, tax or investment
advice with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction.
1.3.4.6 Reliance
on Representations and Warranties. it understands the Representatives’ Units
are being offered and sold to Representatives in reliance on exemptions from the registration requirements under the Act, and
analogous provisions in the laws and regulations of various states, and that the Company is relying upon the truth and accuracy
of its representations, warranties, agreements, acknowledgments and understandings set forth in this Agreement in order to determine
the applicability of such provisions.
1.3.4.7 No
General Solicitation. it is not subscribing for the Representatives’ Units as a result of or subsequent to any general solicitation
or general advertising, including but not limited to any advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio, or presented at any seminar or meeting or in a registration
statement with respect to the Offering filed with the Commission.
1.3.4.8 Legend.
it acknowledges and agrees the certificates (if any) evidencing each of the Representatives’ Securities shall bear a restrictive
legend, in form and substance substantially as set forth in Section 1.3.5 hereof.
1.3.5 Legend.
The certificates (if any) evidencing the Representatives’ Securities will bear the following restrictive legend (the “Legend”)
and appropriate “stop transfer” instructions:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED,
PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR SUCH LAWS
OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THIS CORPORATION, IS
AVAILABLE.
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO LOCKUP PURSUANT TO AN UNDERWRITING AGREEMENTAMONG FG NEW AMERICA ACQUISITION
CORP. (THE “CORPORATION”), THINKEQUITY, A DIVISION OF FORDHAM FINANCIAL MANAGEMENT, INC., AND PIPER SANDLER &
CO. AND MAY ONLY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED DURING THE TERM OF THE LOCKUP PURSUANT TO THE
TERMS SET FORTH IN THE UNDERWRITING AGREEMENT.”
1.4 Private
Placements.
1.4.1
Founder Shares. In July 2020, the Company issued to FG New America Investors LLC (the “Sponsor”),
for an aggregate consideration of $30,000, 6,468,750 shares of its Class B common stock (the “Founder Shares”)
in a private placement exempt from registration under Section 4(a)(2) of the Act. No underwriting discounts, commissions, or placement
fees have been or will be payable in connection with the purchase of Founder Shares. In August 2020, the Sponsor transferred 1,250,000
Founder Shares to members of the Company’s management and board of directors (such individuals, together with the Sponsor,
are referred to herein as the “initial stockholders”). Except as described in the Registration Statement, the
Founder Shares may not be sold, assigned or transferred by the initial stockholders until (x) with respect to 50% of the Founder
Shares, the earlier of: (i) twelve months after the consummation of the Business Combination; or (ii) the date on which the closing
price of the Common Stock exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations)
for any 20 trading days within any 30-trading day period commencing after the consummation of the Business Combination; and (y)
with respect to the remaining 50% of the Founder Shares, twelve months after the consummation of the Business Combination, provided
that all of the Founder Shares may be sold, assigned or transferred on the date following a Business Combination on which the
Company consummates a transaction which results in all of the Company’s stockholders having the right to exchange their
shares for cash, securities, or other property. The holders of Founder Shares shall have no right to any liquidating distributions
with respect to any portion of the Founder Shares in the event the Company fails to consummate a Business Combination. The holders
of the Founder Shares shall not have redemption rights with respect to the Founder Shares. In the event that the Over-allotment
Option is not exercised in full, the Sponsor has agreed to forfeit such number of Founder Shares (up to 843,750 Founder Shares)
such that the Founder Shares then outstanding will comprise 20% of the issued and outstanding shares of the Company after giving
effect to the Offering and exercise, if any, of the Over-allotment Option (excluding the shares of Common Stock underlying the
Representatives’ Units).
1.4.2
Private Placements. Simultaneously with
the Closing Date, the Sponsor will purchase from the Company pursuant to the Purchase Agreements (as defined in Section 2.21.2
hereof), an aggregate of (x) 3,848,750 warrants (the “Founder Warrants”) at a purchase price of $1.00 per Founder
Warrant, (y) 1,512,500 warrants (the “$15 Warrants”) at a purchase price of $0.10 per $15 Warrant, and (z) 462,500
units (the “Placement Units”), each Placement Unit consisting of one share of Common Stock and one warrant (the
“Placement Unit Warrants” and, together with the Founder Warrants and the $15 Warrants, the “Placement
Warrants”), in private placements intended to be exempt from registration under the Act pursuant to Section 4(a)(2) of
the Act. The private placements described in this Section 1.4.2 are referred to herein as the “Private Placements.”
Except as described in the Registration Statement, none of the Placement Warrants (or shares of Common Stock underlying the Placement
Warrants) may be sold, assigned or transferred by the Sponsor or its permitted transferees until thirty (30) days after consummation
of a Business Combination. A portion of the proceeds from the sale of the Placement Warrants will be deposited into the Trust Account.
1.4.3
The Placement Units, the shares of Common Stock underlying the Placement Units, the Placement Warrants and the shares of
Common Stock issuable upon exercise of the Placement Warrants are hereinafter referred to collectively as the “Placement
Securities”. No underwriting discounts, commissions,
or placement fees have been or will be payable in connection with the Placement Securities. The Public Securities, the Representatives’
Securities, the Placement Securities, and the Founder Shares are hereinafter referred to collectively as the “Securities”.
1.5 Working
Capital. Upon consummation of the Offering and the Private Placements, it is intended that approximately $1,050,000
of the proceeds of such offerings will be held by the Company outside of the Trust Account and used to fund the working capital
requirements of the Company.
1.6 Interest
Income. Prior to the Company’s consummation of a Business Combination or the Company’s liquidation, interest earned
on the Trust Account may be released to the Company from the Trust Account in accordance with the terms of the Trust Agreement
to pay any taxes incurred by the Company and up to $100,000 for liquidation expenses, all as more fully described in the Prospectus
(as defined below).
2. Representations
and Warranties of the Company. The Company represents and warrants to the Underwriters as follows:
2.1 Filing
of Registration Statement.
2.1.1
Pursuant to the Act. The Company has filed with the Commission a registration statement and an amendment or amendments
thereto, on Form S-l (File No. 333-248429), including any related preliminary prospectus (“Preliminary Prospectus”),
including any prospectus that is included in the Registration Statement immediately prior to the effectiveness of the Registration
Statement), for the registration of the Units under the Act, which registration statement and amendment or amendments have been
prepared by the Company in conformity with the requirements of the Act, and the rules and regulations (the “Regulations”)
of the Commission under the Act. The conditions for use of Form S-l to register the Offering under the Act, as set forth in the
General Instructions to such Form, have been satisfied. Except as the context may otherwise require, such registration statement,
as amended, on file with the Commission at the time the registration statement becomes effective (including the prospectus, financial
statements, schedules, exhibits and all other documents filed as a part thereof or incorporated therein and all information deemed
to be a part thereof as of such time pursuant to Rule 430A of the Regulations), is hereinafter called the “Registration
Statement,” and the form of the final prospectus dated the Effective Date included in the Registration Statement (or,
if applicable, the form of final prospectus containing information permitted to be omitted at the time of effectiveness by Rule
430A of the Regulations, filed by the Company with the Commission pursuant to Rule 424 of the Regulations), is hereinafter called
the “Prospectus.” For purposes of this Agreement, “Time of Sale,” as used in the Act, means
5:00 p.m. New York City time, on the date of this Agreement. Prior to the Time of Sale, the Company prepared a Preliminary Prospectus,
which was included in the Registration Statement filed on September [28], 2020, for distribution by the Underwriters (such Preliminary
Prospectus used most recently prior to the Time of Sale, the “Sale Preliminary Prospectus”). If the Company
has filed, or is required pursuant to the terms hereof to file, a Registration Statement pursuant to Rule 462(b) under the Act
registering additional securities (a “Rule 462(b) Registration Statement”), then, unless otherwise specified,
any reference herein to the term “Registration Statement” shall be deemed to include such Rule 462(b) Registration
Statement. Other than a Rule 462(b) Registration Statement, which, if filed, becomes effective upon filing, no other document
with respect to the Registration Statement has been filed with the Commission. All of the Public Securities have been registered
for public sale under the Act pursuant to the Registration Statement and, if any Rule 462(b) Registration Statement is filed,
will be duly registered for public sale under the Act with the filing of such Rule 462(b) Registration Statement. The Registration
Statement has been declared effective by the Commission on the date hereof. If, subsequent to the date of this Agreement, the
Company or the Representatives determines that at the Time of Sale, the Sale Preliminary Prospectus includes an untrue statement
of a material fact or omits a statement of material fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading and the Company and the Representatives agree to provide an opportunity to purchasers
of the Units to terminate their old purchase contracts and enter into new purchase contracts, then the Sale Preliminary Prospectus
will be deemed to include any additional information available to purchasers at the time of entry into the first such new purchase
contract.
2.1.2
Pursuant to the Exchange Act. The Company has filed with the Commission a Registration Statement on Form
8-A (File Number 001-39550) providing for the registration under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), of the Units, the Common Stock and the Warrants. The registration of the Units, Common Stock and Warrants under
the Exchange Act has been declared effective by the Commission on the date hereof and the Units, the Common Stock and the Warrants
have been registered pursuant to Section 12(b) of the Exchange Act.
2.1.3
No Stop Orders. Etc. Neither the Commission nor, to the Company’s knowledge, assuming reasonable inquiry,
any federal, state, or other regulatory authority has issued any order or threatened to issue any order preventing or suspending
the use of the Registration Statement, any Preliminary Prospectus, the Sale Preliminary Prospectus, or Prospectus or any part
thereof, or has instituted or, to the Company’s knowledge, assuming reasonable inquiry, threatened to institute any proceedings
with respect to such an order.
2.2 Disclosures
in Registration Statement.
2.2.1
10b-5 Representation. At the time of effectiveness of the Registration Statement (or at the time any post-effective
amendment to the Registration Statement) and at all times subsequent thereto up to the Closing Date and the Option Closing Date,
if any, the Registration Statement, the Sale Preliminary Prospectus and the Prospectus do and will contain all material statements
that are required to be stated therein in accordance with the Act and the Regulations, and did or will, in all material respects,
conform to the requirements of the Act and the Regulations. The Registration Statement, as of the Effective Date, did not, and
the amendments and supplements thereto, as of their respective dates, will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein, or necessary to make the statements therein, not misleading.
The Prospectus, as of its date and the Closing Date or the Option Closing Date, as the case may be, did not, and the amendments
and supplements thereto, as of their respective dates, 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. The Sale Preliminary Prospectus, as of the Time of Sale (or such subsequent Time of Sale pursuant to Section 2.1.1),
did 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. When any Preliminary Prospectus or the
Sale Preliminary Prospectus was first filed with the Commission (whether filed as part of the Registration Statement for the registration
of the Public Securities or any amendment thereto or pursuant to Rule 424(a) of the Regulations) and when any amendment thereof
or supplement thereto was first filed with the Commission, such Preliminary Prospectus or the Sale Preliminary Prospectus and
any amendments thereof and supplements thereto complied or will have been corrected in the Sale Preliminary Prospectus and the
Prospectus to comply in all material respects with the applicable provisions of the Act and the Regulations and did not and will
not contain an 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, in the light of the circumstances under which they were made, not misleading. The representation
and warranty made in this Section 2.2.1 does not apply to statements made or statements omitted in reliance upon and in
conformity with written information furnished to the Company with respect to the Underwriters by the Underwriters expressly for
use in the Registration Statement, the Sale Preliminary Prospectus or the Prospectus or any amendment thereof or supplement thereto.
The parties acknowledge and agree that such information provided by or on behalf of the Underwriters consists solely of the following:
the names of the Underwriters and their respective roles and participation in the sale of the Units, the information with respect
to dealers’ concessions and reallowances contained in the sixth paragraph of the section entitled “Underwriting,”
the information with respect to short positions and stabilizing transactions in the third, fourth, and fifth full paragraph on
page 147 of the Registration Statement and the identity of counsel to the Underwriters contained in the section entitled “Legal
Matters” (such information, collectively, the “Underwriters’ Information”).
2.2.2
Disclosure of Agreements. The agreements and documents described in the Registration Statement, the Sale
Preliminary Prospectus and the Prospectus conform to the descriptions thereof contained therein in all material respects and there
are no agreements or other documents required to be described in the Registration Statement, the Sale Preliminary Prospectus or
the Prospectus or to be filed with the Commission as exhibits to the Registration Statement, that have not been so described or
filed. Each agreement or other instrument (however characterized or described) to which the Company is a party or by which its
property or business is or may be bound or affected and (i) that is referred to in the Registration Statement, Sale Preliminary
Prospectus or the Prospectus or attached as an exhibit thereto, or (ii) is material to the Company’s business, has been
duly authorized and validly executed by the Company, is in full force and effect and is enforceable against the Company and, to
the Company’s knowledge, assuming reasonable inquiry, the other parties thereto, in accordance with its terms, except (x)
as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights
generally, (y) as enforceability of any indemnification or contribution provision may be limited under the foreign, federal and
state securities laws, and (z) that the remedy of specific performance and injunctive and other forms of equitable relief may
be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought, and
no such agreement or instrument has been assigned by the Company, and neither the Company nor, to the Company’s knowledge,
assuming reasonable inquiry, any other party is in breach or default thereunder and, to the Company’s knowledge, assuming
reasonable inquiry, no event has occurred that, with the lapse of time or the giving of notice, or both, would constitute a breach
or default thereunder. To the Company’s knowledge, assuming reasonable inquiry, the performance by the Company of the material
provisions of such agreements or instruments will not result in a violation of any existing applicable law, rule, regulation,
judgment, order or decree of any governmental agency or court, domestic or foreign, having jurisdiction over the Company or any
of its assets or businesses, including, without limitation, those relating to environmental laws and regulations.
2.2.3
Prior Securities Transactions. 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 since the date
of the Company’s formation, except as disclosed in the Registration Statement.
2.2.4
Regulations. The disclosures in the Registration Statement, the Sale Preliminary Prospectus, and Prospectus
concerning the effects of federal, foreign, state, and local regulation on the Company’s business as currently contemplated
are correct in all material respects and do not omit to state a material fact necessary to make the statements therein, in the
light of the circumstances in which they were made, not misleading.
2.3 Changes
After Dates in Registration Statement.
2.3.1
No Material Adverse Change. Since the respective dates as of which information is given in the Registration Statement,
the Sale Preliminary Prospectus and the Prospectus, except as otherwise specifically stated therein, (i) there has been no material
adverse change in the condition, financial or otherwise, or business prospects of the Company, (ii) there have been no material
transactions entered into by the Company, other than as contemplated pursuant to this Agreement, (iii) no member of the Company’s
board of directors (the “Board of Directors”) or management has resigned from any position with the Company and (iv)
no event or occurrence has taken place which materially impairs, or would likely materially impair, with the passage of time,
the ability of the members of the Board of Directors or management to act in their capacities with the Company as described in
the Registration Statement, the Sale Preliminary Prospectus and the Prospectus.
2.3.2
Recent Securities Transactions. Subsequent to the respective dates as of which information is given in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus, and except as may otherwise be indicated or contemplated herein
or therein, the Company has not (i) issued any securities or incurred any liability or obligation, direct or contingent, for borrowed
money; or (ii) declared or paid any dividend or made any other distribution on or in respect to its share capital.
2.4 Independent
Accountants. To the Company’s knowledge, assuming reasonable inquiry, Plante & Moran, PLLC (“Plante”),
whose report is filed with the Commission as part of, and is included in, the Registration Statement, the Sale Preliminary
Prospectus, and the Prospectus, are independent registered public accountants as required by the Act, the Regulations and the
Public Company Accounting Oversight Board (the “PCAOB”), including the rules and regulations promulgated by
such entity. To the Company’s knowledge, assuming reasonable inquiry, Plante is currently registered with the PCAOB. Plante
has not, during the periods covered by the financial statements included in the Registration Statement, the Sale Preliminary Prospectus
and the Prospectus, provided to the Company any non-audit services, as such term is used in Section 10A(g) of the Exchange Act.
2.5 Financial
Statements: Statistical Data.
2.5.1
Financial Statements. The financial statements, including the notes thereto and supporting schedules (if any) included
in the Registration Statement, the Sale Preliminary Prospectus and the Prospectus fairly present the financial position, the results
of operations and the cash flows of the Company at the dates and for the periods to which they apply; such financial statements
have been prepared in conformity with United States generally accepted accounting principles (“GAAP”), consistently
applied throughout the periods involved; and the supporting schedules included in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus present fairly the information required to be stated therein in conformity with the Regulations.
No other financial statements or supporting schedules are required to be included or incorporated by reference in the Registration
Statement, the Sale Preliminary Prospectus or the Prospectus. The Registration Statement, the Sale Preliminary Prospectus and
the Prospectus disclose all material off-balance sheet transactions, arrangements, obligations (including contingent obligations),
and other relationships of the Company 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. There are no pro forma or as adjusted financial statements
that are required to be included in the Registration Statement, the Sale Preliminary Prospectus and the Prospectus in accordance
with Regulation S-X or Form 10 that have not been included as required.
2.5.2
Statistical Data. The statistical, industry-related and market-related data included in the Registration Statement,
the Sale Preliminary Prospectus, and/or the Prospectus are based on or derived from sources that the Company reasonably and in
good faith believes are reliable and accurate, and such data materially agree with the sources from which they are derived.
2.6 Authorized
Capital; Options. The Company had at the date or dates indicated in each of the Registration Statement, the Sale Preliminary
Prospectus, and the Prospectus, as the case may be, duly authorized, issued and outstanding capitalization as set forth in the
Registration Statement, the Sale Preliminary Prospectus, and the Prospectus. Based on the assumptions stated in the Registration
Statement, the Sale Preliminary Prospectus, and the Prospectus, the Company will have on the Closing Date or on the Option Closing
Date, as the case may be, the adjusted share capitalization set forth therein. Except as set forth in, or contemplated by the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus, on the Effective Date and on the Closing Date or Option
Closing Date, as the case may be, there will be no options, warrants, or other rights to purchase or otherwise acquire any authorized
but unissued shares of Common Stock or any security convertible into shares of Common Stock, or any contracts or commitments to
issue or sell Common Stock or any such options, warrants, rights or convertible securities.
2.7 Valid
Issuance of Securities.
2.7.1
Outstanding Securities. All issued and outstanding securities of the Company issued prior to the transactions contemplated
by this Agreement have been duly authorized and validly issued and are fully paid and non-assessable; the holders thereof have
no rights of rescission with respect thereto, and are not subject to personal liability by reason of being such holders; and none
of such securities was 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 authorized and outstanding securities of the Company conform in all material respects to all
statements relating thereto contained in the Registration Statement, the Sale Preliminary Prospectus and the Prospectus. All offers
and sales and any transfers of the outstanding securities of the Company were at all relevant times either registered under the
Act and the applicable state securities or Blue Sky laws or, based in part on the representations and warranties of the purchasers
of such securities, exempt from such registration requirements.
2.7.2
Securities Sold Pursuant to this Agreement. The Securities sold pursuant to this Agreement have been duly
authorized and reserved for issuance and when issued and paid for in accordance with this Agreement, will be validly issued, fully
paid and non-assessable; the holders thereof are not and will not be subject to personal liability by reason of being such holders;
the Securities are not and will not be subject to the preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company; and all corporate action required to be taken for the authorization, issuance and sale
of the Securities has been duly and validly taken. The form of certificates for the Securities conform to the corporate law of
the jurisdiction of the Company’s incorporation and applicable securities laws. The Securities conform in all material respects
to the descriptions thereof contained in the Registration Statement, the Sale Preliminary Prospectus and the Prospectus, as the
case may be. When paid for and issued, the Warrants will constitute valid and binding obligations of the Company to issue the
number and type of securities of the Company called for thereby in accordance with the terms thereof and such Warrants are enforceable
against the Company in accordance with their respective terms, except: (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights generally; (ii) as enforceability of any indemnification
or contribution provision may be limited under foreign, federal and state securities laws; and (iii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought. The shares of Common Stock issuable upon exercise of the Warrants
have been reserved for issuance upon the exercise of the Warrants and upon payment of the consideration therefor, and when issued
in accordance with the terms thereof such shares of Common Stock will be duly and validly authorized, validly issued, fully paid
and non-assessable, and the holders thereof are not and will not be subject to personal liability by reason of being such holders.
2.7.3
Placement Securities.
2.7.3.1 The
Placement Units and Placement Warrants, when issued, will constitute valid and binding obligations of the Company to issue the
number and type of securities of the Company called for thereby in accordance with the terms thereof, and are, or will be, enforceable
against the Company in accordance with their respective terms, except: (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights generally; (ii) as enforceability of any indemnification
or contribution provision may be limited under federal and state securities laws; and (iii) that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
2.7.3.2 The
shares of Common Stock issuable upon exercise of the Placement Warrants and upon separation of the Placement Units have been reserved
for issuance and, when issued in accordance with the terms of the Placement Warrants and Placement Units will be duly and validly
authorized, validly issued and upon payment therefor, fully paid and non-assessable, and the holders thereof are not and will not
be subject to personal liability by reason of being such holders.
2.7.4
No Integration. Neither the Company nor any of its affiliates has, prior to the date hereof, made any offer
or sale of any securities which are required to be or may be “integrated” pursuant to the Act or the Regulations with
the Offering.
2.8 Registration
Rights of Third Parties. Except as set forth in the Registration Statement, the Sale Preliminary 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.
2.9 Validity
and Binding Effect of Agreements. This Agreement, the Warrant Agreement (as defined in Section 2.23). the Trust Agreement,
the Services Agreement (as defined in Section 2.21.3), the Registration Rights Agreement (as defined in Section 2.21.4),
and the Purchase Agreements (as defined in Section 2.21.2, and collectively, the “Transaction Documents”)
have been duly and validly authorized by the Company and, when executed and delivered, will constitute the valid and binding agreements
of the Company, enforceable against the Company in accordance with their respective terms, except: (i) as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, (ii) as
enforceability of any indemnification or contribution provision may be limited under the foreign, federal, and state securities
laws, and (iii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the
equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
2.10 No
Conflicts. Etc. The execution, delivery, and performance by the Company of the Transaction Documents, the consummation by
the Company of the transactions herein and therein contemplated and the compliance by the Company with the terms hereof and thereof
do not and will not, with or without the giving of notice or the lapse of time or both: (i) result in a breach or violation of,
or conflict with any of the terms and provisions of, or constitute a default under, or result in the creation, modification, termination
or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to the terms of any agreement,
obligation, condition, covenant or instrument to which the Company is a party or bound or to which its property is subject except
pursuant to the Trust Agreement (ii) result in any violation of the provisions of the Amended and Restated Certificate of Incorporation
and Bylaws of the Company, each as may be amended (collectively, the “Charter Documents”); or (iii) to the
Company’s knowledge violate any existing applicable statute, law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company or any of its properties, assets or business constituted
as of the date hereof.
2.11 No
Defaults: Violations. No default or violation exists in the due performance and observance of any term, covenant or condition
of any license, contract, indenture, mortgage, deed of trust, note, loan or credit agreement, or any other agreement or instrument
evidencing an obligation for borrowed money, or any other agreement or instrument to which the Company is a party or by which
the Company may be bound or to which any of the properties or assets of the Company is subject. The Company is not in violation
of any term or provision of its Charter Documents or in violation of any franchise, license, permit, applicable law, rule, regulation,
judgment or decree of any governmental agency or court, domestic or foreign, having jurisdiction over the Company or any of its
properties or businesses.
2.12 Corporate
Power; Licenses: Consents.
2.12.1
Conduct of Business. The Company has all requisite corporate power and authority, and has all necessary authorizations,
approvals, orders, licenses, certificates and permits of and from all governmental regulatory officials and bodies that it needs
as of the date hereof to conduct its business for the purposes as described in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus. The disclosures in the Registration Statement, the Sale Preliminary Prospectus and the Prospectus
concerning the effects of foreign, federal, state and local regulation on this Offering and the Company’s business purpose
as currently contemplated are correct in all material respects and do not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
Since its formation, the Company has conducted no business and has incurred no liabilities other than in connection with and in
furtherance of this Offering.
2.12.2
Transactions Contemplated Herein. The Company has all requisite corporate power and authority to enter into this
Agreement and to carry out the provisions and conditions hereof, and all consents, authorizations, approvals and orders required
in connection herewith have been obtained. No consent, authorization, or order of, and no filing with, any court, government agency
or other body, foreign or domestic, is required for the valid issuance, sale, and delivery, of the Securities and the consummation
of the transactions and agreements contemplated by the Transaction Documents and as contemplated by the Registration Statement,
the Sale Preliminary Prospectus and the Prospectus, except with respect to applicable foreign, federal and state securities laws,
the rules of the New York Stock Exchange (the “NYSE”) and the rules and regulations promulgated by FINRA.
2.13 D&O
Questionnaires. All information contained in the questionnaires (“Questionnaires”) completed by each of
the Company’s officers, directors and stockholders (“Insiders”) and provided to the Representatives and
their counsel and the biographies of the Insiders contained in the Registration Statement, Sale Preliminary Prospectus and the
Prospectus (to the extent a biography is contained) 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 each Insider to become
materially inaccurate, incorrect or incomplete.
2.14 Litigation:
Governmental Proceedings. There is no action, suit, proceeding, inquiry, arbitration, investigation, litigation or governmental
proceeding of any material nature pending, or to the Company’s knowledge, assuming reasonable inquiry, threatened against
or involving the Company or, to the Company’s knowledge, assuming reasonable inquiry, any Insider or any stockholder or
member of an Insider that has not been disclosed, that is required to be disclosed, in the Registration Statement, the Sale Preliminary
Prospectus, the Prospectus or the Questionnaires.
2.15 Good
Standing. The Company has been duly organized and is validly existing as a corporation and is in good standing under the laws
of its jurisdiction of incorporation. The Company is duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which its ownership or lease of property or the conduct of business requires such qualification, except
where the failure to qualify would not have a material adverse effect on the condition (financial or otherwise), earnings, assets,
prospects, business, operations or properties of the Company, whether or not arising from transactions in the ordinary course
of business (a “Material Adverse Effect”).
2.16 No
Contemplation of a Business Combination. Neither the Company nor any initial stockholder has identified any Business Combination
target (each a “Target Business”) and the Company has not, nor has anyone on the Company’s behalf, initiated
any substantive discussions, directly or indirectly, with any Target Business.
2.17 Transactions
Requiring Disclosure to FINRA.
2.17.1
Finder’s Fees. There are no claims, payments, arrangements, agreements or understandings relating to the payment
of a finder’s, consulting or origination fee by the Company or any Insider with respect to the sale of the Securities hereunder
or any other arrangements, agreements or understandings of the Company or to the Company’s knowledge, assuming reasonable
inquiry, any Insider that may affect the Underwriters’ compensation, as determined by FINRA.
2.17.2
Payments Within 180 Days. The Company has not made any direct or indirect payments (in cash, securities or otherwise)
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) any FINRA member; or (iii)
any person or entity that has any direct or indirect affiliation or association with any FINRA member, within the 180-day period
prior to the initial filing of the Registration Statement, other than the prior payments to the Representatives in connection
with the Offering. 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. 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
any relationship or affiliation or association with any member of FINRA participating in the Offering. Except with respect to
the Representatives in connection with the Offering, the Company has not entered into any agreement or arrangement (including,
without limitation, any consulting agreement or any other type of agreement) during the 180-day period prior to the initial filing
date of the Registration Statement with the Commission, which arrangement or agreement provides for the receipt of any item of
value and/or the transfer or issuance of any warrants, options, or other securities from the Company to a FINRA member, any person
associated with a member (as defined by FINRA rules), any potential underwriters in the Offering and/or any related persons.
2.17.3
FINRA Affiliation. Other than as disclosed to the Representatives, no officer or director or any direct or indirect
beneficial owner (including the Insiders) of any class of the Company’s unregistered securities (whether debt or equity,
registered or unregistered, regardless of the time acquired or the source from which derived) has any direct or indirect affiliation
or association with any FINRA member (as determined in accordance with the rules and regulations of FINRA). The Company will advise
the Representatives and Loeb if it learns that any officer or director or any direct or indirect beneficial owner (including the
Insiders) is or becomes an affiliate or associated person of a FINRA member participating in the Offering.
2.17.4
Share Ownership. No officer or director or any direct or indirect beneficial owner (including the Insiders) of any
class of the Company’s unregistered securities is an owner of shares or other securities of any member of FINRA participating
in the Offering (other than securities purchased on the open market).
2.17.5
Loans. No officer or director or any direct or indirect beneficial owner (including the Insiders) of any class of
the Company’s unregistered securities has made a subordinated loan to any member of FINRA participating in the Offering.
2.17.6
Proceeds of the Offering. No proceeds from the sale of the Public Securities (excluding underwriting compensation)
or the Placement Securities, will be paid to any FINRA member participating in the Offering, or any persons associated or affiliated
with a member of FINRA participating in the Offering, except as specifically authorized herein.
2.17.7
Conflicts of Interest. To the Company’s knowledge, assuming reasonable inquiry, no FINRA member intending
to participate in the Offering has a conflict of interest with the Company. For this purpose, a “conflict of interest”
exists when a member of FINRA and/or its associated persons, parent or affiliates in the aggregate beneficially own 10% or more
of the Company’s outstanding subordinated debt or common equity, or 10% or more of the Company’s preferred equity.
“Members participating in the Offering” include managing agents, syndicate group members and all dealers which
are members of FINRA.
2.18
Taxes.
2.18.1
There are no transfer taxes or other similar fees or charges under U.S. federal law or the laws of any U.S. state or any
political subdivision of the United States, required to be paid in connection with the execution and delivery of this Agreement
or the issuance or sale by the Company of the Public Securities.
2.18.2
The Company has filed all U.S. federal, state and local tax returns required to be filed with taxing authorities prior
to the date hereof in a timely manner or has duly obtained extensions of time for the filing thereof. The Company has paid all
taxes shown as due on such returns that were filed and has paid all taxes imposed on it and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due and payable. The Company has made appropriate provisions in
the applicable financial statements referred to in Section 2.5.1 above in respect of all federal, state, local and foreign
income and franchise taxes for all current or prior periods as to which the tax liability of the Company has not been finally
determined.
2.19 Foreign
Corrupt Practices Act: Anti-Monev Laundering; Patriot Act.
2.19.1
Foreign Corrupt Practices Act. Neither the Company nor to the Company’s knowledge, assuming reasonable
inquiry, any of the Insiders or any other person acting on behalf of the Company has, directly or indirectly, given or agreed
to give any money, gift or similar benefit (other than legal price concessions to customers in the ordinary course of business)
to any customer, supplier, employee or agent of a customer or supplier, or official or employee of any governmental agency or
instrumentality of any government (domestic or foreign) or any political party or candidate for office (domestic or foreign) or
other person who was, is, or may be in a position to help or hinder the business of the Company (or assist it in connection with
any actual or proposed transaction) that (i) might subject the Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, might have had a Material Adverse Effect, or (iii) if not continued in
the future, might adversely affect the assets, business or operations of the Company. The Company has taken reasonable steps to
ensure that its accounting controls and procedures are sufficient to cause the Company to comply in all material respects with
the Foreign Corrupt Practices Act of 1977, as amended.
2.19.2
Currency and Foreign Transactions Reporting Act. The operations of the Company are and have been conducted
at all times in compliance with (i) the requirements of the U.S. Treasury Department Office of Foreign Asset Control and (ii)
applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transaction Reporting Act of 1970, as
amended, including the Money Laundering Control Act of 1986, as amended, the rules and regulations thereunder and any related
or similar money laundering statutes, rules, regulations or guidelines, issued, administered or enforced by any Federal 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 with respect to the Money Laundering Laws is
pending or, to the Company’s knowledge, assuming reasonable inquiry, threatened.
2.19.3
PATRIOT ACT. Neither the Company nor to the Company’s knowledge, assuming reasonable inquiry, any Insider
has violated the Bank Secrecy Act of 1970, as amended, or 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.
2.20 Officers’
Certificate. Any certificate signed by any duly authorized officer of the Company in connection with the Offering and delivered
to the Representatives or to Loeb shall be deemed a representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
2.21 Agreements
With Insiders.
2.21.1 Insider Letter. The Company has caused to be duly executed a legally binding and enforceable agreement (except (i)
as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights
generally, (ii) as enforceability of any indemnification, contribution or noncompete provision may be limited under foreign, federal
and state securities laws, and (iii) that the remedy of specific performance and injunctive and other forms of equitable relief
may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought),
a form of which is annexed as an exhibit to the Registration Statement (the “Insider Letter”), pursuant to
which each of the Insiders of the Company agree to certain matters. The Insider Letter shall not be amended, modified or otherwise
changed without the prior written consent of the Representatives, which consent shall not be unreasonably withheld.
2.21.2 Purchase Agreement. The Sponsor
has executed and delivered agreements, the forms of which are included as exhibits to the Registration Statement (the “Purchase
Agreements”), pursuant to which the Sponsor will, among other things, on the Closing Date, consummate the purchase of
and deliver the purchase price for the Placement Securities as provided for in such Purchase Agreements. Pursuant to the Purchase
Agreements, (i) the Sponsor has waived any and all rights and claims it may have to any proceeds, and any interest thereon, held
in the Trust Account in respect of the Placement Secutieis, and (ii) a portion of the proceeds from the sale of the Placement Securities
will be deposited by the Company in the Trust Account in accordance with the terms of the Trust Agreement on the Closing Date,
as provided for in the Purchase Agreements.
2.21.3
Administrative Services. The Company and the Sponsor have entered into an agreement (“Services Agreement”)
substantially in the form annexed as an exhibit to the Registration Statement pursuant to which the Sponsor will make available
to the Company general and administrative services including office space, utilities and secretarial support for the Company’s
use for $10,000 per month payable until the earlier of the consummation by the Company of a Business Combination or the liquidation
of the Trust Account, on the terms and subject to the conditions set forth in the Services Agreement.
2.21.4
Registration Rights Agreement. The Company, the Sponsor, the Representatives and the other
initial stockholders have entered into a Registration Rights Agreement (“Registration Rights Agreement”) substantially
in the form annexed as an exhibit to the Registration Statement, whereby such parties will be entitled to certain registration
rights with respect to the securities they hold or may hold, as set forth in such Registration Rights Agreement and described
more fully in the Registration Statement, the Sale Preliminary Prospectus and the Prospectus.
2.21.5
Loans. The Sponsor has agreed to make loans to the Company in the aggregate amount of up to $300,000 (the “Insider
Loans”) pursuant to a promissory note substantially in the form annexed as an exhibit to the Registration Statement.
The Insider Loans do not bear any interest and are repayable by the Company on the earlier of December 31, 2020 or the consummation
of the Offering.
2.22 Investment
Management Trust Agreement. The Company has entered into the Trust Agreement with respect to certain proceeds of the Offering
and the Private Placements substantially in the form annexed as an exhibit to the Registration Statement.
2.23 Warrant
Agreement. The Company has entered into a warrant agreement with respect to the Warrants underlying the Units, the Placement
Warrants, the Representatives’ Warrants and certain other warrants that may be issued by the Company with CST substantially
in the form filed as an exhibit to the Registration Statement (“Warrant Agreement”).
2.24 No
Existing Non-Competition Agreements. No Insider is subject to any non-competition agreement or non-solicitation agreement
with any employer or prior employer which could materially affect his ability to be an employee, officer and/or director of the
Company, except as disclosed in the Registration Statement.
2.25 Investments.
No more than 45% of the “value” (as defined in Section 2(a)(41) of the Investment Company Act of 1940, as amended
(“Investment Company Act”)) of the Company’s total assets consist of, and no more than 45% of the Company’s
net income after taxes is derived from, securities other than “Government Securities” (as defined in Section 2(a)(16)
of the Investment Company Act) or money market funds meeting the conditions of Rule 2a-7 of the Investment Company Act.
2.26 Investment
Company Act. The Company is not required, and upon the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Sale Preliminary Prospectus and Prospectus will not be required,
to register as an “investment company” under the Investment Company Act.
2.27 Subsidiaries.
The Company does not own an interest in any corporation, partnership, limited liability company, joint venture, trust or other
business entity.
2.28 Related
Party Transactions. No relationship, direct or indirect, exists between or among the Company, on the one hand, and any Insider,
on the other hand, which is required by the Act, the Exchange Act or the Regulations to be described in the Registration Statement,
the Sale Preliminary Prospectus and the Prospectus which is not so 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 officers or directors of the Company or any of their respective family members, except as
disclosed in the Registration Statement, the Sale Preliminary Prospectus and 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.
2.29 No
Influence. The Company has not offered, or caused the Underwriters to offer, the Firm Units to any person or entity with the
intention of unlawfully influencing: (a) a customer or supplier of the Company or any affiliate of the Company to alter the customer’s
or supplier’s level or type of business with the Company or such affiliate or (b) a journalist or publication to write or
publish favorable information about the Company or any such affiliate.
2.30 Sarbanes-Oxlev.
The Company is, or on the Closing Date will be, in material compliance with the provisions of the Sarbanes-Oxley Act of 2002,
as amended, and the rules and regulations promulgated thereunder and related or similar rules or regulations promulgated by any
governmental or self-regulatory entity or agency, that are applicable to it as of the date hereof.
2.31 Distribution
of Offering Material by the Company. The Company has not distributed and will not distribute, prior to the later of the Closing
Date and the completion of the distribution of the Units, any offering material in connection with the offering and sale of the
Units other than the Sale Preliminary Prospectus and the Prospectus, in each case as supplemented and amended.
2.32 The
New York Stock Exchange. The Public Securities have been authorized for listing, subject to official notice of issuance and
evidence of satisfactory distribution, on the NYSE, and the Company knows of no reason or set of facts that is likely to adversely
affect such authorization.
2.33 Board
of Directors. As of the Effective Date, the Board of Directors of the Company will be comprised of the persons set forth as
“Directors” or “Director nominees” under the heading of the Sale Preliminary Prospectus and the Prospectus
captioned “Management.” As of the Effective Date, the qualifications of the persons serving as board members and the
overall composition of the board will comply with the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder and the
rules of the NYSE that are, in each case, applicable to the Company. As of the Effective Date, the Company will have an Audit
Committee that satisfies the applicable requirements under the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder
and the rules of the NYSE.
2.34 Emerging
Growth Company. From its formation through the date hereof, the Company has been and is an “emerging growth company,”
as defined in Section 2(a) of the Act (an “Emerging Growth Company”).
2.35 No
Disqualification Events. Neither the Company, nor any of its predecessors or any affiliated issuer, nor any director, executive
officer, or other officer of the Company participating in the Offering, nor any beneficial owner of 20% or more of the Company’s
outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule
405 under the Act) connected with the Company in any capacity at the time of sale (each, a “Company Covered Person”
and, together, “Company Covered Persons”) is subject to any of the “Bad Actor” disqualifications
described in Rule 506(d)(l)(i) to (viii) under the Act (a “Disqualification Event”), except for a Disqualification
Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Company Covered
Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations
under Rule 506(e), and has furnished to the Underwriters a copy of any disclosures provided thereunder.
2.36 Free-Writing
Prospectus and Testing-the-Waters. The Company has not made any offer relating to the Public Securities that would constitute
an issuer free writing prospectus, as defined in Rule 433 under the Act, or that would otherwise constitute a “free writing
prospectus” as defined in Rule 405. The Company: (a) has not engaged in any Testing-the-Waters Communication other than
Testing-the-Waters Communications with the consent of the Representatives 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 (b) has not authorized anyone to engage in Testing-the-Waters Communications other than its officers and the Representatives
and individuals engaged by the Representatives. The Company has not distributed any written Testing-the-Waters Communications
other than those listed on Schedule B hereto. “Testing-the-Waters Communication” means any oral or written
communication with potential investors undertaken in reliance on Section 5(d) of the Act.
3. Covenants
of the Company. The Company covenants and agrees as follows:
3.1 Amendments
to Registration Statement. The Company will deliver to the Representatives, prior to filing, any amendment or supplement to
the Registration Statement, any Preliminary Prospectus or the Prospectus proposed to be filed after the Effective Date and the
Company shall not file any such amendment or supplement to which the Representatives reasonably objects in writing.
3.2 Federal
Securities Laws.
3.2.1
Compliance. During the time when a Prospectus is required to be delivered under the Act, the Company will use its
best efforts to comply with all requirements imposed upon it by the Act, the Regulations, and the Exchange Act, and by the regulations
under the Exchange Act, as from time to time in force, so far as necessary to permit the continuance of sales of or dealings in
the Securities in accordance with the provisions hereof and the Sale Preliminary Prospectus and the Prospectus. If at any time
when a Prospectus relating to the Securities is required to be delivered under the Act, any event shall have occurred as a result
of which, in the opinion of counsel for the Company or counsel for the Underwriter, the Prospectus, as then amended or supplemented,
includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary
at any time to amend or supplement the Prospectus to comply with the Act, the Company will notify the Representatives promptly
and prepare and file with the Commission, subject to Section 3.1 hereof, an appropriate amendment or supplement in accordance
with Section 10 of the Act.
3.2.2
Filing of Final Prospectus. The Company will file the Prospectus (in form and substance satisfactory to the Underwriters)
with the Commission pursuant to the requirements of Rule 424 of the Regulations.
3.2.3
Exchange Act Registration. The Company will use its best efforts to maintain the registration of the
Public Securities under the provisions of the Exchange Act (except in connection with a going-private transaction) for a period
of five years from the Effective Date, or until the Company is required to be liquidated or is acquired, if earlier, or, in the
case of the Warrants, until the Warrants expire and are no longer exercisable or have been exercised or redeemed in full. The
Company will not deregister the Public Securities under the Exchange Act without the prior written consent of the Representatives.
3.2.4
Exchange Act Filings. From the Effective Date until the earlier of the Company’s initial Business Combination,
or its liquidation and dissolution, the Company shall timely file with the Commission via the Electronic Data Gathering, Analysis
and Retrieval System (“EDGAR”) such statements and reports as are required to be filed by a company registered
under Section 12(b) of the Exchange Act.
3.2.5
Sarbanes-Oxlev Compliance. As soon as it is legally required to do so, the Company shall take all actions necessary
to obtain and thereafter maintain material compliance with each applicable provision of the Sarbanes-Oxley Act of 2002 and the
rules and regulations promulgated thereunder and related or similar rules and regulations promulgated by any other governmental
or self-regulatory entity or agency with jurisdiction over the Company.
3.3 Free-Writing
Prospectus. The Company agrees that it will not make any offer relating to the Public Securities that would constitute an
issuer free writing prospectus, as defined in Rule 433 under the Act, or that would otherwise constitute a “free writing
prospectus” as defined in Rule 405, without the prior consent of the Representatives.
3.4 Delivery
to Underwriters of Prospectuses. The Company will deliver to the Underwriters, without charge and from time to time during
the period when the Prospectus is required to be delivered under the Act or the Exchange Act, such number of copies of each Preliminary
Prospectus and the Prospectus as the Underwriters may reasonably request and, as soon as the Registration Statement or any amendment
or supplement thereto becomes effective, deliver to the Underwriters, upon their request, two manually executed Registration Statements,
including exhibits, and all post-effective amendments thereto and copies of all exhibits filed therewith or incorporated therein
by reference and all manually executed consents of certified experts.
3.5 Effectiveness
and Events Requiring Notice to the Representatives. The Company will use its best efforts to cause the Registration Statement
to remain effective and will notify the Representatives immediately and confirm the notice in writing: (i) of the effectiveness
of the Registration Statement and any amendment thereto; (ii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment thereto or preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or of the initiation, or the threatening, of any proceeding for that purpose; (iii) of
the issuance by any foreign or state securities commission of any proceedings for the suspension of the qualification of the Public
Securities for offering or sale in any jurisdiction or of the initiation, or the threatening, of any proceeding for that purpose;
(iv) of the mailing and delivery to the Commission for filing of any amendment or supplement to the Registration Statement or
Prospectus; (v) of the receipt of any comments or request for any additional information from the Commission; and (vi) of the
happening of any event that, in the reasonable judgment of the Company, makes any statement of a material fact made in the Registration
Statement or the Prospectus untrue or that requires the making of any changes in the Registration Statement or the Prospectus
in order to make the statements therein, and in light of the circumstances under which they were made, not misleading. If the
Commission or any foreign or state securities commission shall enter a stop order or suspend such qualification at any time, the
Company will make every reasonable effort to obtain promptly the lifting of such order.
3.6 Affiliated
Transactions.
3.6.1
Business Combinations. The Company will not consummate a Business Combination with any entity that is affiliated
with any Insider unless (i) the Company obtains an opinion from an independent investment banking firm or another independent
entity that commonly renders valuation opinions that the Business Combination is fair to the Company from a financial point of
view and (ii) a majority of the Company’s disinterested and independent directors (if there are any) approve such transaction.
3.6.2
Compensation to Insiders. Except as disclosed in the Prospectus, the Company shall not pay any of the Insiders or
any of their affiliates any fees or compensation from the Company, for services rendered to the Company prior to, or in connection
with, the consummation of a Business Combination.
3.7 Financial
Public Relations Firm. Promptly after the execution of a definitive agreement for a Business Combination, the Company shall
retain a financial public relations firm reasonably acceptable to the Representatives for a term to be agreed on by the Company
and the Representatives.
3.8 Reports
to the Representatives. For a period of five years from the Effective Date or until such earlier time upon which the Company
is required to be liquidated or is no longer required to file reports under the Exchange Act, the Company will furnish to the
Representatives and their counsel upon their request copies of such 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 promptly furnish to the Underwriters:
(i) a copy of each periodic report the Company shall be required to file with the Commission, (ii) a copy of every press release
and every news item and article with respect to the Company or its affairs that was released by the Company, (iii) a copy of each
Current Report on Form 8-K or Schedules 13D, 13G, 14D-1 or 13E-4 received or prepared by the Company, (iv) two (2) copies of
each registration statement filed by the Company with the Commission under the Act, and (v) such additional documents and information
with respect to the Company and the affairs of any future subsidiaries of the Company as the Representatives may from time to
time reasonably request; provided the Representatives shall sign, if requested by the Company, a Regulation FD compliant confidentiality
agreement which is reasonably acceptable to the Representatives and their counsel in connection with the Representatives’
receipt of such information. Documents filed with the Commission pursuant to its EDGAR system shall be deemed to have been delivered
to the Representatives pursuant to this Section.
3.9 Transfer
Agent. For a period of two years following the Effective Date or until such earlier time upon which the Company is required
to be liquidated, the Company shall retain a transfer agent and warrant agent acceptable to the Representatives. CST is acceptable
to the Underwriters.
3.10 Payment
of Expenses. The Company hereby agrees to pay on each of the Closing Date and the Option Closing Date, if any, to the extent
not paid at Closing Date, all Company expenses incident to the performance of the obligations of the Company under this Agreement,
including but not limited to (i) the Company’s legal and accounting fees and disbursements, (ii) the preparation, printing,
filing, mailing and delivery (including the payment of postage with respect to such mailing) of the Registration Statement, the
Preliminary Sale Prospectus and the Prospectus, including any pre or post effective amendments or supplements thereto, and the
printing and mailing of this Agreement and related documents, including the cost of all copies thereof and any amendments thereof
or supplements thereto supplied to the Underwriters in quantities as may be required by the Underwriters, (iii) fees incurred
in connection with conducting background checks of the Company’s management team, up to a maximum of $10,000 in the aggregate,
(iv) the preparation, printing, engraving, issuance and delivery of the Units, the Common Stock and the Warrants included in the
Units, including any transfer or other taxes payable thereon, (v) filing fees incurred in registering the Offering with FINRA
and the reasonable fees and expenses of Representatives’ counsel (not to exceed $90,000) in connection with the Offering,
(vi) fees, costs and expenses incurred in listing the Securities on the NYSE or such other stock exchanges as the Company and
the Underwriters together determine, (vii) all fees and disbursements of the transfer and warrant agent, (viii) all Company’s
expenses associated with “due diligence” and “road show” meetings arranged by the Representatives and
any presentations made available by way of a netroadshow, including without limitation trips for the Company’s management
to meet with prospective investors, all travel, food and lodging expenses associated with such trips incurred by the Company or
such management (not to exceed $15,000); and (ix) all other costs and expenses customarily borne by an issuer incident to the
performance of its obligations hereunder which are not otherwise specifically provided for in this Section 3.10. If the Offering
is consummated, the Representatives may deduct from the net proceeds of the Offering payable to the Company on the Closing Date
the expenses it incurred on behalf of the Company (which shall be mutually agreed upon between the Company and the Representatives
prior to Closing), up to $135,000 (inclusive of the enumerated expenses specified in paragraphs (iii), (v) and (viii)). If the
Offering is not consummated for any reason (other than a breach by the Representatives of any of its obligations hereunder), then
the Company shall reimburse the Representatives in full for its out-of-pocket accountable expenses actually incurred through such
date, including, without limitation, reasonable fees and disbursements of counsel to the Representatives, up to $100,000.
3.11 Application
of Net Proceeds. The Company will apply the net proceeds from the Offering and Private Placements received by it in
a manner consistent with the application described under the caption “Use of Proceeds” in the Prospectus.
3.12 Delivery
of Earnings Statements to Security Holders. The Company will make generally available to its security holders as soon as practicable,
but not later than the first day of the fifteenth full calendar month following the Effective Date, an earnings statement (which
need not be certified by independent public or independent certified public accountants unless required by the Act or the Regulations,
but which shall satisfy the provisions of Rule 158(a) under Section 11(a) of the Act) covering a period of at least twelve consecutive
months beginning after the Effective Date.
3.13 Notice
to FINRA.
3.13.1
Notice to FINRA. For a period of ninety (90) days after the date of the Prospectus, in the event any person or entity
(regardless of any FINRA affiliation or association) is engaged, in writing, to assist the Company in its search for a Target
Business or to provide any other services in connection therewith, the Company will provide the following to FINRA and the Representatives
prior to the consummation of the Business Combination: (i) complete details of all services and copies of agreements governing
such services; and (ii) justification as to why the person or entity providing the merger and acquisition services should not
be considered an “underwriter and related person” with respect to the Offering, as such term is defined in Rule 5110
of the FINRA Manual. The Company also agrees that, if required by law, proper disclosure of such arrangement or potential arrangement
will be made in the tender offer documents or proxy statement which the Company will file with the Commission in connection with
the Business Combination.
3.13.2
FINRA. The Company shall advise the Representatives (who shall make an appropriate filing with FINRA) if it is aware
that any 5% or greater stockholder of the Company becomes an affiliate or associated person of a FINRA member participating in
the distribution of the Public Securities.
3.13.3
Broker/Dealer. In the event the Company intends to register as a broker/dealer, merge with or acquire a registered
broker/dealer, or otherwise become a member of FINRA, it shall promptly notify FINRA.
3.14 Stabilization.
Neither the Company, nor to its knowledge, assuming reasonable inquiry, any of its employees, directors or stockholders (without
the consent of the Representatives) has taken or will take, directly or indirectly, any action designed to or that has constituted
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 Units.
3.15 Internal
Controls. The Company will maintain a system of internal accounting controls sufficient to provide reasonable assurances that:
(i) transactions are executed in accordance with management’s general or specific authorization, (ii) transactions are recorded
as necessary in order to permit preparation of financial statements in accordance with GAAP and to maintain accountability for
assets, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and
(iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
3.16
Accountants. Until the earlier of the closing of a Business Combination or the liquidation of the Company, the Company
shall retain Plante or another independent registered public accounting firm reasonably acceptable to the Representatives.
3.17
Form 8-K. The Company shall, on or prior to the date hereof, retain its independent registered public accounting
firm to audit the balance sheet of the Company as of the Closing Date (“Audited Financial Statements”) reflecting
the receipt by the Company of the proceeds of the Offering and the Private Placements. Within four (4) Business Days after
the Closing Date, the Company shall file a Current Report on Form 8-K with the Commission, which Report shall contain the Company’s
Audited Financial Statements. Promptly after the Option Closing Date, if the Over-allotment Option is exercised after the Closing
Date, the Company shall file with the Commission a Current Report on Form 8-K or an amendment to the Form 8-K to provide updated
financial information to reflect the exercise of such option.
3.18 Corporate
Proceedings. All corporate proceedings and other legal matters necessary to carry out the provisions of this Agreement and
the transactions contemplated hereby shall have been done to the reasonable satisfaction to Loeb.
3.19 Investment
Company. The Company shall cause the proceeds of the Offering to be held in the Trust Account to be invested only as provided
for in the Trust Agreement and disclosed in the Prospectus. The Company will otherwise conduct its business in a manner so that
it will not become subject to the Investment Company Act.
3.20 Amendments
to Charter Documents. The Company covenants and agrees, that prior to its initial Business Combination it will not seek to
amend or modify its Charter Documents, except as set forth therein and except as disclosed in the Registration Statement.
3.21 Press
Releases. The Company agrees that it will not issue press releases or engage in any other publicity, without the Representatives’
prior written consent (not to be unreasonably withheld), for a period of twenty-five (25) days after the Closing Date. Notwithstanding
the foregoing, in no event shall the Company be prohibited from issuing any press releases or engaging in any other publicity
required by law, except that including the name of any Underwriter therein shall require the prior written consent of such Underwriter.
3.22 Insurance.
The Company will maintain directors’ and officers’ insurance (including, without limitation, insurance covering the
Company, its directors and officers for liabilities or losses arising in connection with this Offering, including, without limitation,
liabilities or losses arising under the Act, the Exchange Act, the Regulations and any applicable foreign securities laws).
3.23 Electronic
Prospectus. The Company shall cause to be prepared and delivered to the Underwriters, at the Company’s expense, promptly,
but in no event later than two (2) Business Days from the effective date of this Agreement, an Electronic Prospectus to be used
by the Underwriters in connection with the Offering. As used herein, the term “Electronic Prospectus” means
a form of prospectus, and any amendment or supplement thereto, that meets each of the following conditions: (i) it shall be encoded
in an electronic format, satisfactory to the Representatives, that may be transmitted electronically by the Underwriters to offerees
and purchasers of the Units for at least the period during which a prospectus relating to the Units is required to be delivered
under the Act; (ii) it shall disclose the same information as the paper prospectus and prospectus filed pursuant to EDGAR, except
to the extent that graphic and image material cannot be disseminated electronically, in which case such graphic and image material
shall be replaced in the electronic prospectus with a fair and accurate narrative description or tabular representation of such
material, as appropriate; and (iii) it shall be in or convertible into a paper format or an electronic format, satisfactory to
the Representatives, that will allow recipients thereof to store and have continuously ready access to the prospectus at any future
time, without charge to such recipients (other than any fee charged for subscription to the Internet as a whole and for on-line
time).
3.24 Private
Placement Proceeds. On the Closing Date a portion of the proceeds from the Private Placements shall be deposited
into the Trust Account in accordance with the Purchase Agreements.
3.25 Future
Financings. The Company agrees that neither it, nor any successor or subsidiary of the Company, will consummate any public
or private equity or debt financing prior to the consummation of a Business Combination, unless all investors in such financing
expressly waive, in writing, any rights in or claims against the Trust Account.
3.26 Amendments
to Agreements. The Company shall not amend, modify or otherwise change the Warrant Agreement, Trust Agreement,
Purchase Agreement, the Services Agreement, or any Insider Letter without the prior written consent of the Representatives
which will not be unreasonably withheld.
3.27 NYSE.
Until the consummation of a Business Combination, the Company will use its best efforts to maintain the listing of the Public
Securities on the NYSE or a national securities exchange acceptable to the Representatives.
3.28 Reservation
of Shares. The Company will reserve and keep available that maximum number of its authorized but unissued securities, which
are issuable upon exercise of the Warrants, Placement Warrants and Representative’s Warrants outstanding from time to time.
3.29 Notice
of Disqualification Events. The Company will notify the Underwriters in writing, prior to the Closing Date, of (i) any Disqualification
Event relating to any Company Covered Person and (ii) any event that would, with the passage of time, become a Disqualification
Event relating to any Company Covered Person.
3.30 Disqualification
of S-l. Until the earlier of seven years from the date hereof or until the Warrants have either expired and are no longer
exercisable or have all been exercised, the Company will not take any action or actions that prevent or disqualify the Company’s
use of Form S-l (or other appropriate form) for the registration of the shares of Common Stock issuable upon exercise of the Warrants
under the Act.
3.31 Right
of First Refusal. The Company agrees that if the Firm Units are sold in accordance with the terms of this Underwriting Agreement,
for a period beginning on the closing of this Offering and ending on the later of 24 months after the closing of this Offering
and 12 months after the consummation of our initial Business Combination, the Company shall grant the Representatives the right
of first refusal to act as, on an equal basis, (i) exclusive financial advisors in connection with all of our proposed Business
Combinations for a fee of up to 3.5% of the proceeds of this Offering (subject to the Company’s right, in its sole discretion,
to allocate up to 50% of such fee to another financial institution or extinguish such amount in Company’s sole discretion),
and (ii) exclusive investment bankers, exclusive book-runners, exclusive financial advisors, exclusive underwriters and/or exclusive
placement agents, at the Representatives’ sole and exclusive discretion, for each and every future public and private equity
and debt offering, including all equity linked financings, during such period, (each, a “Subject Transaction”), of
the Company or any successor to the Company or any of the Company’s subsidiaries, on terms agreed to by both the Company
and the Representatives in good faith (the “Right of First Refusal”). In accordance with FINRA Rule 5110(f)(2)(E)(i),
such Right of First Refusal shall not have a duration of more than three years from the effective date of the Registration Statement.
The Company shall notify the Representatives of its intention to pursue a Subject Transaction, including the material terms thereof,
by providing written notice thereof by registered mail or overnight courier service addressed to the Representatives. Any Representative
that fails to exercise its Right of First Refusal with respect to any Subject Transaction within ten (10) Business Days after
the mailing of such written notice shall have no further claim or right with respect to the Subject Transaction. Each Representative
may elect, in its sole and absolute discretion, not to exercise its Right of First Refusal with respect to any Subject Transaction;
provided that any such election by such Representative shall not adversely affect the Representative’s Right of First Refusal
with respect to any other Subject Transaction and shall not affect the other Representative’s Right of First Refusal with
respect to that Subject Transaction; and provided further that in the event that only one of Representatives elects to not to
exercise its right of first refusal for a Subject Transaction, the Representative exercising the right with respect to the Subject
Transaction shall be entitled to 100% of economics relating to such Subject Transaction. The Company and the Representatives shall
make commercially reasonable efforts to agree on the terms of the Subject Transaction (including Representatives compensation
thereunder) in good faith within 10 business days after the acceptance of the Right of First Refusal by the Representatives.
4. Conditions
of Underwriters’ Obligations. The obligations of the Underwriters to purchase and pay for the Units, as provided herein,
shall be subject to the continuing accuracy of the representations and warranties of the Company as of the date hereof and as
of each of the Closing Date and the Option Closing Date, if any, to the accuracy of the statements of officers of the Company
made pursuant to the provisions hereof and to the performance by the Company of its obligations hereunder and to the following
conditions:
4.1 Regulatory
Matters.
4.1.1
Effectiveness of Registration Statement. The Registration Statement shall have become effective not later
than 4:00 p.m., New York time, on the date of this Agreement or such later date and time as shall be consented to in writing by
the Representatives.
4.1.2
FINRA Clearance. By the Effective Date, the Underwriters shall have received clearance from FINRA as to the amount
of compensation allowable or payable to the Underwriters as described in the Registration Statement.
4.1.3
No Commission Stop Order. At the Closing Date and on each Option Closing Date, if any, the Commission has not issued
any order or threatened to issue any order preventing or suspending the use of any Preliminary Prospectus, the Prospectus or any
part thereof, and has not instituted or, to the Company’s knowledge, assuming reasonable inquiry, threatened to institute
any proceedings with respect to such an order.
4.1.4
NYSE. The Securities shall have been approved for listing on the NYSE, subject to official notice of issuance and
evidence of satisfactory distribution, satisfactory evidence of which shall have been provided to the Representatives.
4.2 Company
Counsel Matters.
4.2.1
Closing Date and Option Closing Date Opinions of Counsel. On the Closing Date and each Option Closing Date, if any,
the Representatives shall have received the favorable opinions and negative assurance statements of White & Case LLP, dated
the Closing Date or the Option Closing Date, as the case may be, addressed to the Representatives as representatives for the several
Underwriters and in form and substance satisfactory to the Representatives and Loeb.
4.2.2
Reliance. In rendering such opinions, such counsel may rely as to matters of fact, to the extent they deem proper,
on certificates or other written statements of officers of the Company and officers of departments of various jurisdictions having
custody of documents respecting the corporate existence or good standing of the Company, provided that copies of any such statements
or certificates shall be delivered to the Representatives’ counsel if requested. The opinions of counsel for the Company
shall include a statement to the effect that they may be relied upon by counsel for the Underwriters in its opinion delivered
to the Underwriters.
4.3 Comfort
Letter. At the time this Agreement is executed, and at the Closing Date and each Option Closing Date, if any, the Representatives
shall have received a letter, addressed to the Representatives as representatives for the several Underwriters and in form and
substance satisfactory in all respects to the Representatives from Plante dated, respectively, as of the date of this Agreement
and as of the Closing Date and Option Closing Date.
4.4 Officers’
Certificates.
4.4.1
Officers’ Certificate. At each of the Closing Date and the Option Closing Date, if any, the Representatives
shall have received a certificate of the Company signed by the Chairman of the Board or the Chief Executive Officer and the Secretary
or Assistant Secretary of the Company (in their capacities as such), dated the Closing Date or the Option Closing Date, as the
case may be, respectively, to the effect that the Company has performed all covenants and complied with all conditions required
by this Agreement to be performed or complied with by the Company prior to and as of the Closing Date, or the Option Closing Date,
as the case may be, and that the conditions set forth in Section 4 hereof have been satisfied as of such date and that,
as of Closing Date and the Option Closing Date, as the case may be, the representations and warranties of the Company set forth
in Section 2 hereof are true and correct. In addition, the Representatives will have received such other and further certificates
of officers of the Company (in their capacities as such) as the Representatives may reasonably request.
4.4.2
Secretary’s Certificate. At each of the Closing Date and the Option Closing Date, if any, the Representatives
shall have received a certificate of the Company signed by the Secretary or Assistant Secretary of the Company, dated the Closing
Date or the Option Date, as the case may be, respectively, certifying (i) that the Charter Documents are true and complete, have
not been modified and are in full force and effect, (ii) that the resolutions of the Company’s Board of Directors relating
to the public offering contemplated by this Agreement are in full force and effect and have not been modified, (iii) as to the
accuracy and completeness of all correspondence between the Company or its counsel and the Commission, (iv) as to the accuracy
and completeness of all correspondence between the Company or its counsel and the NYSE and (v) as to the incumbency of the officers
of the Company. The documents referred to in such certificate shall be attached to such certificate.
4.5 No
Material Changes. Prior to and on each of the Closing Date and the Option Closing Date, if any, (i) there shall have been
no material adverse change or development involving a prospective material adverse change in the condition or prospects or the
business activities, financial or otherwise, of the Company from the latest dates as of which such condition is set forth in the
Registration Statement and the Prospectus, (ii) no action suit or proceeding, at law or in equity, shall have been pending or
threatened against the Company or any Insider before or by any court or federal, foreign or state commission, board or other administrative
agency wherein an unfavorable decision, ruling or finding may materially adversely affect the business, operations, or financial
condition or income of the Company, except as set forth in the Registration Statement and the Prospectus, (iii) no stop order
shall have been issued under the Act and no proceedings therefor shall have been initiated or, to the Company’s knowledge,
assuming reasonable inquiry, threatened by the Commission, and (iv) the Registration Statement, the Sale Preliminary Prospectus
and the Prospectus and any amendments or supplements thereto shall contain all material statements which are required to be stated
therein in accordance with the Act and the Regulations and shall conform in all material respects to the requirements of the Act
and the Regulations, and neither the Registration Statement, the Sale Preliminary Prospectus nor the Prospectus nor any amendment
or supplement thereto shall contain any untrue statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
4.6 Delivery
of Agreements. On the Effective Date, the Company shall have delivered to the Representatives executed copies of the Transaction
Documents and all of the Insider Letters.
5. Indemnification
and Contribution.
5.1 Indemnification.
5.1.1
Indemnification of the Underwriters. The Company agrees to indemnify and hold harmless each Underwriter, its affiliates
and their respective partners, members, directors, officers, employees and agents, and each person, if any, who controls each
Underwriter or any affiliate within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act as follows:
(a)
against any and all loss, liability, claim, damage and expense whatsoever, as incurred, joint or several, arising out of
or based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or
any amendment thereto), or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading, or arising out of any untrue statement or alleged untrue statement of a material
fact included in any preliminary prospectus, Sale Preliminary Prospectus, any Testing-the-Waters Communication or the Prospectus
(or any amendment or supplement to the foregoing), or the omission or alleged omission therefrom of a material fact necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(b)
against any and all loss, liability, claim, damage and expense whatsoever, as incurred, joint or several, to the extent
of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental authority,
commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 5.1(d)) any such settlement is effected with the written consent of the
Company, which consent shall not unreasonably be delayed, conditioned or withheld; and
(c)
against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel), reasonably incurred
in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental authority,
commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue
statement or omission (whether or not a party), to the extent that any such expense is not paid under (i) or (ii) above;
provided, however, that the foregoing
shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission
or alleged untrue statement or omission made solely in reliance upon and in conformity with the Underwriters’ Information
(as defined below).
5.1.2
Indemnification of the Company, its Directors and Officers. Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, and its directors, each officer of the Company who signed the Registration Statement
and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 5.1.1,
as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration
Statement, any preliminary prospectus, the Sale Preliminary Prospectus, any Testing-the-Waters Communication or the Prospectus
(or any amendment or supplement to the foregoing), in reliance upon and in conformity with Underwriters’ Information.
5.1.3
Notifications and Other Indemnification Procedures. Any party that proposes to assert the right to be indemnified
under this Section 5.1 will, promptly after receipt of notice of commencement of any action against such party in respect of which
a claim is to be made against an indemnifying party or parties under this Section 5.1, notify each such indemnifying party of
the commencement of such action, enclosing a copy of all papers served, but the omission so to notify such indemnifying party
will not relieve the indemnifying party from (i) any liability that it might have to any indemnified party otherwise than under
this Section 5.1 and (ii) any liability that it may have to any indemnified party under the foregoing provision of this Section
5.1 unless, and only to the extent that, such omission results in the forfeiture of substantive rights or defenses by the indemnifying
party. If any such action is brought against any indemnified party and it notifies the indemnifying party of its commencement,
the indemnifying party will be entitled to participate in and, to the extent that it elects by delivering written notice to the
indemnified party promptly after receiving notice of the commencement of the action from the indemnified party, jointly with any
other indemnifying party similarly notified, to assume the defense of, the action, with counsel reasonably satisfactory to the
indemnified party, and after notice from the indemnifying party to the indemnified party of its election to assume the defense,
the indemnifying party will not be liable to the indemnified party for any other legal expenses except as provided below and except
for the reasonable costs of investigation subsequently incurred by the indemnified party in connection with the defense. The indemnified
party will have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel
will be at the expense of such indemnified party unless (A) the employment of counsel by the indemnified party has been authorized
in writing by the indemnifying party, (B) the indemnified party has reasonably concluded (based on advice of counsel) that there
may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to
the indemnifying party, (C) a conflict or potential conflict exists (based on advice of counsel to the indemnified party) between
the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (D) the indemnifying party has not in fact employed counsel to assume the
defense of such action or counsel reasonably satisfactory to the indemnified party, in each case, within a reasonable time after
receiving notice of the commencement of the action; in each of which cases the reasonable fees, disbursements and other charges
of counsel will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties
shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to practice in such jurisdiction (plus local counsel)
at any one time for all such indemnified party or parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred. An indemnifying party will not, in any event, be liable for any settlement
of any action or claim effected without its written consent. No indemnifying party shall, without the prior written consent of
each indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action
or proceeding relating to the matters contemplated by this Section 5 (whether or not any indemnified party is a party thereto),
unless such settlement, compromise or consent (x) includes an express and unconditional release of each indemnified party, in
form and substance reasonably satisfactory to such indemnified party, from all liability arising out of such litigation, investigation,
proceeding or claim and (y) 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.
5.1.4
Settlement Without Consent if Failure to Reimburse. If an indemnified party shall have requested an indemnifying
party to reimburse the indemnified party for reasonable fees and expenses of counsel, such indemnifying party agrees that it shall
be liable for any settlement of the nature contemplated by Section 5.1.1(b) effected without its written consent if (i) such settlement
is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party
shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii)
such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of
such settlement.
5.2 Contribution.
In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in the foregoing
paragraphs of Section 5.1 is applicable in accordance with its terms but for any reason is held to be unavailable or insufficient
from the Company or the Underwriters, the Company and the Underwriters will contribute to the total losses, claims, liabilities,
expenses and damages (including any investigative, legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim asserted) to which any indemnified party may be subject in
such proportion as shall be appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters
on the other hand. The relative benefits received by the Company on the one hand and the Underwriters on the other hand shall
be deemed to be in the same proportion as the total net proceeds from the sale of the Offered Shares (before deducting expenses)
received by the Company bear to the total compensation received by the Underwriters (before deducting expenses) from the sale
of Units on behalf of the Company. If, but only if, the allocation provided by the foregoing sentence is not permitted by applicable
law, the allocation of contribution shall be made in such proportion as is appropriate to reflect not only the relative benefits
referred to in the foregoing sentence but also the relative fault of the Company, on the one hand, and the Underwriters, on the
other hand, with respect to the statements or omission that resulted in such loss, claim, liability, expense or damage, or action
in respect thereof, as well as any other relevant equitable considerations with respect to such offering. Such relative fault
shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters, the
intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement
or omission. The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this
Section 5.2 were to be determined by pro rata allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim,
liability, expense or damage, or action in respect thereof, referred to above in this Section 5.2 shall be deemed to include,
for the purpose of this Section 5.2, any legal or other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim to the extent consistent with Section 5.1.3. Notwithstanding the foregoing
provisions of Section 5.1 and this Section 5.2, the Underwriters shall not be required to contribute any amount in excess of the
commissions actually received by it under this Agreement and no person found guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 5.2, any person who controls a party to this Agreement within the meaning of the
Securities Act, any affiliates of the respective Underwriters and any officers, directors, partners, employees or agents of the
Underwriters or their respective affiliates, will have the same rights to contribution as that party, and each director of the
Company and each officer of the Company who signed the Registration Statement will have the same rights to contribution as the
Company, subject in each case to the provisions hereof. Any party entitled to contribution, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim for contribution may be made under this Section 5.2,
will notify any such party or parties from whom contribution may be sought, but the omission to so notify will not relieve that
party or parties from whom contribution may be sought from any other obligation it or they may have under this Section 5.2 except
to the extent that the failure to so notify such other party materially prejudiced the substantive rights or defenses of the party
from whom contribution is sought. Except for a settlement entered into pursuant to the last sentence of Section 5.1.3, no party
will be liable for contribution with respect to any action or claim settled without its written consent if such consent is required
pursuant to Section 5.1.3.
6. Default
by an Underwriter.
6.1 Default
Not Exceeding 10% of Firm Units. If any Underwriter or Underwriters shall default in its or their obligations to purchase
the Firm Units and if the number of the Firm Units with respect to which such default relates does not exceed in the aggregate
10% of the number of Firm Units that all Underwriters have agreed to purchase hereunder, then such Firm Units to which the default
relates shall be purchased by the non-defaulting Underwriters in proportion to their respective commitments hereunder.
6.2 Default
Exceeding 10% of Firm Units. In the event that the default addressed in Section 6.1 above relates to more than 10%
of the Firm Units, the Representatives may, in their discretion, arrange for it or for another party or parties to purchase such
Firm Units to which such default relates on the terms contained herein. If within one (1) Business Day after such default relating
to more than 10% of the Firm Units the Representatives does not arrange for the purchase of such Firm Units, then the Company
shall be entitled to a further period of one (1) Business Day within which to procure another party or parties satisfactory to
the Representatives to purchase said Firm Units on such terms. In the event that neither the Representatives nor the Company arrange
for the purchase of the Firm Units to which a default relates as provided in this Section 6, this Agreement may be terminated
by the Representatives or the Company without liability on the part of the Company (except as provided in Sections 3.10.5,
and 9.3 hereof) or the several Underwriters (except as provided in Section 5 hereof); provided that nothing
herein shall relieve a defaulting Underwriter of its liability, if any, to the other several Underwriters and to the Company for
damages occasioned by its default hereunder.
6.3 Postponement
of Closing Date. In the event that the Firm Units to which the default relates are to be purchased by the non-defaulting Underwriters,
or are to be purchased by another party or parties as aforesaid, the Representatives or the Company shall have the right to postpone
the Closing Date for a reasonable period, but not in any event exceeding five (5) Business Days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement and/or the Prospectus, as the case may be, or in any other documents
and arrangements, and the Company agrees to file promptly any amendment to, or to supplement, the Registration Statement and/or
the Prospectus, as the case may be, that in the reasonable opinion of counsel for the Underwriters may thereby be made necessary.
The term “Underwriter” as used in this Agreement shall include any party substituted under this Section 6 with
like effect as if it had originally been a party to this Agreement with respect to such securities.
7. Additional
Covenants.
7.1 Additional
Shares or Options. The Company hereby agrees that until the consummation of a Business Combination, it shall not issue any
shares of Common Stock or any options or other securities convertible into or exercisable for Common Stock, or any preferred shares
or other securities of the Company which participate in any manner in the Trust Account or which vote as a class with the Common
Stock on a Business Combination.
7.2 Trust
Account Waiver Acknowledgments. The Company hereby agrees that it will use its reasonable best efforts prior to commencing
its due diligence investigation of any prospective Target Business or obtaining the services of any vendor to have such Target
Business and/or vendor acknowledge in writing whether through a letter of intent, memorandum of understanding or other similar
document (and subsequently acknowledges the same in any definitive document replacing any of the foregoing), that (a) it has read
the Prospectus and understands that the Company has established the Trust Account, initially in an amount of $230,625,000 (without
giving effect to any exercise of the Over-allotment Option) for the benefit of the Public Stockholders and that, except for a
portion of the interest earned on the amounts held in the Trust Account, the Company may disburse monies from the Trust Account
only (i) to the Public Stockholders in the event they elect to redeem shares of Common Stock contained in the Public Securities
in connection with the consummation of a Business Combination, (ii) to the Public Stockholders if the Company fails to consummate
a Business Combination within the time period set forth in the Charter Documents, or (iii) to the Company after or concurrently
with the consummation of a Business Combination and (b) for and in consideration of the Company (i) agreeing to evaluate such
Target Business for purposes of consummating a Business Combination with it or (ii) agreeing to engage the services of the vendor,
as the case may be, such Target Business or vendor agrees that it does not have any right, title, interest or claim of any kind
in or to any monies in the Trust Account (“Claim”) and waives any Claim it may have in the future as a result
of, or arising out of, any negotiations, contracts or agreements with the Company and will not seek recourse against the Trust
Account for any reason whatsoever. The Company may forego obtaining such waivers only if the Company shall have received the approval
of its Chief Executive Officer and the approving vote of at least a majority of its Board of Directors.
7.3 Insider
Letters. The Company shall not take any action or omit to take any action which would cause a breach of any of the Insider
Letters and will not allow any amendments to, or waivers of, such Insider Letters without the prior written consent of the Representatives,
which consent shall not be unreasonably withheld.
7.4 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 any 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-l under
the Exchange Act during such period.
7.5 Tender
Offer Documents. Proxy Materials and Other Information. The Company shall provide to the Representatives or its counsel (if
so instructed by the Representatives) with 10 copies of all tender offer documents or proxy information and all related material
filed with the Commission in connection with a Business Combination concurrently with such filing with the Commission. Documents
filed with the Commission pursuant to its EDGAR system shall be deemed to have been provided to the Representatives pursuant to
this Section. In addition, the Company shall furnish any other state in which its initial public offering was registered, such
information as may be requested by such state.
7.6 Emerging
Growth Company. The Company shall promptly notify the Representatives if the Company ceases to be an Emerging Growth Company
at any time prior to the completion of the distribution of the Securities within the meaning of the Act.
7.7 Target
Net Assets. The Company agrees that the Target Business that it acquires must have a fair market value equal to at least 80%
of the balance in the Trust Account at the time of signing the definitive agreement for the Business Combination with such Target
Business (excluding taxes payable). The fair market value of such business must be determined by the Board of Directors of the
Company based upon standards generally accepted by the financial community, such as actual and potential sales, earnings, cash
flow and book value. If the Board of Directors of the Company is not able to independently determine that the target business
meets such fair market value requirement, the Company will obtain an opinion from an independent investment banking firm or another
independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria. The Company is
not required to obtain an opinion as to the fair market value if the Company’s Board of Directors independently determines
that the Target Business does have sufficient fair market value.
8. Representations
and Agreements to Survive Delivery. Except as the context otherwise requires, all representations, warranties and agreements
contained in this Agreement shall be deemed to be representations, warranties and agreements as of the Closing Date or the Option
Closing Date, if any, and such representations, warranties and agreements of the Underwriters and the Company, including the indemnity
agreements contained in Section 5 hereof, shall remain operative and in full force and effect regardless of any investigation
made by or on behalf of the Underwriters, the Company, and shall survive termination of this Agreement or the issuance and delivery
of the Public Securities to the Underwriters until the earlier of the expiration of any applicable statute of limitations and
the seventh (7th) anniversary of the later of the Closing Date or the Option Closing Date, if any, at which time the representations,
warranties and agreements shall terminate and be of no further force and effect.
9. Effective
Date of This Agreement and Termination Thereof.
9.1 Effective
Date. This Agreement shall become effective on the Effective Date at the time the Registration Statement is declared effective
by the Commission.
9.2 Termination.
The Representatives shall have the right to terminate this Agreement at any time prior to the Closing Date, (i) if any domestic
or international event or act or occurrence has materially disrupted, or in the Representatives opinion will in the immediate
future materially disrupt, general securities markets in the United States; or (ii) if trading on the NYSE, the NYSE American,
the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market or quoted on the over the counter market
shall have been suspended, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities
shall have been fixed, or maximum ranges for prices for securities shall have been required by FINRA or by order of the Commission
or any other government authority having jurisdiction, or (iii) if the United States shall have become involved in a new war or
an increase in existing major hostilities, or (iv) if a banking moratorium has been declared by a New York State or Federal authority,
or (v) if a moratorium on foreign exchange trading has been declared which materially adversely impacts the United States securities
market, or (vi) if the Company shall have sustained a material loss by fire, flood, accident, hurricane, earthquake, theft, sabotage
or other calamity or malicious act which, whether or not such loss shall have been insured, will, in the Representatives’
sole opinion, make it inadvisable to proceed with the delivery of the Units, or (vii) if the Company is in material breach of
any of its representations, warranties or covenants hereunder, or (viii) if the Representatives shall have become aware after
the date hereof of such a material adverse change in the conditions of the Company, or such adverse material change in general
market conditions, including without limitation as a result of terrorist activities after the date hereof, as in the Representatives’
sole judgment would make it impracticable to proceed with the offering, sale and/or delivery of the Units or to enforce contracts
made by the Underwriters for the sale of the Public Securities.
9.3 Expenses.
If this Agreement shall be terminated pursuant to Section 6 hereof, the Company shall not then be under any liability to any Underwriter;
but, if for any other reason, any Units are not delivered by or on behalf of the Company as provided herein or the Underwriters
decline to purchase the Units for any reason permitted under this Agreement, within the time specified herein or any extensions
thereof pursuant to the terms herein, (i) the obligations of the Company to pay the out of pocket accountable expenses related
to the transactions contemplated herein shall be governed by Section 3.10 hereof, and (ii) the Company shall reimburse
the Representatives for any reasonable and accountable costs and expenses incurred in connection with enforcing any provisions
of this Agreement.
9.4 Indemnification.
Notwithstanding any contrary provision contained in this Agreement, any election hereunder or any termination of this Agreement,
and whether or not this Agreement is otherwise carried out, the provisions of Section 5 shall not be in any way affected by such
election or termination or failure to carry out the terms of this Agreement or any part hereof.
10. Miscellaneous.
10.1 Notices.
All communications hereunder, except as herein otherwise specifically provided, shall be in writing and shall be mailed, delivered
by hand or reputable overnight courier or delivered by electronic mail or facsimile transmission (with printed confirmation of
receipt) and confirmed and shall be deemed given when so mailed, delivered or faxed or if mailed, two days after such mailing.
If to the Representatives:
ThinkEquity,
a division of Fordham Financial Management, Inc.
17 State Street, 22nd Floor
New York, New York 10004
Attention: Mr. Eric Lord, Head of Investment Banking
E-mail: el@think-equity.com
Piper
Sandler & Co.
345 Park Avenue
Suite 1200
New York, NY 10154
Attn:
Mr. James Baker, Global Head of Investment Banking
Copy (which copy shall not constitute
notice) to:
Loeb
& Loeb LLP
345
Park Avenue
New York, New York 10154
Attn: Mitchell S. Nussbaum
Facsimile: (212) 407-4990
Email: mnussbaum@loeb.com
If to the Company:
FG
New America Acquisition Corp.
105
S. Maple Street
Itasca,
Illinois 60143
Attn: Hassan Baqar
Facsimile: N/A
Email:
hbaqar@sequoiafinancial.com
Copy (which copy shall not constitute
notice) to:
White
& Case LLP
1221 Avenue of the Americas
New York, New York 10020
Attn: Joel Rubinstein, Esq.
Facsimile: (212) 354-8113
Email: joel.rubinstein@whitecase.com
10.2
Headings. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any
way limit or affect the meaning or interpretation of any of the terms or provisions of this Agreement.
10.3
Amendment. This Agreement may only be amended by a written instrument executed by each of the parties hereto.
10.4
Entire Agreement. This Agreement (together with the other agreements and documents being delivered pursuant to or
in connection with this Agreement) constitute the entire agreement of the parties hereto with respect to the subject matter hereof
and thereof, and supersede all prior agreements and understandings of the parties, oral and written, with respect to the subject
matter hereof.
10.5
Binding Effect. This Agreement shall inure solely to the benefit of and shall be binding upon the Representatives,
the Underwriters, the Company, directors, agents, partners, members, employees and officers referred to in Section 5 hereof,
and their respective successors, legal representatives and assigns, and no other person shall have or be construed to have any
legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provisions herein contained.
The term “successors and assigns” shall not include a purchaser, in its capacity as such, of securities from the Underwriters.
10.6
Waiver of Immunity. To the extent that the Company may be entitled in any jurisdiction in which judicial proceedings
may at any time be commenced hereunder, to claim for itself or its revenues or assets any immunity, including sovereign immunity,
from suit, jurisdiction, attachment in aid of execution of a judgment or prior to a judgment, execution of a judgment or any other
legal process with respect to its obligations hereunder and to the extent that in any such jurisdiction there may be attributed
to the Company such an immunity (whether or not claimed), the Company hereby irrevocably agrees not to claim and irrevocably waives
such immunity to the maximum extent permitted by law.
10.7
Submission to Jurisdiction. Each of the Company and the Representatives irrevocably submit to the nonexclusive jurisdiction
of any New York State or United States Federal court sitting in The City of New York, Borough of Manhattan, over any suit, action
or proceeding arising out of or relating to this Agreement, the Registration Statement, the Sale Preliminary Prospectus and the
Prospectus or the offering of the Securities. Each of the Company and the Representatives irrevocably waives, to the fullest extent
permitted by law, any objection that they may now or hereafter have to the laying of venue of any such suit, action or proceeding
brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in an
inconvenient forum. Any such process or summons to be served upon the Company or the Representatives may be served by transmitting
a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set
forth in Section 10.1 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company or
the Representatives in any action, proceeding or claim. Each of the Company and the Representatives waives, to the fullest extent
permitted by law, any other requirements of or objections to personal jurisdiction with respect thereto. Notwithstanding the foregoing,
any action based on this Agreement may be instituted by the Underwriters in any competent court. The Company agrees that the Underwriters
shall be entitled to recover all of their reasonable attorneys’ fees and expenses relating to any action or proceeding and/or
incurred in connection with the preparation therefor if any of them are the prevailing party in such action or proceeding.
10.8
Governing Law. 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.
10.9
Execution in Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties
hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute
one and the same agreement, and shall become effective when one or more counterparts has been signed by each of the parties hereto
and delivered to each of the other parties hereto. Delivery of a signed counterpart of this Agreement by facsimile or email/pdf
transmission shall constitute valid and sufficient delivery thereof.
10.10
Waiver. The failure of any of the parties hereto to at any time enforce any of the provisions of this Agreement
shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Agreement
or any provision hereof or the right of any of the parties hereto to thereafter enforce each and every provision of this Agreement.
No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Agreement shall be effective unless
set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought;
and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or
subsequent breach, noncompliance or non-fulfillment.
10.11
No Fiduciary Relationship. The Company acknowledges and agrees that (i) the purchase and sale of the Units pursuant
to this Agreement is an arm’s-length commercial transaction pursuant to a contractual relationship between the Company and
the Underwriters, (ii) in connection therewith and with the process leading to such transaction, each Underwriter is acting solely
as a principal and not the agent or fiduciary of the Company, (iii) the Underwriters have not assumed an advisory or fiduciary
responsibility in favor of the Company with respect to the offering contemplated hereby or the process leading thereto (irrespective
of whether the Underwriters have advised or are currently advising the Company on other matters) or any other obligation to the
Company except the obligations expressly set forth in this Agreement, (iv) in no event do the parties intend that the Underwriters
act or be responsible as a fiduciary to the Company, its management, stockholders, creditors or any other person in connection
with any activity that the Underwriters may undertake or have undertaken in furtherance of this offering of the Company’s
securities, either before or after the date hereof and (v) the Company has consulted its own legal and financial advisors to the
extent it deemed appropriate. The Underwriters hereby expressly disclaim any fiduciary or similar obligations to the Company,
either in connection with the transactions contemplated by this Agreement or any matters leading up to such transactions, and
the Company hereby confirms its understanding and agreement to that effect. The Company agrees that it will not claim that the
Underwriters have rendered advisory services of any nature or respect, or owe a fiduciary or similar duty to the Company, in connection
with such transaction or the process leading thereto. The Company and the Underwriters agree that they are each responsible for
making their own independent judgment with respect to any such transactions, and that any opinions or views expressed by the Underwriters
to the Company regarding such transactions, including but not limited to any opinions or views with respect to the price or market
for the Company’s securities, do not constitute advice or recommendations to the Company. The Company hereby waives and
releases, to the fullest extent permitted by law, any claims that the Company may have against the Underwriters with respect to
any breach or alleged breach of any fiduciary or similar duty to the Company in connection with the transactions contemplated
by this Agreement or any matters leading up to such transactions.
[Remainder of
page intentionally left blank]
If the foregoing
correctly sets forth the understanding between the Underwriters and the Company, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement between us.
| | Very
truly yours,
FG NEW AMERICA ACQUISITION
CORP.
|
| | | |
| By: | |
|
| | |
Name: |
| | |
Title: |
Accepted on the date first
above written.
THINKEQUITY, A DIVISION OF FORDHAM FINANCIAL
MANAGEMENT, INC.
Name:
Title:
PIPER SANDLER & CO.
Name:
Title:
, as Representatives
of the several underwriters
[Signature page to Underwriting Agreement,
dated ______, 2020]
SCHEDULE A
FG NEW AMERICA
ACQUISITION CORP.
22,500,000 Units
Underwriter |
|
Number
of Firm Units to be Purchased |
| |
|
|
| ThinkEquity, a division of Fordham Financial Management, Inc. |
|
|
| |
|
|
| Piper Sandler & Co. |
|
|
| TOTAL |
|
22,500,000 |
SCHEDULE B
Exhibit 3.2
Amended
AND RESTATED
CERTIFICATE OF INCORPORATION
OF
FG NEW AMERICA ACQUISITION corp.
[●], 2020
FG New America Acquisition
Corp., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”),
DOES HEREBY CERTIFY AS FOLLOWS:
1.
The name of the Corporation is “FG New America Acquisition Corp.” The original certificate of incorporation was filed
with the Secretary of State of the State of Delaware on June 24, 2020 (the “Original Certificate”).
2.
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”).
3.
This Amended and Restated Certificate shall become effective on the date of filing with the Secretary of State of Delaware.
4.
Certain capitalized terms used in this Amended and Restated Certificate are defined where appropriate herein.
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 FG New America 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 251 Little Falls Drive, in the City of Wilmington, County of
New Castle, State of Delaware, 19808, and the name of the Corporation’s registered agent at such address is Corporation Service
Company.
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 401,000,000 shares, consisting of (a) 400,000,000 shares of common stock
(the “Common Stock”), including (i) 380,000,000 shares of Class A common stock (the “Class
A Common Stock”), and (ii) 20,000,000 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), the holders
of the 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
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, 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 and on all
other matters properly submitted to a vote of the stockholders. 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 exclusively, 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 concurrently with or immediately following the closing 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 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,
all issued and outstanding shares of Class B Common Stock shall automatically convert into shares of Class A Common Stock
at the time of the closing of the Corporation’s initial Business Combination, the ratio for which the shares of Class B Common
Stock shall convert into shares of Class A Common Stock will be adjusted 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 sum of (i) all 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, excluding any shares of Class A Common Stock or equity-linked securities or rights issued, or to be
issued, to any seller in a Business Combination, any private placement warrants issued to FG New America Investors LLC (the “Sponsor”),
any private placement units issued to the Sponsor or and any warrants issued to an affiliate of the Sponsor or the Corporation’s
officers and directors upon the conversion of working capital loans made to the Corporation, minus (ii) 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.
Notwithstanding
anything to the contrary contained herein, 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).
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 an 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 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 (“By Laws”), 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 By Laws adopted by the stockholders; provided, however, that no By Laws hereafter
adopted by the stockholders shall invalidate any prior act of the Board that would have been valid if such By Laws 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 Board is authorized to assign members of the Board already in office to Class I,
Class II or 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, each of the successors elected to replace 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
that constitutes the Board 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 constituting
the Board shorten the term of any incumbent director. Subject to the rights of the holders of one or more series of Preferred Stock,
voting separately by class or series, to elect directors pursuant to the terms of one or more series of Preferred Stock, the election
of directors shall be determined by a plurality of the votes cast by the stockholders present in person or represented by proxy
at the meeting and entitled to vote thereon. 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)
Subject to Section 5.5 hereof, a director shall hold office until the annual meeting for the year in which his or her term
expires and until his or her successor has been elected and qualified, subject, however, to such director’s earlier death,
resignation, retirement, disqualification or removal.
(d)
Unless and except to the extent that the By Laws shall so require, the election of directors need not be by written ballot. The
holders of shares of Common Stock shall not have cumulative voting rights.
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, any or all of the directors may be removed from office at any time, but only
for cause and only by the affirmative vote of 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.
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.
Section 5.6
Quorum. A quorum for the transaction of business by the directors shall be set forth in the By Laws.
ARTICLE VI
BY LAWS
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 By Laws. The affirmative vote of a majority of the Board shall be required to adopt, amend, alter or
repeal the By Laws. The By Laws also may be adopted, amended, altered or repealed by the stockholders; 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 at least 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 to adopt, amend, alter or repeal the By
Laws; and provided further, however, that no By Laws hereafter adopted by the stockholders shall invalidate any prior act of the
Board that would have been valid if such By Laws had not been adopted.
ARTICLE VII
MEETINGS OF STOCKHOLDERS; ACTION BY WRITTEN CONSENT
Section 7.1
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
to call a special meeting is hereby specifically denied. Except as provided in the foregoing sentence, special meetings of stockholders
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 By Laws.
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 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 any 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 unless a director violated
his or her duty of loyalty to the Corporation or its stockholders, acted in bad faith, knowingly or intentionally violated the
law, authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived improper personal
benefit from his or her actions as a director. 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 By
Laws, 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.
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 consummation of the Corporation’s initial Business Combination and no amendment to this
Article IX shall be effective prior to the consummation of the initial Business Combination 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, initially filed with the U.S. Securities and Exchange Commission (the “SEC”)
on August 26, 2020, 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 withdrawal of interest to pay taxes, 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
24 months from the closing of the Offering and (iii) the redemption of shares in connection with a vote seeking to amend such
provisions of this Amended and Restated Certificate as described in Section 9.7. Holders of shares of Common Stock included
as part of the units 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 the Sponsor
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 upon the consummation of the initial 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 shall not redeem Offering Shares in an amount that would cause the Corporation to have
net tangible assets to be less than $5,000,001 (such limitation hereinafter called the “Redemption Limitation”).
Notwithstanding anything to the contrary contained in this Amended and Restated Certificate, there shall be no Redemption Rights
or liquidating distributions with respect to any warrant issued pursuant to the Offering.
(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 of the Securities Exchange Act of 1934, as amended (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 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 of 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 of 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; provided, however, that
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 earned on the funds held in the Trust Account (which interest shall be net of taxes payable), 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: (x) 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
earned on the funds held in the Trust Account (which interest shall be net of taxes payable), by (y) the total number of then
outstanding Offering Shares.
(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 prior consent of the Corporation.
(d)
In the event that the Corporation has not consummated an initial Business Combination within 24 months from the closing of the
Offering, 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 earned on the funds held in the Trust Account (which interest shall be net
of taxes payable and up to $100,000 of 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 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 as a class with the Class A Common Stock 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 the Sponsor, 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 investment banking firm that is a member of the Financial
Industry Regulatory Authority or a valuation or appraisal 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 Amended and Restated
Certificate (a) to modify the substance or timing of the Corporation’s obligation to redeem 100% of the Offering Shares if
the Corporation has not consummated an initial Business Combination within 24 months from the date of the closing of the Offering
or (b) with respect to any other material provisions of this Amended and Restated Certificate relating to stockholders’ 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 earned on the funds held in the Trust Account (which interest shall be net of taxes payable),
divided by the number of then outstanding Offering Shares; provided, however, that any such amendment will be voided, and this
Article IX will remain unchanged, if any stockholders who wish to redeem are unable to redeem due to the Redemption Limitation.
Section 9.8
Minimum Value of Initial Business Combination. The Corporation’s initial Business Combination must be comprised of
one or more Business Combinations having an aggregate fair market value of at least 80% of the value of the assets held in the
Trust Account (excluding any deferred underwriting commissions) at the time the Corporation signs a definitive agreement in connection
with the initial Business Combination.
ARTICLE X
CORPORATE OPPORTUNITY
To the extent allowed
by law, 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, in circumstances where the application of any such
doctrine would conflict with any fiduciary duties or contractual obligations they may have as of the date of this Amended and Restated
Certificate or in the future, and the Corporation renounces any expectancy that any of the directors or officers of the Corporation
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 with respect to a corporate opportunity
that was offered to such person solely in his or her capacity as a director or officer of the Corporation and (i) such opportunity
is one the Corporation is legally and contractually permitted to undertake and would otherwise be reasonable for the Corporation
to pursue and (ii) the director or officer is permitted to refer that opportunity to the Corporation without violating any legal
obligation.
ARTICLE XI
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 XI; provided, however,
that Article IX of this Amended and Restated Certificate may be amended only as provided therein.
ARTICLE XII
EXCLUSIVE FORUM FOR CERTAIN LAWSUITS
Section 12.1
Forum. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the
State of Delaware (the “Court of Chancery”) shall be the sole and exclusive forum for any stockholder
(including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any
action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the
Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation, its directors,
officers or employees arising pursuant to any provision of the DGCL or this Amended and Restated Certificate or the By Laws, or
(iv) any action asserting a claim against the Corporation, its directors, officers or employees governed by the internal affairs
doctrine 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, except for, as to each of (i) through (iv) above, any claim (A) as to which the Court
of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable
party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B)
which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (C) for which the Court of
Chancery does not have subject matter jurisdiction, or (D) any action arising under the Securities Act of 1933, as amended, as
to which the Court of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction.
Notwithstanding the foregoing, the provisions of this Section 12.1 will not apply
to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have
exclusive jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in any security of the Corporation
shall be deemed to have notice of and consented to the provisions of this Section 12.1.
Section 12.2
Consent to Jurisdiction. If any action the subject matter of which is within the scope of Section 12.1 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 12.1 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.
Section 12.3
Severability. If any provision or provisions of this Article XII 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 Article
XII (including, without limitation, each portion of any sentence of this Article XII 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 any interest in shares of capital stock of the Corporation shall be deemed to have
notice of and consented to the provisions of this Article XII.
[Signature Page Follows]
IN WITNESS WHEREOF,
FG New America 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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FG NEW AMERICA ACQUISITION CORP. |
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By: |
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Name: Larry G. Swets, Jr. |
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Title: Chief Executive Officer |
[Signature Page
to Amended and Restated Certificate of Incorporation]
Exhibit 4.4
WARRANT
AGREEMENT
THIS WARRANT AGREEMENT
(this “Agreement”), dated as of [●], 2020, is by and between FG New America Acquisition Corp.,
a Delaware corporation (the “Company”), and Continental Stock Transfer & Trust Company, a New York
corporation, as warrant agent (in such capacity, the “Warrant Agent”, and also referred to herein as
the “Transfer Agent”).
WHEREAS, the Company
is engaged in an initial public offering (the “Offering”) of units of the Company’s equity securities,
each such unit comprised of one share of Class A common stock of the Company, par value $0.0001 per share (“Common
Stock”), and one-half of one redeemable Public Warrant (as defined below) (the “Public Units”);
WHEREAS, in connection
with the Offering, the Company has determined to issue and deliver 11,250,000 warrants (or up to 12,937,500 warrants if the Over-allotment
Option (as defined below) is exercised in full) to public investors in the Offering, each such warrant exercisable to purchase
one share of Common Stock at a price of $11.50 per share and each exercisable only as a whole warrant and not as a fraction thereof
(the “Public Warrants”);
WHEREAS, the Company
has entered into that certain Underwriting Agreement with Piper Sandler & Co. and ThinkEquity, a division of Fordham Financial
Management, Inc., as representatives of the several Underwriters (the “Underwriters,” and such agreement,
the “Underwriting Agreement”), pursuant to which the Company has agreed to issue and deliver units of
the Company’s equity securities to the Underwriters, each such unit comprised of one share of Common Stock and one-half of
one redeemable Underwriter Warrant (as defined below) (the “Underwriter Units”);
WHEREAS, in connection
with the Underwriting Agreement, the Company has agreed to issue and deliver 56,250 warrants (or up to 64,687 warrants if the Over-allotment
Option (as defined below) is exercised in full) bearing the legend set forth in Exhibit B hereto to the Underwriters concurrently
with the consummation of the Offering, each such warrant exercisable to purchase one share of Common Stock at a price of $11.50
per share and each exercisable only as a whole warrant and not as a fraction thereof (the “Underwriter Warrants”);
WHEREAS, the Company
has entered into that certain Founder Warrants Purchase Agreement (the “Founder Warrants Purchase Agreement”)
with FG New America Investors LLC, a Delaware limited liability company (the “Sponsor”), pursuant to
which the Sponsor agreed to purchase, simultaneously with the closing of the Offering, an aggregate of 3,848,750 warrants bearing
the legend set forth in Exhibit C hereto at a price of $1.00 per warrant, each exercisable to purchase one share of Common
Stock at $11.50 per share (the “Founder Warrants”);
WHEREAS, the Company
has entered into that certain Private Placement Units Purchase Agreement (the “Private Placement Units Purchase Agreement”)
with the Sponsor, pursuant to which the Sponsor agreed to purchase, simultaneously with the closing of the Offering, an aggregate
of 462,500 units, each containing one share of Common Stock and one-half of one warrant, each exercisable to purchase one share
of Common Stock at a price of $11.50 per share, bearing the legend set forth in Exhibit C hereto and each exercisable only
as a whole warrant and not as a fraction thereof (the “Private Warrants”);
WHEREAS, the Company
has entered into that certain $15 Exercise Price Warrant Purchase Agreement (the “$15 Exercise Price Warrants Purchase
Agreement”) with the Sponsor, pursuant to which the Sponsor agreed to purchase, simultaneously with the closing of
the Offering, an aggregate of 1,512,500 warrants bearing the legend set forth in Exhibit C hereto at a price of $0.10 per
warrant, each exercisable to purchase one share of Common Stock at $15.00 per share (the “$15 Exercise Price Warrants”
and, together with the Founder Warrants, the Underwriter Warrants and the Private Warrants, the “Private Placement
Warrants”);
WHEREAS, in order to
finance the Company’s transaction costs in connection with an intended initial Business Combination (as defined below), the
Sponsor or an affiliate of the Sponsor or the Company’s officers and directors may, but are not obligated to, loan to the
Company funds as the Company may require, of which up to $1,500,000 of such loans may be convertible into up to an additional 1,500,000
warrants at a price of $1.00 per warrant (the “Working Capital Warrants”);
WHEREAS, the Company
has filed with the U.S. Securities and Exchange Commission (the “Commission”) a registration statement
on Form S-1, File No. 333-248429 (the “Registration Statement”), and prospectus (the “Prospectus”),
for the registration, under the Securities Act of 1933, as amended (the “Securities Act”), of the Public
Units, the Public Warrants and the Common Stock included in the Public Units;
WHEREAS, following
consummation of the Offering, the Company may issue additional warrants (the “Post-IPO Warrants” and,
together with the Private Placement Warrants, the Working Capital Warrants and the Public Warrants, the “Warrants”)
in connection with, or following the consummation by the Company of, a Business Combination;
WHEREAS, the Company
desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance,
registration, transfer, exchange, redemption and exercise of the Warrants;
WHEREAS, the Company
desires to provide for the form and provisions of the Warrants, the terms upon which they shall be issued and exercised, and the
respective rights, limitation of rights, and immunities of the Company, the Warrant Agent, and the holders of the Warrants; and
WHEREAS, all acts and
things have been done and performed which are necessary to make the Warrants, when executed on behalf of the Company and countersigned
by or on behalf of the Warrant Agent, as provided herein, the valid, binding and legal obligations of the Company, and to authorize
the execution and delivery of this Agreement.
NOW, THEREFORE, in
consideration of the mutual agreements herein contained, the parties hereto agree as follows:
1. Appointment
of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company for the Warrants, and the Warrant
Agent hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set forth in this
Agreement.
2. Warrants.
2.1 Form of Warrant.
Each Warrant shall be issued in registered form only, and, if a physical certificate is issued, shall be in substantially the form
of Exhibit A hereto, the provisions of which are incorporated herein and shall be signed by, or bear the facsimile signature
of, the Chairman of the Board, President, Chief Executive Officer, Chief Financial Officer, Secretary or other principal officer
of the Company. In the event the person whose facsimile signature has been placed upon any Warrant shall have ceased to serve in
the capacity in which such person signed the Warrant before such Warrant is issued, it may be issued with the same effect as if
he or she had not ceased to be such at the date of issuance. All of the Public Warrants shall initially be represented by one or
more book-entry certificates (each, a “Book-Entry Warrant Certificate”).
2.2 Effect of
Countersignature. If a physical certificate is issued, unless and until countersigned by the Warrant Agent pursuant to this
Agreement, a Warrant certificate shall be invalid and of no effect and may not be exercised by the holder thereof.
2.3 Registration.
2.3.1 Warrant
Register. The Warrant Agent shall maintain books (the “Warrant Register”) for the registration of
original issuance and the registration of transfer of the Warrants. Upon the initial issuance of the Warrants, the Warrant Agent
shall issue and register the Warrants in the names of the respective holders thereof in such denominations and otherwise in accordance
with instructions delivered to the Warrant Agent by the Company. All of the Public Warrants shall initially be represented by one
or more Book-Entry Warrant Certificates deposited with The Depository Trust Company (the “Depositary”)
and registered in the name of Cede & Co., a nominee of the Depositary. Ownership of beneficial interests in the Public Warrants
shall be shown on, and the transfer of such ownership shall be effected through, records maintained by (i) the Depositary or its
nominee for each Book-Entry Warrant Certificate, or (ii) institutions that have accounts with the Depositary (each such institution,
with respect to a Warrant in its account, a “Participant”).
If the Depositary subsequently ceases to
make its book-entry settlement system available for the Public Warrants, the Company may instruct the Warrant Agent regarding making
other arrangements for book-entry settlement. In the event that the Public Warrants are not eligible for, or it is no longer necessary
to have the Public Warrants available in, book-entry form, the Warrant Agent shall provide written instructions to the Depositary
to deliver to the Warrant Agent for cancellation each Book-Entry Warrant Certificate, and the Company shall instruct the Warrant
Agent to deliver to the Depositary definitive certificates in physical form evidencing such Warrants (“Definitive Warrant
Certificate”). Such Definitive Warrant Certificate shall be in the form annexed hereto as Exhibit A, with
appropriate insertions, modifications and omissions, as provided above.
2.3.2 Registered
Holder. Prior to due presentment for registration of transfer of any Warrant, the Company and the Warrant Agent may deem and
treat the person in whose name such Warrant is registered in the Warrant Register (the “Registered Holder”)
as the absolute owner of such Warrant and of each Warrant represented thereby (notwithstanding any notation of ownership or other
writing on a Definitive Warrant Certificate made by anyone other than the Company or the Warrant Agent), for the purpose of any
exercise thereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to
the contrary.
2.4 Detachability
of Warrants. The Common Stock and Public Warrants comprising the Public Units shall begin separate trading on the 52nd day
following the date of the Prospectus or, if such 52nd day is not on a day, other than a Saturday, Sunday or federal holiday, on
which banks in New York City are generally open for normal business (a “Business Day”), then on the immediately
succeeding Business Day following such date, or earlier (the “Detachment Date”) with the consent of Piper
Sandler & Co. and ThinkEquity, a division of Fordham Financial Management, Inc., as representatives of the several Underwriters,
but in no event shall the Common Stock and the Public Warrants comprising the Public Units be separately traded until (A) the Company
has filed a current report on Form 8-K with the Commission containing an audited balance sheet reflecting the receipt by the Company
of the gross proceeds of the Offering, including the proceeds received by the Company from the exercise by the Underwriters of
their right to purchase additional Public Units in the Offering (the “Over-allotment Option”), if the
Over-allotment Option is exercised prior to the filing of the Form 8-K, and (B) the Company issues a press release and files with
the Commission a current report on Form 8-K announcing when such separate trading shall begin.
2.5 Fractional
Warrants. The Company shall not issue fractional Warrants other than as part of the Public Units, each of which is comprised
of one share of Common Stock and one-half of one Public Warrant. If, upon the detachment of Public Warrants from Public Units or
otherwise, a holder of Warrants would be entitled to receive a fractional Warrant, the Company shall round down to the nearest
whole number of Warrants to be issued to such holder.
2.6 Private Placement
Warrants and Working Capital Warrants. Other than with respect to Warrant Price (as defined below) and Exercise Period (as
defined below), as described in Sections 3.1 and 3.2, the Private Placement Warrants and the Working Capital Warrants
shall be identical to the Public Warrants, except that so long as they are held by either the Sponsor, the Underwriters or any
of their respective Permitted Transferees (as defined below), as applicable, the Private Placement Warrants and the Working Capital
Warrants: (i) may be exercised for cash or on a cashless basis, pursuant to subsection 3.3.1(c) hereof, (ii) may not be
transferred, assigned or sold until the date that is thirty (30) days after the completion by the Company of an initial Business
Combination (as defined below), (iii) shall not be redeemable by the Company and (iv) so long as they are held by the Underwriters
or their Permitted Transferees, will not be exercisable more than five years from the effective date of the Registration Statement
in accordance with FINRA Rule 5110(f)(2)(G)(i); provided, however, that in the case of (ii) the Private Placement
Warrants and the Working Capital Warrants and any shares of Common Stock held by either the Sponsor or any officers or directors
of the Company, or any Permitted Transferees, as applicable, and issued upon exercise of the Private Placement Warrants and the
Working Capital Warrants may be transferred by the holders thereof:
(a) to the Company’s
officers or directors, any affiliate or family member of any of the Company’s officers or directors, any affiliate of the
Sponsor or to any members of the Sponsor or any of their affiliates;
(b) in the case
of an individual, by gift to a member of such individual’s immediate family or to a trust, the beneficiary of which is a
member of such individual’s immediate family, an affiliate of such individual or to a charitable organization;
(c) in the case
of an individual, by virtue of laws of descent and distribution upon death of such person;
(d) in the case
of an individual, pursuant to a qualified domestic relations order;
(e) by private
sales or transfers made in connection with any forward purchase agreement or similar arrangement or in connection with the consummation
of an initial Business Combination at prices no greater than the price at which the Warrants were originally purchased;
(f) by virtue
of the laws of the State of Delaware or the limited liability company agreement of the Sponsor upon dissolution of the Sponsor;
(g) in the event
of the Company’s liquidation prior to the consummation of a Business Combination; or
(h) in the event
that, subsequent to the consummation of a Business Combination, the Company completes a liquidation, merger, share exchange or
other similar transaction which results in all of the Company’s stockholders having the right to exchange their shares of
Common Stock for cash, securities or other property; provided, however, that, in the case of clauses (a) through
(f), these transferees (the “Permitted Transferees”) enter into a written agreement with the Company
agreeing to be bound by the transfer restrictions in this Agreement and the other restrictions contained in the letter agreement,
dated as of the date hereof, by and among the Company, the Sponsor and the Company’s officers and directors.
2.7 Working Capital
Warrants. Each of the Working Capital Warrants shall be identical to the Founder Warrants.
2.8 Post-IPO
Warrants. The Post-IPO Warrants, when and if issued, shall have the same terms and be in the same form as the Public Warrants
except as may be agreed upon by the Company.
2.9 Underwriter Warrants.
If the Underwriter Warrants are held by holders other than the Underwriters or their Permitted Transferees, the Underwriter Warrants
will be redeemable by the Company and exercisable by the holders on the same basis as the Public Warrants.
3. Terms and
Exercise of Warrants.
3.1 Warrant Price.
Each Warrant shall entitle the Registered Holder thereof, subject to the provisions of such Warrant and of this Agreement, to purchase
from the Company one share of Common Stock at the Warrant Price (as defined below), subject to the adjustments provided in Section
4 hereof and in the last sentence of this Section 3.1. The term “Warrant Price” as used in
this Agreement shall mean the price per share at which shares of Common Stock may be purchased at the time a Warrant is exercised,
which shall be, unless adjusted as described in the preceding sentence, (i) $11.50 for the Public Warrants, Underwriter Warrants,
Founder Warrants, Private Warrants, Working Capital Warrants and Post-IPO Warrants and (ii) $15.00 for the $15 Exercise Price Warrants.
The Company in its sole discretion may lower the Warrant Price at any time prior to the Expiration Date (as defined below) for
a period of not less than twenty (20) Business Days, provided that the Company shall provide at least twenty (20) days prior
written notice of such reduction to Registered Holders of the Warrants, and provided further that any such reduction shall
be identical among all of the Warrants.
3.2 Duration
of Warrants. A Warrant may be exercised only during the period (the “Exercise Period”) commencing
on the later of: (i) the date that is thirty (30) days after the first date on which the Company completes a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business combination, involving the Company and one or more
businesses (a “Business Combination”) and (ii) the date that is twelve (12) months from the date of the
closing of the Offering, and terminating on the earlier to occur of: (i) (x) with respect to the Public Warrants, Underwriter Warrants,
Founder Warrants, Private Warrants, Working Capital Warrants and Post-IPO Warrants, 5:00 p.m., New York City time on the date that
is five (5) years after the date on which the Company completes its initial Business Combination and (y) with respect to the $15
Exercise Price Warrants, 5:00 p.m., New York City time on the date that is ten (10) years after the date on which the Company completes
its initial Business Combination, (ii) the liquidation of the Company and (iii) other than with respect to the Private Placement
Warrants and the Working Capital Warrants then held by either the Sponsor or any officers or directors of the Company, or any of
their Permitted Transferees as provided in Section 6.1, the Redemption Date (as defined below) as provided in Section
6.2 hereof (the “Expiration Date”); provided, however, that the exercise of any Warrant
shall be subject to the satisfaction of any applicable conditions, as set forth in subsection 3.3.2 below, with respect
to an effective registration statement; and provided further, that the Private Placement Warrants then held by the Underwriters
or their Permitted Transferees will not be exercisable more than five (5) years after the effective date of the Registration Statement
in accordance with FINRA Rule 5110(f)(2)(G). Except with respect to the right to receive the Redemption Price (as defined below)
in the event of a redemption (as set forth in Section 6 hereof), each outstanding Warrant (other than a Private Placement
Warrant or a Working Capital Warrant held by either the Sponsor or any officers or directors of the Company, or their Permitted
Transferees, in the event of a redemption for cash) not exercised on or before the Expiration Date shall become void, and all rights
thereunder and all rights in respect thereof under this Agreement shall cease at 5:00 p.m. New York City time on the Expiration
Date. The Company in its sole discretion may extend the duration of the Warrants by delaying the Expiration Date; provided
that the Company shall provide at least twenty (20) days prior written notice of any such extension to Registered Holders of the
Warrants and, provided further that any such extension shall be identical in duration among all the Warrants.
3.3 Exercise
of Warrants.
3.3.1 Payment.
Subject to the provisions of the Warrant and this Agreement, a Warrant may be exercised by the Registered Holder thereof by delivering
to the Warrant Agent at its corporate trust department (i) the Definitive Warrant Certificate evidencing the Warrants to be exercised,
or, in the case of a Book-Entry Warrant Certificate, the Warrants to be exercised (the “Book-Entry Warrants”)
on the records of the Depositary to an account of the Warrant Agent at the Depositary designated for such purposes in writing by
the Warrant Agent to the Depositary from time to time, (ii) an election to purchase (“Election to Purchase”)
shares of Common Stock pursuant to the exercise of a Warrant, properly completed and executed by the Registered Holder on the reverse
of the Definitive Warrant Certificate or, in the case of a Book-Entry Warrant Certificate, properly delivered by the Participant
in accordance with the Depositary’s procedures, and (iii) payment in full of the Warrant Price for each full share of Common
Stock as to which the Warrant is exercised and any and all applicable taxes due in connection with the exercise of the Warrant,
the exchange of the Warrant for the shares of Common Stock and the issuance of such shares of Common Stock, as follows:
(a) in lawful
money of the United States, in good certified check or good bank draft payable to the order of the Warrant Agent or by wire transfer
of immediately available funds;
(b) in the event
of a redemption pursuant to Section 6 hereof in which the Company’s board of directors (the “Board”)
has elected to require all holders of the Warrants to exercise such Warrants on a “cashless basis,” by surrendering
the Warrants for that number of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number
of shares of Common Stock underlying the Warrants, multiplied by the excess of the “Fair Market Value”, as defined
in this subsection 3.3.1(b), over the Warrant Price by (y) the Fair Market Value. Solely for purposes of this subsection
3.3.1(b) and Section 6.3, the “Fair Market Value” shall mean the average closing price of the Common Stock
for the ten (10) trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the
holders of the Warrants, pursuant to Section 6 hereof;
(c) with respect
to any Private Placement Warrant or Working Capital Warrant, so long as such Private Placement Warrant or Working Capital Warrant
is held by either the Sponsor or any officer or director of the Company, the Underwriters or their Permitted Transferees, by surrendering
the Warrants for that number of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number
of shares of Common Stock underlying the Warrants, multiplied by the excess of the “Fair Market Value”, as defined
in this subsection 3.3.1(c), over the Warrant Price by (y) the Fair Market Value. Solely for purposes of this subsection
3.3.1(c), the “Fair Market Value” shall mean the average closing price of the Common Stock for the ten (10) trading
days ending on the third trading day prior to the date on which notice of exercise of the Private Placement Warrant or Working
Capital Warrant is sent to the Warrant Agent; or
(d) as provided
in Section 7.4 hereof.
3.3.2 Issuance
of Shares of Common Stock on Exercise. As soon as practicable after the exercise of any Warrant and the clearance of the funds
in payment of the Warrant Price (if payment is pursuant to subsection 3.3.1 (a)), the Company shall issue to the Registered
Holder of such Warrant a book-entry position or certificate, as applicable, for the number of full shares of Common Stock to which
he, she or it is entitled, registered in such name or names as may be directed by him, her or it, and if such Warrant shall not
have been exercised in full, a new book-entry position or countersigned Warrant, as applicable, for the number of shares of Common
Stock as to which such Warrant shall not have been exercised. If fewer than all the Warrants evidenced by a Book-Entry Warrant
Certificate are exercised, a notation shall be made to the records maintained by the Depositary, its nominee for each Book-Entry
Warrant Certificate, or a Participant, as appropriate, evidencing the balance of the Warrants remaining after such exercise. Notwithstanding
the foregoing, the Company shall not be obligated to deliver any shares of Common Stock pursuant to the exercise of a Warrant and
shall have no obligation to settle such Warrant exercise unless a registration statement under the Securities Act with respect
to the shares of Common Stock underlying the Public Warrants is then effective and a prospectus relating thereto is current, subject
to the Company’s satisfying its obligations under Section 7.4. No Warrant shall be exercisable and the Company shall
not be obligated to issue shares of Common Stock upon exercise of a Warrant unless the Common Stock issuable upon such Warrant
exercise has been registered, qualified or deemed to be exempt from registration or qualification under the securities laws of
the state of residence of the Registered Holder of the Warrants. In the event that the conditions in the two immediately preceding
sentences are not satisfied with respect to a Warrant, the holder of such Warrant shall not be entitled to exercise such Warrant
and such Warrant may have no value and expire worthless, in which case the purchaser of a Public Unit containing such Public Warrants
shall have paid the full purchase price for the Public Unit solely for the shares of Common Stock underlying such Public Unit.
In no event will the Company be required to net cash settle the Warrant exercise. The Company may require holders of Public Warrants
to settle the Warrant on a “cashless basis” pursuant to Section 7.4. If, by reason of any exercise of Warrants
on a “cashless basis”, the holder of any Warrant would be entitled, upon the exercise of such Warrant, to receive a
fractional interest in a share of Common Stock, the Company shall round down to the nearest whole number, the number of shares
of Common Stock to be issued to such holder.
3.3.3 Valid
Issuance. All shares of Common Stock issued upon the proper exercise of a Warrant in conformity with this Agreement shall be
validly issued, fully paid and non-assessable.
3.3.4 Date
of Issuance. Each person in whose name any book-entry position or certificate, as applicable, for shares of Common Stock is
issued shall for all purposes be deemed to have become the holder of record of such shares of Common Stock on the date on which
the Warrant, or book-entry position representing such Warrant, was surrendered and payment of the Warrant Price was made, irrespective
of the date of delivery of such certificate in the case of a certificated Warrant, except that, if the date of such surrender and
payment is a date when the share transfer books of the Company or book-entry system of the Warrant Agent are closed, such person
shall be deemed to have become the holder of such shares of Common Stock at the close of business on the next succeeding date on
which the share transfer books or book-entry system are open.
3.3.5 Maximum
Percentage. A holder of a Warrant may notify the Company in writing in the event it elects to be subject to the provisions
contained in this subsection 3.3.5; however, no holder of a Warrant shall be subject to this subsection 3.3.5
unless he, she or it makes such election. If the election is made by a holder, the Warrant Agent shall not effect the exercise
of the holder’s Warrant, and such holder shall not have the right to exercise such Warrant, to the extent that after giving
effect to such exercise, such person (together with such person’s affiliates), to the Warrant Agent’s actual knowledge,
would beneficially own in excess of 4.9% or 9.8% (or such other amount as a holder may specify) (the “Maximum Percentage”)
of the shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence,
the aggregate number of shares of Common Stock beneficially owned by such person and its affiliates shall include the number of
shares of Common Stock issuable upon exercise of the Warrant with respect to which the determination of such sentence is being
made, but shall exclude shares of Common Stock that would be issuable upon (x) exercise of the remaining, unexercised portion of
the Warrant beneficially owned by such person and its affiliates and (y) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company beneficially owned by such person and its affiliates (including, without limitation,
any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to
the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership
shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). For purposes of the Warrant, in determining the number of outstanding shares of Common Stock, the holder may
rely on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent Annual Report on Form
10-K, Quarterly Report on Form 10-Q, current report on Form 8-K or other public filing with the Commission as the case may be,
(2) a more recent public announcement by the Company or (3) any other notice by the Company or the Transfer Agent setting forth
the number of shares of Common Stock outstanding. For any reason at any time, upon the written request of the holder of the Warrant,
the Company shall, within two (2) Business Days, confirm orally and in writing to such holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the
conversion or exercise of equity securities of the Company by the holder and its affiliates since the date as of which such number
of outstanding shares of Common Stock was reported. By written notice to the Company, the holder of a Warrant may from time to
time increase or decrease the Maximum Percentage applicable to such holder to any other percentage specified in such notice; provided,
however, that any such increase shall not be effective until the sixty-first (61st) day after such notice is delivered to
the Company.
4. Adjustments.
4.1 Stock Dividends.
4.1.1 Split-Ups.
If after the date hereof, and subject to the provisions of Section 4.6 below, the number of outstanding shares of Common
Stock is increased by a stock dividend payable in shares of Common Stock, or by a split-up of shares of Common Stock or other similar
event, then, on the effective date of such stock dividend, split-up or similar event, the number of shares of Common Stock issuable
on exercise of each Warrant shall be increased in proportion to such increase in the outstanding shares of Common Stock. A rights
offering to holders of the Common Stock entitling holders to purchase shares of Common Stock at a price less than the “Fair
Market Value” (as defined below) shall be deemed a stock dividend of a number of shares of Common Stock equal to the product
of (i) the number of shares of Common Stock actually sold in such rights offering (or issuable under any other equity securities
sold in such rights offering that are convertible into or exercisable for the Common Stock) multiplied by (ii) one (1) minus the
quotient of (x) the price per share of Common Stock paid in such rights offering and divided by (y) the Fair Market Value. For
purposes of this subsection 4.1.1, (i) if the rights offering is for securities convertible into or exercisable for Common
Stock, in determining the price payable for Common Stock, there shall be taken into account any consideration received for such
rights, as well as any additional amount payable upon exercise or conversion and (ii) “Fair Market Value” means the
volume weighted average price of the Common Stock as reported during the ten (10) trading day period ending on the trading day
prior to the first date on which the shares of Common Stock trade on the applicable exchange or in the applicable market, regular
way, without the right to receive such rights.
4.1.2 Extraordinary
Dividends. If the Company, at any time while the Warrants are outstanding and unexpired, shall pay a dividend or make a distribution
in cash, securities or other assets to the holders of the Common Stock on account of such shares of Common Stock (or other shares
of the Company’s capital stock into which the Warrants are convertible), other than (a) as described in subsection 4.1.1
above, (b) Ordinary Cash Dividends (as defined below), (c) to satisfy the redemption rights of the holders of the Common Stock
in connection with a proposed initial Business Combination, (d) to satisfy the redemption rights of the holders of Common Stock
in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation (as amended
from time to time, the “Charter”) to modify the substance or timing of the Company’s obligation
to redeem 100% of the shares of Common Stock included in the Public Units sold in the Offering if the Company does not complete
the Business Combination within the period set forth in the Charter or with respect to any other material provisions relating to
stockholders’ rights or pre-initial Business Combination activity, or to provide for redemption in connection with a Business
Combination or (e) in connection with the redemption of public shares of Common Stock included in the Public Units sold in the
Offering upon the failure of the Company to complete its initial Business Combination and any subsequent distribution of its assets
upon its liquidation (any such non-excluded event being referred to herein as an “Extraordinary Dividend”),
then the Warrant Price shall be decreased, effective immediately after the effective date of such Extraordinary Dividend, by the
amount of cash and/or the fair market value (as determined by the Board, in good faith) of any securities or other assets paid
on each share of Common Stock in respect of such Extraordinary Dividend. For purposes of this subsection 4.1.2, “Ordinary
Cash Dividends” means any cash dividend or cash distribution which, when combined on a per share basis, with the
per share amounts of all other cash dividends and cash distributions paid on the Common Stock during the 365-day period ending
on the date of declaration of such dividend or distribution (as adjusted to appropriately reflect any of the events referred to
in other subsections of this Section 4 and excluding cash dividends or cash distributions that resulted in an adjustment
to the Warrant Price or to the number of shares of Common Stock issuable on exercise of each Warrant) does not exceed $0.50 (being
5% of the offering price of the Public Units in the Offering).
4.2 Aggregation
of Shares. If after the date hereof, and subject to the provisions of Section 4.6 hereof, the number of outstanding
shares of Common Stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of Common
Stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification
or similar event, the number of shares of Common Stock issuable on exercise of each Warrant shall be decreased in proportion to
such decrease in outstanding shares of Common Stock.
4.3 Adjustments
in Warrant Price.
4.3.1 Whenever
the number of shares of Common Stock purchasable upon the exercise of the Warrants is adjusted, as provided in subsection 4.1.1
or Section 4.2 above, the Warrant Price shall be adjusted (to the nearest cent) by multiplying such Warrant Price immediately
prior to such adjustment by a fraction (x) the numerator of which shall be the number of shares of Common Stock purchasable upon
the exercise of the Warrants immediately prior to such adjustment, and (y) the denominator of which shall be the number of shares
of Common Stock so purchasable immediately thereafter.
4.3.2 If (x) the
Company issues additional shares of Common Stock or equity-linked securities for capital raising purposes in connection with the
closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Common Stock
(with such issue price or effective issue price to be determined in good faith by the Board and, in the case of any such issuance
to the initial stockholders (as defined in the Prospectus) or their affiliates, without taking into account any shares of Class
B Common Stock (as defined below) held by such stockholders or their affiliates, as applicable, prior to such issuance (the “Newly
Issued Price”)), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity
proceeds, and interest thereon, available for funding the initial Business Combination (net of redemptions), and (z) the volume
weighted average trading price of the Common Stock during the 20 trading day period starting on the trading day prior to the day
on which the Company consummates the Business Combination (such price, the “Market Value”) is below $9.20
per share, the Warrant Price shall be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and
the Newly Issued Price, and the last sales price of the Common Stock that triggers the Company’s right to redeem the Warrants
pursuant to Section 6.1 below shall be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value
and the Newly Issued Price.
4.4 Replacement
of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding shares of Common
Stock (other than a change under subsections 4.1.1 or 4.1.2 or Section 4.2 hereof or that solely affects the
par value of such shares of Common Stock), or in the case of any merger or consolidation of the Company with or into another entity
or conversion of the Company as another entity (other than a consolidation or merger in which the Company is the continuing corporation
(and is not a subsidiary of another entity whose stockholders did not own all or substantially all of the Common Stock of the Company
in substantially the same proportions immediately before such transaction) and that does not result in any reclassification or
reorganization of the outstanding shares of Common Stock), or in the case of any sale or conveyance to another entity of the assets
or other property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved,
the holders of the Warrants shall thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions
specified in the Warrants and in lieu of the shares of Common Stock of the Company immediately theretofore purchasable and receivable
upon the exercise of the rights represented thereby, the kind and amount of shares of stock or other securities or property (including
cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such
sale or transfer, that the holder of the Warrants would have received if such holder had exercised his, her or its Warrant(s) immediately
prior to such event (the “Alternative Issuance”); provided, however, that (i) if the holders
of the Common Stock were entitled to exercise a right of election as to the kind or amount of securities, cash or other assets
receivable upon such consolidation or merger, then the kind and amount of securities, cash or other assets constituting the Alternative
Issuance for which each Warrant shall become exercisable shall be deemed to be the weighted average of the kind and amount received
per share by the holders of the Common Stock in such consolidation or merger that affirmatively make such election, and (ii) if
a tender, exchange or redemption offer shall have been made to and accepted by the holders of the Common Stock (other than a tender,
exchange or redemption offer made by the Company in connection with redemption rights held by stockholders of the Company as provided
for in the Charter or as a result of the redemption of shares of Common Stock by the Company if a proposed initial Business Combination
is presented to the stockholders of the Company for approval) under circumstances in which, upon completion of such tender or exchange
offer, the maker thereof, together with members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange Act (or
any successor rule)) of which such maker is a part, and together with any affiliate or associate of such maker (within the meaning
of Rule 12b-2 under the Exchange Act (or any successor rule)) and any members of any such group of which any such affiliate or
associate is a part, own beneficially (within the meaning of Rule 13d-3 under the Exchange Act (or any successor rule)) more than
50% of the outstanding shares of Common Stock, the holder of a Warrant shall be entitled to receive as the Alternative Issuance,
the highest amount of cash, securities or other property to which such holder would actually have been entitled as a stockholder
if such Warrant holder had exercised the Warrant prior to the expiration of such tender or exchange offer, accepted such offer
and all of the Common Stock held by such holder had been purchased pursuant to such tender or exchange offer, subject to adjustments
(from and after the consummation of such tender or exchange offer) as nearly equivalent as possible to the adjustments provided
for in this Section 4; provided further that if less than 70% of the consideration receivable by the holders of the
Common Stock in the applicable event is payable in the form of common stock in the successor entity that is listed for trading
on a national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or
quoted immediately following such event, and if the Registered Holder properly exercises the Warrant within thirty (30) days following
the public disclosure of the consummation of such applicable event by the Company pursuant to a Current Report on Form 8-K filed
with the Commission, the Warrant Price shall be reduced by an amount (in dollars) equal to the difference (but in no event less
than zero) of (i) the Warrant Price in effect prior to such reduction minus (ii) (A) the Per Share Consideration (as defined below)
minus (B) the Black-Scholes Warrant Value (as defined below). The “Black-Scholes Warrant Value” means
the value of a Warrant immediately prior to the consummation of the applicable event based on the Black-Scholes Warrant Model for
a Capped American Call on Bloomberg Financial Markets (“Bloomberg”).
For purposes of calculating such amount,
(1) Section 6 of this Agreement shall be taken into account, (2) the price of each share of Common Stock shall be the volume
weighted average price of the Common Stock as reported during the ten (10) trading day period ending on the trading day prior to
the effective date of the applicable event, (3) the assumed volatility shall be the 90 day volatility obtained from the HVT function
on Bloomberg determined as of the trading day immediately prior to the day of the announcement of the applicable event, and (4)
the assumed risk-free interest rate shall correspond to the U.S. Treasury rate for a period equal to the remaining term of the
Warrant. “Per Share Consideration” means (i) if the consideration paid to holders of the Common Stock
consists exclusively of cash, the amount of such cash per share of Common Stock, and (ii) in all other cases, the volume weighted
average price of the Common Stock as reported during the ten (10) trading day period ending on the trading day prior to the effective
date of the applicable event. If any reclassification or reorganization also results in a change in shares of Common Stock covered
by subsection 4.1.1, then such adjustment shall be made pursuant to subsection 4.1.1 or Sections 4.2, 4.3
and this Section 4.4. The provisions of this Section 4.4 shall similarly apply to successive reclassifications, reorganizations,
mergers or consolidations, sales or other transfers. In no event will the Warrant Price be reduced to less than the par value per
share issuable upon exercise of the Warrant.
4.5 Notices of
Changes in Warrant. Upon every adjustment of the Warrant Price or the number of shares of Common Stock issuable upon exercise
of a Warrant, the Company shall give written notice thereof to the Warrant Agent, which notice shall state the Warrant Price resulting
from such adjustment and the increase or decrease, if any, in the number of shares of Common Stock purchasable at such price upon
the exercise of a Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation
is based. Upon the occurrence of any event specified in Sections 4.1, 4.2, 4.3 or 4.4, the Company
shall give written notice of the occurrence of such event to each holder of a Warrant, at the last address set forth for such holder
in the Warrant Register, of the record date or the effective date of the event. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of such event.
4.6 No Fractional
Shares. Notwithstanding any provision contained in this Agreement to the contrary, the Company shall not issue fractional shares
of Common Stock upon the exercise of Warrants. If, by reason of any adjustment made pursuant to this Section 4, the holder
of any Warrant would be entitled, upon the exercise of such Warrant, to receive a fractional interest in a share, the Company shall,
upon such exercise, round down to the nearest whole number the number of shares of Common Stock to be issued to such holder.
4.7 Form of Warrant.
The form of Warrant need not be changed because of any adjustment pursuant to this Section 4, and Warrants issued after
such adjustment may state the same Warrant Price and the same number of shares of Common Stock as is stated in the Warrants initially
issued pursuant to this Agreement; provided, however, that the Company may at any time in its sole discretion make
any change in the form of Warrant that the Company may deem appropriate and that does not affect the substance thereof, and any
Warrant thereafter issued or countersigned, whether in exchange or substitution for an outstanding Warrant or otherwise, may be
in the form as so changed.
4.8 Other Events.
In case any event shall occur affecting the Company as to which none of the provisions of the preceding subsections of this Section
4 are strictly applicable, but which would require an adjustment to the terms of the Warrants in order to (i) avoid an adverse
impact on the Warrants and (ii) effectuate the intent and purpose of this Section 4, then, in each such case, the Company
shall appoint a firm of independent public accountants, investment banking or other appraisal firm of recognized national standing,
which shall give its opinion as to whether or not any adjustment to the rights represented by the Warrants is necessary to effectuate
the intent and purpose of this Section 4 and, if they determine that an adjustment is necessary, the terms of such adjustment.
The Company shall adjust the terms of the Warrants in a manner that is consistent with any adjustment recommended in such opinion.
4.9 No Adjustment.
For the avoidance of doubt, no adjustment shall be made to the terms of the Warrants solely as a result of an adjustment to the
conversion ratio of the Company’s Class B common stock (the “Class B Common Stock”) into shares
of Common Stock or the conversion of the shares of Class B Common Stock into shares of Common Stock, in each case, pursuant to
the Charter.
5. Transfer
and Exchange of Warrants.
5.1 Registration
of Transfer. The Warrant Agent shall register the transfer, from time to time, of any outstanding Warrant upon the Warrant
Register, upon surrender of such Warrant for transfer, in the case of a certificated Warrant, properly endorsed with signatures
properly guaranteed and accompanied by appropriate instructions for transfer. Upon any such transfer, a new Warrant representing
an equal aggregate number of Warrants shall be issued and the old Warrant shall be cancelled by the Warrant Agent. In the case
of certificated Warrants, the Warrants so cancelled shall be delivered by the Warrant Agent to the Company from time to time upon
request.
5.2 Procedure
for Surrender of Warrants. Warrants may be surrendered to the Warrant Agent, together with a written request for exchange or
transfer, and thereupon the Warrant Agent shall issue in exchange therefor one or more new Warrants as requested by the Registered
Holder of the Warrants so surrendered, representing an equal aggregate number of Warrants; provided, however, that
except as otherwise provided herein or in any Book-Entry Warrant Certificate or Definitive Warrant Certificate, each Book-Entry
Warrant Certificate and Definitive Warrant Certificate may be transferred only in whole and only to the Depositary, to another
nominee of the Depositary, to a successor depository, or to a nominee of a successor depository; provided further, however,
that in the event that a Warrant surrendered for transfer bears a restrictive legend (as in the case of the Private Placement Warrants
and the Working Capital Warrants), the Warrant Agent shall not cancel such Warrant and issue new Warrants in exchange thereof until
the Warrant Agent has received an opinion of counsel for the Company stating that such transfer may be made and indicating whether
the new Warrants must also bear a restrictive legend.
5.3 Fractional
Warrants. The Warrant Agent shall not be required to effect any registration of transfer or exchange which shall result in
the issuance of a warrant certificate or book-entry position for a fraction of a warrant, except as part of the Public Units.
5.4 Service Charges.
No service charge shall be made for any exchange or registration of transfer of Warrants.
5.5 Warrant Execution
and Countersignature. The Warrant Agent is hereby authorized to countersign and to deliver, in accordance with the terms of
this Agreement, the Warrants required to be issued pursuant to the provisions of this Section 5, and the Company, whenever
required by the Warrant Agent, shall supply the Warrant Agent with Warrants duly executed on behalf of the Company for such purpose.
5.6 Transfer
of Warrants. Prior to the Detachment Date, the Public Warrants may be transferred or exchanged only together with the Public
Unit in which such Warrant is included, and only for the purpose of effecting, or in conjunction with, a transfer or exchange of
such Public Unit. Furthermore, each transfer of a Public Unit on the register relating to such Public Units shall operate also
to transfer the Warrants included in such Public Unit. Notwithstanding the foregoing, the provisions of this Section 5.6
shall have no effect on any transfer of Warrants on and after the Detachment Date.
6. Redemption.
6.1 Redemption
of Warrants for Cash. Subject to Sections 6.4 and 6.5 hereof, not less than all of the outstanding Warrants may
be redeemed, at the option of the Company, at any time while they are exercisable and prior to their expiration, at the office
of the Warrant Agent, upon notice to the Registered Holders of the Warrants, as described in Section 6.2 below, at the price
of $0.01 per Warrant (the “Redemption Price”); provided that the closing price of the Common Stock
reported has been at least $18.00 per share (subject to adjustment in compliance with Section 4 hereof), on each of twenty
(20) trading days within the thirty (30) trading-day period ending on the third Business Day prior to the date on which notice
of the redemption is given; provided further that there is an effective registration statement covering the shares of Common
Stock issuable upon exercise of the Warrants, and a current prospectus relating thereto, available throughout the 30-day Redemption
Period (as defined in Section 6.2 below) or the Company has elected to require the exercise of the Warrants on a “cashless
basis” pursuant to subsection 3.3.1 and such cashless exercise is exempt from registration under the Securities Act.
6.2 Date Fixed
for, and Notice of, Redemption. In the event that the Company elects to redeem all of the Warrants pursuant to Section 6.1,
the Company shall fix a date for the redemption (the “Redemption Date”). Notice of redemption shall be
mailed by first class mail, postage prepaid, by the Company not less than thirty (30) days prior to the Redemption Date (such period,
the “Redemption Period”) to the Registered Holders of the Warrants to be redeemed at their last addresses
as they shall appear on the registration books. Any notice mailed in the manner herein provided shall be conclusively presumed
to have been duly given whether or not the Registered Holder received such notice.
6.3 Exercise
After Notice of Redemption. The Warrants may be exercised, for cash (or on a “cashless basis” in accordance with
subsection 3.3.1(b) of this Agreement) at any time after notice of redemption shall have been given by the Company pursuant
to Section 6.2 hereof and prior to the Redemption Date. In the event that the Company determines to require all holders
of Warrants to exercise their Warrants on a “cashless basis” pursuant to subsection 3.3.1, the notice of redemption
shall contain the information necessary to calculate the number of shares of Common Stock to be received upon exercise of the Warrants,
including the “Fair Market Value” (as such term is defined in subsection 3.3.1(b) hereof) in such case. On and
after the Redemption Date, the record holder of the Warrants shall have no further rights except to receive, upon surrender of
the Warrants, the Redemption Price.
6.4 Exclusion
of Certain Warrants. The Company agrees that the redemption rights provided in Section 6.1 shall not apply to the Private
Placement Warrants, the Working Capital Warrants or the Post-IPO Warrants (if such Post-IPO Warrants provide that they are non-redeemable
by the Company) if at the time of the redemption such Private Placement Warrants, Working Capital Warrants or Post-IPO Warrants
continue to be held by the Sponsor, the Underwriters or any of their respective Permitted Transferees, as applicable. However,
once such Private Placement Warrants, Working Capital Warrants or Post-IPO Warrants are transferred (other than to Permitted Transferees
under Section 2.6), the Company may redeem the Private Placement Warrants, the Working Capital Warrants or the Post-IPO
Warrants (if the Post-IPO Warrants permit such redemption by their terms) pursuant to Section 6.1 hereof, provided that
the criteria for redemption are met, including the opportunity of the holder of such Private Placement Warrants, Working Capital
Warrants or Post-IPO Warrants to exercise the Private Placement Warrants, the Working Capital Warrants or the Post-IPO Warrants
prior to redemption pursuant to Section 6.1. The Private Placement Warrants, the Working Capital Warrants or the Post-IPO
Warrants (if such Post-IPO Warrants provide that they are non-redeemable by the Company) that are transferred to persons other
than Permitted Transferees shall upon such transfer become redeemable on the same terms as the Public Warrants.
7. Other Provisions
Relating to Rights of Holders of Warrants.
7.1 No Rights
as Stockholder. A Warrant does not entitle the Registered Holder thereof to any of the rights of a stockholder of the Company,
including, without limitation, the right to receive dividends, or other distributions, exercise any preemptive rights to vote or
to consent or to receive notice as stockholders in respect of the meetings of stockholders or the election of directors of the
Company or any other matter.
7.2 Lost, Stolen,
Mutilated, or Destroyed Warrants. If any Warrant is lost, stolen, mutilated, or destroyed, the Company and the Warrant Agent
may on such terms as to indemnity or otherwise as they may in their discretion impose (which shall, in the case of a mutilated
Warrant, include the surrender thereof), issue a new Warrant of like denomination, tenor, and date as the Warrant so lost, stolen,
mutilated, or destroyed. Any such new Warrant shall constitute a substitute contractual obligation of the Company, whether or not
the allegedly lost, stolen, mutilated, or destroyed Warrant shall be at any time enforceable by anyone.
7.3 Reservation
of Common Stock. The Company shall at all times reserve and keep available a number of its authorized but unissued shares of
Common Stock that shall be sufficient to permit the exercise in full of all outstanding Warrants issued pursuant to this Agreement.
7.4 Registration
of Common Stock; Cashless Exercise at Company’s Option.
7.4.1 Registration
of the Common Stock. The Company agrees that as soon as practicable, but in no event later than fifteen (15) Business Days
after the closing of its initial Business Combination, it shall use its best efforts to file with the Commission a registration
statement registering, under the Securities Act, the issuance of the shares of Common Stock issuable upon exercise of the Warrants.
The Company shall use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration
statement, and a current prospectus relating thereto, until the expiration of the Warrants in accordance with the provisions of
this Agreement. If any such registration statement has not been declared effective by the 60th Business Day following the closing
of the Business Combination, holders of the Warrants shall have the right, during the period beginning on the 61st Business Day
after the closing of the Business Combination and ending upon such registration statement being declared effective by the Commission,
and during any other period when the Company shall fail to have maintained an effective registration statement covering the shares
of Common Stock issuable upon exercise of the Warrants, to exercise such Warrants on a “cashless basis,” by exchanging
the Warrants (in accordance with Section 3(a)(9) of the Securities Act (or any successor rule) or another exemption) for that number
of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying
the Warrants, multiplied by the excess of the “Fair Market Value” (as defined below) over the Warrant Price by (y)
the Fair Market Value. Solely for purposes of this subsection 7.4.1, “Fair Market Value” shall mean the average
closing price of the Common Stock for the ten (10) trading day period ending on the trading day prior to the date that notice of
exercise is received by the Warrant Agent from the holder of such Warrants or its securities broker or intermediary. The date that
notice of cashless exercise is received by the Warrant Agent shall be conclusively determined by the Warrant Agent. In connection
with the “cashless exercise” of a Public Warrant, the Company shall, upon request, provide the Warrant Agent with an
opinion of counsel for the Company (which shall be an outside law firm with securities law experience) stating that (i) the exercise
of the Warrants on a cashless basis in accordance with this subsection 7.4.1 is not required to be registered under the
Securities Act and (ii) the shares of Common Stock issued upon such exercise shall be freely tradable under United States federal
securities laws by anyone who is not an affiliate (as such term is defined in Rule 144 under the Securities Act (or any successor
rule)) of the Company and, accordingly, shall not be required to bear a restrictive legend. Except as provided in subsection
7.4.2, for the avoidance of any doubt, unless and until all of the Warrants have been exercised or have expired, the Company
shall continue to be obligated to comply with its registration obligations under the first three sentences of this subsection
7.4.1.
7.4.2 Cashless
Exercise at Company’s Option. If the Common Stock is at the time of any exercise of a Warrant not listed on a national
securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities
Act (or any successor rule), the Company may, at its option, require holders of Public Warrants who exercise Public Warrants to
exercise such Public Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act (or any
successor rule) as described in subsection 7.4.1 and (i) in the event the Company so elects, the Company shall not be required
to file or maintain in effect a registration statement for the registration, under the Securities Act, of the Common Stock issuable
upon exercise of the Warrants, notwithstanding anything in this Agreement to the contrary or (ii) if the Company does not so elect,
the Company agrees to use its best efforts to register or qualify for sale the Common Stock issuable upon exercise of the Public
Warrants under the blue sky laws of the state of residence of the exercising Public Warrant holder to the extent an exemption is
not available.
8. Concerning
the Warrant Agent and Other Matters.
8.1 Payment of
Taxes. The Company shall from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Warrant
Agent in respect of the issuance or delivery of shares of Common Stock upon the exercise of the Warrants, but the Company shall
not be obligated to pay any transfer taxes in respect of the Warrants or such shares of Common Stock.
8.2 Resignation,
Consolidation, or Merger of Warrant Agent.
8.2.1 Appointment
of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged
from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company. If the
office of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing
a successor Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such appointment within a period of
thirty (30) days after it has been notified in writing of such resignation or incapacity by the Warrant Agent or by the holder
of a Warrant (who shall, with such notice, submit his, her or its Warrant for inspection by the Company), then the holder of any
Warrant may apply to the Supreme Court of the State of New York for the County of New York for the appointment of a successor Warrant
Agent at the Company’s cost. Any successor Warrant Agent, whether appointed by the Company or by such court, shall be a corporation
organized and existing under the laws of the State of New York, in good standing and having its principal office in the Borough
of Manhattan, City and State of New York, and authorized under such laws to exercise corporate trust powers and subject to supervision
or examination by federal or state authority. After appointment, any successor Warrant Agent shall be vested with all the authority,
powers, rights, immunities, duties, and obligations of its predecessor Warrant Agent with like effect as if originally named as
Warrant Agent hereunder, without any further act or deed; but if for any reason it becomes necessary or appropriate, the predecessor
Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent
all the authority, powers, and rights of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent
the Company shall make, execute, acknowledge, and deliver any and all instruments in writing for more fully and effectually vesting
in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties, and obligations.
8.2.2 Notice
of Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall give notice thereof
to the predecessor Warrant Agent and the Transfer Agent for the Common Stock not later than the effective date of any such appointment.
8.2.3 Merger
or Consolidation of Warrant Agent. Any corporation into which the Warrant Agent may be merged or with which it may be consolidated
or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party shall be the successor
Warrant Agent under this Agreement without any further act.
8.3 Fees and
Expenses of Warrant Agent.
8.3.1 Remuneration.
The Company agrees to pay the Warrant Agent reasonable remuneration for its services as such Warrant Agent hereunder and shall,
pursuant to its obligations under this Agreement, reimburse the Warrant Agent upon demand for all expenditures that the Warrant
Agent may reasonably incur in the execution of its duties hereunder.
8.3.2 Further
Assurances. The Company agrees to perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged,
and delivered all such further and other acts, instruments, and assurances as may reasonably be required by the Warrant Agent for
the carrying out or performing of the provisions of this Agreement.
8.4 Liability
of Warrant Agent.
8.4.1 Reliance
on Company Statement. Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary
or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a statement signed by the Chief Executive Officer, Chief Financial Officer, President, Executive Vice
President, Vice President, Secretary or Chairman of the Board of the Company and delivered to the Warrant Agent. The Warrant Agent
may rely upon such statement for any action taken or suffered in good faith by it pursuant to the provisions of this Agreement.
8.4.2 Indemnity.
The Warrant Agent shall be liable hereunder only for its own gross negligence, willful misconduct or bad faith. The Company agrees
to indemnify the Warrant Agent and save it harmless against any and all liabilities, including judgments, costs and reasonable
counsel fees, for anything done or omitted by the Warrant Agent in the execution of this Agreement, except as a result of the Warrant
Agent’s gross negligence, willful misconduct or bad faith.
8.4.3 Exclusions.
The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or
execution of any Warrant (except its countersignature thereof). The Warrant Agent shall not be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Warrant. The Warrant Agent shall not be responsible
to make any adjustments required under the provisions of Section 4 hereof or responsible for the manner, method, or amount
of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any
act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock
to be issued pursuant to this Agreement or any Warrant or as to whether any shares of Common Stock shall, when issued, be valid
and fully paid and non-assessable.
8.5 Acceptance
of Agency. The Warrant Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the
terms and conditions herein set forth and among other things, shall account promptly to the Company with respect to Warrants exercised
and concurrently account for, and pay to the Company, all monies received by the Warrant Agent for the purchase of shares of Common
Stock through the exercise of the Warrants.
8.6 Waiver.
The Warrant Agent has no right of set-off or any other right, title, interest or claim of any kind (“Claim”)
in, or to any distribution of, the Trust Account (as defined in that certain Investment Management Trust Agreement, dated as of
the date hereof, by and between the Company and the Warrant Agent as trustee thereunder) and hereby agrees not to seek recourse,
reimbursement, payment or satisfaction for any Claim against the Trust Account for any reason whatsoever. The Warrant Agent hereby
waives any and all Claims against the Trust Account and any and all rights to seek access to the Trust Account.
9. Miscellaneous
Provisions.
9.1 Successors.
All the covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure
to the benefit of their respective successors and assigns.
9.2 Notices.
Any notice, statement or demand authorized by this Agreement to be given or made by the Warrant Agent or by the holder of any Warrant
to or on the Company shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail
or private courier service within five (5) days after deposit of such notice, postage prepaid, addressed (until another address
is filed in writing by the Company with the Warrant Agent), as follows:
FG New America Acquisition Corp.
105 S. Maple Street
Itasca, Illinois 60143
Attention: Larry Swets, Jr., Chief Executive
Officer
Any notice, statement or demand authorized
by this Agreement to be given or made by the holder of any Warrant or by the Company to or on the Warrant Agent shall be sufficiently
given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five (5)
days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Warrant Agent with
the Company), as follows:
Continental Stock Transfer &
Trust Company
One State Street, 30th
Floor
New York, NY 10004
Attention: Compliance Department
in each case, with copies to:
White & Case LLP
1221 Avenue of the Americas
New York, NY 10020
Attn: Joel L. Rubinstein, Esq.
Email: joel.rubinstein@whitecase.com
and
Loeb & Loeb LLP
345 Park Avenue
New York, NY 10154
Attn: Mitchell S. Nussbaum
Giovanni
Caruso
Email: mnussbaum@loeb.com
gcaruso@loeb.com
9.3 Applicable
Law. The validity, interpretation, and performance of this Agreement and of the Warrants shall be governed in all respects
by the laws of the State of New York. The Company hereby agrees that any action, proceeding or claim against it arising out of
or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States
District Court for the Southern District of New York, and irrevocably submits to such jurisdiction. The Company hereby waives any
objection to such jurisdiction and that such courts represent an inconvenient forum.
9.4 Persons Having
Rights under this Agreement. Nothing in this Agreement shall be construed to confer upon, or give to, any person or corporation
other than the parties hereto and the Registered Holders of the Warrants any right, remedy, or claim under or by reason of this
Agreement or of any covenant, condition, stipulation, promise, or agreement hereof. All covenants, conditions, stipulations, promises,
and agreements contained in this Agreement shall be for the sole and exclusive benefit of the parties hereto and their successors
and assigns and of the Registered Holders of the Warrants.
9.5 Examination
of the Warrant Agreement. A copy of this Agreement shall be available at all reasonable times at the office of the Warrant
Agent in the Borough of Manhattan, City and State of New York, for inspection by the Registered Holder of any Warrant. The Warrant
Agent may require any such holder to submit such holder’s Warrant for inspection by the Warrant Agent.
9.6 Counterparts.
This 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.
9.7 Effect of
Headings. The section headings herein are for convenience only and are not part of this Agreement and shall not affect the
interpretation thereof.
9.8 Amendments.
This Agreement may be amended by the parties hereto without the consent of any Registered Holder (i) for the purpose of curing
any ambiguity, or curing, correcting or supplementing any defective provision contained herein or adding or changing any other
provisions with respect to matters or questions arising under this Agreement as the parties may deem necessary or desirable and
that the parties deem shall not adversely affect the interest of the Registered Holders, and (ii) to provide for the delivery of
Alternative Issuance pursuant to Section 4.4. All other modifications or amendments, including any modification or amendment to
increase the Warrant Price or shorten the Exercise Period shall require the vote or written consent of the Registered Holders of
50% of the number of the then outstanding Public Warrants and, solely with respect to any amendment to the terms of the Private
Placement Warrants, Working Capital Warrants or Post-IPO Warrants or any provision of this Agreement with respect to the Private
Placement Warrants, Working Capital Warrants or Post-IPO Warrants, 50% of the number of then outstanding Private Placement Warrants,
Working Capital Warrants or Post-IPO Warrants. Notwithstanding the foregoing, the Company may lower the Warrant Price or extend
the duration of the Exercise Period pursuant to Sections 3.1 and 3.2, respectively, without the consent of the Registered
Holders.
9.9 Severability.
This 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 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 Agreement a provision
as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.
[Signature Page Follows]
IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed as of the date first above written.
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FG NEW AMERICA ACQUISITION CORP. |
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By: |
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Name: |
Larry Swets, Jr. |
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Title: |
Chief Executive Officer |
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CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Warrant Agent |
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By: |
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Name: |
Henry Farrell |
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Title: |
Vice President |
[Signature Page
to Warrant Agreement]
EXHIBIT
A
Form of Warrant Certificate
[FACE]
Number
Warrants
THIS WARRANT SHALL BE VOID IF NOT EXERCISED
PRIOR TO
THE EXPIRATION OF THE EXERCISE PERIOD
PROVIDED FOR
IN THE WARRANT AGREEMENT DESCRIBED BELOW
FG NEW AMERICA ACQUISITION CORP.
Incorporated Under the Laws of the State
of Delaware
CUSIP 30259V 114
Warrant Certificate
This Warrant
Certificate certifies that ________________, or registered assigns, is the registered holder of warrant(s) evidenced hereby
(the “Warrants” and each, a “Warrant”) to purchase shares of Class A common
stock, $0.0001 par value per share (“Class A Common Stock”), of FG New America Acquisition Corp., a Delaware
corporation (the “Company”). Each whole Warrant entitles the holder, upon exercise during the period
set forth in the Warrant Agreement referred to below, to receive from the Company that number of fully paid and non-assessable
shares of Class A Common Stock as set forth below, at the exercise price (the “Warrant Price”) as determined
pursuant to the Warrant Agreement, payable in lawful money (or through “cashless exercise” as provided
for in the Warrant Agreement) of the United States of America upon surrender of this Warrant Certificate and payment of the Warrant
Price at the office or agency of the Warrant Agent referred to below, subject to the conditions set forth herein and in the Warrant
Agreement. Defined terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant
Agreement.
Each whole Warrant
is initially exercisable for one fully paid and non-assessable share of Class A Common Stock. No fractional shares will be issued
upon exercise of any Warrant. If, upon the exercise of Warrants, a holder would be entitled to receive a fractional interest in
a share of Class A Common Stock, the Company will, upon exercise, round down to the nearest whole number the number of shares of
Class A Common Stock to be issued to the Warrant holder. The number of shares of Class A Common Stock issuable upon exercise of
the Warrants is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.
The initial Warrant
Price per share of Class A Common Stock for any Warrant is equal to $11.50 per share. The Warrant Price is subject to adjustment
upon the occurrence of certain events set forth in the Warrant Agreement.
Subject to the conditions
set forth in the Warrant Agreement, the Warrants may be exercised only during the Exercise Period and to the extent not exercised
by the end of such Exercise Period, such Warrants shall become void. The Warrants may be redeemed, subject to certain conditions,
as set forth in the Warrant Agreement.
Reference is hereby
made to the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for
all purposes have the same effect as though fully set forth at this place.
This Warrant
Certificate shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate
shall be governed by and construed in accordance with the internal laws of the State of New York.
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FG NEW AMERICA ACQUISITION CORP. |
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By: |
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Name: |
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Title: |
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CONTINENTAL STOCK TRANSFER & TRUST COMPANY |
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as Warrant Agent |
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By: |
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Name: |
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Title: |
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[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced
by this Warrant Certificate are part of a duly authorized issue of Warrants entitling the holder on exercise to receive shares
of Class A Common Stock and are issued or to be issued pursuant to a Warrant Agreement dated as of _______________, 2020 (the “Warrant Agreement”),
duly executed and delivered by the Company to Continental Stock Transfer & Trust Company, a New York corporation, as warrant
agent (the “Warrant Agent”), which Warrant Agreement is hereby incorporated by reference in and made
a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties
and immunities thereunder of the Warrant Agent, the Company and the holders (the words “holders” or “holder”
meaning the Registered Holders or Registered Holder, respectively) of the Warrants. A copy of the Warrant Agreement may be obtained
by the holder hereof upon written request to the Company. Defined terms used in this Warrant Certificate but not defined herein
shall have the meanings given to them in the Warrant Agreement.
Warrants may be exercised
at any time during the Exercise Period set forth in the Warrant Agreement. The holder of Warrants evidenced by this Warrant Certificate
may exercise them by surrendering this Warrant Certificate, with the form of election to purchase set forth hereon properly completed
and executed, together with payment of the Warrant Price as specified in the Warrant Agreement (or through “cashless exercise”
as provided for in the Warrant Agreement) at the principal corporate trust office of the Warrant Agent. In the event that upon
any exercise of Warrants evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants evidenced
hereby, there shall be issued to the holder hereof or his, her or its assignee, a new Warrant Certificate evidencing the number
of Warrants not exercised.
Notwithstanding anything
else in this Warrant Certificate or the Warrant Agreement, no Warrant may be exercised unless at the time of exercise (i) a registration
statement covering the shares of Class A Common Stock to be issued upon exercise is effective under the Securities Act and (ii)
a prospectus thereunder relating to the shares of Class A Common Stock is current, except through “cashless exercise”
as provided for in the Warrant Agreement.
The Warrant Agreement
provides that upon the occurrence of certain events the number of shares of Class A Common Stock issuable upon exercise of the
Warrants set forth on the face hereof may, subject to certain conditions, be adjusted. If, upon exercise of a Warrant, the holder
thereof would be entitled to receive a fractional interest in a share of Class A Common Stock, the Company shall, upon exercise,
round down to the nearest whole number of shares of Class A Common Stock to be issued to the holder of the Warrant.
Warrant Certificates,
when surrendered at the principal corporate trust office of the Warrant Agent by the Registered Holder thereof in person or by
legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided
in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of
like tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation
for registration of transfer of this Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange
for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or
other governmental charge imposed in connection therewith.
The Company and the
Warrant Agent may deem and treat the Registered Holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution
to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice
to the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of
the Company.
Election to Purchase
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby
irrevocably elects to exercise the right, represented by this Warrant Certificate, to receive _____ shares of Class A Common Stock
and herewith tenders payment for such shares of Class A Common Stock to the order of FG New America Acquisition Corp. (the “Company”)
in the amount of $_____________ in accordance with the terms hereof. The undersigned requests that a certificate for such shares
of Class A Common Stock be registered in the name of _____________, whose address is ______________ and that such shares of Class
A Common Stock be delivered to ______________ whose address is _______________. If said number of shares of Class A Common Stock
is less than all of the shares of Class A Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares of Class A Common Stock be registered in the name of ___________________, whose
address is _______________ and that such Warrant Certificate be delivered to _______________, whose address is _______________.
In the event that the
Warrant has been called for redemption by the Company pursuant to Section 6.1 of the Warrant Agreement and the Company has
required cashless exercise pursuant to Section 6.3 of the Warrant Agreement, the number of shares of Class A Common Stock
that this Warrant is exercisable for shall be determined in accordance with subsection 3.3.1(b) and Section 6.3 of
the Warrant Agreement.
In the event that the
Warrant is a Private Placement Warrant or a Working Capital Warrant that is to be exercised on a “cashless” basis pursuant
to subsection 3.3.1(c) of the Warrant Agreement, the number of shares of Class A Common Stock that this Warrant is exercisable
for shall be determined in accordance with subsection 3.3.1(c) of the Warrant Agreement.
In the event that the
Warrant is to be exercised on a “cashless” basis pursuant to Section 7.4 of the Warrant Agreement, the
number of shares of Class A Common Stock that this Warrant is exercisable for shall be determined in accordance with Section
7.4 of the Warrant Agreement.
In the event that the
Warrant may be exercised, to the extent allowed by the Warrant Agreement, through cashless exercise (i) the number of shares of
Class A Common Stock that this Warrant is exercisable for would be determined in accordance with the relevant section of the Warrant
Agreement which allows for such cashless exercise and (ii) the holder hereof shall complete the following: The undersigned hereby
irrevocably elects to exercise the right, represented by this Warrant Certificate, through the cashless exercise provisions of
the Warrant Agreement, to receive shares of Class A Common Stock. If said number of shares of Class A Common Stock is less than
all of the shares of Class A Common Stock purchasable hereunder (after giving effect to the cashless exercise), the undersigned
requests that a new Warrant Certificate representing the remaining balance of such shares of Class A Common Stock be registered
in the name of ________________, whose address is________________ and that such Warrant Certificate be delivered to ________________,
whose address is ________________.
[Signature Page Follows]
| Date: ____________, 20___ |
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Signature |
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(Address) |
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(Tax Identification Number) |
THE SIGNATURE(S) SHOULD 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 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (OR
ANY SUCCESSOR RULE)).
EXHIBIT
B
UNDERWRITER WARRANT LEGEND
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND
NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THIS CORPORATION, IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
LOCKUP PURSUANT TO AN UNDERWRITING AGREEMENTAMONG FG NEW AMERICA ACQUISITION CORP., THINKEQUITY, A DIVISION OF FORDHAM FINANCIAL
MANAGEMENT, INC., AND PIPER SANDLER & CO. AND MAY ONLY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED DURING
THE TERM OF THE LOCKUP PURSUANT TO THE TERMS SET FORTH IN THE UNDERWRITING AGREEMENT.”
EXHIBIT C
PRIVATE PLACEMENT WARRANT LEGEND
“THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. IN ADDITION, SUBJECT TO ANY ADDITIONAL LIMITATIONS ON TRANSFER
DESCRIBED IN THE LETTER AGREEMENT BY AND AMONG FG NEW AMERICA ACQUISITION CORP. (THE “COMPANY”), FG NEW AMERICA INVESTORS
LLC AND THE OTHER PARTIES THERETO, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED PRIOR TO THE DATE
THAT IS THIRTY (30) DAYS AFTER THE DATE UPON WHICH THE COMPANY COMPLETES ITS INITIAL BUSINESS COMBINATION (AS DEFINED IN SECTION
3 OF THE WARRANT AGREEMENT REFERRED TO HEREIN) EXCEPT TO A PERMITTED TRANSFEREE (AS DEFINED IN SECTION 2 OF THE WARRANT AGREEMENT)
WHO AGREES IN WRITING WITH THE COMPANY TO BE SUBJECT TO SUCH TRANSFER PROVISIONS.
SECURITIES EVIDENCED BY THIS CERTIFICATE
AND SHARES OF CLASS A COMMON STOCK OF THE COMPANY ISSUED UPON EXERCISE OF SUCH SECURITIES SHALL BE ENTITLED TO REGISTRATION RIGHTS
UNDER A REGISTRATION RIGHTS AGREEMENT TO BE EXECUTED BY THE COMPANY.”
Exhibit
10.1
[●], 2020
FG New America Acquisition Corp.
105 S. Maple Street
Itasca, Illinois 60143
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”) entered into by and between FG New America Acquisition Corp., a Delaware corporation (the “Company”),
and Piper Sandler & Co. and ThinkEquity, a division of Fordham Financial Management, Inc., as representatives (the “Representatives”)
of the several underwriters (each, an “Underwriter” and collectively, the “Underwriters”),
relating to an underwritten initial public offering (the “Public Offering”), of up
to 25,875,000 of the Company’s units (including up to 3,375,000 units that may be purchased to cover over-allotments, if
any) (the “Units”), each comprised of one share of the Company’s Class A common stock, par value
$0.0001 per share (the “Class A Common Stock”), and one-half of one redeemable warrant. Each whole warrant
(each, a “Warrant”) entitles the holder thereof to purchase one share of Class A Common Stock at a price
of $11.50 per share, subject to adjustment as described in the Prospectus (as defined below). The Units will be sold in the Public
Offering pursuant to a registration statement on Form S-1 and prospectus (the “Prospectus”) filed by
the Company with the U.S. Securities and Exchange Commission (the “Commission”) and the Units have been
approved for listing on the New York Stock Exchange. Certain capitalized terms used herein are defined in paragraph 11 hereof.
In order to induce
the Company and the Underwriters 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, each of FG New America Investors
LLC (the “Sponsor”) and the undersigned individuals, each of whom is a member of the Company’s
board of directors and/or management team (each of the undersigned individuals, an “Insider” and collectively,
the “Insiders”), hereby agrees with the Company as follows:
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1. |
The Sponsor and each Insider agrees that if the Company seeks stockholder approval of a proposed Business Combination, then in connection with such proposed Business Combination, it, he or she shall (i) vote any shares of Common Stock (as defined below) owned by it, him or her in favor of any proposed Business Combination and (ii) not redeem any shares of Common Stock owned by it, him or her in connection with such stockholder approval. If the Company seeks to consummate a proposed Business Combination by engaging in a tender offer, the Sponsor and each Insider agrees that it, he or she will not sell or tender any shares of Common Stock owned by it, him or her in connection therewith. |
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2. |
The Sponsor and each Insider hereby agrees 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 (as it may be amended from time to time, the “Charter”), the Sponsor and each 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 ten business days thereafter, redeem 100% of the shares of Class A Common Stock sold as part of the Units 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 (as defined below), including interest earned on the funds held in the Trust Account (which interest shall be net of taxes payable, and 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), 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, liquidate and dissolve, 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 Sponsor and each Insider agrees to not propose any 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 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 earned on the funds held in the Trust Account (which interest shall be net of taxes payable), divided by the number of then outstanding Offering Shares. |
The Sponsor and each Insider acknowledges
that it, he or she has no right, title, interest or claim of any kind in or to any monies held in the Trust Account or any other
asset of the Company as a result of any liquidation of the Company with respect to the Founder Shares held by it, him or her. The
Sponsor and each Insider hereby further waives, with respect to any shares of Common Stock held by it, him or her, if any, any
redemption rights it, he or she may have in connection with (A) 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 (B) 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 has not consummated 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
or in the context of a tender offer made by the Company to purchase Offering Shares (although the Sponsor, the Insiders and their
respective affiliates shall be entitled to redemption and liquidation rights with respect to any Offering Shares it or they hold
if the Company fails to consummate a Business Combination within the time period set forth in the Charter).
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3. |
During the period commencing on the effective date of the Underwriting Agreement and ending 180 days after such date, the Sponsor and each Insider shall not, without the prior written consent of the Representatives, (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 Units, shares of Common Stock (including, but not limited to, Founder Shares), Warrants or any securities convertible into, or exercisable, or exchangeable for, shares of Common Stock owned by it, him or her, (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 Units, shares of Common Stock (including, but not limited to, Founder Shares), Warrants or any securities convertible into, or exercisable, or exchangeable for, shares of Common Stock owned by it, him or her, 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). Each of the Insiders and the Sponsor 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 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 the release or waiver is effected solely to permit a transfer not for consideration and 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. |
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4. |
In the event of the liquidation of the Trust Account upon the
failure of the Company to consummate its initial Business Combination within the time period set forth in the Charter, the
Sponsor (the “Indemnitor”) 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) 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 written letter of intent,
confidentiality or other similar agreement or Business Combination agreement (a “Target”); provided, however,
that such indemnification of the Company by the Indemnitor (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) $10.25
per Offering Share (or such lesser per share amount after taking into account the deposit of $10.00 per share for each share
purchased pursuant to the Underwriters' over-allotment option) and (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 $10.25 per Offering Share (or such lesser per share amount after taking into account the deposit of $10.00 per share for each share purchased pursuant to the Underwriters'
over-allotment option) is then held in
the Trust Account due to reductions in the value of the trust assets, less taxes payable, (y) shall not apply to any claims
by a third party or a Target which 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
Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. The Indemnitor
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 Indemnitor, the Indemnitor notifies the Company in
writing that it shall undertake such defense. |
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5. |
To the extent that the Underwriters do not exercise their over-allotment option to purchase up to an additional 3,375,000 Units within 45 days from the date of the Prospectus (and as further described in the Prospectus), the Sponsor agrees to forfeit, at no cost, a number of Founder Shares in the aggregate equal to 843,750 multiplied by a fraction, (i) the numerator of which is 3,375,000 minus the number of Units purchased by the Underwriters upon the exercise of their over-allotment option, and (ii) the denominator of which is 3,375,000. The forfeiture will be adjusted to the extent that the over-allotment option is not exercised in full by the Underwriters so that the Founder Shares will represent an aggregate of 20.0% of the Company’s issued and outstanding shares of Common Stock (not including shares of Class A Common Stock underlying the Warrants, Private Placement Warrants, Private Units (as defined below) or Underwriter Units (as defined below)). The Sponsor further agrees that to the extent that the size of the Public Offering is increased or decreased, the Company will purchase or sell Units or effect a share repurchase or share capitalization, as applicable, immediately prior to the consummation of the Public Offering in such amount as to maintain the ownership of the initial shareholders prior to the Public Offering at 20.0% of its issued and outstanding shares of Common Stock upon the consummation of the Public Offering (not including shares of Class A Common Stock underlying the Warrants, Private Placement Warrants, Private Units or Underwriter Units). In connection with such increase or decrease in the size of the Public Offering, then (A) the references to 3,375,000 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 Class A Common Stock included in the Units issued in the Public Offering and (B) the reference to 843,750 in the formula set forth in the first sentence of this paragraph shall be adjusted to such number of Founder Shares that the Sponsor would have to surrender to the Company in order for the initial shareholders to hold an aggregate of 20.0% of the Company’s issued and outstanding shares of Common Stock after the Public Offering (not including shares of Class A Common Stock underlying the Warrants, Private Placement Warrants, Private Units or Underwriter Units). |
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The Sponsor and each Insider hereby agrees and acknowledges that: (i) the Underwriters and the Company would be irreparably injured in the event of a breach by such Sponsor or an Insider of its, his or her 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. |
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7. |
(a) The Sponsor and each Insider agrees that it, he or she shall not Transfer any Founder Shares (or any shares of Class A Common Stock issuable upon conversion thereof) until, (i) with respect to 50% of the Founder Shares, the earlier of (A) one year after the completion of the Company’s initial Business Combination and (B) the date on which the closing price of the Class A Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after the Company’s initial Business Combination and (ii) with respect to the remaining 50% of the Founder Shares, one year after the date of the consummation of the initial Business Combination, or earlier, in each case, if, subsequent to the initial Business Combination, the Company consummates a subsequent 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 Class A Common Stock for cash, securities or other property (the “Founder Shares Lock-up Period”). |
(b) The Sponsor and each Insider
agrees that it, he or she shall not Transfer (i) any Private Units (or any securities underlying the Private Units, including the
shares of Class A Common Stock and Private Warrants (as defined below) included in the Private Units and the shares of Class A
Common Stock issued or issuable upon exercise of the Private Warrants) or (ii) any Private Placement Warrants (or any shares of
Class A Common Stock issued or issuable upon the exercise of the Private Placement Warrants), until 30 days after the completion
of a Business Combination (together with the Founder Shares Lock-up Period, the “Lock-up Periods”).
(c) Notwithstanding the provisions
set forth in paragraphs 7(a) and (b), Transfers of the Founder Shares, Private Placement Warrants, Private Units, component securities
of Private Units and shares of Class A Common Stock issued or issuable upon the exercise or conversion of the Private Placement
Warrants, the Private Warrants, or the Founder Shares that are held by the Sponsor, any Insider or any of their permitted transferees
(that have complied with this paragraph 7(d)), are permitted (a) to the Company’s officers or directors, any affiliate or
family member of any of the Company’s officers or directors, any affiliate of the Sponsor or to any member of the Sponsor
or any of their affiliates; (b) in the case of an individual, by gift to a member of such individual’s immediate family or
to a trust, the beneficiary of which is a member of such individual’s immediate family, an affiliate of such individual or
to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of such
individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) by private sales or transfers
made in connection with any forward purchase agreement or similar arrangement or in connection with the consummation of an initial
Business Combination at prices no greater than the price at which the securities were originally purchased; (f) by virtue of the
laws of the State of Delaware or the Sponsor’s limited liability company agreement upon dissolution of the Sponsor; (g) in
the event of the Company’s liquidation prior to the completion of an initial Business Combination; or (h) in the event of
the Company’s liquidation, merger, capital stock exchange or other similar transaction which results in all of the Company’s
stockholders having the right to exchange their shares of Class A Common Stock for cash, securities or other property subsequent
to the Company’s completion of an initial Business Combination; provided, however, that in the case of clauses
(a) through (f), 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).
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8. |
The Sponsor and each Insider represents and warrants that it, he or she 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 Sponsor and each Insider’s questionnaire furnished to the Company is true and accurate in all respects. The Sponsor and each Insider represents and warrants that: it, he or she 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; it, he or she 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 it, he or she is not currently a defendant in any such criminal proceeding. |
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9. |
Except as disclosed in the Prospectus, neither the Sponsor nor any officer, nor any affiliate of the Sponsor or any officer, nor any director of the Company, shall receive from the Company any finder’s fee, reimbursement, consulting fee, non-cash payments, 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 up to an aggregate of $300,000 made to the Company by the Sponsor; payments to the Sponsor for certain office space, secretarial and administrative services as may be reasonably required by the Company of $10,000 per month; reimbursement for any reasonable out-of-pocket expenses related to identifying, investigating, negotiating and completing 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 an affiliate of the Sponsor or any of the Company’s officers or 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 warrants at a price of $1.00 per warrant at the option of the lender. Such warrants would be identical to the Founder Warrants (as defined below), including as to exercise price, exercisability and exercise period. |
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10. |
The Sponsor and each Insider has full right and power, without violating any agreement to which it 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 director on the board of directors of the Company and hereby consents to being named in the Prospectus as an officer and/or director of the Company. |
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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) “Common Stock” shall mean the Class A Common Stock and Class B common stock, par value $0.0001 per share (“Class B Common Stock”); (iii) “Founder Shares” shall mean the 6,468,750 shares of Class B common stock issued and outstanding (up to 843,750 Shares of which are subject to complete or partial forfeiture if the over-allotment option is not exercised by the Underwriters); (iv) “Initial Stockholders” shall mean the Sponsor and any Insider that holds Founder Shares; (v) “Private Placement Warrants” shall mean the 5,592,500 Warrants, consisting of (a) 3,848,750 warrants to be purchased by our insiders (and/or their designees) at $1.00 per warrant (the “Founder Warrants”), (b) 1,512,500 warrants to be purchased by our insiders (and/or their designees) at $0.10 per warrant (the “$15 Exercise Price Warrants”) and (c) 231,250 warrants (the “Private Warrants”) to purchase shares of Class A Common Stock underlying the units (the “Private Units”) that the Sponsor has agreed to purchase for an aggregate price of $4,625,000, to be sold in private placements 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 Warrants shall be deposited; (viii) “Transfer” shall mean the (a) sale 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); (ix) “Underwriter Units” shall mean the units issued to the Underwriters in a private placement to be completed concurrently with the consummation of the Public Offering; and (x) “Warrants” shall mean the Private Placement Warrants and public warrants. |
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12. |
The Company will maintain an insurance policy or policies providing directors’ and officers’ liability insurance, and each Director shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any of the Company’s directors or officers. |
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13. |
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. |
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14. |
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 Sponsor and each Insider and their respective successors, heirs and assigns and permitted transferees. |
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15. |
Nothing in this Letter Agreement shall be construed to confer upon, or give to, any person or corporation 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. |
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16. |
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. |
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17. |
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. |
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18. |
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. |
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19. |
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, electronic mail or facsimile transmission. |
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20. |
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 by December 31, 2020; provided further that paragraph 4 of this Letter Agreement shall survive such liquidation. |
[Signature Page Follows]
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Sincerely, |
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FG NEW AMERICA INVESTORS LLC |
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By: |
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Name: |
Larry G. Swets, Jr. |
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Title: |
Manager |
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Larry G. Swets, Jr. |
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D. Kyle Cerminara |
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Joseph Hugh Moglia |
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Robert Weeks |
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Nicholas Rudd |
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Hassan Baqar |
| Acknowledged and Agreed: |
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| FG NEW AMERICA ACQUISITION CORP. |
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| By: |
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Name: |
Larry G. Swets |
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Title: |
Chief Executive Officer |
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[Signature Page to Letter Agreement]
Exhibit 10.2
INVESTMENT MANAGEMENT TRUST AGREEMENT
This Investment Management
Trust Agreement (this “Agreement”) is made effective as of [●], 2020 by and between FG New America
Acquisition Corp., a Delaware corporation (the “Company”), and Continental Stock Transfer & Trust
Company, a New York corporation, a New York corporation (the “Trustee”).
WHEREAS, the Company’s
registration statement on Form S-1, File No. 333-248429 (the “Registration Statement”) and prospectus
(the “Prospectus”) for the initial public offering (the “Offering”) of the
Company’s units (the “Units”), each of which consists of one share of the Company’s Class
A common stock, par value $0.0001 per share (the “Common Stock”), and one-half of one redeemable warrant,
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 Piper Sandler & Co.
and ThinkEquity, a division of Fordham Financial Management, Inc., as representatives (the “Representatives”)
of the several underwriters (the “Underwriters”) named therein; and
WHEREAS, as described
in the Prospectus, $230,625,000 of the gross proceeds of the Offering and sale of the Placement Units and Placement Warrants (each
as defined in the Underwriting Agreement) (or $264,375,000 if the Underwriters’ 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 included in
the Units 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, 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 J.P. Morgan Chase Bank, N.A. (or at another U.S. chartered commercial bank with consolidated assets of $100
billion or more), maintained by the Trustee 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 solely in 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; 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 credits 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) Promptly notify the
Company and the Representatives 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, Chief Financial Officer,
President, Executive Vice President, Vice President, 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 Representatives,
and complete the liquidation of the Trust Account and distribute the Property in the Trust Account, including interest earned on
the funds held in the Trust Account (which interest shall be net of taxes payable and up to $100,000 of interest 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 (1) 24 months after the closing of the Offering and (2) 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 the funds held in the Trust Account (which interest shall be net of taxes payable and up to $100,000 of interest 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, which amount
shall be delivered directly to the Company by electronic funds transfer or other method of prompt payment, and the Company shall
forward such payment to the relevant taxing authority, so long as there is no reduction in the principal amount per share initially
deposited in the Trust Account; 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 (it being acknowledged and agreed that any such amount in excess of interest income earned
on the Property shall not be payable from 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;
(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 “Stockholder Redemption Withdrawal Instruction”), the Trustee shall distribute 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 shares of Common Stock included in the Units
sold in the Offering (the “public shares”) 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
(l) Not make any withdrawals
or distributions from the Trust Account other than pursuant to Section 1(i), (j) or (k) 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, Chief Executive Officer, Chief Financial
Officer, President, Executive Vice President, Vice President or Secretary. In addition, except with respect to its duties under
Sections 1(i), 1(j) and 1(k) 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 in any way 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 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, which consent shall not be unreasonably withheld. The Trustee may not
agree to settle any Indemnified Claim without the prior written consent of the Company, which such consent shall not be unreasonably
withheld. The Company may participate in such action with its own counsel;
(c) Pay the Trustee the
fees set forth on Schedule A hereto, including an initial acceptance 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 it is distributed to the Company pursuant to Sections 1(i) through
1(j) hereof. The Company shall pay the Trustee the initial acceptance fee and the first annual administration fee at the
consummation of the Offering. 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 Representatives
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; and
(f) 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.
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 third
party except for liability arising out of the Trustee’s 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 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 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, 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) or
1(k) 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.
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 relating to the Trust Account, 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 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. 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. Subject to Section 6(d)
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) This Agreement or
any provision hereof may only be changed, amended or modified pursuant to Section 6(c) hereof with the Consent of the Stockholders.
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 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. No such amendment will affect any Public Stockholder who has otherwise indicated his election to redeem his shares
of Common Stock in connection with a stockholder vote sought to amend this Agreement to modify the substance or timing of the Company’s
obligation to redeem 100% of the Common Stock if the Company does not complete its initial Business Combination within the time
frame specified in the Company’s amended and restated certificate of incorporation. Except for any liability arising out
of the Trustee’s 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, 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 electronic
mail:
| |
if to the Trustee, to: |
| |
|
| |
Continental Stock Transfer & Trust Company |
| |
1 State Street, 30th Floor |
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New York, New York 10004 |
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Attn: Francis Wolf & Celeste Gonzalez |
| |
Email: fwolf@continentalstock.com |
| |
Email: cgonzalez@continentalstock.com |
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if to the Company, to: |
| |
|
| |
FG New America Acquisition Corp.
105 S. Maple Street
Itasca, Illinois 60143 |
| |
Attn: Hassan Baqar |
| |
Email: hbaqar@sequoiafin.com |
| |
|
| |
in each case, with copies to: |
| |
|
| |
White & Case LLP |
| |
1221 Avenue of the Americas |
| |
New York, New York 10020 |
| |
Attn: Joel L. Rubinstein |
| |
Email: joel.rubinstein@whitecase.com |
| |
|
| |
and |
| |
|
| |
Piper Sandler & Co. |
| |
609 Main Street |
| |
Houston, TX 77002 |
| |
Attn: Mr. James Baker, Global Head of Investment Banking |
| |
|
| |
and |
| |
|
| |
ThinkEquity, a division of Fordham Financial Management, Inc. |
| |
17 State Street, 22nd Floor |
| |
New York, NY 10004 |
| |
Attn: Mr. Eric Lord, Head of Investment Banking |
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Fax No.: (212) 349-2550 |
| |
|
| |
and |
| |
|
| |
Loeb & Loeb LLP |
| |
345 Park Avenue |
| |
New York, NY 10154 |
| |
Attn.: Mitchell S. Nussbaum |
| |
Giovanni Caruso |
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Email: mnussbaum@loeb.com |
| |
gcaruso@loeb.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) This Agreement is
the joint product of the Trustee and the Company and each provision hereof has been subject to the mutual consultation, negotiation
and agreement of such parties and shall not be construed for or against any party hereto.
(i) This Agreement may
be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument. Delivery of a signed counterpart of this Agreement by facsimile or electronic transmission
shall constitute valid and sufficient delivery thereof.
(j) Each of the Company
and the Trustee hereby acknowledges and agrees that the Representatives on behalf of the Underwriters is a third-party beneficiary
of this Agreement.
(k) Except as specified
herein, no party to this Agreement may assign its rights or delegate its obligations hereunder to any other person or entity.
[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 |
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|
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|
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By: |
|
| |
|
Name: Francis Wolf |
| |
|
Title: Vice President |
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|
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FG NEW AMERICA ACQUISITION CORP. |
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|
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|
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By: |
|
| |
|
Name: Hassan Baqar |
| |
|
Title: Chief Financial Officer |
[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. |
|
$ |
1,000.00 |
|
| Trustee administration fee |
|
Payable annually. First year fee payable, at initial closing of Offering by wire transfer, thereafter by wire transfer or check. |
|
$ |
10,000.00 |
|
| Transaction processing fee for disbursements to Company under Sections 1 and 2 |
|
Billed to Company following disbursement made to Company under Section 1 and 2 |
|
$ |
250.00 |
|
| Paying Agent services as required pursuant to Section 1(i) and 1(k) |
|
Billed to Company upon delivery of service pursuant to Section 1(i) and 1(k) |
|
|
Prevailing rates |
|
EXHIBIT A
[Letterhead of Company]
[Insert date]
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
Attn: Francis Wolf & Celeste Gonzalez
| |
Re: |
Trust Account - Termination Letter |
Dear Mr. Wolf and Ms. Gonzalez:
Pursuant to Section
1(i) of the Investment Management Trust Agreement between FG New America Acquisition Corp. (the “Company”)
and Continental Stock Transfer & Trust Company (“Trustee”), dated as of __________, 2020 (the “Trust
Agreement”), this is to advise you that the Company has entered into an agreement with ___________ (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
(or such shorter period as you may agree) 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 to a segregated account held by you on behalf of the Beneficiaries 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.
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) a certificate by the Chief Executive Officer, Chief Financial Officer, Co-Executive
Chairman or Vice Chairman, 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 written instruction signed by the Company 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 redemption rights (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 notice as soon thereafter as possible.
| |
Very truly yours, |
| |
|
| |
FG New America Acquisition Corp. |
| |
|
| |
By: |
|
| |
|
Name: |
| |
|
Title: |
| Agreed and acknowledged by: |
|
| |
|
| Piper Sandler & Co. |
|
| |
|
| By: |
|
|
| |
Name: |
|
| |
Title: |
|
| |
|
|
| |
|
|
| |
|
|
| ThinkEquity, a division of Fordham Financial Management, Inc. |
|
| |
|
|
| By: |
|
|
| |
Name: |
|
| |
Title: |
|
EXHIBIT B
[Letterhead of Company]
[Insert date]
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
Attn: Francis Wolf & Celeste Gonzalez
| |
Re: |
Trust Account -Termination Letter |
Dear Mr. Wolf and Ms. Gonzalez:
Pursuant to Section
1(i) of the Investment Management Trust Agreement between FG New America Acquisition Corp. (the “Company”)
and Continental Stock Transfer & Trust Company (the “Trustee”), dated as of _________, 2020
(the “Trust Agreement”), this is to advise you that the Company has been unable to effect a business
combination with a Target Business (the “Business Combination”) 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 Operating 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 __________1 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 Company’s 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, |
| |
|
| |
FG New America Acquisition Corp. |
| |
|
| |
By: |
|
| |
|
Name: |
| |
|
Title: |
| cc: Piper Sandler & Co. and ThinkEquity, a division of Fordham Financial Management, Inc. |
|
1 24 months from the closing
of the Offering or such later date as may be approved by the Company’s stockholders in accordance with the Company’s
amended and restated certificate of incorporation.
EXHIBIT C
[Letterhead of Company]
[Insert date]
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
Attn: Francis Wolf & Celeste Gonzalez
| |
Re: |
Trust Account - Tax Payment Withdrawal Instruction |
Dear Mr. Wolf and Ms. Gonzalez:
Pursuant to Section
1(j) of the Investment Management Trust Agreement between FG New America Acquisition Corp. (the “Company”)
and Continental Stock Transfer & Trust Company (the “Trustee”), dated as of ________, 2020 (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, |
| |
|
| |
FG New America Acquisition Corp. |
| |
|
| |
By: |
|
| |
|
Name: |
| |
|
Title: |
| |
|
| cc: Piper Sandler & Co. and ThinkEquity, a division of Fordham Financial Management, Inc. |
|
EXHIBIT D
[Letterhead of Company]
[Insert date]
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
Attn: Francis Wolf & Celeste Gonzalez
| |
Re: |
Trust Account -Stockholder Redemption Withdrawal Instruction |
Dear Mr. Wolf and Ms. Gonzalez:
Pursuant to Section
1(k) of the Investment Management Trust Agreement between FG New America Acquisition Corp. (the “Company”)
and Continental Stock Transfer & Trust Company (the “Trustee”), dated as of _____, 2020 (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 to a segregated account held by you on behalf
of the Beneficiaries. 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
to modify the substance or timing of the Company’s obligation to redeem 100% of 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. As such, you are hereby directed and authorized to transfer (via wire transfer) such funds promptly
upon your receipt of this letter to a segregated account held by you on behalf of the Beneficiaries.
| |
Very truly yours, |
| |
|
| |
FG New America Acquisition Corp. |
| |
|
| |
By: |
|
| |
|
Name: |
| |
|
Title: |
| |
|
| cc: Piper Sandler & Co. and ThinkEquity, a division of Fordham Financial Management, Inc. |
|
Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS
AGREEMENT (this “Agreement”), dated as of [__], 2020, is made and entered into by and among FG New America
Acquisition Corp., a Delaware corporation (the “Company”), FG New America Investors LLC, a Delaware limited
liability company (the “Sponsor”), Piper Sandler & Co. and ThinkEquity, a division of Fordham Financial
Management, Inc., as representatives of the underwriters (the “Underwriters”) and the undersigned parties
listed on the signature page hereto under “Holders” (each such party, together with the Sponsor, the Underwriters 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 has 6,468,750 shares of Class B common stock, par value $0.0001 per share (the “Founder Shares”),
issued and outstanding, up to 843,750 of which will be forfeited to the Company for no consideration depending on the extent to
which the Underwriters of the Company’s initial public offering (the “Offering”) exercise their
over-allotment option;
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 [●], 2020, the Company and the Sponsor entered into that certain Founder Warrants Purchase Agreement (the “Founder
Warrants Purchase Agreement”), pursuant to which the Sponsor agreed to purchase 3,848,750 private placement warrants
(the “Founder Warrants”) in a private placement transaction occurring simultaneously with the closing
of the Offering;
WHEREAS,
on [●], 2020, the Company and the Sponsor entered into that certain $15 Exercise Price Warrants Purchase Agreement (the “$15
Exercise Price Warrants Purchase Agreement”), pursuant to which the Sponsor agreed to purchase 1,512,500 private
placement warrants (the “$15 Exercise Price Warrants”) in a private placement transaction occurring simultaneously
with the closing of the Offering;
WHEREAS,
on [●], 2020, the Company and the Sponsor entered into that certain Private Placement Units Purchase Agreement (the “Private
Placement Units Purchase Agreement”), pursuant to which the Sponsor agreed to purchase 462,500 units (the “Private
Units”), each Private Unit consisting of one share of Common Stock (the “Private Shares”)
and one-half of one redeemable warrant (the “Private Warrants” and, together with the Founder Warrants
and the $15 Exercise Price Warrants, the “Private Placement Warrants”) in a private placement transaction
occurring simultaneously with the closing of the Offering;
WHEREAS,
the Company has entered into that certain underwriting agreement with the Underwriters (the “Underwriting Agreement”),
pursuant to which the Company has agreed to issue to the Underwriter 112,500 units (or up to 129,375 units depending on the extent
to which the Underwriters exercise their over-allotment option) (the “Underwriter Units”), each Underwriter
Unit consisting of one share of Common Stock (the “Underwriter Shares”) and one-half of one redeemable
warrant (the “Underwriter Warrants”) in a private placement transaction occurring simultaneously with
the Offering;
WHEREAS,
in order to finance the Company’s transaction costs in connection with its search for and consummation of an initial Business
Combination (as defined below), the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers 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 Founder
Warrant-equivalent warrants (“Working Capital Warrants”) at a price of $1.00 per warrant at the
option of the lender; 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:
“$15 Exercise
Price Warrants Purchase Agreement” shall have the meaning given in the Recitals hereto.
“$15 Exercise
Price Warrants” shall have the meaning given in the Recitals hereto.
“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.
“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
Warrants” shall have the meaning given in the Recitals hereto.
“Founder
Warrants Purchase Agreement” shall have the meaning given in the Recitals hereto.
“Founder Shares Lock-up Period”
shall mean, with respect to the Founder Shares, the period ending on (A) with respect to 50% of the Founder Shares, the earlier
of (i) one year after the completion of the Company’s initial Business Combination and (ii) the date on which the closing
price of the Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and
recapitalizations) for any 20 trading days within any 30-day trading period commencing after the Company’s initial Business
Combination or (B) with respect to the remaining 50% of the Founder Shares, one year after the date of the completion of the Company’s
initial Business Combination.
“Holders”
shall have the meaning given in the Preamble.
“Insider Letter”
shall mean that certain letter agreement, dated as of [●], 2020, 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 light of the circumstances
under which they were made) not misleading.
“Offering”
shall have the meaning given in the Recitals hereto.
“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, Private Placement Lock-up Period, Underwriter Lock-up Period or any
other lock-up period, as the case may be, under the Insider Letter, the Founder Warrants Purchase Agreement, the $15 Exercise Price
Warrants Purchase Agreement, the Underwriting Agreement, this Agreement and any other applicable agreement between such Holder
and the Company, 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 Units and Private Placement Warrants that are held by the initial purchasers of such Private
Placement Warrants and Private Units or their Permitted Transferees, the Private Units, the securities underlying such Private
Units, the Private Placement Warrants, the shares of Common Stock issuable upon the exercise or conversion of the Private Placement
Warrants, and that are held by the initial purchasers of the Private Placement Warrants or their Permitted Transferees, the period
ending 30 days after the completion of the Company’s initial Business Combination.
“Private
Placement Units Purchase Agreement” shall have the meaning given in the Recitals hereto.
“Private
Units” shall have the meaning given in the Recitals hereto.
“Private Placement Warrants”
shall have the meaning given in the Recitals hereto.
“Private
Shares” shall have the meaning given in the Recitals hereto.
“Private
Warrants” shall have the meaning given in the Recitals hereto.
“Pro Rata”
shall have the meaning given in subsection 2.1.4.
“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 Founder Shares and the shares of Common Stock issued or issuable upon the conversion of the Founder Shares,
(b) the Private Placement Warrants (including any shares of Common Stock issued or issuable upon the exercise of the Private
Placement Warrants), (c) the Underwriter Units (including the Underwriter Shares, the Underwriter Warrants and any shares of Common
Stock issued or issuable upon the exercise of the Underwriter Warrants), (d) the Private Units (including the Private Shares, the
Private Warrants and any shares of Common Stock issued or issuable upon the exercise of the Private Warrants), (e) any outstanding
shares of Common Stock or any other equity security (including the shares of Common Stock issued or issuable upon the exercise
of any other equity security) of the Company held by a Holder as of the date of this Agreement, (f) 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 Warrants and shares of Common Stock issued or issuable upon the exercise of the Working Capital Warrants) and (g) 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 may be sold without registration
pursuant to Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission)
(but with no volume or other restrictions or limitations); 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 Recitals hereto.
“Underwriters”
shall have the meaning given in the Preamble.
“Underwriter Lock-up Period”
shall mean, with respect to the Underwriter Units and the securities underlying such Underwriter Units that are held by the Underwriters
or their Permitted Transferees, the period ending after the completion of the Company’s initial Business Combination.
“Underwriting
Agreement” shall have the meaning given in the Recitals hereto.
“Underwriter
Shares” shall have the meaning given in the Recitals hereto.
“Underwriter
Units” shall have the meaning given in the Recitals hereto.
“Underwriter
Warrants” shall have the meaning given in the Recitals hereto.
“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 Warrants” 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 fifteen percent (15%)
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 ten (10) 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) 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
three (3) 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 Demanding Holders and 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; and 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) has requested be included in such Underwritten Registration and the aggregate number of Registrable
Securities that the Demanding Holders and Requesting Holders have requested be included in such Underwritten Registration (such
proportion is referred to herein as “Pro Rata”)) 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), the Registrable Securities of Holders (Pro Rata, based on the respective number of Registrable Securities
that each Holder has so requested) exercising their rights to register their Registrable Securities pursuant to subsection 2.2.1 hereof,
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), the Common Stock or other equity securities that the Company desires
to sell, which can be sold without exceeding the Maximum Number of Securities; and (iv) fourth, to the extent that the Maximum
Number of Securities has not been reached under the foregoing clauses (i), (ii) and (iii), the Common Stock or other equity
securities of other persons or entities that the Company is obligated to register in a Registration pursuant to separate written
contractual arrangements with such persons and that 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 ten (10) 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) 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 the 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, the Common Stock
or other equity securities that the Company desires to sell, 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 hereof
(pro rata based on the respective number of Registrable Securities that such Holder has requested be included in such 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), the 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, 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, the 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, pro
rata based on the number of Registrable Securities that each Holder has requested be included in such Registration and the aggregate
number of Registrable Securities that the Holders have requested to be included in such Registration, which can be sold without
exceeding the Maximum Number of Securities; (C) third, to the extent that the Maximum Number of Securities has not been reached
under the foregoing clauses (A) and (B), the Common Stock or other equity securities that the Company desires to sell, which
can be sold without exceeding the Maximum Number of Securities; and (D) fourth, to the extent that the Maximum Number of Securities
has not been reached under the foregoing clauses (A), (B) and (C), the 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, 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),
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”); provided, however, that
the Company shall not be obligated to effect such request through an Underwritten Offering. Within five (5) 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 $10,000,000.
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.
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 or warrant agent, as applicable, 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 furnish
a copy thereof to each seller of such Registrable Securities and its counsel, including, without limitation, providing copies promptly
upon receipt of any comment letters received with respect to any such Registration Statement or Prospectus;
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 (such representative to be selected by a majority of the participating 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; and provided further, the Company may not include
the name of any Holder or Underwriter or any information regarding any Holder or Underwriter in any Registration Statement or Prospectus,
any amendment or supplement to such Registration Statement or Prospectus, any document that is to be incorporated by reference
into such Registration Statement or Prospectus, or any response to any comment letter, without the prior written consent of such
Holder or Underwriter and providing each such Holder or Underwriter a reasonable amount of time to review and comment on such applicable
document, which comments the Company shall include unless contrary to applicable law;
3.1.11 obtain a “cold
comfort” letter from the Company’s independent registered public accountants in the event of an Underwritten Registration
which the participating Holders may rely on, 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.
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.
3.6 Limitation on
Registration Rights. Notwithstanding anything herein to the contrary, (i) the Underwriters may not exercise their rights under
Sections 2.1 and 2.2 hereunder after five (5) and seven (7) years, respectively, after the effective date of the registration statement
relating to the Company’s initial public offering and (ii) the Underwriters may not exercise their rights under Section 2.1
more than one time.
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
(plus local 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: 105 S. Maple Street, Itasca, Illinois 60143, and, if to any Holder, at such Holder’s address or contact
information 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 The rights granted
to a Holder by the Company under this Agreement may be transferred or assigned (but only with all related obligations) by a Holder
only to a transferee of Registrable Securities that is a transferee or assignee of not less than 10,000 Registrable Securities
(as presently constituted and subject to subsequent adjustments for stock splits, stock dividends, reverse stock splits and the
like); provided, that (x) such transfer or assignment of Registrable Securities is effected in accordance with applicable securities
laws, (y) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of
such transferee and the Registrable Securities with respect to which such rights are being transferred and (z) such transferee
agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement;
provided, however, that prior to the expiration of the Founder Shares Lock-up Period, Private Placement Lock-up Period
or Underwriter Lock-up Period, as the case may be, no Holder may assign or delegate such Holder’s rights, duties or obligations
under this Agreement, in whole or in part, except in connection with a transfer of Registrable Securities by such Holder to a Permitted
Transferee but only if such Permitted Transferee 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 (I) 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 AND (II) THE VENUE FOR ANY ACTION TAKEN
WITH RESPECT TO THIS AGREEMENT SHALL BE ANY STATE OR FEDERAL COURT IN NEW YORK COUNTY IN THE STATE OF NEW YORK.
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 earlier of (i) the fifteenth anniversary of the date of this Agreement or (ii) 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 without registration pursuant to Rule 144 (or any similar provision) under the Securities
Act with no volume or other restrictions or limitations. The provisions of Section 3.5 and Article
IV shall survive any termination.
[Signature
Page Follows]
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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FG New america acquisition corp, a Delaware corporation |
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By: |
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Name: Larry G. Swets |
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Title: Chief Executive Officer |
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HOLDERS: |
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Joseph H. Moglia |
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Larry G. Swets, Jr. |
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D. Kyle Cerminara |
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Hassan R. Baqar |
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Nicholas S. Rudd |
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Robert C. Weeks |
[Signature Page to Registration Rights Agreement]
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FG NEW AMERICA INVESTORS LLC |
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By: |
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Name: Larry G. Swets, Jr. |
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Title: Manager |
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PIPER SANDLER & CO. |
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By: |
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Name: |
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Title: |
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THINKEQUITY, A DIVISION OF FORDHAM FINANCIAL MANAGEMENT, INC. |
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By: |
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Name: |
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Title: |
[Signature Page to Registration Rights Agreement]
Exhibit 10.6
PRIVATE
PLACEMENT UNITS PURCHASE AGREEMENT
This PRIVATE PLACEMENT
UNITS PURCHASE AGREEMENT (this “Agreement”) is made as of the [●] day of September, 2020, by and
between FG New America Acquisition Corp., a Delaware corporation (the “Company”), having its principal place
of business at 105. S. Maple Street, Itasca, Illinois 60143, and FG New America Investors LLC, a Delaware limited liability company
(the “Subscriber”), having its principal place of business at 105. S. Maple Street, Itasca, Illinois 60143.
WHEREAS, the Company desires
to sell to the Subscriber on a private placement basis (the “Placement”) an aggregate of 462,500 units (the
“Units”) of the Company, each Unit comprised of one share of Class A common stock of the Company, par value
$0.0001 per share (“Common Stock”) and one-half of one warrant, each whole warrant exercisable to purchase one
share of Common Stock (“Warrant”), for a purchase price of $10.00 per Unit. The shares of Common Stock underlying
the Warrants are hereinafter referred to as the “Warrant Shares.” The shares of Common Stock underlying the
Units (excluding the Warrant Shares) are hereinafter referred to as the “Placement Shares.” The Warrants underlying
the Units are hereinafter referred to as the “Placement Warrants.” The Units, Placement Shares, Placement Warrants
and Warrant Shares, collectively, are hereinafter referred to as the “Securities.” Each Placement Warrant is
exercisable to purchase one share of Common Stock at an exercise price of $11.50 during the period commencing on the later of (i)
twelve (12) months from the date of the closing of the Company’s initial public offering of units (the “IPO”)
and (ii) 30 days following the consummation of the Company’s initial business combination (the “Business Combination”),
as such term is defined in the registration statement in connection with the IPO, as amended at the time it becomes effective (the
“Registration Statement”), and expiring on the fifth anniversary of the consummation of the Business Combination;
and
WHEREAS, the Subscriber
wishes to purchase 462,500 Units, and the Company wishes to accept such subscription from the Subscriber.
NOW, THEREFORE, in consideration
of the premises and the mutual covenants hereinafter set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and the Subscriber hereby agree as follows:
1.
Agreement to Subscribe
1.1.
Purchase and Issuance of the Units. Upon the terms and subject to the conditions of this Agreement, the Subscriber hereby
agrees to purchase from the Company, and the Company hereby agrees to sell to the Subscriber, on the Closing Date (as defined below)
the Units in consideration of the payment of the Purchase Price (as defined below). On the Closing Date, the Company shall, at
its option, deliver to the Subscriber the certificates representing the Securities purchased or effect such delivery in book-entry
form.
1.2.
Purchase Price. As payment in full for the Units being purchased under this Agreement,
the Subscriber shall pay $4,625,000 (the “Purchase Price”) by wire transfer of immediately available funds or
by such other method as may be reasonably acceptable to the Company, to the trust account (the “Trust Account”)
at a financial institution to be chosen by the Company, maintained by Continental Stock Transfer & Trust Company, acting as
trustee (“Continental”) one (1) business day prior to the date of effectiveness of the Registration Statement.
1.3.
Closing. The closing of the purchase and sale of the Units shall take place simultaneously with the closing of the IPO (the
“Closing Date”). The closing of the purchase and sale of the Units shall take place at the offices of White
& Case LLP, 1221 Avenue of the Americas, New York, New York 10020, or such other place as may be agreed upon by the parties
hereto.
1.4.
Termination. This Agreement and each of the obligations of the undersigned shall be null and void and without effect if
a Closing does not occur prior to December 31, 2020.
2.
Representations and Warranties of the Subscriber
The Subscriber
represents and warrants that:
2.1.
No Government Recommendation or Approval. The Subscriber understands that no federal or state agency has passed upon or
made any recommendation or endorsement of the Company or the Placement of the Securities.
2.2.
Accredited Investor. The Subscriber represents that it is an “accredited investor” as such term is defined in
Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), and acknowledges
that the sale contemplated hereby is being made in reliance, among other things, on a private placement exemption to “accredited
investors” under the Securities Act and similar exemptions under state law.
2.3.
Intent. The Subscriber is purchasing the Securities solely for investment purposes, for Subscriber’s own account (and/or
for the account or benefit of its members or affiliates, as permitted, pursuant to the terms of an agreement (the “Insider
Letter”) to be entered into with respect to the Securities between, among others, the Subscriber and the Company, as
described in the Registration Statement), and not with a view to the distribution thereof and the Subscriber has no present arrangement
to sell the Securities to or through any person or entity except as may be permitted under the Insider Letter. the Subscriber shall
not engage in hedging transactions with regard to the Securities unless in compliance with the Securities Act.
2.4.
Restrictions on Transfer. The Subscriber acknowledges and understands the Units are being offered in a transaction not involving
a public offering in the United States within the meaning of the Securities Act. The Securities have not been registered under
the Securities Act and, if in the future the Subscriber decides to offer, resell, pledge or otherwise transfer the Securities,
such Securities may be offered, resold, pledged or otherwise transferred only (A) pursuant to an effective registration statement
filed under the Securities Act, (B) pursuant to an exemption from registration under Rule 144 promulgated under the Securities
Act, if available, or (C) pursuant to any other available exemption from the registration requirements of the Securities Act, and
in each case in accordance with any applicable securities laws of any state or any other jurisdiction. Notwithstanding the foregoing,
the Subscriber acknowledges and understands the Securities are subject to transfer restrictions as described in Section 8 hereof.
The Subscriber agrees that if any transfer of its Securities or any interest therein is proposed to be made, as a condition precedent
to any such transfer, the Subscriber may be required to deliver to the Company an opinion of counsel satisfactory to the Company
with respect to such transfer. Absent registration or another available exemption from registration, the Subscriber agrees it will
not resell the Securities (unless otherwise permitted pursuant to the Insider Letter, as described in the Registration Statement).
The Subscriber further acknowledges that because the Company is a shell company, Rule 144 may not be available to the Subscriber
for the resale of the Securities until the one year anniversary following consummation of the initial Business Combination of the
Company, despite technical compliance with the requirements of Rule 144 and the release or waiver of any contractual transfer restrictions.
2.5.
Sophisticated Investor.
(i)
The Subscriber is sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in
the Securities.
(ii)
The Subscriber is aware that an investment in the Securities is highly speculative and subject to substantial risks because,
among other things, the Securities are subject to transfer restrictions and have not been registered under the Securities Act and
therefore cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available.
The Subscriber is able to bear the economic risk of its investment in the Securities for an indefinite period of time.
2.6.
Independent Investigation. The Subscriber, in making the decision to purchase the Units, has relied upon an independent
investigation of the Company and has not relied upon any information or representations made by any third parties or upon any oral
or written representations or assurances from the Company, its officers, directors or employees or any other representatives or
agents of the Company, other than as set forth in this Agreement. The Subscriber is familiar with the business, operations and
financial condition of the Company and has had an opportunity to ask questions of, and receive answers from the Company’s
officers and directors concerning the Company and the terms and conditions of the offering of the Units and has had full access
to such other information concerning the Company as the Subscriber has requested. The Subscriber confirms that all documents that
it has requested have been made available and that the Subscriber has been supplied with all of the additional information concerning
this investment which the Subscriber has requested.
2.7.
Organization and Authority. The Subscriber is duly organized, validly existing and in good standing under the laws of the
State of Delaware and it possesses all requisite power and authority necessary to carry out the transactions contemplated by this
Agreement.
2.8.
Authority. This Agreement has been validly authorized, executed and delivered by the Subscriber and is a valid and binding
agreement enforceable in accordance with its terms, subject to the general principles of equity and to bankruptcy or other laws
affecting the enforcement of creditors’ rights generally.
2.9.
No Conflicts. The execution, delivery and performance of this Agreement and the consummation by the Subscriber of the transactions
contemplated hereby do not violate, conflict with or constitute a default under (i) the Subscriber’s charter documents, (ii)
any agreement or instrument to which the Subscriber is a party or (iii) any law, statute, rule or regulation to which the Subscriber
is subject, or any agreement, order, judgment or decree to which the Subscriber is subject.
2.10.
No Legal Advice from Company. The Subscriber acknowledges it has had the opportunity to review this Agreement and the transactions
contemplated by this Agreement and the other agreements entered into between the parties hereto with the Subscriber’s own
legal counsel and investment and tax advisors. Except for any statements or representations of the Company made in this Agreement
and the other agreements entered into between the parties hereto, the Subscriber is relying solely on such counsel and advisors
and not on any statements or representations of the Company or any of its representatives or agents for legal, tax or investment
advice with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction.
2.11.
Reliance on Representations and Warranties. The Subscriber understands the Units are being offered and sold to the Subscriber
in reliance on exemptions from the registration requirements under the Securities Act, and analogous provisions in the laws and
regulations of various states, and that the Company is relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of the Subscriber set forth in this Agreement in order to determine the applicability
of such provisions.
2.12.
No General Solicitation. The Subscriber is not subscribing for the Units as a result of or subsequent to any general solicitation
or general advertising, including but not limited to any advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio, or presented at any seminar or meeting or in a registration
statement with respect to the IPO filed with the Securities and Exchange Commission (“SEC”).
2.13.
Legend. The Subscriber acknowledges and agrees the certificates (if any) evidencing each of the Securities shall bear a
restrictive legend (the “Legend”), in form and substance substantially as set forth in Section 4 hereof.
3.
Representations, Warranties and Covenants of the Company
The Company
represents and warrants to, and agrees with, the Subscriber that:
3.1. Valid Issuance of Capital Stock. The total number of shares of all classes of capital stock which the Company has authority to issue is 380,000,000 shares of Class A Common Stock, 20,000,000 shares of Class B Common Stock, $0.0001 par value per share (the “Class B Common Stock”), and 1,000,000 shares of preferred stock, $0.0001 par value per share (“Preferred Stock”). As of the date hereof, the Company has issued and outstanding 6,468,750 shares of Class B Common Stock (of which up to 843,750 shares are subject to forfeiture as described in the Registration Statement), no shares of Class A Common Stock and no shares of Preferred Stock. All of the issued shares of capital stock of the Company have been duly authorized, validly issued, and are fully paid and non-assessable.
3.2.
Title to Securities. Upon issuance in accordance with, and payment pursuant to, the terms hereof and that certain warrant
agreement to be entered into between the Company and Continental, as warrant agent (the “Warrant Agreement”),
as the case may be, each of the Units, Placement Shares, Placement Warrants and Warrant Shares will be duly and validly issued,
fully paid and non-assessable. On the date of issuance of the Units, the Warrant Shares shall have been reserved for issuance.
Upon issuance in accordance with, and payment pursuant to, the terms hereof and the Warrant Agreement, as the case may be, the
Subscriber will have or receive good title to the Units, Placement Shares and Placement Warrants, free and clear of all liens,
claims and encumbrances of any kind, other than (i) transfer restrictions hereunder and pursuant to the Insider Letter and (ii)
transfer restrictions under federal and state securities laws.
3.3.
Organization and Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and has the requisite corporate power to own its properties and assets and to carry on its business
as now being conducted.
3.4.
Authorization; Enforcement. (i) The Company has the requisite corporate power and authority to enter into and perform its
obligations under this Agreement and to issue the Securities in accordance with the terms hereof, (ii) the execution, delivery
and performance of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action, and no further consent or authorization of the Company or its Board of Directors
or stockholders is required, and (iii) this Agreement constitutes valid and binding obligations of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, moratorium, reorganization, or similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by equitable principles of general application and except as enforcement of rights to indemnity and contribution
may be limited by federal and state securities laws or principles of public policy.
3.5.
No Conflicts. The execution, delivery and performance of this Agreement and the consummation by the Company of the transactions
contemplated hereby do not (i) result in a violation of the Company’s certificate of incorporation or by-laws, (ii) conflict
with, or constitute a default under any agreement or instrument to which the Company is a party or (iii) any law statute, rule
or regulation to which the Company is subject or any agreement, order, judgment or decree to which the Company is subject. Other
than any SEC or state securities filings which may be required to be made by the Company subsequent to the Closing, and any registration
statement which may be filed pursuant thereto, the Company is not required under federal, state or local law, rule or regulation
to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency or
self-regulatory entity in order for it to perform any of its obligations under this Agreement or issue the Units, Placement Shares,
Placement Warrants or Warrant Shares in accordance with the terms hereof.
4.
Legends
4.1.
Legend. The Company will issue the Units, Placement Shares and Placement Warrants, and when issued, the Warrant Shares,
purchased by the Subscriber in the name of the Subscriber. The certificates (if any) evidencing Securities will bear the following
Legend and appropriate “stop transfer” instructions:
“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR SUCH LAWS OR AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THIS CORPORATION, IS AVAILABLE.”
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO LOCKUP PURSUANT TO AN INSIDER LETTER BETWEEN, AMONG OTHERS, FG NEW AMERICA
ACQUSITION CORP. AND FG NEW AMERICA INVESTORS LLC AND MAY ONLY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED DURING
THE TERM OF THE LOCKUP PURSUANT TO THE TERMS SET FORTH IN THE INSIDER LETTER.”
4.2.
Subscriber’s Compliance. Nothing in this Section 4 shall affect in any way the Subscriber’s obligations and
agreements to comply with all applicable securities laws upon resale of the Securities.
4.3.
Company’s Refusal to Register Transfer of the Securities. The Company shall refuse to register any transfer of the
Securities, if in the sole judgment of the Company such purported transfer would not be made (i) pursuant to an effective registration
statement filed under the Securities Act, or pursuant to an available exemption from the registration requirements of the Securities
Act and (ii) in compliance herewith and with the Insider Letter.
4.4.
Registration Rights. The Subscriber will be entitled to certain registration rights which will be governed by a registration
rights agreement (“Registration Rights Agreement”) to be entered into between, among others, the Subscriber
and the Company, on or prior to the effective date of the Registration Statement.
5.
Waiver of Liquidation Distributions.
In connection
with the Securities purchased pursuant to this Agreement, the Subscriber hereby waives any and all right, title, interest or claim
of any kind in or to any distributions of the amounts in the Trust Account with respect to the Securities, whether (i) in connection
with the exercise of redemption rights if the Company consummates the Business Combination, (ii) in connection with any tender
offer conducted by the Company prior to a Business Combination, (iii) upon the Company’s redemption of shares of Common Stock
sold in the Company’s IPO upon the Company’s failure to timely complete the Business Combination or (iv) in connection
with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation (A) to
modify the substance or timing of the Company’s obligation to redeem 100% of the Company’s public shares if the Company
does not timely complete the Business Combination or (B) with respect to any other provision relating to stockholders’ rights
or pre-Business Combination activity. In the event the Subscriber purchases shares of Common Stock in the IPO or in the aftermarket,
any additional shares so purchased shall be eligible to receive the redemption value of such shares of Common Stock upon the same
terms offered to all other purchasers of Common Stock in the IPO in the event the Company fails to consummate the Business Combination.
6.
Terms of Placement Warrants. Each Placement Warrant shall have the terms set forth in the Warrant Agreement.
7.
[Reserved].
8.
Terms of the Units and Placement Warrants
8.1.
The Units and their component parts are substantially identical to the units to be offered in the IPO except that: (i) the
Units and component parts are subject to the transfer restrictions described in the Insider Letter, (ii) the Placement Warrants
will be non-redeemable if called for redemption pursuant to Section 6.1 of the Warrant Agreement so long as they are held by the
Subscriber (or any of its permitted transferees) and as otherwise provided in Section 5 herein, and may be exercisable on a “cashless”
basis if held by the Subscriber or its permitted transferees, as further described in the Warrant Agreement and (iii) the Units
and component parts 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 clause (i) and they are registered pursuant to
the Registration Rights Agreement to be signed on or before the date of the Prospectus or an exemption from registration is available.
8.2.
The Subscriber agrees to vote the Placement Shares in accordance with the terms of the Insider Letter and as otherwise described
in the Registration Statement.
9.
Governing Law; Jurisdiction; Waiver of Jury Trial
This Agreement
shall be governed by and construed in accordance with the laws of the State of New York for agreements made and to be wholly performed
within such state. THE PARTIES HERETO HEREBY WAIVE ANY RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION PURSUANT TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
10.
Assignment; Entire Agreement; Amendment
10.1.
Assignment. Neither this Agreement nor any rights hereunder may be assigned by any party to any other person other than
by the Subscriber to a person agreeing to be bound by the terms hereof, including the waiver contained in Section 5 hereof.
10.2.
Entire Agreement. This Agreement sets forth the entire agreement and understanding between the parties as to the subject
matter thereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them.
10.3.
Amendment. Except as expressly provided in this Agreement, neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by all of the parties hereto.
10.4.
Binding upon Successors. This Agreement shall be binding upon and inure to the benefit of the parties hereto and to their
respective heirs, legal representatives, successors and permitted assigns.
11.
Notices
11.1.
Notices. Unless otherwise provided herein, any notice or other communication to a party hereunder shall be sufficiently
given if in writing and personally delivered or sent by facsimile or other electronic transmission with copy sent in another manner
herein provided or sent by courier (which for all purposes of this Agreement shall include Federal Express or other recognized
overnight courier) or mailed to said party by certified mail, return receipt requested, at its address provided for herein or such
other address as either may designate for itself in such notice to the other. Communications shall be deemed to have been received
when delivered personally, on the scheduled arrival date when sent by next day or 2nd-day courier service, or if sent by facsimile
upon receipt of confirmation of transmittal or, if sent by mail, then three days after deposit in the mail. If given by electronic
transmission, such notice shall be deemed to be delivered (a) if by electronic mail, when directed to an electronic mail address
at which the stockholder has consented to receive notice; (b) if by a posting on an electronic network together with separate notice
to the stockholder of such specific posting, upon the later of (1) such posting and (2) the giving of such separate notice; and
(c) if by any other form of electronic transmission, when directed to the stockholder.
12.
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 by e-mail
delivery of a “pdf” format data file, 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 facsimile or “.pdf” signature
page were an original thereof.
13.
Survival; Severability
13.1.
Survival. The representations, warranties, covenants and agreements of the parties hereto shall survive each Closing Date.
13.2.
Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction
to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that
no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party.
14.
Headings.
The titles
and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this
Agreement.
[remainder of page intentionally left blank]
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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FG NEW AMERICA ACQUISITION CORP. |
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By: |
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Name: Larry G. Swets, Jr. |
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Title: Chief Executive Officer |
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SUBSCRIBER: |
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FG NEW AMERICA INVESTORS LLC
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By: |
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Name: Larry G. Swets Jr. |
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Title: Managing Member |
[Signature Page to Unit Purchase Agreement]
Exhibit 23.1
Consent of Independent Registered Accounting
Firm
We consent to the inclusion in this Registration
Statement of FG New America Acquisition Corp. on Form S-1 of our report dated September 28, 2020, 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 FG New America Acquisition Corp. as of July 13, 2020 and for the period from June 24, 2020 (inception) to July 13,
2020, which report appears in the Prospectus, which is part of the Registration Statement. We also consent to the reference to
our Firm under the heading “Experts” in such Prospectus.
/s/ Plante & Moran, PLLC
Plante & Moran, PLLC
Chicago, Illinois
September 28, 2020
