As filed with the Securities and Exchange Commission on October 8, 2020
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Consonance-HFW Acquisition Corp.
(Exact name of registrant as specified in its charter)
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Cayman Islands
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6770
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98-1556622
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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 No.)
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1 Palmer Square,
Suite 305, Princeton, NJ 08540
Tel: (609)-921-2333
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Gad Soffer
1 Palmer Square,
Suite 305, Princeton, NJ 08540
Tel: (609)-921-2333
(Name, address, including zip code, and telephone number, including area code, of agent for service)
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Jocelyn M. Arel
Jacqueline Mercier
Daniel J. Espinoza
Goodwin Procter LLP
100 Northern Avenue
Boston, Massachusetts 02210
Tel: (617) 570-1000
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Deanna L. Kirkpatrick
Derek J. Dostal
Roshni Banker Cariello
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, New York 10017
Tel: (212) 450-4000
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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, 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 SECURITIES TO BE 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 Class A ordinary share, $0.0001 par value, and one-third of a redeemable Warrant to acquire one Class A ordinary shares(2)
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11,500,000 units
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$ |
10.00 |
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$ |
115,000,000 |
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$ |
12,546.50 |
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Class A ordinary shares included as part of the Units(3)
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11,500,000 shares
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— |
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— |
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—(4) |
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Redeemable warrants to acquire one Class A ordinary share included as part of
the Units(3)
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3,833,333 warrants
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— |
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— |
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—(4) |
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Total
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$ |
115,000,000 |
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$ |
12,546.50 |
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(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act.
(2) Includes 1,500,000 Units, consisting of 1,500,000 Class A ordinary shares and 500,000 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(a), there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from share sub-divisions, share capitalizations or similar transactions.
(4) No fee pursuant to Rule 457(g).
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED October 8, 2020
PRELIMINARY PROSPECTUS
$100,000,000
Consonance-HFW Acquisition Corp.
10,000,000 Units
Consonance-HFW Acquisition Corp. is a newly incorporated blank check company incorporated as a Cayman Islands exempted company and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities, which we refer to as our initial business combination. We have not selected any business combination partner and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination partner.
This is the initial public offering of our securities. Each unit has an offering price of $10.00 and consists of one Class A ordinary share and one-third of one redeemable warrant. Each whole warrant entitles the holder thereof to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment, terms and limitations as described herein. The underwriters have a 45-day option from the date of this prospectus to purchase up to 1,500,000 additional units to cover over-allotments, if any.
We will provide our public shareholders with the opportunity to redeem all or a portion of their Class A ordinary shares upon the completion of our initial business combination, subject to the limitations as described herein. If we do not consummate an initial business combination within 24 months from the closing of this offering, we will redeem 100% of the public shares for cash, subject to applicable law and certain conditions as described herein.
Our sponsor, Consonance Life Sciences, has agreed to purchase 450,000 units (or 480,000 units if the underwriters’ over-allotment option is exercised in full), at a price of $10.00 per unit in a private placement to occur concurrently with the closing of this offering for an aggregate purchase price of $4,500,000 (or $4,800,000 if the over-allotment option is exercised in full) that will close simultaneously with the closing of this offering. Each private placement unit is identical to the units sold in this offering, subject to certain limited exceptions as described in this prospectus.
Our initial shareholders currently own 2,875,000 Class B ordinary shares (up to 375,000 of which are subject to forfeiture) which will automatically convert into Class A ordinary shares at the time of our initial business combination as described herein. Prior to the completion of our initial business combination, only holders of our Class B ordinary shares will be entitled to vote on the appointment of directors.
Our sponsor has indicated an interest to purchase up to an aggregate of 2,500,000 of our Class A ordinary shares (for $10.00 per share or $25,000,000 in the aggregate) in a private placement that would occur concurrently with the consummation of our initial business combination. The capital from such private placement would be used as part of the consideration to the sellers in our initial business combination, and any excess capital from such private placement would be used for working capital in the post-transaction company. However, because indications of interest are not binding agreements or commitments to purchase, our sponsor may determine not to purchase any such shares, or to purchase fewer shares than it has indicated an interest in purchasing. We are not under any obligation to sell any such shares. Such investment would be made on terms and conditions determined at the time of the business combination.
Currently, there is no public market for our securities. We intend to apply to have our units listed on the New York Stock Exchange, or the NYSE, under the symbol “CHFW.U.” We cannot guarantee that our securities will be approved for listing on the NYSE. We expect the Class A ordinary shares and warrants comprising the units to begin separate trading on the NYSE under the symbols “CHFW” and “CHFW.W,” respectively, on the 52nd day following the date of this prospectus unless J.P. Morgan Securities LLC informs us of its decision to permit earlier separate trading and we have satisfied certain conditions described herein.
We are an “emerging growth company” and “smaller reporting 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
37 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 United States (“U.S.”) Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
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PER UNIT
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TOTAL
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Public offering price
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$ |
10.00 |
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100,000,000 |
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Underwriting discounts and commissions(1)
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$ |
0.55 |
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$ |
5,500,000 |
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Proceeds, before expenses, to us
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$ |
9.45 |
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$ |
94,500,000 |
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(1) Includes $0.35 per unit, or $3,500,000 in the aggregate (or $4,025,000 in the aggregate if the underwriters’ over-allotment option is exercised in full), payable to the underwriters for deferred underwriting commissions to be placed in a trust account located in the U.S. as described herein and released to the underwriters only upon the consummation of an initial business combination. See also “Underwriting” beginning on page 165 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 units described in this prospectus, $100.0 million, or $115 million if the underwriters’ over-allotment option is exercised in full ($10.00 per unit in either case), will be deposited into a trust account located in the U.S. with Continental Stock Transfer & Trust Company acting as trustee.
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.
J.P. Morgan
, 2020
Table of contents
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Page
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1
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36
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37
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74
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75
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78
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79
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81
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87
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115
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126
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129
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131
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155
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166
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173
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173
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173
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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 neither we nor the underwriters take any 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.
SUMMARY
This summary only highlights the more detailed information appearing elsewhere in this prospectus. 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:
“Companies Law” are to the Companies Law (2020 Revision) of the Cayman Islands as the same may be amended from time to time;
“company,” “we,” “us,” “our,” or “our company” are to Consonance-HFW Acquisition Corp., a Cayman Islands exempted company;
“Consonance Capital” are to Consonance Capital Management LP, any existing and future entity in the investment advisory business to which Mitchell Blutt, Benny Soffer or Kevin Livingston provides services and any affiliates of our sponsor;
“Consonance Capital Management” are to Consonance Capital Management LP, a Delaware limited partnership;
“founders” are to Gad Soffer, our Chief Executive Officer and Kevin Livingston, our Chief Financial Officer;
“founder shares” are to our Class B ordinary shares initially issued to our sponsor in a private placement prior to this offering and the Class A ordinary shares that will be issued upon the automatic conversion of the Class B ordinary shares at the time of our initial business combination (for the avoidance of doubt, such Class A ordinary shares will not be “public shares”);
“initial shareholders” are to our sponsor and each other holder of founder shares upon the consummation of this offering;
“ordinary shares” are to our Class A ordinary shares and our Class B ordinary shares;
“our founding team” are to our executive officers and directors (including our director nominees who will become directors at the consummation of this offering);
“private placement units” are to the units sold to our sponsor in a private placement simultaneously with the closing of this offering and upon conversion of working capital loans, if any;
“public shareholders” are to the holders of our public shares, including our sponsor and founding team to the extent our sponsor and/or members of our founding team purchase public shares, provided that our sponsor’s and each member of our founding team’s status as a “public shareholder” will only exist with respect to such public shares;
“public shares” are to our Class A ordinary shares to be sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market); and
“sponsor” are to Consonance Life Sciences, a Cayman Islands exempted company.
Any forfeiture of shares described in this prospectus will take effect as a surrender of shares for no consideration of such shares as a matter of Cayman Islands law. Any conversion of the Class B ordinary shares described in this prospectus will take effect as a compulsory redemption of Class B ordinary shares and an issuance of Class A ordinary shares as a matter of Cayman Islands law. Any share dividends described in this prospectus will take effect as share capitalizations as a matter of Cayman Islands law.
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 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We were incorporated on August 21, 2020 as a Cayman exempted company and, to date, our efforts have been limited to organizational activities as well as activities related to this offering. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. We have generated no operating revenues to date and we do not expect to generate operating revenues until we consummate our initial business combination.
While we may pursue an acquisition opportunity in any business, industry, sector or geographical location, we intend to capitalize on our management team’s background to identify and acquire a business in the life sciences industry. In particular, we will target companies in the biotechnology sector where our management team has extensive experience with a focus on identifying target businesses in developed countries including, but not limited to, the United States and countries in Europe. We may pursue a transaction in which our shareholders immediately prior to the completion of our initial business combination would collectively own a minority interest in the post-business combination company.
Our Founders
Our sponsor, Consonance Life Sciences, combines life sciences and biotechnology investing expertise and market knowledge with industry-based business development, transactional and operational experience. Consonance Life Sciences was formed by the founders of Consonance Capital Management, a leading healthcare-dedicated hedge fund manager, and then partnered with a dedicated team of biotechnology industry professionals with extensive experience identifying attractive and unique acquisition opportunities. Our management team and Board of Directors have significant, meaningful experience as executives, clinicians, project leaders, corporate strategists and business development heads within public and private biotechnology companies. Our Chairman, Mitchell Blutt, is the Founder and Chief Executive Officer, or CEO, of Consonance Capital and Founder, CEO and Chairman of the Investment Committee of Consonance Capital Management, the hedge fund business of Consonance Capital, and a Co-Managing Partner and Co-Founder of Consonance Capital Partners, the private equity business of Consonance Capital, collectively referred to as Consonance Capital. Our CEO, Gad Soffer, is a life sciences and biotechnology industry-experienced business development and operating professional who has held a number of leadership positions at both early-clinical stage and commercial biopharmaceutical companies. Our Chief Financial Officer, or CFO, Kevin Livingston, is a Co-Founder, Partner, and Member of the Investment Committee of Consonance Capital Management. Benny Soffer, a member of our sponsor and Board of Directors, is a Co-Founder, Partner, Chief Investment Officer, or CIO, Portfolio Manager, and Member of the Investment Committee of Consonance Capital Management. We believe the combination of our investment, business development and operational backgrounds will enable us to identify promising acquisition opportunities and also add substantial value to a target business beyond the initial business combination.
Consonance Capital Management was founded in 2007 with approximately $50 million of assets under management by Mitchell Blutt, Benny Soffer and Kevin Livingston. As of September 1, 2020, the fund has grown to over $1 billion in assets under management and focuses on equity investments in publicly-traded life sciences companies, with an emphasis on small and mid-cap life sciences companies. The founding team of Consonance Capital Management brings significant investment and transactional experience with clinical medical expertise, which we believe will provide a significant advantage as we seek to identify, evaluate and acquire a private company in the life sciences and biotechnology industry. Our team of operating professionals and Board of Directors combine wide therapeutic area experience covering hematology, oncology, autoimmunity, inflammatory diseases, and rare diseases; a strong drug development track record with numerous regulatory filings in the United States and the European Union including Investigational New Drug, or IND, applications, Breakthrough Therapy applications, New Drug Applications, or NDA, and Marketing Authorisation Applications, or MAAs; extensive operating experience spanning different therapeutic modalities including small molecules,
biologics, as well as cell therapy; and leadership in the areas of strategic prioritization of external opportunities, diversification and growth through business development, product life cycle management, public and private financings, mergers and acquisitions, scientific, translational, clinical, and regulatory strategy, and manufacturing.
Our sponsor has indicated an interest to purchase up to an aggregate of 2,500,000 of our Class A ordinary shares (for $10.00 per share or $25,000,000 in the aggregate) in a private placement that would occur concurrently with the consummation of our initial business combination. The capital from such private placement would be used as part of the consideration to the sellers in our initial business combination, and any excess capital from such private placement would be used for working capital in the post-transaction company. However, because indications of interest are not binding agreements or commitments to purchase, our sponsor may determine not to purchase any such shares, or to purchase fewer shares than it has indicated an interest in purchasing. We are not under any obligation to sell any such shares. Such investment would be made on terms and conditions determined at the time of the business combination.
Our officers, directors and director nominees
Dr. Mitchell Blutt, M.D., our Chairman, is the founder and CEO of Consonance Capital, founder, CEO and Chairman of the Investment Committee of Consonance Capital Management, and a Co-Managing Partner and co-founder of Consonance Capital Partners. Prior to founding Consonance Capital Management in 2007, he was Executive Partner at JP Morgan Partners, or JPMP, from 1992 until 2004. In addition to his general management responsibilities across JPMP, Dr. Blutt founded and led JPMP’s healthcare group for nearly 18 years, including its private equity and venture capital platforms. He was one of the earliest employees at Chemical Venture Partners, the predecessor to JPMP, joining in 1987. Dr. Blutt currently sits on the board of directors of the Commonwealth Fund, a health policy research foundation. He is also on the Board of Overseers of the University of Pennsylvania School of Arts and Sciences as well as the Wharton School. Dr. Blutt currently serves or formerly served on 38 healthcare corporate boards of directors including numerous public and venture stage company boards of directors. He also formerly served on the board of directors of the Michael J. Fox Foundation for Parkinson’s Research, the board of trustees of Penn Medicine (the University of Pennsylvania Health System), the board of trustees of the University of Pennsylvania, and the board of directors of The Brearley School. Dr. Blutt is a Clinical Assistant Professor of Medicine, in the Department of Medicine at Weill Cornell Medical College. He is on the New York Weill Cornell Council and the Dean’s Council of the Weil Cornell Medical College as well as the board of overseers of Weill Cornell Medical College. Dr. Blutt holds BA and MD degrees from the University of Pennsylvania. He received his MBA from the Wharton School of the University of Pennsylvania through the Clinical Scholars Fellowship sponsored by the Robert Wood Johnson Foundation. He completed his medical residency at the New York Presbyterian Hospital/Weill Cornell Medical College.
Gad Soffer, our CEO, was previously Chief Operating Officer, or COO, at Rheos Medicines, Inc., a Third Rock Ventures-funded startup launched in 2018. Prior to joining Rheos, Mr. Soffer was part of the founding team at Atara Biotherapeutics, a Kleiner, Perkins, Caufield & Byers, Domain Associates-funded startup where he served initially as COO and then Chief Strategy Officer, or CSO. At Atara, Mr. Soffer led the strategic evaluation and in-licensing of the company’s allogeneic T cell therapy platform as well as the subsequent identification and licensing of technologies leading to the development of its off-the-shelf CAR-T programs. Prior to joining Atara, Mr. Soffer worked at Celgene Corporation as Executive Director and Global Project Leader where he led the team responsible for product development and lifecycle management for Abraxane, a breast, lung, and pancreatic cancer treatment also in development for a variety of solid tumors. He also served as Director of Business Development at Celgene where he drove and supported numerous business development transactions including its strategic collaboration with Agios Pharmaceuticals and the acquisition of Abraxis Biosciences while advising on venture investment and strategic partnerships. Earlier, Mr. Soffer was a healthcare consultant with Easton Associates. He earned an MBA from Harvard Business School, an MS from Columbia University and an AB from Harvard University.
Kevin Livingston, our CFO, is a Co-Founder, Partner, and Member of the Investment Committee of Consonance Capital Management. Prior to joining Consonance Capital Management, Mr. Livingston was a Managing Director in
the Investment Management Division at U.S. Trust Company of New York. At U.S. Trust, Mr. Livingston managed client capital in discretionary multi-manager portfolios, and was a Member of the Open Architecture Investment Committee. Mr. Livingston currently serves on the board of directors of DC Safety. He is a trustee of Alfred University and serves as the Chair of the Investment Committee. Mr. Livingston is a Certified Public Accountant and a graduate of Alfred University, where he received his BS. He also received his Executive MBA from Columbia Business School.
Dr. Benny Soffer, M.D., has agreed to serve on our Board of Directors following the completion of this offering. Dr. Soffer is a Co-Founder, Partner, CIO, Portfolio Manager, and Member of the Investment Committee of Consonance Capital Management. Prior to joining Consonance Capital Management, Dr. Soffer completed a residency in internal medicine at Yale School of Medicine and served in a variety of managerial roles at Yale New Haven Hospital, including as Medical Director of Clinical Process Improvement and as Interim Medical Director of Medical Information Systems. Dr. Soffer is a Clinical Assistant Professor of Medicine, in the Department of Medicine at Weill Cornell Medical College. He is also a member of the Scientific Advisory Committee of Daedalus Fund for Innovation. Dr. Soffer is a graduate of Williams College, where he received his BA, of Emory University, where he received his MD, and of Yale University, where he received his MBA.
Joshua House serves as our VP Business Development. Mr. House joined Consonance Life Sciences Management in September 2020 where he currently serves as Vice President. Between November 2018 and September 2020, Mr. House held the role of Senior Director, Business Development and Corporate Strategy at Atara Biotherapeutics, where he was responsible for business development, in-licensing and corporate strategic activities. Between April 2017 and November 2018 he held the role of Director of Corporate Strategy at Atara Biotherapeutics. Prior to joining Atara, Mr. House was an Investment Banking Vice President at Citigroup in San Francisco, where he executed capital markets and M&A transactions for clients in the biotechnology sector. Mr. House earned a JD and MBA from Columbia University, and a BA in Public Policy from Stanford University.
Donald J. Santel has agreed to serve on our Board of Directors following the completion of this offering. Mr. Santel served as Executive Chairman of Adicet Bio, Inc., a private allogeneic cell therapy oncology company, from October 2017 through its reverse merger with resTORbio, Inc. in September 2020. From March 2018 through April 2019, Mr. Santel also served as Adicet Bio’s interim Chief Executive Officer. He previously served as Chief Executive Officer of Hyperion Therapeutics (Nasdaq GM: HPTX) from June 2008 until the sale of the company to Horizon Pharma (Nasdaq GM: HZNP) for $1.1B in May 2015. He led Hyperion from a development stage private company through the approval and commercial launch of Ravicti® for the treatment of urea cycle disorders. Mr. Santel was a member of Hyperion’s board of directors from March 2007 through the company’s sale. Previously, Mr. Santel was a co-founder, member of the board of directors and the Chief Executive Officer of CoTherix, Inc., (Nasdaq GM: CTRX) from January 2000 through its sale to Actelion for $419M in January 2007. He led CoTherix from a development stage private company, through the approval and commercial launch of Ventavis® for the treatment of pulmonary arterial hypertension. Prior to joining CoTherix, Mr. Santel was employed by several medical device companies, including Cardiac Pathways Corporation (acquired by Boston Scientific) and Medtronic, Inc. Mr . Santel previously served on the board of directors and the audit and compensation committees of Anthera Pharmaceuticals, Inc. and as a director of ChemGenex Pharmaceuticals, Inc. Mr. Santel holds an MS in electrical engineering from the University of Minnesota and a BSE in biomedical engineering from Purdue University.
Dr. Christopher Haqq, M.D., Ph.D., has agreed to serve on our Board of Directors following the completion of this offering. Dr. Haqq brings over 20 years of drug development leadership across large and small biotechnology companies and across cell therapy, small molecule and biologics in large and small biotech settings. Dr. Haqq joined Elicio Therapeutics as Executive Vice President, Head of Research and Development and Chief Medical Officer, or CMO, in October 2019. He was the first employee and CMO of Atara Biotherapeutics, and later CSO, where he was the architect of an innovative allogeneic T cell product candidate pipeline for oncology and autoimmune disease, and led the design of next-generation off-the-shelf CAR T cells for solid tumors. Earlier at Cougar Biotechnology and Janssen, he was the lead clinician for a pivotal prostate cancer study leading to market approval for Zytiga® (abiraterone acetate). At Amgen, he led early development studies of the anti-insulin like growth
factor type 1 receptor AMG 479 (ganitumab) antibody. Dr. Haqq has worked closely with the US Food and Drug Administration, or the FDA, and other global regulatory agencies. He has filed successful applications for INDs, breakthrough therapies, priority medicines, special protocol assessments and their international equivalents, and marketing approvals. Dr. Haqq initially practiced as a medical oncologist and led a translational science laboratory as an Assistant Professor in the Division of Hematology/Oncology at the University of California, San Francisco following his post-graduate training as an Intern and Resident in Internal Medicine, Fellow in Medical Oncology and Fellow in Molecular Medicine. Dr. Haqq completed his MD and PhD in Genetics at Harvard Medical School and his undergraduate training at Stanford University and the University of British Columbia.
Jennifer Jarrett has agreed to serve on our Board of Directors following the completion of this offering. Ms. Jarrett currently serves as Chief Operating Officer at Arcus Biosciences, Inc. (NYSE: RCUS) where she is responsible for Arcus’s commercial and general and administrative organizations, including finance and human resources. Ms. Jarrett previously served as the Vice President of Corporate Development and Capital Markets at Uber Technologies, Inc. (NYSE: UBER) from January 2019 to September 2020. Prior to Uber, Ms. Jarrett served as the Chief Financial Officer and Chief Operating Officer of Arcus Biosciences, Inc. from March 2017 to January 2019. From March 2016 to October 2016, Ms. Jarrett served as the Chief Financial Officer of Medivation, Inc. until it was acquired by Pfizer Inc. (NYSE: PFE). Ms. Jarrett brings over 20 years of experience in biotechnology investment banking, including her experience as managing director and head of West Coast Life Sciences Investment Banking at Citigroup and managing director and head of U.S. Biotechnology Investment Banking at Credit Suisse. Ms. Jarrett currently serves on the board of directors of Arena Pharmaceuticals, Inc. (NASDAQ: ARNA), Syndax Pharmaceuticals, Inc. (NASDAQ: SNDX) and Arcus Biosciences. Ms. Jarrett is a graduate of Dartmouth College, where she received her BA in economics, and Stanford University, where she received her MBA.
We believe our Board of Directors and management team are well positioned to take advantage of the growing set of investment opportunities focused on the biotechnology sector, and that our contacts, relationships and investment and operating experience will allow us to generate an attractive transaction for our shareholders.
Industry Opportunity
While we may acquire a company in any industry, our focus will be on the healthcare industry, particularly the biotechnology sector, in developed countries including, but not limited to, the United States and countries in Europe. We believe the healthcare industry, particularly the biotechnology sector, represents an enormous and growing target market with a large number of potential target acquisition opportunities. Moreover, we believe that biotechnology companies have unique characteristics that make them attractive public company investment opportunities, and that an acquisition by a special purpose acquisition company may prove to be a superior way for a private company to access the public markets.
According to the United States Centers for Medicare and Medicaid Service, or CMS, U.S. national healthcare expenditures in 2018 exceeded $3.6 trillion, representing approximately 18% of total U.S. gross domestic product. CMS projected national healthcare expenditures to grow at an average rate of 5.5% annually between 2018 and 2027, above the projected growth rate for the overall U.S. economy, and that by 2027 national healthcare expenditures may reach $6.0 trillion. As of 2018, spending on prescription drugs represented approximately 10% of national healthcare expenditures.
Accompanying the overall growth of the healthcare industry in the United States has been a shift in the research and development strategies pursued by many large pharmaceutical companies in the United States and Europe, away from internal activities and towards external research and development through licensing partnerships and strategic acquisitions. According to EvaluatePharma, between 2012 and 2019 the dollar volume of up-front payments made in biopharma licensing transactions grew from approximately $3.5 billion to $8 billion, and the dollar volume of acquisition transactions grew from approximately $60 billion to over $200 billion.
Moreover, the biotechnology industry has undergone a rapid increase in the pace of innovation over the past 10 years, which can be measured by the number of FDA approvals of novel drugs, defined as drugs containing an active ingredient that has never been approved in the United States. In 2019, the FDA approved 48 novel drugs
versus 21 in 2010. We believe the accelerating pace of approvals reflects scientific breakthroughs in computing, genetics, translational medicine and an increase in our understanding of the biological basis of disease, as well as from a more accommodative regulatory environment offering multiple accelerated pathways for drug approval. We believe that the biotechnology industry will continue to be one of the most innovative sectors of the U.S. economy, providing ample opportunities to acquire a private company that will fit our acquisition criteria as described below.
Separate and apart from the industry dynamics described above, we believe pre-commercial biotechnology companies represent attractive investment opportunities. The scientific and clinical risk embedded in these companies is relatively uncorrelated with dynamics in the broader economy, making them potential sources of uncorrelated investment returns. In addition, we believe that the ongoing global COVID-19 pandemic and subsequent performance of the biotechnology industry highlights both the importance and resilience of this innovative industry. Investing in pre-commercial biotechnology companies benefits from specialized training, knowledge, and experience and many dedicated healthcare investors possess advanced degrees in medicine or science. We believe this creates barriers to entry to investing in these companies, creating an opportunity for us to acquire an attractive private company.
Finally, we believe an acquisition by a special purpose acquisition company may become a preferred route for a private company to access the public markets. According to the Biotechnology Innovation Organization, or BIO, the number of pre-commercial biotechnology companies completing an initial public offering, or IPO, in the United States grew from 11 companies in 2010 to 41 companies in 2019. Embedded in this overall trend, however, is significant volatility: for example, there were 55 IPOs of pre-commercial biotechnology companies in 2014, which fell to 22 in 2016. This volatility makes accessing the public markets via a traditional IPO subject to significant uncertainty that is not present when accessing the public markets via an acquisition by a special purpose acquisition company. We believe there other are factors increasing the attractiveness of an acquisition by a special purpose acquisition vehicle versus a traditional IPO, including a potentially faster overall timeline to accessing the public markets, and the ability to combine pre-IPO private financing rounds, now commonly referred to as “crossovers,” and an IPO into a single transaction consisting of an acquisition and concurrent private placement.
Our Competitive Advantage, Investment Process, and Investment Criteria
We believe our management team and Board of Directors possess an attractive combination of operational, transactional and investment experience that offers us a significant potential advantage as we seek to identify, evaluate and acquire a private company in the life sciences and biotechnology industry. We believe this experience, combined with our relationship with the team at Consonance Capital Management, make us a preferred counterparty for a private company seeking to access the public markets. In addition, we believe that the combination of investing expertise, both in the public and private markets, and industry operating experience in both public and private biotechnology companies has the potential to add value to a target business beyond the initial business combination.
We believe our management team and Board of Directors are differentiated among other special purpose acquisition vehicles focused on the healthcare or biotechnology industry. Certain members of our management team will be dedicated full-time to the process of identifying, evaluating and negotiating with an acquisition target for our initial business combination. Our management team and Board of Directors have significant, meaningful experience as executives, clinicians, project leaders, corporate strategists and business development heads within public and private biotechnology companies. We have led the preparation and filing of multiple INDs, NDAs and Biologics License Applications, or BLAs, utilizing both regular and accelerated pathways. We have executed in- and out-licensing, M&A and capital markets transactions totaling well in excess of $10 billion, both in leadership roles at life sciences and biotechnology companies and investment banks. Our management team and Board of Directors have broad and deep relationships in the life sciences and biotechnology ecosystem, including with venture capitalists, public investors, private and public company executives, academics and key opinion leaders, investment bankers and lawyers which we expect to leverage to identify and evaluate potential acquisition
opportunities. Our team’s investment experience spans the public, venture capital, and private equity markets in healthcare and life sciences.
Given our significant operating experience, we believe our management team and Board of Directors are well positioned to both oversee detailed due diligence of a potential acquisition and contribute meaningfully to such company after the closing of our initial business combination. With regard to due diligence, our management team is intimately familiar with the details of drug development and will be able to critically evaluate a target company’s pre-clinical and clinical data, non-clinical and clinical development plans, manufacturing and operating plans and regulatory filings. After we complete our initial business combination, we believe that we can offer significant insight and guidance to the company on business development and financial strategy, operations, portfolio and pipeline prioritization, investor relations and communications and assist with the identification and recruitment of key members to the executive and functional leadership team. We believe this has the potential to make us an attractive partner for certain companies considering accessing the public markets.
We expect to combine this extensive operating experience with our significant investment management experience, giving us a multi-faceted perspective on which companies are likely to make a successful transition to becoming publicly traded. Our target identification and evaluation process is centered on five key areas: a defined investment universe with a life sciences and biotechnology focus; systematic idea generation both internally and through our network; conduct of fundamental research and due diligence informed by our real-world operating experience; a formal investment committee review; and finally transaction execution. We intend to use the following criteria to evaluate investment opportunities:
•
Multiple “shots on goal”. Prioritizing targets with multiple clinical and or pre-clinical product candidates in its pipeline, diversifying risk away from a single asset and providing multiple potential catalysts for value creation, business development or financing activities once public.
•
Validated science. Existing clinical or preclinical data, whether or not generated by the target company, suggesting a validated biologic or mechanistic rationale for the most advanced product candidates in its pipeline.
•
High unmet need. Pre-clinical or clinical development programs designed to address significant challenges in areas of high unmet need where opportunities exist for accelerated clinical development and registration due to the paucity of existing treatments or the limited safety or efficacy of current treatments.
•
Asymmetric risk/reward. Companies with a valuation at acquisition suggesting an attractive risk/reward profile for investors.
•
Management track record. Management team with significant scientific, clinical, and operational expertise, with a track record of drug development giving us confidence that they can execute against stated timelines.
•
Company would benefit from becoming a public company. Company would be funded well beyond significant value inflection points once our transaction is complete, and would benefit from our experience and network to bring value to patients and shareholders.
These criteria are not meant 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 criteria as well as other considerations, factors, criteria and guidelines that our management may deem relevant.
Initial Business Combination
NYSE rules and our amended and restated memorandum and articles of association require that our initial business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the trust account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount of any deferred underwriting discount). We refer to this as the 80% net assets test. If our board of directors is not able to independently determine the fair market value of the partner business or businesses or we are considering an initial business combination with an affiliated entity, we will obtain an opinion from an independent investment banking firm which is a member of the Financial Industry Regulatory Authority, Inc., or FINRA, or an independent valuation or accounting firm with
respect to the satisfaction of such criteria. Our shareholders may not be provided with a copy of such opinion nor will they be able to rely on such opinion.
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 a partner business or businesses, it may be unable to do so if the board of directors is less familiar or experienced with the partner company’s business, there is a significant amount of uncertainty as to the value of the company’s assets or prospects, including if such company is at an early stage of development, operations or growth, or if the anticipated transaction involves a complex financial analysis or other specialized skills and the board of directors determines that outside expertise would be helpful or necessary in conducting such analysis. Since any opinion, if obtained, would merely state that the fair market value of the partner business meets the 80% of net assets test, unless such opinion includes material information regarding the valuation of a partner business or the consideration to be provided, it is not anticipated that copies of such opinion would be distributed to our shareholders. However, if required under applicable law, any proxy statement that we deliver to shareholders and file with the SEC in connection with a proposed transaction will include such opinion.
We may pursue an initial business combination opportunity jointly with our sponsor, Consonance Life Sciences, or one or more affiliates of and/or investors in Consonance Capital, which we refer to as an “Affiliated Joint Acquisition”. Any such parties may co-invest with us in the partner business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by issuing to such parties a class of equity or equity-linked securities. Any such issuance of equity or equity-linked securities would, on a fully diluted basis, reduce the percentage ownership of our then-existing shareholders. Notwithstanding the foregoing, pursuant to the anti-dilution provisions of our Class B ordinary shares, issuances or deemed issuances of Class A ordinary shares or equity-linked securities (other than the forward purchase securities) would result in an adjustment to the ratio at which Class B ordinary shares shall convert into Class A ordinary such that our sponsor and its permitted transferees, if any, would retain its aggregate percentage ownership at 20%, on an as-converted basis, of the sum of (i) the total number of ordinary shares issued and outstanding upon the consummation of this offering, plus (ii) the sum of the total number of Class A ordinary shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities (as defined herein) or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial business combination (net of any redemptions of Class A ordinary shares by public shareholders), excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, deemed issued, or to be issued, to any seller in the initial business combination and any private placement units issued to our sponsor, members of our founding team or any of their affiliates upon conversion of working capital loans, unless the holders of a majority of the then outstanding Class B ordinary agree to waive such adjustment with respect to such issuance or deemed issuance at the time thereof. In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one-to-one. Neither our sponsor nor Consonance Capital Management nor any of their respective affiliates, have an obligation to make any such investment.
We anticipate structuring our initial business combination so that the post-business combination company in which our public shareholders own shares will own or acquire 100% of the equity interests or assets of the partner business or businesses. We may, however, structure our initial business combination such that the post-business combination company owns or acquires less than 100% of such interests or assets of the partner business in order to meet certain objectives of the partner management team or shareholders or for other reasons including an Affiliated Joint Acquisition, as described above, but we will only complete such business combination if the post-business combination company owns or acquires 50% or more of the outstanding voting securities of the partner or otherwise acquires a controlling interest in the partner business 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-business combination company owns or acquires 50% or more of the voting securities of the partner, our shareholders prior to the business combination may collectively own a minority interest in the post-business combination company, depending on valuations ascribed to the partner 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, shares or other equity interests of a partner. In this case, we would acquire a 100% controlling interest in the partner. However, as a result of the issuance of a
substantial number of new shares, our shareholders immediately prior to the completion of 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 partner business or businesses are owned or acquired by the post-business combination company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If the business combination involves more than one partner business, the 80% of net assets test will be based on the aggregate value of all of the partner businesses and we will treat the partner businesses together as the initial business combination for purposes of a tender offer or for seeking shareholder approval, as applicable.
Our sponsor has indicated an interest to purchase up to an aggregate of 2,500,000 of our Class A ordinary shares (for $10.00 per share or $25,000,000 in the aggregate) in a private placement that would occur concurrently with the consummation of our initial business combination. The capital from such private placement would be used as part of the consideration to the sellers in our initial business combination, and any excess capital from such private placement would be used for working capital in the post-transaction company. However, because indications of interest are not binding agreements or commitments to purchase, our sponsor may determine not to purchase any such shares, or to purchase fewer shares than it has indicated an interest in purchasing. We are not under any obligation to sell any such shares. Such investment would be made on terms and conditions determined at the time of the business combination. If we sell shares to our sponsor (or any other investor) in connection with our initial business combination, the equity interest of investors in this offering in the combined company may be diluted and the market prices for our securities may be adversely affected. In addition, if the per share trading price of our Class A ordinary shares is greater than the price per share paid in the private placement, the private placement will result in value dilution to you, in addition to the immediate dilution that you will experience in connection with the consummation of this offering. See “Dilution.”
Sourcing of Potential Initial Business Combination Targets
Certain members of our management team have spent significant portions of their careers working with businesses in the healthcare industry, and have developed a wide network of professional services contacts and business relationships in that industry. The members of our board of directors also have significant executive management and public company experience with healthcare and healthcare-related companies. We believe that the network of contacts and relationships of our management team will provide us with an important source of acquisition opportunities. In addition, we anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including private investment funds, investment market participants, private equity groups, investment banks, consultants, accounting firms and large business enterprises. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings. These sources may also introduce us, on an unsolicited basis, to target businesses in which they think we may be interested, since many of these sources will have read this prospectus and know what types of businesses we are targeting. Our officers and directors, as well as their affiliates, may also bring to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions. In addition, we expect to receive a number of proprietary opportunities that would not otherwise necessarily be available to us as a result of the track record and business relationships of our officers and directors.
As more fully discussed in “Management—Conflicts of Interest,” if any of our executive officers becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us. In addition, certain of our executive officers currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us.
Other Considerations
We are not prohibited from pursuing an initial business combination or subsequent transaction with a company that is affiliated with Consonance Capital, our sponsor, founders, officers or directors. In the event we seek to
complete our initial business combination with a company that is affiliated with Consonance Capital, our sponsor or any of our founders, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent valuation or accounting firm that such initial business combination or transaction is fair to our company from a financial point of view.
Affiliates of Consonance Capital Management and members of our board of directors will directly or indirectly own founder shares and private placement units following this offering and, accordingly, may have a conflict of interest in determining whether a particular partner 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 or directors were to be included by a partner business as a condition to any agreement with respect to our initial business combination.
We currently do not have any specific business combination under consideration. Our officers and directors have neither individually selected nor considered a partner business nor have they had any substantive discussions regarding possible partner businesses among themselves or with our underwriters or other advisors. Consonance Capital is continuously made aware of potential business opportunities, one or more of which we may desire to pursue for a business combination, but we have not (nor has anyone on our behalf) contacted any prospective partner business or had any substantive discussions, formal or otherwise, with respect to a business combination transaction with our company. We have not (nor have any of our agents or affiliates) been approached by any candidates (or representative of any candidates) with respect to a possible acquisition transaction with our company and we will not consider a business combination with any company that has already been identified to Consonance Capital as a suitable acquisition candidate for it, unless Consonance Capital, in its sole discretion, declines such potential business combination or makes available to our company a co-investment opportunity in accordance with Consonance Capital’s applicable existing and future policies and procedures. Additionally, we have not, nor has anyone on our behalf, taken any substantive measure, directly or indirectly, to select or locate any suitable acquisition candidate for us, nor have we engaged or retained any agent or other representative to select or locate any such acquisition candidate.
Consonance Capital may manage multiple investment vehicles and raise additional funds and/or successor funds in the future, which may be during the period in which we are seeking our initial business combination. These Consonance Capital investment entities may be seeking acquisition opportunities and related financing at any time. We may compete with any one or more of them on any given acquisition opportunity.
In addition, certain of our founders, officers and directors presently have, and any of them in the future may have additional, fiduciary and contractual duties to other entities, including without limitation, investment funds, accounts, co-investment vehicles and other entities managed by affiliates of Consonance Capital and certain companies in which Consonance Capital or such entities have invested. As a result, if any of our founders, officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he, she or it has then-current fiduciary or contractual obligations (including, without limitation, any Consonance Capital funds or other investment vehicles), then, subject to their fiduciary duties under applicable law, he or she will need to honor such fiduciary or contractual obligations to present such business combination opportunity to such entity, before we can pursue such opportunity. If these funds or investment entities decide to pursue any such opportunity, we may be precluded from pursuing the same. In addition, investment ideas generated within or presented to Consonance Capital or our founders may be suitable for both us and a current or future Consonance Capital fund, portfolio company or other investment entity and, subject to applicable fiduciary duties, will first be directed to such fund, portfolio company or other entity before being directed, if at all, to us. None of Consonance Capital, our founders or any members of our board of directors who are also employed by Consonance Capital or their affiliates have any obligation to present us with any opportunity for a potential business combination of which they become aware solely in their capacities as officers or executives of Consonance Capital.
In addition, our founders, certain 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 management time among various business activities, including identifying potential business combinations and monitoring the related due diligence. Moreover, our founders, certain officers and directors have, and will have in the future, time and attention requirements for current and future investment funds, accounts, co-investment vehicles and other entities managed by Consonance Capital. To the extent any conflict of interest arises between, on the one hand, us and, on the other hand, investments funds, accounts, co-investment vehicles and other entities managed by Consonance Capital (including, without limitation, arising as a result of certain of our founders, officers and directors being required to offer acquisition opportunities to such investment funds, accounts, co-investment vehicles and other entities), Consonance Capital and their affiliates will resolve such conflicts of interest in their sole discretion in accordance with their then existing fiduciary, contractual and other duties and there can be no assurance that such conflict of interest will be resolved in our favor.
Corporate Information
Our executive offices are located at 1 Palmer Square, Suite 305, Princeton, NJ 08540. We maintain a corporate website at . The information contained on or accessible through our corporate website or any other website that we may maintain is not part of this prospectus or the registration statement of which this prospectus is a part.
We are a Cayman Islands exempted company. Exempted companies are Cayman Islands companies conducting business mainly outside the Cayman Islands and, as such, are exempted from complying with certain provisions of the Companies Law. As an exempted company, we have applied for and received a tax exemption undertaking from the Cayman Islands government that, in accordance with Section 6 of the Tax Concessions Law (2018 Revision) of the Cayman Islands, for a period of 20 years from the date of the undertaking, no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations will apply to us or our operations and, in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax will be payable (i) on or in respect of our shares, debentures or other obligations or (ii) by way of the withholding in whole or in part of a payment of dividend or other distribution of income or capital by us to our shareholders or a payment of principal or interest or other sums due under a debenture or other obligation of us.
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or 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 shareholder 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 ordinary shares that are 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 during the prior three-year period. References herein to “emerging growth company” 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 ordinary shares held by non-affiliates equal to or exceeds $250 million as of the prior June 30, and (2) our annual revenues equaled or exceeded $100 million during such completed fiscal year and the market value of our ordinary shares held by non-affiliates equals or exceeds $700 million as of the prior June 30.
THE OFFERING
In deciding whether to invest in our securities, you should take into account not only the backgrounds of the members of our founding 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” of this prospectus.
10,000,000 units (or 11,500,000 units if the underwriters’ over-allotment option is exercised in full), at $10.00 per unit, each unit consisting of:
•
one Class A ordinary share; and
•
one-third of one redeemable warrant.
Units: “CHFW.U”
Class A ordinary shares: “CHFW”
Warrants: “CHFW.W”
Trading commencement and separation of Class A ordinary shares and warrants
The units are expected to begin trading on or promptly after the date of this prospectus. The Class A ordinary shares and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless J.P. Morgan Securities LLC informs us of its 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 Class A ordinary shares 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 ordinary shares 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 three units, you will not be able to receive or trade a whole warrant.
Additionally, the units will automatically separate into their component parts and will not be traded after completion of our initial business combination.
Separate trading of the Class A ordinary shares and warrants is prohibited until we have filed a Current Report on
Form 8-K
In no event will the Class A ordinary shares 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. 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 to be sold in a private placement simultaneously with this offering
450,000(1)
Number outstanding after this offering
10,000,000(1)
Number to be outstanding after this offering and the private placement
10,450,000(1)
Ordinary shares:
Number outstanding before this
offering
2,500,000(2)(3)
Number outstanding after this offering
12,950,000(1)(2)(3)(4)
Warrants:
Number outstanding before this
offering
0
Number to be outstanding after this offering and the private placement
3,483,333(1)(5)
Each whole warrant sold in this offering is exercisable to purchase one Class A ordinary share, subject to adjustment as described herein. Only whole warrants are exercisable.
We structured each unit to contain one-third of one redeemable warrant, with each whole warrant exercisable for one Class A ordinary share, as compared to units issued by some other similar blank check companies which contain whole warrants exercisable for one whole share, in order 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 partner businesses.
(1) Assumes no exercise of the underwriters’ over-allotment option.
(2) Founder shares are currently classified as Class B ordinary shares, which shares will automatically convert into Class A ordinary shares at the time of our initial business combination as described below adjacent to the caption “Founder shares conversion and anti-dilution rights” and in our amended and restated memorandum and articles of association.
(3) Does not include up to 375,000 founder shares that are currently outstanding and subject to forfeiture in the underwriters’ over-allotment option is not exercised.
(4) Includes 10,000,000 public shares, 450,000 shares underlying the private placement units and 2,500,000 founder shares, assuming 375,000 founder shares have been forfeited.
(5) Includes 3,333,333 public warrants included in the units sold in this offering and 150,000 private placement warrants underlying the private placement units to be sold in the private placement.
$11.50 per whole share, subject to adjustments as described herein. In addition, if (x) we issue additional Class A ordinary shares 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 Class A ordinary share (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 sponsor or its affiliates, without taking into account any founder shares held by our sponsor or such affiliates, as applicable, prior to such issuance), or 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 ordinary shares 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 $10.00 and $18.00 per share redemption trigger prices described below under “Redemption of warrants for Class A ordinary shares when the price per Class A ordinary share equals or exceeds $10.00” and “Redemption of warrants for cash when the price per Class A ordinary share equals or exceeds $18.00” will be adjusted (to the nearest cent) to be equal to 100% and 180% of the higher of the Market Value and the Newly Issued Price, respectively.
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 Class A ordinary shares 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 Class A ordinary shares issuable upon exercise of the warrants at this time. However, we have
agreed that as soon as practicable, but in no event later than 20 business days after the closing of our initial business combination, we will use our commercially reasonable efforts to file with the SEC a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants, and we will use our commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of our initial business combination, and to maintain the effectiveness of such registration statement and a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed, as specified in the warrant agreement; provided that if our Class A ordinary shares 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. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the 60th day after the closing of the 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, but 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 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.
Redemption of warrants for cash when the price per Class A ordinary share equals or exceeds $18.00
Once the warrants become exercisable, we may redeem the outstanding warrants (except as described herein with respect to the private placement warrants):
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in whole and not in part;
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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 last reported sales price (the “closing price”) of our Class A ordinary shares equals or exceeds
$18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) 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 (the “Reference Value”).
We will not redeem the warrants as described above unless an effective registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the warrants is effective and a current prospectus relating to those Class A ordinary shares is available throughout the 30-day redemption period.
Any such exercise would not be on a “cashless” basis and would require the exercising warrant holder to pay the exercise price for each warrant being exercised.
Redemption of warrants for Class A ordinary shares when the price per Class A ordinary share equals or
exceeds $10.00
After the warrants become exercisable, we may redeem the outstanding warrants:
•
in whole and not in part;
•
at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to the table set forth under “Description of Securities—Warrants—Public Shareholders’ Warrants” based on the redemption date and the “fair market value” of our Class A ordinary shares (as defined below);
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if, and only if, the closing price of our Class A ordinary shares equals or exceeds $10.00 per public share (as adjusted per share subdivisions, share dividends, reorganizations, recapitalizations and the like) on the trading day before we send the notice of redemption to the warrant holders; and
•
if the Reference Value is less than $18.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like), then the private placement warrants must also concurrently be called for redemption on the same terms (except as described herein with respect to a holder’s ability to cashless exercise its warrants) as the outstanding public warrants as described above.
The “fair market value” of our Class A ordinary shares shall mean the volume-weighted average price of our Class A ordinary shares for the 10 trading days immediately following the date on which the notice of redemption is sent to the
holders of warrants. This redemption feature differs from the typical warrant redemption features used in other blank check offerings. We will provide our warrant holders with the final fair market value no later than one business day after the 10-day trading period described above ends. In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 Class A ordinary shares per warrant (subject to adjustment).
No fractional Class A ordinary shares will be issued upon redemption. If, upon redemption, a holder would be entitled to receive a fractional interest in a share, we will round down to the nearest whole number of the number of Class A ordinary shares to be issued to the holder. Please see the section entitled “Description of Securities—Warrants—Public Shareholders’ Warrants” for additional information.
Our sponsor has indicated an interest to purchase up to an aggregate of 2,500,000 of our Class A ordinary shares (for $10.00 per share or $25,000,000 in the aggregate) in a private placement that would occur concurrently with the consummation of our initial business combination. The capital from such private placement would be used as part of the consideration to the sellers in our initial business combination, and any excess capital from such private placement would be used for working capital in the post-transaction company. However, because indications of interest are not binding agreements or commitments to purchase, our sponsor may determine not to purchase any such shares, or to purchase fewer shares than it has indicated an interest in purchasing. We are not under any obligation to sell any such shares. Such investment would be made on terms and conditions determined at the time of the business combination.
On September 4, 2020, our sponsor paid $25,000, or approximately $0.00696 per share, to cover for certain offering and formation costs in consideration for 3,593,750 founder shares. On October 8, 2020, 718,750 founder shares were contributed back to the Company for no consideration, resulting in there being 2,875,000 founder shares issued and outstanding (at approximately $0.0087 per share).
Prior to the initial investment in the company of $25,000 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 contributed to the company by the number of founder shares issued. If we increase or decrease the size of this offering, we will effect a share capitalization or a share surrender or redemption or other appropriate mechanism, as applicable, with respect to our Class B ordinary shares immediately prior to the consummation of this offering in such amount as to maintain the ownership of our initial shareholders (and their permitted transferees), on an as-converted basis, at 20% of our issued and outstanding ordinary
shares (excluding the private placement shares underlying the private placement units) upon the consummation of this offering. Up to 375,000 founder shares held by our sponsor are subject to forfeiture, depending on the extent to which the underwriter’s over-allotment option is exercised.
The founder shares are identical to the Class A ordinary shares included in the units being sold in this offering, except that:
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only holders of the founder shares have the right to vote on the appointment of directors prior to the completion of our initial business combination and holders of a majority of our founder shares may remove a member of the board of directors for any reason;
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the founder shares are subject to certain transfer restrictions, as described in more detail below;
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our sponsor and our founding team have entered into an agreement with us, pursuant to which they have agreed to (i) waive their redemption rights with respect to any founder shares, private placement shares and public shares they hold, (ii) to waive their redemption rights with respect to any founder shares, private placement shares and any public shares purchased during or after this offering in connection with a shareholder vote to approve an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity and (iii) waive their rights to liquidating distributions from the trust account with respect to any founder shares or private placement shares they hold if we fail to consummate an initial business combination within 24 months from the closing of this offering (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 24 months from the closing of this offering). If we seek shareholder approval, we will complete our initial business combination only if we receive approval pursuant to an ordinary resolution under Cayman Islands law, which requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the company. In such case, our sponsor and each member of our founding team have agreed to vote their founder shares, private placement shares 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 shareholders’ founder shares and private placement shares, we would need 3,525,001, or 35.3%, of the 10,000,000 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 issued and outstanding shares are voted, the private placement shares to be issued to our sponsor are voted in favor of the transaction and the over-allotment option is not exercised);
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the founder shares will automatically convert into our Class A ordinary shares at the time of our initial business combination as described below adjacent to the caption “Founder shares conversion and anti-dilution rights” and in our amended and restated memorandum and articles of association; and
•
the founder shares are entitled to registration rights.
Transfer restrictions on founder shares and private placement units
Except as described herein, our sponsor and our founding team have agreed not to transfer, assign or sell (i) any of their founder shares until the earliest of (A) one year after the completion of our initial business combination and (B) subsequent to our initial business combination, (x) if the closing price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (y) the date on which we complete a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of our public shareholders having the right to exchange their ordinary shares for cash, securities or other property, and (ii) any of their private placement units, private placement shares, private placement warrants and Class A ordinary shares issued upon conversion or exercise thereof until 30 days after the completion of our initial business combination. Any permitted transferees would be subject to the same restrictions and other agreements of our sponsor and founding team with respect to any founder shares, private placement units, private placement shares, private placement warrants and Class A ordinary shares issued upon conversion or exercise thereof.
Founder shares conversion and anti-dilution rights
The founder shares are designated as Class B ordinary shares and will automatically convert into Class A ordinary shares on the first business day following the consummation of our initial business combination at a ratio such that the number of Class A ordinary shares issuable upon conversion of all
founder shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of ordinary shares issued and outstanding upon the consummation of this offering (excluding the private placement shares underlying the private placement units), plus (ii) the sum of the total number of Class A ordinary shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities (as defined herein) or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial business combination (net of any redemptions of Class A ordinary shares by public shareholders), excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, deemed issued, or to be issued, to any seller in the initial business combination and any private placement warrants issued to our sponsor, members of our founding team or any of their affiliates upon conversion of working capital loans. Any conversion of Class B ordinary shares described herein will take effect as a compulsory redemption of Class B ordinary shares and an issuance of Class A ordinary shares as a matter of Cayman Islands law. In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one-to-one.
The term “equity-linked securities” refers to any debt or equity securities that are convertible, exercisable or exchangeable for our Class A ordinary shares issued in a financing transaction in connection with our initial business combination, including, but not limited to, a private placement of equity or debt.
Appointment of directors;
Voting rights
Prior to our initial business combination, only holders of our founder shares will have the right to vote on the appointment of directors. Holders of our public shares will not be entitled to vote on the appointment of directors during such time. In addition, prior to the completion of an initial business combination, holders of a majority of our founder shares may remove a member of the board of directors for any reason. These provisions of our amended and restated memorandum and articles of association may only be amended by a resolution passed by a majority of our Class B ordinary shares. With respect to any other matter submitted to a vote of our shareholders, including any vote in connection with our initial business combination, except as required by law or the applicable rules of the NYSE then in effect, holders of our founder shares and holders of our public shares will vote together as a single class, with each share entitling the holder to one vote.
Our amended and restated memorandum and articles of association provide that our board of directors will be divided into three classes with only one class of directors being
appointed in each year and each class (except for those directors appointed prior to our first annual general meeting) serving a three-year term.
Our sponsor has committed, pursuant to a written agreement, to purchase an aggregate of 450,000 private placement units (or 480,000 private placement units if the underwriters’ over-allotment option is exercised in full) for a purchase price of $4,500,000 (or $4,800,000 if the underwriters’ over-allotment option is exercised in full), in a private placement that will close simultaneously with the closing of this offering. The private placement units are identical to the units sold in this offering, subject to certain limited exceptions as described in this prospectus. The private placement warrants included in the private placement units will be non-redeemable by us (except as set forth under “Description of Securities—Warrants—Public Shareholders’ Warrants—Redemption of warrants for Class A ordinary shares when the price per Class A ordinary share equals or exceeds $10.00”) and exercisable on a cashless basis so long as they are held by our sponsor or its permitted transferees (see “Description of Securities—Warrants—Private Placement Warrants”). If the private placement warrants are held by holders other than our sponsor or its permitted transferees, the private placement warrants will be redeemable by us in all redemption scenarios and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering.
Cashless exercise of private placement warrants
If holders of private placement warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering their warrants for that number of Class A ordinary shares equal to the quotient obtained by dividing (x) the product of the number of Class A ordinary shares underlying the warrants, multiplied by the excess of the “historical fair market value” over the exercise price of the warrants by (x) the historical fair market value. The “historical fair market value” will mean the average reported closing price of the Class A ordinary shares 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 sponsor or its 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 restrict insiders from selling our securities except during specific periods.
Proceeds to be held in trust account
$100,000,000 (or $115,000,000 if the over-allotment option is exercised in full) of the net proceeds of this offering
and the proceeds we will receive from the sale of the private placement units, or $10.00 per unit sold to the public in this offering, will be deposited in a segregated trust account located in the U.S. at J.P. Morgan Chase Bank, N.A. with Continental Stock Transfer & Trust Company, acting as trustee pursuant to an agreement to be signed on the date of this prospectus and approximately $1,000,000 will be used to pay expenses in connection with the closing of this offering and approximately $1,500,000 will be used for working capital following this offering. These proceeds include $3,500,000 ($4,025,000 if the underwriters’ over-allotment option is exercised in full) in deferred underwriting commissions which will be paid to the underwriters upon the closing of the business combination. The remainder of the net proceeds of this offering will not be held in the trust account.
Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our income taxes, if any, our amended and restated memorandum and articles of association, as discussed below and subject to the requirements of law and regulation, will provide that the proceeds from this offering and the sale of the private placement units held in the trust account will not be released from the trust account (1) to us, until the completion of our initial business combination, or (2) to our public shareholders, until the earliest of (a) the completion of our initial business combination, and then only in connection with those Class A ordinary shares that such shareholders properly elected to redeem, subject to the limitations described herein, (b) the redemption of any public shares properly tendered in connection with a (A) shareholder vote to amend our amended and restated memorandum and articles of association to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity, and (c) the redemption of our public shares if we have not consummated our business combination within 24 months from the closing of this offering, subject to applicable law. Public shareholders who redeem their Class A ordinary shares in connection with a shareholder vote described in clause (b) in the preceding sentence shall not be entitled to funds from the trust account upon the subsequent completion of an initial business combination or liquidation if we have not consummated an initial business combination within 24 months from the closing of this offering, with respect to such Class A ordinary shares so redeemed. 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 shareholders.
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 income (if any) to pay our income taxes, if any. 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. Assuming an interest rate of 0.2% per year, we estimate the interest earned on the trust account will be approximately $200,000 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:
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the net proceeds of this offering and the sale of the private placement units not held in the trust account, which will be approximately $1,500,000 in working capital after the payment of approximately $1,000,000 in expenses relating to this offering; and
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any loans or additional investments from our sponsor or certain of our officers and directors, although they are under no obligation to advance funds or invest in us, and provided 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.
Conditions to completing our initial business combination
NYSE rules and our amended and restated memorandum and articles of association require that our initial business combination must occur with one or more partner businesses that together have an aggregate fair market value of at least 80% of our assets held in the trust account (excluding the amount of deferred underwriting discounts held in trust and taxes payable on the interest earned on the trust account) at the time of signing the agreement to enter into the initial business combination. If our board of directors is not able to independently determine the fair market value of the partner business or businesses or we are considering an initial business combination with an affiliated entity, we will obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent valuation or accounting firm with respect to the satisfaction of such criteria. Our shareholders may not be provided with a copy of such opinion nor will they be able to rely on such opinion.
We will complete our initial business combination only if the post-business combination company in which our public shareholders own shares will own or acquire 50% or more of
the outstanding voting securities of the partner business or is otherwise not required to register as an investment company under the Investment Company Act. Even if the post-business combination company owns or acquires 50% or more of the voting securities of the partner business, our shareholders prior to the completion of our initial business combination may collectively own a minority interest in the post-business combination company, depending on valuations ascribed to the partner and us in the business combination transaction. If less than 100% of the equity interests or assets of a partner business or businesses are owned or acquired by the post-business combination company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test, provided that in the event that the business combination involves more than one partner business, the 80% of net assets test will be based on the aggregate value of all of the partner businesses and we will treat the partner businesses together as the initial business combination for purposes of a tender offer or for seeking shareholder approval, as applicable.
Permitted purchases and other transactions with respect to our
securities
If we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor, directors, executive officers, advisors or their affiliates may purchase public shares or warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. Additionally, at any time at or prior to the completion of our initial business combination, subject to applicable securities laws (including with respect to material nonpublic information), our sponsor, directors, executive officers, advisors or their affiliates may enter into transactions with investors and others to provide them with incentives to acquire public shares, vote their public shares in favor of our initial business combination or not redeem their public shares. 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 public shares or warrants in such transactions. If our sponsor, directors, executive officers, advisors or their affiliates 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 Securities Exchange Act of 1934, as amended, or 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 be required to comply with such rules. 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 and Other Transactions with Respect to Our Securities” for a description of how our sponsor, directors, executive officers, advisors or their affiliates will select which shareholders to purchase securities from in any private transaction.
The purpose of any such transaction could be to (1) vote in favor of the business combination and thereby increase the likelihood of obtaining shareholder approval of the business combination, (2) reduce the number of public warrants outstanding or vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination or (3) satisfy a closing condition in an agreement with a partner that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible. In addition, if such purchases are made, the public “float” of our Class A ordinary shares 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.
Redemption rights for public shareholders upon completion of our initial business combination
We will provide our public shareholders with the opportunity to redeem all or a portion of their Class A ordinary 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 the initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our income taxes, if any, divided by the number of then-outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.00 per public share. The per share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriter. The redemption right may include the requirement that a beneficial holder must identify
itself in order to validly redeem its shares. There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Further, we will not proceed with redeeming our public shares, even if a public shareholder has properly elected to redeem its shares, if a business combination does not close. Our sponsor and each member of our founding team have entered into an agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares, private placement shares and any public shares purchased during or after this offering in connection with (i) the completion of our initial business combination and (ii) a shareholder vote to approve an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity.
Limitations on redemptions
Our amended and restated memorandum and articles of association 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. However, a greater net tangible asset or cash requirement may be contained in the agreement relating to our initial business combination. For example, the proposed business combination may require: (i) cash consideration to be paid to the partner or its owners, (ii) cash to be transferred to the partner for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. Furthermore, although we will not redeem shares in an amount that would cause our net tangible assets to fall below $5,000,001, we do not have a maximum redemption threshold based on the percentage of shares sold in this offering, as many blank check companies do. In the event the aggregate cash consideration we would be required to pay for all Class A ordinary shares that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all Class A ordinary shares submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
Manner of conducting redemptions
We will provide our public shareholders 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 general meeting called to approve the business combination or (ii) by means of a tender offer. The decision as to whether we will seek shareholder 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 shareholder approval under applicable law or stock exchange listing requirement. Asset acquisitions and share purchases would not typically require shareholder approval, while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our issued and outstanding ordinary shares (excluding the private placement shares underlying the private placement units) or seek to amend our amended and restated memorandum and articles of association would typically require shareholder approval. We currently intend to conduct redemptions in connection with a shareholder vote unless shareholder approval is not required by applicable law or stock exchange rule or we choose to conduct redemptions pursuant to the tender offer rules of the SEC for business or other reasons.
If we hold a shareholder vote to approve our initial business combination, 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 shareholder approval, we will complete our initial business combination only if we receive approval pursuant to an ordinary resolution under Cayman Islands law, which requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the company. In such case, our sponsor and our founding team have agreed to vote their founder shares, private placement shares 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 shareholders’ founder shares and private placement shares, we would need 3,525,001, or 35.3%, of the 10,000,000 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 issued and outstanding shares are voted, the private placement shares to be issued to our sponsor are voted in favor of the transaction and the over-allotment option is not exercised). Each public shareholder may elect to redeem their public shares
irrespective of whether they vote for or against the proposed transaction or vote at all. Our amended and restated memorandum and articles of association will require that at least five days’ notice will be given of any such general meeting.
If we conduct redemptions pursuant to the tender offer rules of the SEC, we will, pursuant to our amended and restated memorandum and articles of association:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers; and
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file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
Upon the public announcement of our initial business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we and our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase our Class A ordinary shares in the open market, in order to comply with Rule 14e-5 under the Exchange Act. In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public shareholders not tendering more than the number of public shares we are permitted to redeem. If public shareholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete such initial business combination.
Limitation on redemption rights of shareholders holding more than 15% of the shares sold in this offering if we hold a shareholder vote
Notwithstanding the foregoing redemption rights, if we seek shareholder 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 memorandum and articles of association provides 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 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 shareholders 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 founders to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public shareholder 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 founding team at a premium to the then-current market price or on other undesirable terms. By limiting our shareholders’ 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 shareholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with a business combination with a partner 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 shareholders’ ability to vote all of their shares (including all shares held by those shareholders 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 disbursed directly by the trustee to pay amounts due to any public shareholders who properly exercise their redemption rights as described above adjacent to the caption “Redemption rights for public shareholders upon completion of our initial business combination,” to pay the underwriters their deferred underwriting commissions, to pay all or a portion of the consideration payable to the partner or owners of the partner 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 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 ordinary shares, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of post-business combination 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 memorandum and articles of association provides that we will have only 24 months from the closing of this offering to consummate our initial business combination. If we do not consummate 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 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 and not previously released to us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to our obligations under Cayman Islands 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 consummate an initial business combination within 24 months from the closing of this offering.
Our sponsor and each member of our founding team have entered into an agreement with us, pursuant to which they have agreed to waive their rights to liquidating distributions from the trust account with respect to any founder shares or private placement shares they hold if we fail to consummate an initial business combination within 24 months from the closing of this offering (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 24 months from the closing of this offering).
The underwriters have agreed to waive their rights to their deferred underwriting commission held in the trust account in the event we do not consummate an initial business combination within 24 months from the closing of this offering and, in such event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of our public shares.
Our sponsor, executive officers, directors and director nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated memorandum and articles of association
(A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity; unless we provide our public shareholders with the opportunity to redeem their Class A ordinary 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 and not previously released to us to pay our income taxes, if any, divided by the number of the then-outstanding public shares, subject to the limitations described above adjacent to the caption “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 shareholder approval of such proposal and, in connection therewith, provide our public shareholders with the redemption rights described above upon shareholder approval of such amendment. This redemption right shall apply in the event of the approval of any such amendment, whether proposed by our sponsor, any executive officer, director or director nominee, or any other person.
Our amended and restated memorandum and articles of association provides that, if we wind up for any other reason prior to the consummation of our initial business combination, we will follow the foregoing procedures with respect to the liquidation of the trust account as promptly as reasonably possible but not more than 10 business days thereafter, subject to applicable Cayman Islands law.
Limited payments to insiders
There will be no finder’s fees, reimbursements or cash payments made by the company to our sponsor, officers or directors, or their affiliates, for services rendered to us prior to or in connection with the completion of our initial business combination, other than the following payments, none of which will be made from the proceeds of this offering and the sale of the private placement units held in the trust account prior to the completion of our initial business combination:
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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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reimbursement for office space, secretarial and administrative services provided to us by our sponsor, in the amount of $10,000 per month;
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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 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 private placement units of the post-business combination company at a price of $10.00 per private placement unit at the option of the lender. The private placement units would be identical to the units.
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.
Any such payments will be made either (i) prior to the completion of our initial business combination using proceeds of this offering and the sale of the private placement units held outside the trust account or from loans made to us by our sponsor or an affiliate of our sponsor or certain of our officers and directors or (ii) in connection with or after the consummation of our initial business combination.
We will establish and maintain an audit committee, which will be composed entirely of independent directors. Among its responsibilities, the audit committee will review on a quarterly basis all payments that were made by us to our sponsor, officers or directors, 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.”
Consonance Capital manages several investment vehicles. Consonance Capital may compete with us for acquisition opportunities. If they decide to pursue any such opportunity, we may be precluded from procuring such opportunities. In addition, investment ideas generated within Consonance Capital may be suitable for both us and for current or future Consonance Capital funds and may be directed to such Consonance Capital funds rather than to us. Neither Consonance Capital nor members of our management teams who are also employed by Consonance Capital or their affiliates have any obligation to present us with any opportunity for a potential business combination of which they become aware, unless presented to such member solely in his or her capacity as an officer of the Company. Consonance Capital and/or our management, in their capacities as employees of Consonance Capital or in their other endeavors, may be required to present
potential business combinations to other entities before they present such opportunities to us. 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, including private funds under the management of Consonance Capital and their respective portfolio companies, pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. In addition, existing and future funds managed by Consonance Capital and their respective portfolio companies may compete with us for business combination opportunities and, if such opportunities are pursued by such entities, we may be precluded from pursuing such opportunities. 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, and may only decide to present it to us if such entity rejects the opportunity and consummating the same would not violate any restrictive covenants to which such officers and directors are subject.
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.
Notwithstanding the foregoing, we may pursue an Affiliated Joint Acquisition opportunity with one or more affiliates of Consonance Capital and/or investors in Consonance Capital. Such entities may co-invest with us in the partner business at the time of our initial business combination, including pursuant to their rights contained in the forward purchase agreement, or we could raise additional proceeds to complete the acquisition by issuing to such entities a class of equity or equity-linked securities.
Risks
We are a newly incorporated company that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our founding 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” of 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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September 4, 2020
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Balance Sheet Data:
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Working capital (deficiency)
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$ |
(30,000) |
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Total assets
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$ |
50,039 |
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Total liabilities
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$ |
30,000 |
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Shareholder’s equity
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$ |
20,039 |
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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 recently incorporated company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a recently incorporated company established under the laws of the Cayman Islands with no operating results, and we will not commence operations until obtaining funding through this offering. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our initial business combination with one or more partner businesses. We have no plans, arrangements or understandings with any prospective partner 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 independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.”
As of September 4, 2020, we had no cash and a working capital deficit of $30,000. Further, we have incurred and expect to continue to incur significant costs in pursuit of our acquisition plans. Management’s plans to address this need for capital through this offering are discussed in the section of this prospectus titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our plans to raise capital and to consummate our initial business combination may not be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements contained elsewhere in this prospectus do not include any adjustments that might result from our inability to consummate this offering or our inability to continue as a going concern.
Past performance by our founding team or their affiliates may not be indicative of future performance of an investment in us.
Information regarding performance by, or businesses associated with, our founding team or their affiliates is presented for informational purposes only. Any past experience of and performance by our founding team or their affiliates, is not a guarantee either: (1) that we will be able to successfully identify a suitable candidate for our initial business combination; or (2) of any results with respect to any initial business combination we may consummate. You should not rely on the historical record of our founding team or any of their affiliates’ as indicative of the future performance of an investment in us or the returns we will, or are likely to, generate going forward.
Our shareholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we may complete our initial business combination even though a majority of our shareholders do not support such a combination.
We may not hold a shareholder vote to approve our initial business combination unless the business combination would require shareholder approval under applicable Cayman Islands law or stock exchange listing requirements or if we decide to hold a shareholder vote for business or other reasons. For instance, NYSE rules currently allow us to engage in a tender offer in lieu of a general meeting but would still require us to obtain shareholder approval if we were seeking to issue more than 20% of our issued and outstanding shares (excluding the private placement shares underlying the private placement units) to a partner business as consideration in any business combination. Therefore, if we were structuring a business combination that required us to issue more than 20% of our issued and outstanding ordinary shares (excluding the private placement shares underlying the private placement units), we would seek shareholder approval of such business combination. However, except as
required by applicable law or stock exchange rule, the decision as to whether we will seek shareholder approval of a proposed business combination or will allow shareholders 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 shareholder approval. Accordingly, we may consummate our initial business combination even if holders of a majority of the outstanding ordinary shares do not approve of the business combination we consummate. Please see the section entitled “Proposed Business—Shareholders 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 any partner businesses. Since our board of directors may complete a business combination without seeking shareholder approval, public shareholders may not have the right or opportunity to vote on the business combination, unless we seek such shareholder approval. Accordingly, your only opportunity to affect the investment decision regarding a potential business combination may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public shareholders in which we describe our initial business combination.
If we seek shareholder approval of our initial business combination, our sponsor and members of our founding team have agreed to vote in favor of such initial business combination, regardless of how our public shareholders vote.
Our sponsor will own, on an as-converted basis, 20% of our issued and outstanding ordinary shares (excluding the private placement shares underlying the private placement units) immediately following the completion of this offering. Our sponsor and members of our founding team also may from time to time purchase Class A ordinary shares prior to the completion of our initial business combination. Our amended and restated memorandum and articles of association provides that, if we seek shareholder approval, we will complete our initial business combination only if we receive approval pursuant to an ordinary resolution under Cayman Islands law, which requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the company. As a result, in addition to our initial shareholders’ founder shares and private placement shares, we would need 3,525,001, or 35.3%, of the 10,000,000 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 issued and outstanding shares are voted, the private placement shares to be issued to our sponsor are voted in favor of the transaction and the over-allotment option is not exercised). Accordingly, if we seek shareholder approval of our initial business combination, the agreement by our sponsor and our founding team to vote in favor of our initial business combination will increase the likelihood that we will receive the requisite shareholder approval for such initial business combination.
The ability of our public shareholders to redeem their shares for cash may make our financial condition unattractive to potential business combination partners, which may make it difficult for us to enter into a business combination with a partner.
We may seek to enter into a business combination transaction agreement with a prospective partner that requires as a closing condition that we have a minimum net worth or a certain amount of cash. If too many public shareholders 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 (so that we do not then become subject to the SEC’s “penny stock” rules). Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related business combination and may instead search for an alternate
business combination. Prospective partners 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 shareholders 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 shareholders 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 a large number of shares are submitted for redemption, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange for additional third party financing. Raising additional third party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital structure. The amount of the deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are redeemed in connection with an initial business combination. The per-share amount we will distribute to shareholders who properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after such redemptions, the amount held in trust will continue to reflect our obligation to pay the entire deferred underwriting commissions.
The ability of our public shareholders 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 funds in 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 our redemption until we liquidate or you are able to sell your shares in the open market.
The requirement that we consummate an initial business combination within 24 months after the closing of this offering may give potential partner 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 partners, 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 shareholders.
Any potential partner business with which we enter into negotiations concerning a business combination will be aware that we must consummate an initial business combination within 24 months from the closing of this offering.
Consequently, such partner business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete our initial business combination within the required time period with that particular partner business, we may be unable to complete our initial business combination with any partner 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.
Our search for a business combination, and any partner business with which we ultimately consummate a business combination, may be materially adversely affected by the coronavirus or COVID-19 pandemic and the status of debt and equity markets.
In March 2020, the World Health Organization declared novel coronavirus disease 2019 (“COVID-19”) a global pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, lowered equity market valuations, created significant volatility and disruption in financial markets, and increased
unemployment levels, all of which may become heightened concerns upon a second wave of infection or future developments. In addition, the pandemic has resulted in temporary closures of many businesses and the institution of social distancing and sheltering in place requirements in many states and communities. The COVID-19 pandemic has and a significant outbreak of other infectious diseases could result in a widespread health crisis that could adversely affect the economies and financial markets worldwide, and the business of any potential partner 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 concerns relating to COVID-19 continue to restrict travel, limit the ability to have meetings with potential investors or the partner business’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 partner business with which we ultimately consummate a business combination, may be materially adversely affected. In addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and other events, including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all.
We may not be able to consummate an 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 partner business and consummate an 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. For example, the COVID-19 pandemic continues to grow both in the U.S. and globally and, while the extent of the impact of the pandemic on us will depend on future developments, it could limit our ability to complete our initial business combination, including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Additionally, the COVID-19 pandemic may negatively impact businesses we may seek to acquire. If we have not consummated an initial business combination within such applicable 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 10 business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. Our amended and restated memorandum and articles of association provides that, if we wind up for any other reason prior to the consummation of our initial business combination, we will follow the foregoing procedures with respect to the liquidation of the trust account as promptly as reasonably possible but not more than 10 business days thereafter, subject to applicable Cayman Islands law. In either such case, our public shareholders may receive only $10.00 per public share, or less than $10.00 per public share, on the redemption of their shares, and our warrants will expire worthless. See “—If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by shareholders may be less than $10.00 per public share” and other risk factors herein.
If we seek shareholder approval of our initial business combination, our sponsor, directors, executive officers, advisors and their affiliates may elect to purchase public shares or warrants, which may influence a vote on a proposed business combination and reduce the public “float” of our Class A ordinary shares or public warrants.
If we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor, directors, executive officers, advisors or their affiliates may purchase public shares or 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. 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 public shares or warrants in such transactions.
In the event that our sponsor, directors, executive officers, advisors or their affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. The purpose of any such transaction could be to (1) vote in favor of the business combination and thereby increase the likelihood of obtaining shareholder approval of the business combination, (2) reduce the number of public warrants outstanding or vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination or (3) satisfy a closing condition in an agreement with a partner that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible. In addition, if such purchases are made, the public “float” of our Class A ordinary shares 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.
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 and Other Transactions with Respect to Our Securities” for a description of how our sponsor, directors, executive officers, advisors or their affiliates will select which shareholders to purchase securities from in any private transaction.
If a shareholder 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 shareholder fails to receive our proxy solicitation or tender offer materials, as applicable, such shareholder may not become aware of the opportunity to redeem its shares. In addition, the proxy solicitation or tender offer materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures that must be complied with in order to validly redeem or tender public shares. In the event that a shareholder fails to comply with these procedures, its shares may not be redeemed. See “Proposed Business—Effecting Our Initial Business Combination—Tendering Share Certificates in Connection with a Tender Offer or Redemption Rights.”
You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
Our public shareholders 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 Class A ordinary shares that such shareholder properly elected to redeem, subject to the limitations described herein, (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend our amended
and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity, and (iii) the redemption of our public shares if we have not consummated an initial business within 24 months from the closing of this offering, subject to applicable law and as further described herein. Public shareholders who redeem their Class A ordinary shares in connection with a shareholder vote described in clause (ii) in the preceding sentence shall not be entitled to funds from the trust account upon the subsequent completion of an initial business combination or liquidation if we have not consummated an initial business combination within 24 months from the closing of this offering, with respect to such Class A ordinary shares so redeemed. In no other circumstances will a shareholder have any right or interest of any kind to or 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 intend to apply to have our units listed on the NYSE on the date of this prospectus and our Class A ordinary shares and warrants on or promptly after their date of separation. Although after giving effect to this offering we expect to meet, on a pro forma basis, the minimum initial listing standards set forth in NYSE’s listing standards, our securities may not be, or may not continue to be, listed on the NYSE in the future or prior to the completion of our initial business combination. In order to continue listing our securities on the NYSE prior to the completion of our initial business combination, we must maintain certain financial, distribution and share price levels. Generally, we must maintain a minimum amount in shareholders’ equity (currently $1,100,000) and a minimum number of holders of our securities (currently 400 public holders). Additionally, our units will not be traded after completion of our initial business combination and, in connection with our initial business combination, we will be required to demonstrate compliance with NYSE’s initial listing requirements, which are more rigorous than NYSE’s continued listing requirements, in order to continue to maintain the listing of our securities on the NYSE. For instance, the share price of our securities would currently be required to be at least $4.00 per share and our shareholders’ equity would currently be required to be at least $5,000,000 and we would be required to have a minimum of 400 round-lot holders. We may not 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; reduced liquidity for our securities;
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a determination that our Class A ordinary shares are a “penny stock” which will require brokers trading in our Class A ordinary shares 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 ordinary shares and warrants will be listed on the NYSE, our units, Class A ordinary shares and warrants will qualify as covered securities under the statute. Although the states are preempted from regulating the sale of covered 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 units are intended to be used to complete an initial business combination with a partner business that has not been selected, we may be deemed to be a “blank check” company under the U.S. securities laws. However, because we will have net tangible assets in excess of $5,000,000 upon the completion of this offering and the sale of the private placement units 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 shareholder 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 shareholders are deemed to hold in excess of 15% of our Class A ordinary shares, you will lose the ability to redeem all such shares in excess of 15% of our Class A ordinary shares.
If we seek shareholder 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 memorandum and articles of association provides 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 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, which we refer to as the “Excess Shares,” without our prior consent. However, we would not be restricting our shareholders’ 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 do not complete our initial business combination within the required time period, our public shareholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
We expect to encounter intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous partner businesses we could potentially acquire with the net proceeds of this offering and the sale of the private placement units, our ability to compete with respect to the acquisition of
certain partner 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 partner 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 shareholder vote or via a tender offer. Partner 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 have not consummated our initial business combination within the required time period, our public shareholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless. See “—If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by shareholders may be less than $10.00 per public share” and other risk factors herein.
If the net proceeds of this offering and the sale of the private placement units not being held in the trust account are insufficient to allow us to operate for the 24 months following the closing of this offering, it could limit the amount available to fund our search for a partner business or businesses and complete our initial business combination, and we will depend on loans from our sponsor or founding team to fund our search and to complete our initial business combination.
Of the net proceeds of this offering and the sale of the private placement units, only $1,500,000 will be available to us initially outside the trust account to fund our working capital requirements. We believe that, upon the closing of this offering, the funds available to us outside of the trust account, together with funds available from loans from our sponsor, members of our founding team or any of their affiliates will be sufficient to allow us to operate for at least the 24 months following the closing of this offering; however, our estimate may not be accurate, and our sponsor, members of our founding team or any of their affiliates are under no obligation to advance funds to us in such circumstances. Of the funds available to us, we expect to use a portion of the funds available to us to pay fees to consultants to assist us with our search for a partner 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 designed to keep partner businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such partner 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 where we paid for the right to receive exclusivity from a partner 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 partner business.
In the event that our offering expenses exceed our estimate of $1,000,000, we may fund such excess with funds not to be held in the trust account. In such case, unless funded by the proceeds of loans available from our sponsor, members of our founding team or any of their affiliates, 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 $1,000,000, 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, members of our founding team or any of their affiliates or other third parties to operate or may be forced to liquidate. Neither our sponsor, members of our founding team nor any of their affiliates is under any obligation to advance funds to us in such circumstances. Any such advances may 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 private placement units of the post-business combination entity at a price of $10.00 per private placement unit at the option of the lender. The private placement units would be identical to the units. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor, members of our founding team or any of their affiliates 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 do not complete our initial business combination within the required time period 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 shareholders may only receive an estimated $10.00 per public
share, or possibly less, on our redemption of our public shares, and our warrants will expire worthless. See “—If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by shareholders may be less than $10.00 per public share” and other risk factors herein.
Subsequent to our completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and the share price of our securities, which could cause you to lose some or all of your investment.
Even if we conduct due diligence on a partner business with which we combine, this diligence may not surface all material issues with a particular partner business. In addition, factors outside of the partner business and outside of our control may 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 partner business or by virtue of our obtaining post-combination debt financing.
Accordingly, any holders who choose to retain their securities following the business combination could suffer a reduction in the value of their securities.
Such 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.
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 shareholders may be less than $10.00 per public 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 (excluding our independent registered public accounting firm), prospective partner 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 shareholders, 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 founders will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if our founding team believes that such third party’s engagement would be significantly more beneficial to us than any alternative.
Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by our founding team to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where our founding team 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 have not consummated an initial business combination within 24 months from the closing of this offering, 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 shareholders could be less than the $10.00 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 (excluding our independent registered public accounting firm) for services rendered or products sold to us, or a prospective partner business with which we have discussed entering into a transaction agreement, reduce the amounts in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per share held in the trust account as of the date of the liquidation of the trust account if less than $10.00 per public share due to reductions in the value of the trust assets, in each case net of the interest that may be withdrawn to pay our tax obligations, provided that such liability will not apply to any claims by a third party or prospective partner business who executed a waiver of any and all rights to seek access to the trust account 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. Moreover, 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.
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. Our sponsor may not be able to satisfy those obligations. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective partner businesses.
Since only holders of our founder shares will have the right to vote on the appointment of directors, upon the listing of our shares on the NYSE, the NYSE may consider us to be a ‘controlled company’ within the meaning of the NYSE rules and, as a result, we may qualify for exemptions from certain corporate governance requirements.
After completion of this offering, prior to our initial business combination only holders of our founder shares will have the right to vote on the appointment of directors. As a result, the NYSE may consider us to be a ‘controlled company’ within the meaning of the NYSE corporate governance standards. Under the NYSE corporate governance standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a ‘controlled company’ and may elect not to comply with certain corporate governance requirements, including the requirements that:
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we have a board of directors that includes a majority of ‘independent directors,’ as defined under the rules of the NYSE;
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we have a compensation committee of our board of directors that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and
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we have a nominating and corporate governance committee of our board of directors that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
We do not intend to utilize these exemptions and intend to comply with the corporate governance requirements of the NYSE, subject to applicable phase-in rules. However, if we determine in the future to utilize some or all of these exemptions, you will not have the same protections afforded to shareholders of companies that are subject to all of the NYSE corporate governance requirements.
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 shareholders.
In the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per public share and (ii) the actual amount per share held in the trust account as of the date of the liquidation of the trust account if less than $10.00 per public share due to reductions in the value of the trust assets, in each case net of the interest that may be withdrawn to pay our tax obligations, 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 shareholders may be reduced below $10.00 per public share.
The securities in which we invest the funds held in the trust account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the per-share redemption amount received by public shareholders may be less than $10.00 per share.
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. While short-term U.S. government treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the U.S. In the event that we do not to complete our initial business combination or make certain amendments to our amended and restated memorandum and articles of association, our public shareholders are entitled to receive their pro-rata share of the proceeds held in the trust account, plus any interest income, net of taxes paid or payable (less, in the case we are unable to complete our initial business combination, $100,000 of interest). Negative interest rates could reduce the value of the assets held in trust such that the per-share redemption amount received by public shareholders may be less than $10.00 per share.
If, after we distribute the proceeds in the trust account to our public shareholders, we file a bankruptcy or insolvency petition or an involuntary bankruptcy or insolvency petition is filed against us that is not dismissed, a bankruptcy or insolvency 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 shareholders, we file a bankruptcy or insolvency petition or an involuntary bankruptcy or insolvency petition is filed against us that is not dismissed, any distributions received by shareholders 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 or insolvency court could seek to recover some or all amounts received by our shareholders. 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, thereby exposing itself and us to claims of punitive damages, by paying public shareholders from the trust account prior to addressing the claims of creditors.
If, before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy or insolvency petition or an involuntary bankruptcy or insolvency petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our shareholders and the per-share amount that would otherwise be received by our shareholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the trust account to our public shareholders, we file a bankruptcy or insolvency petition or an involuntary bankruptcy or insolvency 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 shareholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our shareholders 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 currently not subject to.
In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our 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-business combination 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 U.S. “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 shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity, and (iii) the redemption of our public shares if we have not consummated an initial business within 24 months from the closing of this offering, subject to applicable law and as further described herein. 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 do not complete our initial business combination within the required time period, our public shareholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our trust account 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.
If we do not consummate an initial business combination within 24 months from the closing of this offering, our public shareholders may be forced to wait beyond such 24 months before redemption from our trust account.
If we do not consummate an initial business combination within 24 months from the closing of this offering, the proceeds then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), will be used to fund the redemption of our public shares, as further described herein. Any redemption of public shareholders from the trust account will be effected automatically by function of our amended and restated memorandum and articles of association prior to any voluntary winding up. If we are required to wind up, liquidate the trust account and distribute such amount therein, pro rata, to our public shareholders, as part of any liquidation process, such winding up, liquidation and distribution must comply with the applicable provisions of the Companies Law. In that case, investors may be forced to wait beyond 24 months from the closing of this offering before the redemption proceeds of our trust account become available to them, and they receive the return of their pro rata portion of the proceeds from our trust account. We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless, prior thereto, we consummate our initial business combination or amend certain provisions of our amended and restated memorandum and articles of association, and only then in cases where investors have sought to redeem their Class A ordinary shares. Only upon our redemption or any liquidation will public shareholders be entitled to distributions if we do not complete our initial business combination and do not amend certain provisions of our amended and restated memorandum and articles of association. Our amended and restated memorandum and articles of association provides that, if we wind up for any other reason prior to the consummation of our initial business combination, we will follow the foregoing procedures with respect to the liquidation of the trust account as promptly as reasonably possible but not more than 10 business days thereafter, subject to applicable Cayman Islands law.
Our shareholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
If we are forced to enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover some or all amounts received by our shareholders. Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, thereby exposing themselves and our company to claims, by paying public shareholders from the trust account prior to addressing the claims of creditors.
Claims may be brought against us for these reasons. We and our directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of our share premium account while we were unable to pay our debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable for a fine of $18,292.68 and imprisonment for five years in the Cayman Islands.
We may not hold an annual general meeting until after the consummation of our initial business combination.
In accordance with NYSE corporate governance requirements and our amended and restated memorandum and articles of association, we are not required to hold an annual general meeting until no later than one year after our first fiscal year end following our listing on the NYSE. As an exempted company, there is no requirement under the Companies Law for us to hold annual or extraordinary general meetings to appoint directors. Until we hold an annual general meeting, public shareholders may not be afforded the opportunity to appoint directors and to discuss company affairs with our founding team. Our board of directors is divided into three classes with only
one class of directors being appointed in each year and each class (except for those directors appointed prior to our first annual general meeting) serving a three-year term.
Holders of Class A ordinary shares will not be entitled to vote on any appointment of directors we hold prior to the completion of our initial business combination.
Prior to the completion of our initial business combination, only holders of our founder shares will have the right to vote on the appointment of directors. Holders of our public shares will not be entitled to vote on the appointment of directors during such time. In addition, prior to the completion of an initial business combination, holders of a majority of our founder shares may remove a member of the board of directors for any reason. Accordingly, you may not have any say in the management of our company prior to the consummation of an initial business combination.
We are not registering the Class A ordinary shares issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants and causing such warrants to expire worthless.
We are not registering the Class A ordinary shares 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 to use our commercially reasonable efforts to file a registration statement under the Securities Act covering such shares and to maintain the effectiveness of such registration statement and a current prospectus relating to the Class A ordinary shares issuable upon exercise of the warrants until the expiration or redemption of the warrants in accordance with the provisions of the warrant agreement. We may not 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, complete or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant will 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, unless an exemption is available. Notwithstanding the above, if our Class A ordinary shares 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, but we will use our reasonable best efforts to register or qualify the shares under applicable blue sky 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 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. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant 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 ordinary shares included in the units. There may be a circumstance where an exemption from registration exists for holders of our private placement warrants to exercise their warrants while a corresponding exemption does not exist for holders of the warrants included as part of units sold in this offering. In such an instance, our sponsor and its transferees (which may include our founding team) would be able to exercise their warrants and sell the ordinary shares underlying their warrants while holders of our public warrants would not be able to exercise their warrants and sell the underlying ordinary shares. 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.
Our ability to require holders of our warrants to exercise such warrants on a cashless basis after we call the warrants for redemption or if there is no effective registration statement covering the Class A ordinary shares issuable upon exercise of these warrants will cause holders to receive fewer Class A ordinary shares upon their exercise of the warrants than they would have received had they been able to pay the exercise price of their warrants in cash.
If we call the warrants for redemption for cash, we will have the option, in our sole discretion, to require all holders that wish to exercise warrants to do so on a cashless basis. If we choose to require holders to exercise their warrants on a cashless basis or if holders elect to do so when there is no effective registration statement, the number of Class A ordinary shares received by a holder upon exercise will be fewer than it would have been had such holder exercised his or her warrant for cash.
For example, if the holder is exercising 875 public warrants at $11.50 per share through a cashless exercise when the Class A ordinary shares have a fair market value of $17.50 per share, then upon the cashless exercise, the holder will receive 300 Class A ordinary shares. The holder would have received 875 Class A ordinary shares if the exercise price was paid in cash. This will have the effect of reducing the potential “upside” of the holder’s investment in our company because the warrantholder will hold a smaller number of Class A ordinary shares upon a cashless exercise of the warrants they hold.
The warrants may become exercisable and redeemable for a security other than the Class A ordinary shares, and you will not have any information regarding such other security at this time.
In certain situations, including if we are not the surviving entity in our initial business combination, the warrants may become exercisable for a security other than the Class A ordinary shares. As a result, if the surviving company redeems your warrants for securities pursuant to the warrant agreement, you may receive a security in a company of which you do not have information at this time. Pursuant to the warrant agreement, the surviving company will be required to use commercially reasonable efforts to register the issuance of the security underlying the warrants within twenty business days of the closing of an initial business combination.
The grant of registration rights to our initial shareholders may make it more difficult to complete our initial business combination, and the future exercise of such rights may adversely affect the market price of our Class A ordinary shares.
Pursuant to an agreement to be entered into concurrently with the issuance and sale of the securities in this offering, our initial shareholders, and their permitted transferees can demand that we register the Class A ordinary shares into which founder shares are convertible, the private placement units, the private placement shares and the private placement warrants and the Class A ordinary shares issuable upon exercise of the private placement warrants, and warrants that may be issued upon conversion of working capital loans and the Class A ordinary shares issuable upon conversion of such warrants. 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 ordinary shares. In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude. This is because the shareholders of the partner 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 securities that is expected when the securities owned by our initial shareholders or their permitted transferees are registered for resale.
Because we are neither limited to evaluating a partner business in a particular industry sector nor have we selected any specific partner businesses with which to pursue our initial business combination, you will be unable to ascertain the merits or risks of any particular partner business’s operations.
We may pursue business combination opportunities in any sector, except that we will not, under our amended and restated memorandum and articles of association, be permitted to effectuate our initial business combination solely with another blank check company or similar company with nominal operations. Because we have not yet selected or approached any specific partner business with respect to a business combination, there is no basis to evaluate the possible merits or risks of any particular partner 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 partner business, we may not 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 partner business. An investment in our units may not ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination partner. Accordingly, any holders who choose to retain their securities following our initial business combination could suffer a reduction in the value of their securities. Such 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.
We may seek acquisition opportunities in industries or sectors which may or may not be outside of our founders’ area of expertise.
We will consider a business combination outside of our founders’ area of expertise if a business combination partner is presented to us and we determine that such candidate offers an attractive acquisition opportunity for our company. Although our founding team will endeavor to evaluate the risks inherent in any particular business combination partner, we may not 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 partner. In the event we elect to pursue an acquisition outside of the areas of our founders’ expertise, our founders’ expertise may not be directly applicable to its evaluation or operation, and the information contained in this prospectus regarding the areas of our founders’ expertise would not be relevant to an understanding of the business that we elect to acquire. As a result, our founding team may not be able to adequately ascertain or assess all of the significant risk factors. Accordingly, any holders who choose to retain their securities following our initial business combination could suffer a reduction in the value of their securities. Such 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.
Although we have identified general criteria that we believe are important in evaluating prospective partner businesses, we may enter into our initial business combination with a partner that does not meet such criteria, and as a result, the partner business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria.
Although we have identified general criteria for evaluating prospective partner businesses, it is possible that a partner 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 partner that does not meet some or all of these criteria, such combination may not be as successful as a combination with a business that does meet all of our general criteria. In addition, if we announce a prospective business combination with a partner that does not meet our general criteria, a greater number of shareholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a partner business that requires us to have a minimum net worth or a certain amount of cash. In addition, if shareholder approval of the transaction is required by applicable law or stock exchange rule, or we decide to obtain shareholder approval for business or other reasons, it may be more difficult for us to attain shareholder approval of our initial business combination if the partner business does not meet our general criteria. If we do not complete our initial business combination within the required time period, our public shareholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
We are not required to obtain an opinion from an independent accounting or investment banking 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 shareholders from a financial point of view.
Unless we complete our initial business combination with an affiliated entity, we are not required to obtain an opinion from an independent accounting firm or independent investment banking firm which is a member of FINRA that the price we are paying is fair to our shareholders from a financial point of view. If no opinion is obtained, our shareholders 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 solicitation or tender offer materials, as applicable, related to our initial business combination.
We may issue additional Class A ordinary shares or preference shares to complete our initial business combination or under an employee incentive plan after completion of our initial business combination. We may also issue Class A ordinary shares 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 memorandum and articles of association. Any such issuances would dilute the interest of our shareholders and likely present other risks.
Our amended and restated memorandum and articles of association will authorize the issuance of up to 350,000,000 Class A ordinary shares, par value $0.0001 per share, 150,000,000 Class B ordinary shares, par value $0.0001 per share, and 1,000,000 preference shares, par value $0.0001 per share. Immediately after this offering, there will be 337,050,000 and 147,500,000 (assuming in each case that the underwriters have not exercised their over-allotment option) authorized but unissued Class A ordinary shares and Class B ordinary shares, respectively, available for issuance which amount includes shares reserved for issuance upon exercise of outstanding warrants or shares issuable upon conversion of the Class B ordinary shares, if any. The Class B ordinary shares are automatically convertible into Class A ordinary shares at the time of our initial business combination as described herein and in our amended and restated memorandum and articles of association. Immediately after this offering, there will be no preference shares issued and outstanding.
We may issue a substantial number of additional Class A ordinary shares or preference shares to complete our initial business combination or under an employee incentive plan after completion of our initial business combination. We may also issue Class A ordinary shares to redeem the warrants as described in “Description of Securities—Warrants—Public Shareholders’ Warrants—Redemption of warrants for Class A ordinary shares when the price per Class A ordinary share equals or exceeds $10.00” or upon conversion of the Class B ordinary 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 as set forth herein. However, our amended and restated memorandum and articles of association provides, among other things, that prior to the completion of 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 on any initial business combination or on any other proposal presented to shareholders prior to or in connection with the completion of an initial business combination. These provisions of our amended and restated memorandum and articles of association, like all provisions of our amended and restated memorandum and articles of association, may be amended with a shareholder vote. The issuance of additional ordinary or preference shares:
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may significantly dilute the equity interest of investors in this offering, which dilution would increase if the anti-dilution provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares;
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may subordinate the rights of holders of Class A ordinary shares if preference shares are issued with rights senior to those afforded our Class A ordinary shares;
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could cause a change in control if a substantial number of our Class A ordinary shares 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;
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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;
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may adversely affect prevailing market prices for our units, Class A ordinary shares and/or warrants; and
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may not result in adjustment to the exercise price of our warrants.
Our initial shareholders may receive additional Class A ordinary shares if we issue shares to consummate an initial business combination.
The founder shares will automatically convert into Class A ordinary shares on the first business day following the consummation of our initial business combination at a ratio such that the number of Class A ordinary shares issuable upon conversion of all founder shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of ordinary shares issued and outstanding upon completion of this offering (excluding the private placement shares underlying the private placement units), plus (ii) the sum of the total number of Class A ordinary shares 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 Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, deemed issued, or to be issued, to any seller in the initial business combination and any private placement warrants issued to our sponsor, members of our founding team or any of their affiliates upon conversion of working capital loans. In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one to one.
Resources could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we do not complete our initial business combination within the required time period, our public shareholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
We anticipate that the investigation of each specific partner 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 partner 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 do not complete our initial business combination within the required time period, our public shareholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
We may be a passive foreign investment company, or “PFIC,” which could result in adverse U.S. federal income tax consequences to U.S. investors.
If we are a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder (as defined in the section of this prospectus captioned “Taxation—United States Federal Income Tax Considerations—General”) of our Class A ordinary shares or warrants, the U.S. Holder may be subject to adverse U.S. federal income tax consequences and may be subject to additional reporting requirements. Our PFIC status for our current and subsequent taxable years may depend on whether we qualify for the PFIC start-up exception (see the section of this prospectus captioned “Taxation—United States Federal Income Tax Considerations—U.S. Holders—Passive Foreign Investment Company Rules”). Depending on the particular circumstances, the application of the start-up exception may be subject to uncertainty, and there cannot be any assurance that we will qualify for the start-up exception. Accordingly, there can be no assurances with respect to our status as a PFIC for our current taxable year or any subsequent taxable year. Our actual PFIC status for any taxable year, however, will not be determinable until after the end of such taxable year. Moreover, if we determine we are a PFIC for any taxable year, upon written request, we will endeavor to provide to a U.S. Holder such information as the Internal Revenue Service (“IRS”) may require, including a PFIC Annual Information Statement, in order to enable the U.S. Holder to make and maintain a “qualified electing fund” election, but there can be no assurance that we will timely
provide such required information, and such election would be unavailable with respect to our warrants in all cases. We urge U.S. investors to consult their tax advisors regarding the possible application of the PFIC rules. For a more detailed discussion of the tax consequences of PFIC classification to U.S. Holders, see the section of this prospectus captioned “Taxation—United States Federal Income Tax Considerations—U.S. Holders—Passive Foreign Investment Company Rules.”
We may reincorporate in another jurisdiction in connection with our initial business combination and such reincorporation may result in taxes imposed on shareholders.
We may, in connection with our initial business combination and subject to requisite shareholder approval under the Companies Law, reincorporate in the jurisdiction in which the partner company or business is located or in another jurisdiction. The transaction may require a shareholder or warrantholder to recognize taxable income in the jurisdiction in which the shareholder or warrantholder is a tax resident or in which its members are resident if it is a tax transparent entity. We do not intend to make any cash distributions to shareholders or warrantholders to pay such taxes. Shareholders or warrantholders may be subject to withholding taxes or other taxes with respect to their ownership of us after the reincorporation.
After our initial business combination, it is possible that a majority of our directors and officers will live outside the U.S. and all of our assets will be located outside the U.S.; therefore investors may not be able to enforce federal securities laws or their other legal rights.
It is possible that after our initial business combination, a majority of our directors and officers will reside outside of the U.S. and all of our assets will be located outside of the U.S. As a result, it may be difficult, or in some cases not possible, for investors in the U.S. to enforce their legal rights, to effect service of process upon all of our directors or officers or to enforce judgments of U.S. courts predicated upon civil liabilities and criminal penalties on our directors and officers under U.S. laws.
In particular, there is uncertainty as to whether the courts of the Cayman Islands or any other applicable jurisdictions would recognize and enforce judgments of U.S. courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the U.S. or any state in the U.S. or entertain original actions brought in the Cayman Islands or any other applicable jurisdiction’s courts against us or our directors or officers predicated upon the securities laws of the U.S. or any state in the U.S.
For a more detailed discussion, see the section of this prospectus captioned “Description of Securities—Certain Differences in Corporate Law.”
Past performance by Consonance Capital Management, including our management team, may not be indicative of future performance of an investment in us.
Information regarding performance by, or businesses associated with, Consonance Capital Management is presented for informational purposes only. Any past experience and performance of Consonance Capital Management or their management team is not a guarantee either: (1) that we will be able to successfully identify a suitable candidate for our initial business combination; or (2) of any results with respect to any initial business combination we may consummate. You should not rely on the historical record of Consonance Capital Management or their management teams’ performance as indicative of the future performance of an investment in us or the returns we will, or are likely to, generate going forward. An investment in us is not an investment in Consonance Capital Management. None of our sponsor, officers, directors or Consonance Capital Management has had experience with a blank check company or special purpose acquisition company in the past.
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. 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 totally 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 partner business, however, cannot presently be ascertained. Although some of our key personnel may remain with the partner business in senior management or advisory positions following our initial business combination, it is likely that some or all of the management of the partner 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 partner 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 partner business. In addition, pursuant to an agreement to be entered into on or prior to the closing of this offering, our sponsor, upon and following consummation of an initial business combination, will be entitled to nominate three individuals for election to our board of directors, as long as the sponsor holds any securities covered by the registration and shareholder rights agreement, which is described under the section of this prospectus entitled “Description of Securities—Registration and Shareholder Rights.”
We may have a limited ability to assess the management of a prospective partner business and, as a result, may affect our initial business combination with a partner 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 partner business, our ability to assess the partner business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the partner business’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the partner 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 holders who choose to retain their securities following our initial business combination could suffer a reduction in the value of their securities. Such holders are unlikely to have a remedy for such reduction in value.
The officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The loss of a business combination partner’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.
Certain of 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.
Certain of 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, Directors and Director Nominees.”
Our officers and directors presently have, and any of them in the future may have additional, fiduciary or contractual obligations to other entities, including another blank check company, 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, including private funds under the management of Consonance Capital and their respective portfolio companies, pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity, subject to his or her fiduciary duties under Cayman Islands law. In addition, existing and future funds managed by Consonance Capital and their respective portfolio companies may compete with us for business combination opportunities and, if such opportunities are pursued by such entities, we may be precluded from pursuing such opportunities. 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 partner business may be presented to another entity prior to its presentation to us, subject to their fiduciary duties under Cayman Islands law.
In addition, our founders and our directors and officers expect in the future to become affiliated with other public blank check companies that may have acquisition objectives that are similar to ours. 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 partner business may be presented to such other blank check companies, prior to its presentation to us, subject to our officers’ and directors’ fiduciary duties under Cayman Islands law. Our amended and restated memorandum and articles of association provides that we renounce our interest in any business combination 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 it is an opportunity that we are able to complete on a reasonable basis.
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, Directors and Director Nominees,” “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 partner business that is affiliated with our sponsor, our directors or executive officers, although we do not intend to do so or we may acquire a target business through an Affiliated Joint Acquisition with one or more affiliates of Consonance Capital and/or one or more investors in Consonance Capital funds; 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. As a result, there may be substantial overlap between companies that would be a suitable business combination for us and companies that would make an attractive target for the Consonance Capital funds.
The personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting a partner business and completing a business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable partner 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 shareholders’ best interest. If this were the case, it would be a breach of their fiduciary duties to us as a matter of Cayman Islands law and we or our shareholders might have a claim against such individuals for infringing on our shareholders’ rights. See the section titled “Description of Securities—Certain Differences in Corporate Law—Shareholders’ Suits” for further information on the ability to bring such claims. 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 partner businesses that have relationships with entities that may be affiliated with our sponsor, executive officers, directors or initial shareholders 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 initial shareholders. Our directors also serve as officers and board members for other entities, including, without limitation, those described under “Management—Conflicts of Interest.” 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. 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 pursuing, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for a business combination as set forth in “Proposed Business—Effecting Our Initial Business Combination—Evaluation of a Partner Business and Structuring of Our Initial Business Combination” and such transaction was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent valuation or accounting 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 initial shareholders, 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 shareholders as they would be absent any conflicts of interest.
Moreover, we may pursue an Affiliated Joint Acquisition opportunity with one or more affiliates of Consonance Capital and/or one or more investors in Consonance Capital. Any such parties may co-invest with us in the partner business at the time of our initial business combination, or we could raise additional proceeds to complete the business combination by issuing to such parties a class of equity or equity-linked securities. Accordingly, such persons or entities may have a conflict between their interests and ours.
A conflict of interest may arise from the need to obtain the consent of Consonance Capital Management, which owns a significant interest in our sponsor, to our business combination.
We may elect not to complete a business combination without the consent of Consonance Capital Management, which owns a significant interest in our sponsor. As a consequence, interests of affiliates of our sponsor may conflict with those of the rest of our shareholders if Consonance Capital Management does not wish to proceed with a business combination.
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 partner is appropriate for our initial business combination.
On September 4, 2020, our sponsor paid $25,000, or approximately $0.00696 per share, to cover for certain offering costs in consideration for 3,593,750 founder shares. On October 8, 2020, 718,750 founder shares were contributed back to the Company for no consideration, resulting in there being 2,875,000 founder shares issued and outstanding (at approximately $0.0087 per share). Prior to the initial investment in the company of $25,000 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 contributed to the company by the number of founder shares issued. The founder shares will be worthless if we do not complete an initial business combination. In addition, our sponsor has committed, pursuant to a written agreement, to purchase 450,000 private placement units (or 480,000 private placement units if the underwriters’ over-allotment option is exercised in full), at a purchase price of $4,500,000 (or $4,800,000 if the underwriters’ over-allotment option is exercised in full), in a private placement that will close simultaneously with the closing of this offering. If we do not consummate an initial business within 24 months from the closing of this offering, the private placement units (and the underlying securities) will expire worthless. The personal and financial interests of our executive officers and directors may influence their motivation in identifying and selecting a partner 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 consummation of an initial business combination.
We may issue notes or other debt, 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 shareholders’ investment in us.
Although we have no commitments as of the date of this prospectus to issue any notes or other debt, or to otherwise incur 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 ordinary shares;
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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 ordinary shares 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 units, 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 units will provide us with up to $96,500,000 (or $110,975,000 if the underwriters’ over-allotment option is exercised in full) that we may use to complete our initial business combination (after taking into account the $3,500,000, or $4,025,000 if the over-allotment option is exercised in full, of deferred underwriting commissions being held in the trust account and the estimated expenses of this offering and estimated working capital requirements after this offering).
We may effectuate our initial business combination with a single partner business or multiple partner 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 partner 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 partner 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 partners, 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 (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.
We may attempt to complete our initial business combination with a private company about which little information is available, which may result in a business combination with a company that is not as profitable as we suspected, if at all.
In pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. Very little public information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business combination on the basis of limited information, which may result in a business combination with a company that is not as profitable as we suspected, if at all.
Our founding team may not be able to maintain control of a partner business after our initial business combination. Upon the loss of control of a partner business, new management may not possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure our initial business combination so that the post-business combination company in which our public shareholders own shares will own less than 100% of the equity interests or assets of a partner business, but we will only complete such business combination if the post-business combination company owns or acquires 50% or more of the outstanding voting securities of the partner or otherwise acquires a controlling interest in the partner business sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-business combination company owns 50% or more of the voting securities of the partner, our shareholders prior to the completion of our initial business combination may collectively own a minority interest in the post-business combination company, depending on valuations ascribed to the partner and us in the business combination. For example, we could pursue a transaction in which we issue a substantial number of new Class A ordinary shares in exchange for all of the outstanding capital stock, shares or other equity interests of a partner. In this case, we would acquire a 100% interest in the partner. However, as a result of the issuance of a substantial number of new Class A ordinary shares, our shareholders immediately prior to such transaction could own less than a majority of our issued and outstanding Class A ordinary shares subsequent to such transaction. In addition, other minority shareholders 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 founding team will not be able to maintain control of the partner business.
We may seek business combination opportunities with a high degree of complexity that require significant operational improvements, which could delay or prevent us from achieving our desired results.
We may seek business combination opportunities with large, highly complex companies that we believe would benefit from operational improvements. While we intend to implement such improvements, to the extent that our efforts are delayed or we are unable to achieve the desired improvements, the business combination may not be as successful as we anticipate.
To the extent we complete our initial business combination with a large complex business or entity with a complex operating structure, we may also be affected by numerous risks inherent in the operations of the business with which we combine, which could delay or prevent us from implementing our strategy. Although our founding team will endeavor to evaluate the risks inherent in a particular partner business and its operations, we may not be able to properly ascertain or assess all of the significant risk factors until we complete our business combination. If we are not able to achieve our desired operational improvements, or the improvements take longer to implement than anticipated, we may not achieve the gains that we anticipate. Furthermore, some of these risks and complexities may be outside of our control and leave us with no ability to control or reduce the chances that those risks and complexities will adversely impact a partner business. Such combination may not be as successful as a combination with a smaller, less complex organization.
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 shareholders do not agree.
Our amended and restated memorandum and articles of association will not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares in an amount that would cause
our net tangible assets to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock” rules). As a result, we may be able to complete our initial business combination even though a substantial majority of our public shareholders do not agree with the transaction and have redeemed their shares or, if we seek shareholder 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 Class A ordinary shares that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, all Class A ordinary shares submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments, including their warrant agreements. We may seek to amend our amended and restated memorandum and articles of association or governing instruments in a manner that will make it easier for us to complete our initial business combination that our shareholders may not support.
In order to effectuate a business combination, blank check companies have, in the recent past, amended various provisions of their charters and governing instruments, including their warrant agreements. For example, blank check companies have amended the definition of business combination, increased redemption thresholds, extended the time to consummate a 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 memorandum and articles of association will require at least a special resolution of our shareholders as a matter of Cayman Islands law, meaning the approval of holders of at least two-thirds of our ordinary shares who attend and vote at a general meeting of the company, 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 memorandum and articles of association will require us to provide our public shareholders with the opportunity to redeem their public shares for cash if we propose an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity. To the extent any of such amendments would be deemed to fundamentally change the nature of any of the securities offered through this registration statement, we would register, or seek an exemption from registration for, the affected securities.
The provisions of our amended and restated memorandum and articles of association 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 a special resolution which requires the approval of the holders of at least two-thirds of our ordinary shares who attend and vote at a general meeting of the company, which is a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore, to amend our amended and restated memorandum and articles of association to facilitate the completion of an initial business combination that some of our shareholders may not support.
Some other blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including those which relate to a company’s pre-business combination activity, without approval by a certain percentage of the company’s shareholders. In those companies, amendment of these provisions typically requires approval by between 90% and 100% of the company’s shareholders. Our amended and restated memorandum and articles of association provides that any of its provisions related to pre-business combination activity (including the requirement to deposit proceeds of this offering and the sale of the private placement units
into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public shareholders as described herein) may be amended if approved by special resolution, meaning holders of at least two-thirds of our ordinary shares who attend and vote at a general meeting of the company, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of at least 65% of our ordinary shares; provided that the provisions of our amended and restated memorandum and articles of association governing the appointment or removal of directors prior to our initial business combination may only be amended by a special resolution passed by holders representing at least two-thirds of our issued and outstanding Class B ordinary shares. Our initial shareholders, and their permitted transferees, if any, who will collectively beneficially own, on an as-converted basis, 20% of our Class A ordinary shares upon the closing of this offering (excluding the private placement shares underlying the private placement units and assuming they do not purchase any units in this offering), will participate in any vote to amend our amended and restated memorandum and articles of association 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 memorandum and articles of association which govern our pre-business combination behavior more easily than some other blank check companies, and this may increase our ability to complete a business combination with which you do not agree. Our shareholders may pursue remedies against us for any breach of our amended and restated memorandum and articles of association.
Our sponsor, executive officers, directors and director nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity; unless we provide our public shareholders with the opportunity to redeem their Class A ordinary 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 and not previously released to us to pay our income taxes, if any, divided by the number of the then-outstanding public shares. Our shareholders are not parties to, or third-party beneficiaries of, this agreement 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 this agreement. As a result, in the event of a breach, our shareholders would need to pursue a shareholder derivative action, subject to applicable law.
Our letter agreement with our sponsor, officers and directors may be amended without shareholder approval.
Our letter agreement with our sponsor, officers and directors contain provisions relating to transfer restrictions of our founder shares and private placement units, indemnification of the trust account, waiver of redemption rights and participation in liquidating distributions from the trust account. The letter agreement may be amended without shareholder approval (although releasing the parties from the restriction not to transfer the founder shares for 180 days following the date of this prospectus will require the prior written consent of the underwriters). While we do not expect our board of directors to approve any amendment to the letter agreement 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 the letter agreement. Any such amendments to the letter agreement would not require approval from our shareholders and may have an adverse effect on the value of an investment in 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 partner business, which could compel us to restructure or abandon a particular business combination. If we are unable to complete our initial business combination, our public shareholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
Although we believe that the net proceeds of this offering and the sale of the private placement units will be sufficient to allow us to complete our initial business combination, because we have not yet selected any prospective
partner business we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of this offering and the sale of the private placement units prove to be insufficient, either because of the size of our initial business combination, the depletion of the available net proceeds in search of a partner business, the obligation to redeem for cash a significant number of shares from shareholders who elect redemption in connection with our initial business combination or the terms of negotiated transactions to purchase shares in connection with our initial business combination, we may be required to seek additional financing or to abandon the proposed business combination. Such financing may not be available on acceptable terms, if at all. The current economic environment may make difficult for companies to obtain acquisition financing. 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 partner business candidate. If we do not complete our initial business combination within the required time period, our public shareholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our trust account 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 partner business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the partner business. None of our officers, directors or shareholders is required to provide any financing to us in connection with or after our initial business combination.
Our initial shareholders control a substantial interest in us and thus may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support.
Upon the closing of this offering, our initial shareholders will own, on an as-converted basis, 20% of our issued and outstanding ordinary shares (excluding the private placement shares underlying the private placement units and assuming they do not purchase any units in this offering). Accordingly, they may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support, including amendments to our amended and restated memorandum and articles of association. If our initial shareholders purchases any units in this offering or if our initial shareholders purchases any additional Class A ordinary shares in the aftermarket or in privately negotiated transactions, this would increase their control. Neither our sponsor 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 ordinary shares. 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 term of three years with only one class of directors being elected in each year. We may not hold an annual general meeting to appoint 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 general 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 sponsor, because of its ownership position, will control the outcome, as only holders of our Class B ordinary shares will have the right to vote on the election of directors and to remove directors prior to our initial business combination. Accordingly, our sponsor will continue to exert control at least until the completion of our initial business combination. In addition, we have agreed not to enter into a definitive agreement regarding an initial business combination without the prior consent of our sponsor.
Our sponsor contributed $25,000, or approximately $0.0087 per founder share, and, accordingly, you will experience immediate and substantial dilution from the purchase of our Class A ordinary shares.
The difference between the public offering price per share (allocating all of the unit purchase price to the Class A ordinary share and none to the warrant included in the unit) and the pro forma net tangible book value per Class A ordinary share after this offering constitutes the dilution to you and the other investors in this offering. Our sponsor acquired the founder shares at a nominal price, significantly contributing to this dilution. Upon the closing of this offering, and assuming no value is ascribed to the warrants included in the units, you and the other public shareholders will incur an immediate and substantial dilution of approximately 86.3% (or $8.63 per
share, assuming no exercise of the underwriters’ over-allotment option), the difference between the pro forma net tangible book value per share of $1.37 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 Class A ordinary shares 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 shareholders 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 ordinary shares.
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 our Class A ordinary shares 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 or correct any mistake, including to conform the provisions of the warrant agreement to the description of the terms of the warrants and the warrant agreement set forth in this prospectus, 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 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. 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, shorten the exercise period or decrease the number of Class A ordinary shares purchasable upon exercise of a warrant. We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
A provision of our warrant agreement may make it more difficult for us to consummate an initial business combination.
If (x) we issue additional Class A ordinary shares 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 Class A ordinary share (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 shareholders or their affiliates, without taking into account any founder shares held by our initial shareholders or such affiliates, as applicable, prior to such issuance including any transfer or reissuance of such shares), (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, and (z) the volume-weighted average trading price of our Class A ordinary shares during the 10 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 Market Value, and the $10.00 and $18.00 per share redemption trigger prices of the warrants will be adjusted (to the nearest cent) to be equal to 100% and 180% of the Market Value, respectively. This may make it more difficult for us to consummate an initial business combination with a partner business.
Our warrant agreement will designate the courts of the State of New York or the U.S. 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 U.S. 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 U.S. 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 of the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the U.S. 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 founding team 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 the outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, if, among other things, the Reference Value equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like). Please see “Description of Securities—Warrants—Public Shareholders’ Warrants—Redemption of warrants for cash when the price per Class A ordinary share equals or exceeds $18.00.” 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 as described above 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, we expect would 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 our sponsors or their permitted transferees.
In addition, we have the ability to redeem the outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.10 per warrant if, among other things, the Reference Value equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like). In such a case, the holders will be able to exercise their warrants prior to redemption for a number of shares of our Class A ordinary shares determined based on the redemption date and the fair market value of our Class A ordinary shares. Please see “Description of Securities—Warrants—Public Shareholders’ Warrants—Redemption of warrants for Class A ordinary shares when the price per Class A ordinary share equals or exceeds $10.00.” The value received upon exercise of the warrants (1) may be less than the value the holders would have received if they had exercised their warrants at a later time where the underlying share price is higher and (2) may not compensate the holders for the value of the warrants, including because the number of ordinary shares received is capped at 0.361 shares of our Class A ordinary shares per warrant (subject to adjustment) irrespective of the remaining life of the warrants.
Our warrants may have an adverse effect on the market price of our Class A ordinary shares and make it more difficult to effectuate our initial business combination.
We will be issuing public warrants to purchase 3,333,333 of our Class A ordinary shares (or up to 3,833,333 Class A ordinary shares 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 450,000 private placement units (or 480,000 private placement units if the underwriters’ over-allotment option is exercised in full). The private placement units will have underlying warrants to purchase an aggregate of 150,000 Class A ordinary shares (or up to 160,000 Class A ordinary shares if the underwriters’ over-allotment option is exercised in full) at $10.00 per unit. In addition, if the sponsor makes any working capital loans, it may convert up to $1,500,000 of such loans into up to an additional 150,000 private placement units, at the price of $10.00 per private placement unit. Our public warrants are also redeemable by us for Class A ordinary shares as described in “Description of Securities—Warrants—Public Shareholders’ Warrants—Redemption of warrants for Class A ordinary shares when the price per Class A ordinary share equals or exceeds $10.00.” To the extent we issue ordinary shares to effectuate a business transaction, the potential for the issuance of a substantial number of additional Class A ordinary shares upon exercise of these warrants could make us a less attractive acquisition vehicle to a partner business. Such warrants, when exercised, will increase the number of issued and outstanding Class A ordinary shares and reduce the value of the Class A ordinary shares 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 partner business.
Because each unit contains one-third of one warrant and only a whole warrant may be exercised, the units may be worth less than units of other blank check companies.
Each unit contains one-third 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 Class A ordinary shares to be issued to the warrant holder. This is different from other offerings similar to ours whose units include one ordinary 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-third 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 partner 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 and the size of this offering is more arbitrary than the pricing of securities and size of an offering of an operating company in a particular industry. You may have less assurance, therefore, that the offering price of our 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, our founding team held customary organizational meetings with 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 ordinary shares and warrants underlying the units, include:
•
the history and prospects of companies whose principal business is the acquisition of other companies; prior offerings of those companies;
•
our prospects for acquiring an operating business at attractive values; a review of debt-to-equity ratios in leveraged transactions;
•
our capital structure;
•
an assessment of our founding team and their experience in identifying operating companies; general conditions of the securities markets at the time of this offering; and
•
other factors as were deemed relevant.
Although these factors were considered, the determination of our offering price 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. Shareholders therefore have no access to information about prior market history on which to base their investment decision. Following this offering, the price of our securities may vary significantly due to one or more potential business combinations and general market or economic conditions, including as a result of the COVID-19 pandemic. 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 shareholders with partner business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective partner businesses.
The federal proxy rules require that a proxy statement with respect to a vote on our proposed business combination include historical and/or pro forma financial statement disclosure. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the U.S. of America, or GAAP, or international financial reporting standards as issued by the International Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (U.S.), or PCAOB. These financial statement requirements may limit the pool of potential partner businesses we may acquire because some partners 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 24 months from the closing of this offering.
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 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 shareholder approval of any golden parachute payments not previously approved. As a result, our shareholders 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 ordinary shares 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 ordinary shares held by non-affiliates equals or exceeds $250 million as of the prior June 30, and (2) our annual revenues equaled or exceeded $100 million during such completed fiscal year and the market value of our ordinary shares held by non-affiliates equals or exceeds $700 million as of the prior June 30. 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 a business combination, require substantial financial and management resources, and increase the time and costs of completing an acquisition.
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. 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 partner 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 acquisition.
Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited.
We are an exempted company incorporated under the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service of process within the U.S. upon our directors or executive officers, or enforce judgments obtained in the U.S. courts against our directors or officers.
Our corporate affairs and the rights of shareholders will be governed by our amended and restated memorandum and articles of association, the Companies Law (as the same may be supplemented or amended from time to time) and the common law of the Cayman Islands. We will also be subject to the federal securities laws of the U.S. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are different from what
they would be under statutes or judicial precedent in some jurisdictions in the U.S. In particular, the Cayman Islands has a different body of securities laws as compared to the U.S., and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the U.S. For a more detailed discussion of the principal differences between the provisions of the Companies Law applicable to us and, for example, the laws applicable to companies incorporated in the U.S. and their shareholders, see the section of this prospectus captioned “Description of Securities—Certain Differences in Corporate Law.”
Shareholders of Cayman Islands exempted companies like the Company have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of the register of members of these companies. Our directors have discretion under our amended and restated memorandum and articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.
We have been advised by Campbells, our Cayman Islands legal counsel, that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the U.S. predicated upon the civil liability provisions of the federal securities laws of the U.S. or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal securities laws of the U.S. or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the U.S., the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by our founding team, members of the board of directors or controlling shareholders than they would as public shareholders of a U.S. company.
Provisions in our amended and restated memorandum and articles of association may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class A ordinary shares and could entrench our founding team.
Our amended and restated memorandum and articles of association will contain provisions that may discourage unsolicited takeover proposals that shareholders may consider to be in their best interests. These provisions will include a staggered board of directors, the ability of the board of directors to designate the terms of and issue new series of preference shares, and the fact that prior to the completion of our initial business combination only holders of our Class B ordinary shares, which have been issued to our sponsor, are entitled to vote on the appointment of directors, which may make more difficult the removal of our founding team and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
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.
Risks Associated with Acquiring and Operating a Business in Foreign Countries
If we pursue a partner company with operations or opportunities outside of the U.S. 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 partner a company with operations or opportunities outside of the U.S. 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;
•
longer payment cycles;
•
tax issues, such as tax law changes and variations in tax laws as compared to U.S. tax laws;
•
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, natural disasters, pandemics and wars;
•
and deterioration of political relations with the U.S.
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 combination, our operations might suffer, either of which may adversely impact our business, financial condition and results of operations.
If our founding team following our initial business combination is unfamiliar with U.S. securities laws, they may have to expend time and resources becoming familiar with such laws, which could lead to various regulatory issues.
Following our initial business combination, our founding team may resign from their positions as officers or directors of the company and the management of the partner business at the time of the business combination will remain in place. Management of the partner business may not be familiar with U.S. securities laws. If new management is unfamiliar with U.S. securities laws, they may have to expend time and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
After our initial business combination, substantially all of our assets may be located in a foreign country and substantially all of our revenue may be derived from our operations in such country. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political and social conditions and government policies, developments and conditions in the country in which we operate.
The economic, political and social conditions, as well as government policies, of the country in which our operations are located could affect our business. Economic growth could be uneven, both geographically and among various sectors of the economy and such growth may not be sustained in the future. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected, there may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially and adversely affect our ability to find an attractive partner business with which to consummate our initial business combination and if we effect our initial business combination, the ability of that partner business to become profitable.
Exchange rate fluctuations and currency policies may cause a partner business’ ability to succeed in the international markets to be diminished.
In the event we acquire a non-U.S. partner, all revenues and income would likely be received in a foreign currency, and the dollar equivalent of our net assets and distributions, if any, could be adversely affected by reductions in the value of the local currency. The value of the currencies in our target regions fluctuate and are affected by, among other things, changes in political and economic conditions. Any change in the relative value of such currency against our reporting currency may affect the attractiveness of any partner business or, following consummation of our initial business combination, our financial condition and results of operations. Additionally, if a currency appreciates in value against the dollar prior to the consummation of our initial business combination, the cost of a partner business as measured in dollars will increase, which may make it less likely that we are able to consummate such transaction.
We may reincorporate in another jurisdiction in connection with our initial business combination, and the laws of such jurisdiction may govern some or all of our future material agreements and we may not be able to enforce our legal rights.
In connection with our initial business combination, we may relocate the home jurisdiction of our business from the Cayman Islands to another jurisdiction. If we determine to do this, the laws of such jurisdiction may govern some or all of our future material agreements. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the U.S. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital.
We are subject to changing law and regulations regarding regulatory matters, corporate governance and public disclosure that have increased both our costs and the risk of non-compliance.
We are subject to rules and regulations by various governing bodies, including, for example, the SEC, which are charged with the protection of investors and the oversight of companies whose securities are publicly traded, and to new and evolving regulatory measures under applicable law. Our efforts to comply with new and changing
laws and regulations have resulted in and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from seeking a business combination partner.
Moreover, because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices. If we fail to address and comply with these regulations and any subsequent changes, we may be subject to penalty and our business may be harmed.
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 founding 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 partner business or businesses; our ability to complete our initial business combination;
•
our expectations around the performance of a prospective partner 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 partner businesses;
•
our ability to consummate an initial business combination due to the uncertainties resulting from the COVID-19 pandemic;
•
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 10,000,000 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 units, 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)
|
|
|
|
$ |
100,000,000 |
|
|
|
|
$ |
115,000,000 |
|
|
|
Gross proceeds from sale of the private placement units offered in a private placement to the sponsor
|
|
|
|
$ |
4,500,000 |
|
|
|
|
$ |
4,800,000 |
|
|
|
Total gross proceeds
|
|
|
|
$ |
104,500,000 |
|
|
|
|
$ |
119,800,000 |
|
|
|
Estimated Offering expenses(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting commissions (2.0% of gross proceeds from units offered to public, excluding deferred portion)(3)
|
|
|
|
$ |
2,000,000 |
|
|
|
|
$ |
2,300,000 |
|
|
|
Legal fees and expenses
|
|
|
|
|
300,000 |
|
|
|
|
|
300,000 |
|
|
|
Printing and engraving expenses
|
|
|
|
|
40,000 |
|
|
|
|
|
40,000 |
|
|
|
Accounting fees and expenses
|
|
|
|
|
60,000 |
|
|
|
|
|
60,000 |
|
|
|
SEC/FINRA Expenses
|
|
|
|
|
33,000 |
|
|
|
|
|
33,000 |
|
|
|
Travel and road show
|
|
|
|
|
20,000 |
|
|
|
|
|
20,000 |
|
|
|
NYSE listing and filing fees
|
|
|
|
|
75,000 |
|
|
|
|
|
75,000 |
|
|
|
Director & Officer liability insurance premiums
|
|
|
|
|
125,000 |
|
|
|
|
|
125,000 |
|
|
|
Miscellaneous
|
|
|
|
|
347,000 |
|
|
|
|
|
347,000 |
|
|
|
Total estimated offering expenses (excluding underwriting commissions)
|
|
|
|
$ |
1,000,000 |
|
|
|
|
$ |
1,000,000 |
|
|
|
Proceeds after estimated offering expenses
|
|
|
|
$ |
101,500,000 |
|
|
|
|
$ |
116,500,000 |
|
|
|
Held in trust account(3)
|
|
|
|
|
100,000,000 |
|
|
|
|
|
115,000,000 |
|
|
|
% of public offering size
|
|
|
|
|
100% |
|
|
|
|
|
100% |
|
|
|
Not held in trust account
|
|
|
|
$ |
1,500,000 |
|
|
|
|
$ |
1,500,000 |
|
|
The following table shows the use of the $1,500,000 of net proceeds not held in the trust account.(4)(5)
| |
|
|
Amount
|
|
|
% of total
|
|
|
Legal, accounting, due diligence, travel, and other expenses in connection with any business combination(6)
|
|
|
|
|
350,000 |
|
|
|
|
|
23.33% |
|
|
|
Legal and accounting fees related to regulatory reporting obligations
|
|
|
|
|
150,000 |
|
|
|
|
|
10.00% |
|
|
|
Administrative and support services
|
|
|
|
|
240,000 |
|
|
|
|
|
16.00% |
|
|
|
NYSE continued listing fees
|
|
|
|
|
55,000 |
|
|
|
|
|
3.67% |
|
|
|
Reserve for Liquidation
|
|
|
|
|
100,000 |
|
|
|
|
|
6.67% |
|
|
|
Other miscellaneous expenses
|
|
|
|
|
605,000 |
|
|
|
|
|
40.33% |
|
|
|
Total
|
|
|
|
$ |
1,500,000 |
|
|
|
|
|
100.0% |
|
|
(1) Includes amounts payable to public shareholders who properly redeem their shares in connection with our successful completion of our initial business combination.
(2) In addition, 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. To date, we have no borrowings under the promissory note with our sponsor. These loans will be repaid upon completion of this offering out of the $1,000,000 of offering proceeds that has been allocated for the payment of offering expenses (other than underwriting commissions) and not to be held in the trust account. 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. In the event that the offering expenses are more than as set forth in this table, we may fund such excess with funds not held in the trust account.
(3) The underwriters have agreed to defer underwriting commissions of 3.5% of the gross proceeds of this offering. Upon and concurrently with the completion of our initial business combination, $3,500,000, which constitutes the underwriters’ deferred commissions (or $4,025,000 if the underwriters’ over-allotment option is exercised in full) will be paid to the underwriters from the funds held in the trust account. See “Underwriting.” The remaining funds, less amounts released to the trustee to pay redeeming shareholders, will be released to us and can be used to pay all or a portion of the purchase price of the business or businesses with which our initial business combination occurs or for general corporate purposes, including payment of principal or interest on indebtedness incurred in connection with our initial business combination, to fund the purchases of other companies or for working capital. The underwriters will not be entitled to any interest accrued on the deferred underwriting discounts and commissions.
(4) 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 partner 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. Assuming an interest rate of 0.2% per year, we estimate the interest earned on the trust account will be approximately $200,000 per year; however, we can provide no assurances regarding this amount.
(5) Assumes no exercise of the underwriters’ over-allotment option.
(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.
NYSE rules and our amended and restated memorandum and articles of association provide that at least 90% of the gross proceeds from this offering and the sale of the private placement units be deposited in a trust account. Of the $104,500,000 in proceeds we receive from this offering and the sale of the private placement units described in this prospectus, or $119,800,000 if the underwriters’ over-allotment option is exercised in full, $100,000,000 ($10.00 per unit), or $115,000,000 if the underwriters’ over-allotment option is exercised in full ($10.00 per unit), will be deposited into a trust account located in the U.S. with Continental Stock Transfer & Trust Company acting as trustee, and $4,500,000, or up to $4,800,000 if the underwriters’ over-allotment option is exercised in full, will be used to pay expenses in connection with the closing of this offering (including the portion of the underwriting commissions payable upon closing of this offering) and for working capital following this offering. We will not be permitted to withdraw any of the principal or interest held in the trust account, except with respect to interest earned on the funds held in the trust account that may be released to us to pay our income taxes, if any, until the earliest of (i) the completion of our initial business combination, (ii) the redemption of our public shares if we have not consummated an 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 shareholder vote to approve an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity. Based on current interest rates, we expect that interest income earned on the trust account (if any) will be sufficient to pay our income taxes.
The net proceeds held in the trust account may be used as consideration to pay the sellers of a partner business with which we ultimately complete our initial business combination. If our initial business combination is paid for using equity or debt, 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 ordinary shares, 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-business combination 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 privately or through loans in connection with our initial business combination.
We believe that amounts not held in trust, together with funds available to us from loans from our sponsor, members of our founding team or any of their affiliates will be sufficient to pay the costs and expenses to which such proceeds are allocated. 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 founding team or any of their affiliates, but such persons are not under any obligation to advance funds to, or invest in, us.
We will reimburse our sponsor for office space, secretarial and administrative services provided to members of our founding team, in the amount of $10,000 per month. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
Our sponsor has agreed to loan us up to $300,000 to be used for a portion of the expenses of this offering. To date, we have no borrowings under the promissory note with our sponsor. These loans are non-interest bearing, unsecured and are due at the earlier of December 31, 2021 and the closing of this offering. The loans will be repaid upon the closing of this offering out of the $1,000,000 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 may repay such loaned amounts out of the proceeds of the trust account released to us. Otherwise, such loans would be repaid only out of funds held outside the trust account. 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 private placement units of the post-business combination company at a price of $10.00 per private placement unit at the option of the lender. The private placement units would be identical to the units. 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, members of our founding team or any of their affiliates 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 ordinary shares 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, and we will only pay such dividend out of our profits or share premium (subject to solvency requirements) as permitted under Cayman Islands law. If we increase the size of this offering, we will effect a share capitalization or other appropriate mechanism immediately prior to the consummation of this offering in such amount as to maintain the number of founder shares, on an as-converted basis, at 20% of our issued and outstanding ordinary shares (excluding the private placement shares underlying the private placement units) upon the consummation of this offering. Further, if we incur any indebtedness in connection with a 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 Class A ordinary share, assuming no value is attributed to the warrants included in the units we are offering pursuant to this prospectus or the private placement warrants, and the pro forma net tangible book value per Class A ordinary share 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 placement warrants, which would cause the actual dilution to the public shareholders 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 Class A ordinary shares which may be redeemed for cash), by the number of outstanding Class A ordinary shares.
At September 4, 2020, our net tangible book deficit was $(30,000), or approximately $(0.01) per ordinary share. After giving effect to the sale of 10,000,000 Class A ordinary shares included in the units we are offering by this prospectus (or 11,500,000 Class A ordinary shares if the underwriters’ over-allotment option is exercised in full), the sale of the private placement units and the deduction of underwriting commissions and estimated expenses of this offering, our pro forma net tangible book value at September 4, 2020 would have been $5,000,009, or $1.37 per share (or $5,000,009, or $1.22 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 9,302,003 Class A ordinary shares that may be redeemed for cash, or 10,749,503 Class A ordinary shares if the underwriters’ over-allotment option is exercised in full) of $1.38 per share (or $1.23 if the underwriters’ over-allotment option is exercised in full) to our sponsor as of the date of this prospectus and an immediate dilution to public shareholders from this offering of $10.00 per public share. Total dilution to public shareholders from this offering will be $8.63 per share (or $8.78 if the underwriters’ over-allotment option is exercised in full).
The following table illustrates the dilution to the public shareholders on a per-share basis, assuming no value is attributed to the warrants included in the units or the private placement units:
| |
|
|
Without
over-
allotment
|
|
|
With
over-
allotment
|
|
|
Public offering price
|
|
|
|
$ |
10.00 |
|
|
|
|
$ |
10.00 |
|
|
|
Net tangible book deficit before this offering
|
|
|
|
|
(0.01) |
|
|
|
|
|
(0.01) |
|
|
|
Increase attributable to public shareholders
|
|
|
|
|
1.38 |
|
|
|
|
|
1.23 |
|
|
|
Pro forma net tangible book value after this offering and the sale of the private placement units
|
|
|
|
|
1.37 |
|
|
|
|
|
1.22 |
|
|
|
Dilution to public shareholders
|
|
|
|
$ |
8.63 |
|
|
|
|
$ |
8.78 |
|
|
|
Percentage of dilution to public shareholders
|
|
|
|
|
86.3% |
|
|
|
|
|
87.8% |
|
|
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 $98,020,039 because holders of up to approximately 93.0% 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 shareholders meeting, including interest earned on the funds held in the trust account and not previously released to us to pay our income taxes, if any, divided by the number of the then-outstanding public shares).
The following table sets forth information with respect to our initial shareholders, who hold our Class B ordinary shares, and the public shareholders:
| |
|
|
Shares Purchased
|
|
|
Total Consideration
|
|
|
Average Price
Per Share
|
|
| |
|
|
Number
|
|
|
Percentage
|
|
|
Amount
|
|
|
Percentage
|
|
|
Class B Ordinary Shares(1)
|
|
|
|
|
2,500,000 |
|
|
|
|
|
19.31% |
|
|
|
|
$ |
25,000 |
|
|
|
|
|
0.02% |
|
|
|
|
$ |
0.01 |
|
|
|
Private Placement Shares
|
|
|
|
|
450,000 |
|
|
|
|
|
3.47% |
|
|
|
|
$ |
4,500,000 |
|
|
|
|
|
4.31% |
|
|
|
|
$ |
10.00 |
|
|
|
Public Shareholders
|
|
|
|
|
10,000,000 |
|
|
|
|
|
77.22% |
|
|
|
|
$ |
100,000,000 |
|
|
|
|
|
95.67% |
|
|
|
|
$ |
10.00 |
|
|
| |
|
|
|
|
12,950,000 |
|
|
|
|
|
100% |
|
|
|
|
$ |
104,025,000 |
|
|
|
|
|
100.00% |
|
|
|
|
|
|
|
|
(1) Assumes no exercise of the underwriters’ over-allotment option and the corresponding forfeiture of 375,000 Class B ordinary shares held by our sponsor.
The pro forma net tangible book value per share after this offering is calculated as follows:
| |
|
|
Without Over-
allotment
|
|
|
With Over-
allotment
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net tangible book deficit before this offering
|
|
|
|
$ |
(30,000) |
|
|
|
|
$ |
(30,000) |
|
|
|
Net proceeds from this offering and sale of the private placement
units(1)
|
|
|
|
|
101,500,000 |
|
|
|
|
|
116,500,000 |
|
|
|
Plus: Offering costs paid in advance, excluded from tangible book value before this offering
|
|
|
|
|
50,039 |
|
|
|
|
|
50,039 |
|
|
|
Less: Deferred underwriting commissions
|
|
|
|
|
(3,500,000) |
|
|
|
|
|
(4,025,000) |
|
|
|
Less: Proceeds held in trust subject to redemption(2)
|
|
|
|
|
(93,020,030) |
|
|
|
|
|
(107,495,030) |
|
|
| |
|
|
|
$ |
5,000,009 |
|
|
|
|
$ |
5,000,009 |
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares outstanding prior to this offering and sale of private placement units
|
|
|
|
|
2,875,000 |
|
|
|
|
|
2,875,000 |
|
|
|
Ordinary shares forfeited if over-allotment is not exercised
|
|
|
|
|
(375,000) |
|
|
|
|
|
— |
|
|
|
Ordinary shares included in the units offered
|
|
|
|
|
10,000,000 |
|
|
|
|
|
11,500,000 |
|
|
|
Ordinary shares included in the private placement units
|
|
|
|
|
450,000 |
|
|
|
|
|
480,000 |
|
|
|
Less: Ordinary shares subject to redemption
|
|
|
|
|
(9,302,003) |
|
|
|
|
|
(10,749,503) |
|
|
| |
|
|
|
|
3,647,997 |
|
|
|
|
|
4,105,497 |
|
|
(1) Expenses applied against gross proceeds include offering expenses of $1,000,000 and underwriting commissions of $2,000,000 or $2,300,000 if the underwriters exercise their over-allotment option. See “Use of Proceeds.”
(2) If we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor, directors, executive officers, advisors or their affiliates may purchase public shares or 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 Class A ordinary shares 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 — Effecting Our Initial Business Combination — Permitted Purchases and Other Transactions with Respect to Our Securities.”
CAPITALIZATION
The following table sets forth our capitalization at September 4, 2020, and as adjusted to give effect to the filing of our amended and restated memorandum and articles of association, the sale of our units in this offering and the private placement units and the application of the estimated net proceeds derived from the sale of such securities:
| |
|
|
September 4, 2020
|
|
| |
|
|
Actual
|
|
|
As Adjusted(1)
|
|
|
Note payable to related party(2)
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
Deferred underwriting commissions(3)
|
|
|
|
|
— |
|
|
|
|
|
3,500,000 |
|
|
|
Class A ordinary shares, $0.0001 par value, 350,000,000 shares authorized; -0- and 9,302,003 shares are subject to possible redemption, respectively(4)
|
|
|
|
|
— |
|
|
|
|
|
93,020,030 |
|
|
|
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued
and outstanding, actual and as adjusted
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Class A ordinary shares, $0.0001 par value, 350,000,000 shares authorized; -0- and 1,147,997 shares issued and outstanding (excluding -0- and 9,302,003 shares subject to possible redemption), actual and as adjusted,
respectively(4)
|
|
|
|
|
— |
|
|
|
|
|
115 |
|
|
|
Class B ordinary shares, $0.0001 par value, 150,000,000 shares authorized, 2,875,000 and 2,500,000 shares issued and outstanding, actual and as adjusted, respectively
|
|
|
|
|
288 |
|
|
|
|
|
250 |
|
|
|
Additional paid-in capital
|
|
|
|
|
24,712 |
|
|
|
|
|
5,004,605 |
|
|
|
Accumulated deficit
|
|
|
|
|
(4,961) |
|
|
|
|
|
(4,961) |
|
|
|
Total shareholders’ equity
|
|
|
|
$ |
20,039 |
|
|
|
|
$ |
5,000,009 |
|
|
|
Total capitalization
|
|
|
|
$ |
20,039 |
|
|
|
|
$ |
101,520,039 |
|
|
(1) Assumes no exercise of the underwriters’ over-allotment option and the corresponding forfeiture of 375,000 Class B ordinary shares held by our sponsor.
(2) Our sponsor has agreed to loan us up to $300,000 under an unsecured promissory note to be used for a portion of the expenses of this offering. To date, we have not borrowed any amounts under the note.
(3) $0.35 per Unit, or $3,500,000 ($4,025,000 if the over-allotment is exercised in full), will be payable to the underwriters for deferred underwriting commissions. The deferred underwriting commissions will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement. The Company records deferred underwriting commissions upon the closing of the initial public offering as a reduction of additional paid-in capital. Since the actual additional paid-in capital was reduced by the recording of the accrued deferred underwriting commission, total capitalization, as adjusted, includes the amount of the deferred underwriting commission to reflect total capitalization.
(4) Upon the completion of our initial business combination, we will provide our public shareholders 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 the initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our income taxes, if any, divided by the number of the 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 and any limitations (including, but not limited to, cash requirements) created by the terms of the proposed business combination.
Management’s discussion and analysis of
financial condition and results of operations
Overview
We are a blank check company incorporated on August 21, 2020 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. We have not selected any business combination partner and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination partner. We intend to effectuate our initial business combination using cash from the proceeds of this offering and the sale of the private placement units, our shares, debt or a combination of cash, equity and debt.
The issuance of additional shares in a business combination:
•
may significantly dilute the equity interest of investors in this offering, which dilution would increase if the anti-dilution provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares;
•
may subordinate the rights of holders of Class A ordinary shares if preference shares are issued with rights senior to those afforded our Class A ordinary shares;
•
could cause a change in control if a substantial number of our Class A ordinary shares 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;
•
may adversely affect prevailing market prices for our units, Class A ordinary shares and/or warrants; and
•
may not result in adjustment to the exercise price of our warrants. Similarly, if we issue debt or otherwise incur significant debt, 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 ordinary shares;
•
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 ordinary shares 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, as of September 4, 2020, we had no cash and deferred offering costs of approximately $50,039. 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. These factors, among others, raise substantial doubt about our ability to continue as a going concern.
Results of operations and known trends or future events
We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities and those necessary to prepare for this offering.
Following this offering, we will not generate any operating revenues until after completion of our initial business combination. We will generate non-operating income in the form of interest income on cash and cash equivalents after this offering. There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements. After this offering, we expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
We expect our expenses to increase substantially after the closing of this offering.
Liquidity and capital resources
Our liquidity needs have been satisfied prior to the completion of this offering through receipt of $25,000, or approximately $0.0087 per share, to cover for certain offering costs in consideration for 2,875,000 founder shares. We estimate that the net proceeds from (i) the sale of the units in this offering, after deducting offering expenses of $1,000,000, underwriting commissions of $2,000,000, or $2,300,000 if the underwriters’ over-allotment option is exercised in full (excluding deferred underwriting commissions of $3,500,000, or $4,025,000 if the underwriters’ over-allotment option is exercised in full), and (ii) the sale of the private placement units for a purchase price of $4,500,000 (or $4,800,000 if the underwriters’ over-allotment option is exercised in full) will be $101,500,000 (or $116,500,000 if the underwriters’ over-allotment option is exercised in full). $100,000,000 (or $115,000,000 if the underwriters’ over-allotment option is exercised in full) will be held in the trust account, which includes the deferred underwriting commissions 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. The remaining $1,500,000 will not be held in the trust account. In the event that our offering expenses exceed our estimate of $1,000,000, 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 $1,000,000, 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 (less taxes payable and deferred underwriting commissions), to complete our initial business combination. We may withdraw interest income (if any) to pay income taxes, if any. 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 income earned on the amount in the trust account (if any) 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 partner 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 $1,500,000 of proceeds held outside the trust account, as well as certain funds from loans from our sponsor, members of our management team or any of their affiliates. We will use these funds to primarily identify and evaluate partner
businesses, perform business due diligence on prospective partner businesses, travel to and from the offices, plants or similar locations of prospective partner businesses or their representatives or owners, review corporate documents and material agreements of prospective partner 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 the completion of our initial business combination, other than funds available from loans from our sponsor, members of our management team or any of their affiliates. However, if our estimates of the costs of identifying a partner 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 the completion of 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 may 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 private placement units of the post-business combination company at a price of $10.00 per private placement unit at the option of the lender. The private placement units would be identical to the units. 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, members of our management team or any of their affiliates 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 $350,000 for legal, accounting, due diligence, travel and other expenses in connection with any business combinations; $150,000 for legal and accounting fees related to regulatory reporting obligations; $605,000 for miscellaneous expenses incurred during the search for an initial business combination partner; $55,000 for NYSE continued listing fees; and $100,000 will be used as a reserve for or liquidation.
We will also reimburse our sponsor for office space, secretarial and administrative services provided to us in the amount of $10,000 per month ($240,000 in the aggregate). 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 partner business or as a down payment or to fund a “no-shop” provision (a provision designed to keep partner businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such partner 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 partner 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 partner 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. If we have not consummated our initial business combination within 24 months from the closing of this offering because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account.
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 qualify as an emerging growth company would we be required to comply with the independent registered public accounting firm attestation requirement on internal control over financial reporting. 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 have our auditors tested our systems, of our internal controls. We expect to assess the internal controls of our partner 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 partner 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 partner businesses we may consider for our initial business combination may have internal controls that need improvement in areas such as:
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staffing for financial, accounting and external reporting areas, including segregation of duties; reconciliation of accounts;
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proper recording of expenses and liabilities in the period to which they relate;
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evidence of internal review and approval of accounting transactions;
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documentation of processes, assumptions and conclusions underlying significant estimates; and 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 partner business, we may incur significant expenses in meeting our public reporting responsibilities, particularly in the areas of designing, enhancing, or remediating internal and disclosure controls. Doing so effectively may also take longer than we expect, thus increasing our exposure to financial fraud or erroneous financing reporting.
Once our management’s report on internal controls is complete, we will retain our independent auditors to audit and render an opinion on such report when required by Section 404 of the Sarbanes-Oxley Act. The independent auditors may identify additional issues concerning a partner 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 units 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 September 4, 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 auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (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 auditor’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 chief executive officer’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our initial public offering or until we are no longer an “emerging growth company,” whichever is earlier.
Proposed business
General
We are a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We were incorporated on August 21, 2020 as a Cayman exempted company and, to date, our efforts have been limited to organizational activities as well as activities related to this offering. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. We have generated no operating revenues to date and we do not expect to generate operating revenues until we consummate our initial business combination.
While we may pursue an acquisition opportunity in any business, industry, sector or geographical location, we intend to capitalize on our management team’s background to identify and acquire a business in the life sciences industry. In particular, we will target companies in the biotechnology sector where our management team has extensive experience with a focus on identifying target businesses in developed countries including, but not limited to, the United States and countries in Europe. We may pursue a transaction in which our shareholders immediately prior to the completion of our initial business combination would collectively own a minority interest in the post-business combination company.
Industry opportunity
While we may acquire a company in any industry, our focus will be on the healthcare industry, particularly the biotechnology sector, in developed countries including, but not limited to, the United States and countries in Europe. We believe the healthcare industry, particularly the biotechnology sector, represents an enormous and growing target market with a large number of potential target acquisition opportunities. Moreover, we believe that biotechnology companies have unique characteristics that make them attractive public company investment opportunities, and that an acquisition by a special purpose acquisition company may prove to be a superior way for a private company to access the public markets.
According to the United States Centers for Medicare and Medicaid Service, or CMS, U.S. national healthcare expenditures in 2018 exceeded $3.6 trillion, representing approximately 18% of total U.S. gross domestic product. CMS projected national healthcare expenditures to grow at an average rate of 5.5% annually between 2018 and 2027, above the projected growth rate for the overall U.S. economy, and that by 2027 national healthcare expenditures may reach $6.0 trillion. As of 2018, spending on prescription drugs represented approximately 10% of national healthcare expenditures.
Accompanying the overall growth of the healthcare industry in the United States has been a shift in the research and development strategies pursued by many large pharmaceutical companies in the United States and Europe, away from internal activities and towards external research and development through licensing partnerships and strategic acquisitions. According to EvaluatePharma, between 2012 and 2019 the dollar volume of up-front payments made in biopharma licensing transactions grew from approximately $3.5 billion to $8 billion, and the dollar volume of acquisition transactions grew from approximately $60 billion to over $200 billion.
Moreover, the biotechnology industry has undergone a rapid increase in the pace of innovation over the past 10 years, which can be measured by the number of FDA approvals of novel drugs, defined as drugs containing an active ingredient that has never been approved in the United States. In 2019, the FDA approved 48 novel drugs versus 21 in 2010. We believe the accelerating pace of approvals reflects scientific breakthroughs in computing, genetics, translational medicine and an increase in our understanding of the biological basis of disease, as well as from a more accommodative regulatory environment offering multiple accelerated pathways for drug approval. We believe that the biotechnology industry will continue to be one of the most innovative sectors of the U.S. economy, providing ample opportunities to acquire a private company that will fit our acquisition criteria as described below.
Separate and apart from the industry dynamics described above, we believe pre-commercial biotechnology companies represent attractive investment opportunities. The scientific and clinical risk embedded in these companies is relatively uncorrelated with dynamics in the broader economy, making them potential sources of uncorrelated investment returns. In addition, we believe that the ongoing global COVID-19 pandemic and subsequent performance of the biotechnology industry highlights both the importance and resilience of this innovative industry. Investing in pre-commercial biotechnology companies benefits from specialized training, knowledge, and experience and many dedicated healthcare investors possess advanced degrees in medicine or science. We believe this creates barriers to entry to investing in these companies, creating an opportunity for us to acquire an attractive private company.
Finally, we believe an acquisition by a special purpose acquisition company may become a preferred route for a private company to access the public markets. According to the Biotechnology Innovation Organization, or BIO, the number of pre-commercial biotechnology companies completing an initial public offering, or IPO, in the United States grew from 11 companies in 2010 to 41 companies in 2019. Embedded in this overall trend, however, is significant volatility: for example, there were 55 IPOs of pre-commercial biotechnology companies in 2014, which fell to 22 in 2016. This volatility makes accessing the public markets via a traditional IPO subject to significant uncertainty that is not present when accessing the public markets via an acquisition by a special purpose acquisition company. We believe there other are factors increasing the attractiveness of an acquisition by a special purpose acquisition vehicle versus a traditional IPO, including a potentially faster overall timeline to accessing the public markets, and the ability to combine pre-IPO private financing rounds, now commonly referred to as “crossovers,” and an IPO into a single transaction consisting of an acquisition and concurrent private placement.
Our competitive advantage, investment process, and investment criteria
We believe our management team and Board of Directors possess an attractive combination of operational, transactional and investment experience that offers us a significant potential advantage as we seek to identify, evaluate and acquire a private company in the life sciences and biotechnology industry. We believe this experience, combined with our relationship with the team at Consonance Capital Management make us a preferred counterparty for a private company seeking to access the public markets. In addition, we believe that the combination of investing expertise, both in the public and private markets, and industry operating experience in both public and private biotechnology companies has the potential to add value to a target business beyond the initial business combination.
We believe our management team and Board of Directors are differentiated among other special purpose acquisition vehicles focused on the healthcare or biotechnology industry. Certain members of our management team will be dedicated full-time to the process of identifying, evaluating and negotiating with an acquisition target for our initial business combination. Our management team and Board of Directors have significant, meaningful experience as executives, clinicians, project leaders, corporate strategists and business development heads within public and private biotechnology companies. We have led the preparation and filing of multiple INDs, NDAs and Biologics License Applications, or BLAs, utilizing both regular and accelerated pathways. We have executed in- and out-licensing, M&A and capital markets transactions totaling well in excess of $10 billion, both in leadership roles at life sciences and biotechnology companies and investment banks. Our management team and Board of Directors have broad and deep relationships in the life sciences and biotechnology ecosystem, including with venture capitalists, public investors, private and public company executives, academics and key opinion leaders, investment bankers and lawyers which we expect to leverage to identify and evaluate potential acquisition opportunities. Our team’s investment experience spans the public, venture capital, and private equity markets in healthcare and life sciences.
Given our significant operating experience, we believe our management team and Board of Directors are well positioned to both oversee detailed due diligence of a potential acquisition and contribute meaningfully to such company after the closing of our initial business combination. With regard to due diligence, our management team is intimately familiar with the details of drug development and will be able to critically evaluate a target company’s pre-clinical and clinical data, non-clinical and clinical development plans, manufacturing and operating
plans and regulatory filings. After we complete our initial business combination, we believe that we can offer significant insight and guidance to the company on business development and financial strategy, operations, portfolio and pipeline prioritization, investor relations and communications and assist with the identification and recruitment of key members to the executive and functional leadership team. We believe this has the potential to make us an attractive partner for certain companies considering accessing the public markets.
We expect to combine this extensive operating experience with our significant investment management experience, giving us a multi-faceted perspective on which companies are likely to make a successful transition to becoming publicly traded. Our target identification and evaluation process is centered on five key areas: a defined investment universe with a life sciences and biotechnology focus; systematic idea generation both internally and through our network; conduct of fundamental research and due diligence informed by our real-world operating experience; a formal investment committee review; and finally transaction execution. We intend to use the following criteria to evaluate investment opportunities:
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Multiple “shots on goal”. Prioritizing targets with multiple clinical and or pre-clinical product candidates in its pipeline, diversifying risk away from a single asset and providing multiple potential catalysts for value creation, business development or financing activities once public.
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Validated science. Existing clinical or preclinical data, whether or not generated by the target company, suggesting a validated biologic or mechanistic rationale for the most advanced product candidates in its pipeline.
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High unmet need. Pre-clinical or clinical development programs designed to address significant challenges in areas of high unmet need where opportunities exist for accelerated clinical development and registration due to the paucity of existing treatments or the limited safety or efficacy of current treatments.
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Asymmetric risk/reward. Companies with a valuation at acquisition suggesting an attractive risk/reward profile for investors.
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Management track record. Management team with significant scientific, clinical, and operational expertise, with a track record of drug development giving us confidence that they can execute against stated timelines.
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Company would benefit from becoming a public company. Company would be funded well beyond significant value inflection points once our transaction is complete, and would benefit from our experience and network to bring value to patients and shareholders.
These criteria are not meant 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 criteria as well as other considerations, factors, criteria and guidelines that our management may deem relevant.
Initial business combination
NYSE rules and our amended and restated memorandum and articles of association require that our initial business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the trust account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount of any deferred underwriting discount). We refer to this as the 80% net assets test. If our board of directors is not able to independently determine the fair market value of the partner business or businesses or we are considering an initial business combination with an affiliated entity, we will obtain an opinion from an independent investment banking firm which is a member of the Financial Industry Regulatory Authority, Inc., or FINRA, or an independent valuation or accounting firm with respect to the satisfaction of such criteria. Our shareholders may not be provided with a copy of such opinion nor will they be able to rely on such opinion.
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 a partner business or businesses, it may be unable to do so if the board of directors is less familiar or experienced with the partner company’s business, there is a significant amount of uncertainty as to the value of the company’s assets or prospects, including if such company is at an early stage of development, operations or growth, or if the anticipated transaction involves a complex financial analysis or other specialized
skills and the board of directors determines that outside expertise would be helpful or necessary in conducting such analysis. Since any opinion, if obtained, would merely state that the fair market value of the partner business meets the 80% of net assets test, unless such opinion includes material information regarding the valuation of a partner business or the consideration to be provided, it is not anticipated that copies of such opinion would be distributed to our shareholders. However, if required under applicable law, any proxy statement that we deliver to shareholders and file with the SEC in connection with a proposed transaction will include such opinion.
We may pursue an initial business combination opportunity jointly with our sponsor, Consonance Life Sciences, or one or more affiliates of and/or investors in Consonance Capital, which we refer to as an “Affiliated Joint Acquisition”. Any such parties may co-invest with us in the partner business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by issuing to such parties a class of equity or equity-linked securities. Any such issuance of equity or equity-linked securities would, on a fully diluted basis, reduce the percentage ownership of our then-existing shareholders. Notwithstanding the foregoing, pursuant to the anti-dilution provisions of our Class B ordinary shares, issuances or deemed issuances of Class A ordinary shares or equity-linked securities (other than the forward purchase securities) would result in an adjustment to the ratio at which Class B ordinary shares shall convert into Class A ordinary such that our sponsor and its permitted transferees, if any, would retain its aggregate percentage ownership at 20%, on an as-converted basis, of the sum of (i) the total number of ordinary shares issued and outstanding upon the consummation of this offering, plus (ii) the sum of the total number of Class A ordinary shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities (as defined herein) or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial business combination (net of any redemptions of Class A ordinary shares by public shareholders), excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, deemed issued, or to be issued, to any seller in the initial business combination and any private placement warrants issued to our sponsor, members of our founding team or any of their affiliates upon conversion of working capital loans, unless the holders of a majority of the then outstanding Class B ordinary agree to waive such adjustment with respect to such issuance or deemed issuance at the time thereof. In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one-to-one. Neither our sponsor nor Consonance Capital Management nor any of their respective affiliates, have an obligation to make any such investment.
We anticipate structuring our initial business combination so that the post-business combination company in which our public shareholders own shares will own or acquire 100% of the equity interests or assets of the partner business or businesses. We may, however, structure our initial business combination such that the post-business combination company owns or acquires less than 100% of such interests or assets of the partner business in order to meet certain objectives of the partner management team or shareholders or for other reasons including an Affiliated Joint Acquisition, as described above, but we will only complete such business combination if the post-business combination company owns or acquires 50% or more of the outstanding voting securities of the partner or otherwise acquires a controlling interest in the partner business 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-business combination company owns or acquires 50% or more of the voting securities of the partner, our shareholders prior to the business combination may collectively own a minority interest in the post-business combination company, depending on valuations ascribed to the partner 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, shares or other equity interests of a partner. In this case, we would acquire a 100% controlling interest in the partner. However, as a result of the issuance of a substantial number of new shares, our shareholders immediately prior to the completion of 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 partner business or businesses are owned or acquired by the post-business combination company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If the business combination involves more than one partner business, the 80% of net assets test will be based on the aggregate value of all
of the partner businesses and we will treat the partner businesses together as the initial business combination for purposes of a tender offer or for seeking shareholder approval, as applicable.
Our sponsor has indicated an interest to purchase up to an aggregate of 2,500,000 of our Class A ordinary shares (for $10.00 per share or $25,000,000 in the aggregate) in a private placement that would occur concurrently with the consummation of our initial business combination. The capital from such private placement would be used as part of the consideration to the sellers in our initial business combination, and any excess capital from such private placement would be used for working capital in the post-transaction company. However, because indications of interest are not binding agreements or commitments to purchase, our sponsor may determine not to purchase any such shares, or to purchase fewer shares than it has indicated an interest in purchasing. We are not under any obligation to sell any such shares. Such investment would be made on terms and conditions determined at the time of the business combination. If we sell shares to our sponsor (or any other investor) in connection with our initial business combination, the equity interest of investors in this offering in the combined company may be diluted and the market prices for our securities may be adversely affected. In addition, if the per share trading price of our Class A ordinary shares is greater than the price per share paid in the private placement, the private placement will result in value dilution to you, in addition to the immediate dilution that you will experience in connection with the consummation of this offering. See “Dilution.”
Sourcing of potential initial business combination targets
Certain members of our management team have spent significant portions of their careers working with businesses in the healthcare industry, and have developed a wide network of professional services contacts and business relationships in that industry. The members of our board of directors also have significant executive management and public company experience with healthcare and healthcare-related companies. We believe that the network of contacts and relationships of our management team will provide us with an important source of acquisition opportunities. In addition, we anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including private investment funds, investment market participants, private equity groups, investment banks, consultants, accounting firms and large business enterprises. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings. These sources may also introduce us, on an unsolicited basis, to target businesses in which they think we may be interested, since many of these sources will have read this prospectus and know what types of businesses we are targeting. Our officers and directors, as well as their affiliates, may also bring to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions. In addition, we expect to receive a number of proprietary opportunities that would not otherwise necessarily be available to us as a result of the track record and business relationships of our officers and directors.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, executive officers or directors, or making the acquisition 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 which is a member of FINRA or a qualified independent accounting firm that such an 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.
As more fully discussed in “Management — Conflicts of Interest,” if any of our executive officers becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us. In addition, Certain of our executive officers currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us.
Other considerations
We are not prohibited from pursuing an initial business combination or subsequent transaction with a company that is affiliated with Consonance Capital, our sponsor, founders, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with Consonance Capital, our sponsor or any of our founders, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent valuation or accounting firm that such initial business combination or transaction is fair to our company from a financial point of view.
Affiliates of Consonance Capital Management and members of our board of directors will directly or indirectly own founder shares and private placement units following this offering and, accordingly, may have a conflict of interest in determining whether a particular partner 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 or directors were to be included by a partner business as a condition to any agreement with respect to our initial business combination.
We currently do not have any specific business combination under consideration. Our officers and directors have neither individually selected nor considered a partner business nor have they had any substantive discussions regarding possible partner businesses among themselves or with our underwriters or other advisors. Consonance Capital is continuously made aware of potential business opportunities, one or more of which we may desire to pursue for a business combination, but we have not (nor has anyone on our behalf) contacted any prospective partner business or had any substantive discussions, formal or otherwise, with respect to a business combination transaction with our company. We have not (nor have any of our agents or affiliates) been approached by any candidates (or representative of any candidates) with respect to a possible acquisition transaction with our company and we will not consider a business combination with any company that has already been identified to Consonance Capital as a suitable acquisition candidate for it, unless Consonance Capital, in their sole discretion, declines such potential business combination or makes available to our company a co-investment opportunity in accordance with Consonance Capital’s applicable existing and future policies and procedures. Additionally, we have not, nor has anyone on our behalf, taken any substantive measure, directly or indirectly, to select or locate any suitable acquisition candidate for us, nor have we engaged or retained any agent or other representative to select or locate any such acquisition candidate.
Consonance Capital may manage multiple investment vehicles and raise additional funds and/or successor funds in the future, which may be during the period in which we are seeking our initial business combination. These Consonance Capital investment entities may be seeking acquisition opportunities and related financing at any time. We may compete with any one or more of them on any given acquisition opportunity.
In addition, certain of our founders, officers and directors presently have, and any of them in the future may have additional, fiduciary and contractual duties to other entities, including without limitation, investment funds, accounts, co-investment vehicles and other entities managed by affiliates of Consonance Capital and certain companies in which Consonance Capital or such entities have invested. As a result, if any of our founders, officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he, she or it has then-current fiduciary or contractual obligations (including, without limitation, any Consonance Capital funds or other investment vehicles), then, subject to their fiduciary duties under applicable law, he or she will need to honor such fiduciary or contractual obligations to present such business combination opportunity to such entity, before we can pursue such opportunity. If these funds or investment entities decide to pursue any such opportunity, we may be precluded from pursuing the same. In addition, investment ideas generated within or presented to Consonance Capital or our founders may be suitable for both us and a current or future Consonance Capital fund, portfolio company or other investment entity and, subject to applicable fiduciary duties, will first be directed to such fund, portfolio company or other entity before being directed, if at all, to us. None of Consonance Capital, our founders or any members of our board of directors who are also employed by
Consonance Capital or their affiliates have any obligation to present us with any opportunity for a potential business combination of which they become aware solely in their capacities as officers or executives of Consonance Capital.
In addition, our founders, certain 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 management time among various business activities, including identifying potential business combinations and monitoring the related due diligence. Moreover, our founders, certain officers and directors have, and will have in the future, time and attention requirements for current and future investment funds, accounts, co-investment vehicles and other entities managed by Consonance Capital. To the extent any conflict of interest arises between, on the one hand, us and, on the other hand, investments funds, accounts, co-investment vehicles and other entities managed by Consonance Capital (including, without limitation, arising as a result of certain of our founders, officers and directors being required to offer acquisition opportunities to such investment funds, accounts, co-investment vehicles and other entities), Consonance Capital and their affiliates will resolve such conflicts of interest in their sole discretion in accordance with their then existing fiduciary, contractual and other duties and there can be no assurance that such conflict of interest will be resolved in our favor.
Corporate information
Our executive offices are located at 1 Palmer Square, Suite 305, Princeton, NJ 08540. We maintain a corporate website at . The information contained on or accessible through our corporate website or any other website that we may maintain is not part of this prospectus or the registration statement of which this prospectus is a part.
We are a Cayman Islands exempted company. Exempted companies are Cayman Islands companies conducting business mainly outside the Cayman Islands and, as such, are exempted from complying with certain provisions of the Companies Law. As an exempted company, we have applied for and received a tax exemption undertaking from the Cayman Islands government that, in accordance with Section 6 of the Tax Concessions Law (2018 Revision) of the Cayman Islands, for a period of 20 years from the date of the undertaking, no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations will apply to us or our operations and, in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax will be payable (i) on or in respect of our shares, debentures or other obligations or (ii) by way of the withholding in whole or in part of a payment of dividend or other distribution of income or capital by us to our shareholders or a payment of principal or interest or other sums due under a debenture or other obligation of us.
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or 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 shareholder 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 ordinary shares that are 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 during the prior three-year period. References herein to “emerging growth company” 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 ordinary shares held by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our ordinary shares held by non-affiliates exceeds $700 million as of the end of that year’s second fiscal quarter. 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.
Status as a public company
We believe our structure will make us an attractive business combination partner to partner businesses. As an existing public company, we offer a partner business an alternative to the traditional initial public offering through a merger or other business combination with us. In a business combination transaction with us, the owners of the partner business may, for example, exchange their capital stock, shares or other equity interests in the partner business for our Class A ordinary shares (or shares of a new holding company) or for a combination of our Class A ordinary shares and cash, allowing us to tailor the consideration to the specific needs of the sellers. We believe partner businesses will find this method a more expeditious and cost effective method to becoming a public company than the typical initial public offering. The typical initial public offering process takes a significantly longer period of time than the typical business combination transaction process, and there are significant expenses in the initial public offering process, including underwriting discounts and commissions, that may not be present to the same extent in connection with a business combination with us.
Furthermore, once a proposed business combination is completed, the partner business will have effectively become public, whereas an initial public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could delay or prevent the offering from occurring or have negative valuation consequences. Once public, we believe the partner business would then have greater access to capital, an additional means of providing management incentives consistent with shareholders’ interests and the ability to use its shares as currency for acquisitions.
Being a public company can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
While we believe that our structure and our founding team’s backgrounds will make us an attractive business partner, some potential partner businesses may view our status as a blank check company, such as our lack of an operating history and our ability to seek shareholder approval of any proposed initial business combination, negatively.
Financial position
With funds available for a business combination initially in the amount of $96,500,000, after payment of the estimated expenses of this offering, estimated working capital requirements after this offering and $3,500,000 of deferred underwriting fees (or $110,975,000 after payment of the estimated expenses of this offering and $4,025,000 of deferred underwriting fees if the underwriters’ over-allotment option is exercised in full), we offer a partner 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 partner business to fit its needs and desires. However, we have not taken any steps to secure third party financing and there can be no assurance it will be available to us.
Effecting our initial business combination
General
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, the sale of the private placement units, our equity, debt or a combination of these as the consideration to be paid in our initial business combination. We may seek to complete our initial business combination with a company or business that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
If our initial business combination is paid for using equity or debt, 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 ordinary shares, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of the post-business combination 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 business combination partner and we have not, nor has anyone on our behalf, initiated any substantive discussions with any business combination partner. Additionally, we have not engaged or retained any agent or other representative to identify or locate any suitable acquisition candidate, to conduct any research or take any measures, directly or indirectly, to locate or contact a partner business, other than our officers and directors.
Accordingly, there is no current basis for investors in this offering to evaluate the possible merits or risks of the partner business with which we may ultimately complete our initial business combination.
Although our founding team will assess the risks inherent in a particular partner business with which we may combine, we cannot assure you that this assessment will result in our identifying all risks that a partner 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 partner 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.
Sources of partner businesses
Our process of identifying acquisition partners will leverage our founding team’s unique industry experiences, proven deal sourcing capabilities and broad and deep network of relationships in numerous industries, including executives and management teams, private equity groups and other institutional investors, large business enterprises, lenders, investment bankers and other investment market participants, restructuring advisers, consultants, attorneys and accountants, which we believe should provide us with a number of business combination opportunities. We expect that the collective experience, capability and network of our founders, directors and officers, combined with their individual and collective reputations in the investment community, will help to create prospective business combination opportunities.
In addition, we anticipate that partner business candidates may be brought to our attention from various unaffiliated sources, including investment bankers and private investment funds. Partner businesses may be
brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings. These sources may also introduce us to partner businesses in which they think we may be interested on an unsolicited basis, since many of these sources will have read this prospectus and know what types of businesses we are pursuing. Our officers and directors, as well as their affiliates, may also bring to our attention partner business candidates of which they become aware through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions.
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 founding team 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 founding team 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). None of our sponsor, executive officers or directors, or any of their respective affiliates, will be allowed to receive any compensation, finder’s fees or consulting fees from a prospective business combination partner in connection with a contemplated acquisition of such partner by us. We have agreed to pay our sponsor a total of $10,000 per month for office space, secretarial and administrative support and to reimburse our sponsor for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination. Some of our officers and directors may enter into employment or consulting agreements with the post-business combination company following our initial business combination.
We are not prohibited from pursuing an initial business combination or subsequent transaction with a company that is affiliated with our sponsor, founders, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor or any of our founders, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent valuation or accounting firm that such initial business combination or transaction is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
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, including any future special purpose acquisition companies we expect they may be involved in and entities that are affiliates of our sponsor, 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, subject to their fiduciary duties under Cayman Islands law. In addition, existing and future funds managed by Consonance Capital and their respective portfolio companies may compete with us for business combination opportunities and if such opportunities are pursued by such entities, we may be precluded from pursuing such opportunities. All of our executive officers currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us. In addition, we may pursue an Affiliated Joint Acquisition opportunity with an entity to which an officer or director has a fiduciary or contractual obligation. Any such entity may co-invest with us in the partner business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by issuing to such entity a class of equity or equity-linked securities. Our amended and restated articles of association 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. See “Management — Conflicts of Interest.”
Evaluation of a partner business and structuring of our initial business combination
In evaluating a prospective partner business, we expect to conduct a thorough due diligence review which may encompass, among other things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial, operational, legal and other information which will be made available to us. If we determine to move forward with a particular partner, we will proceed to structure and negotiate the terms of the business combination transaction.
The time required to identify and evaluate a partner 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 partner 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 founding team, or any of their respective affiliates, for services rendered to or in connection with our initial business combination. In addition, we have agreed not to enter into a definitive agreement regarding an initial business combination without the prior consent of our sponsor.
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 partner’s management team
Although we intend to closely scrutinize the management of a prospective partner business when evaluating the desirability of effecting our initial business combination with that business, our assessment of the partner 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 founding team, if any, in the partner business cannot presently be stated with any certainty. The determination as to whether any of the members of our founding 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 founding team will have significant experience or knowledge relating to the operations of the particular partner 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 partner 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.
Shareholders may not have the ability to approve our initial business combination
We may conduct redemptions without a shareholder vote pursuant to the tender offer rules of the SEC subject to the provisions of our amended and restated memorandum and articles of association. However, we will seek shareholder approval if it is required by applicable law or stock exchange rule, or we may decide to seek shareholder approval for business or other reasons.
Under NYSE rules and our amended and restated memorandum and articles of association, shareholder 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) ordinary shares that will either (a) be equal to or in excess of 20% of the number of ordinary shares then issued and outstanding or (b) have voting power equal to or in excess of 20% of the voting power then issued and outstanding;
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any of our directors, officers or substantial security holders (as defined by NYSE rules) has a 5% or greater interest, directly or indirectly, in the partner business or assets to be acquired and if the number of ordinary shares to be issued, or if the number of ordinary shares into which the securities may be convertible or exercisable, exceeds either (a) 1% of the number of ordinary shares or 1% of the voting power outstanding before the issuance in the case of any of our directors and officers or (b) 5% of the number of ordinary shares or 5% of the voting power outstanding before the issuance in the case of any substantial security holders; or
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the issuance or potential issuance of ordinary shares will result in our undergoing a change of control.
The Companies Law and Cayman Islands law do not currently require, and we are not aware of any other applicable law that will require, shareholder approval of our initial business combination.
The decision as to whether we will seek shareholder approval of a proposed business combination in those instances in which shareholder approval is not required by law will be made by us, solely in our discretion, and will be based on business and legal reasons, which include a variety of factors, including, but not limited to:
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the timing of the transaction, including in the event we determine shareholder approval would require additional time and there is either not enough time to seek shareholder approval or doing so would place the company at a disadvantage in the transaction or result in other additional burdens on the company;
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the expected cost of holding a shareholder vote;
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the risk that the shareholders would fail to approve the proposed business combination; other time and budget constraints of the company; and
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additional legal complexities of a proposed business combination that would be time-consuming and burdensome to present to shareholders.
Permitted purchases and other transactions with respect to our securities
If we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor, directors, executive officers, advisors or their affiliates may purchase public shares or warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. Additionally, at any time at or prior to our initial business combination, subject to applicable securities laws (including with respect to material nonpublic information), our sponsor, directors, executive officers, advisors or their affiliates may enter into transactions with investors and others to provide them with incentives to acquire public shares, vote their public shares in favor of our initial business combination or not redeem their public shares. 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 public shares or 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, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights or submitted a proxy to vote against our initial business combination, such selling shareholders would be required to revoke their prior elections to redeem their shares and any proxy to vote against our initial business combination. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will be required to comply with such rules.
The purpose of any such transactions could be to (i) vote such shares in favor of the business combination and thereby increase the likelihood of obtaining shareholder approval of the business combination, (ii) to satisfy a closing condition in an agreement with a partner business 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 or (iii) reduce the number of public warrants outstanding or vote such warrants or any matter submitted to the warrant holders 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 ordinary shares 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, officers, directors and/or their affiliates anticipate that they may identify the shareholders with whom our sponsor, officers, directors or their affiliates may pursue privately negotiated transactions by either the shareholders contacting us directly or by our receipt of redemption requests submitted by shareholders (in the case of Class A ordinary shares) following our mailing of tender offer or 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 transaction, they would identify and contact only potential selling or redeeming shareholders 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 shareholder has already submitted a proxy with respect to our initial business combination but only if such shares have not already been voted at the general meeting related to our initial business combination. Our sponsor, executive officers, directors, advisors or their affiliates will select which shareholders to purchase shares from based on the negotiated price and number of shares and any other factors that they may deem relevant, and will be restricted from purchasing shares if such purchases do not 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 would be reported by such person pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements.
Redemption rights for public shareholders upon completion of our initial business combination
We will provide our public shareholders with the opportunity to redeem all or a portion of their Class A ordinary 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 the initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our income taxes, if any, divided by the number of the then-outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.00 per public share. The per share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters.
The redemption rights may include the requirement that a beneficial holder must identify itself in order to validly redeem its shares. There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Further, we will not proceed with redeeming our public shares, even if a public shareholder has properly elected to redeem its shares, if a business combination does not close. Our sponsor and our founding team have entered into an agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares, private placement units and any public shares purchased during or after this offering in connection with (i) the completion of our initial business combination and (ii) a shareholder vote to approve an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity.
Limitations on redemptions
Our amended and restated memorandum and articles of association provide that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock” rules). However, the proposed business combination may require: (i) cash consideration to be paid to the partner or its owners, (ii) cash to be transferred to the partner for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all Class A ordinary shares that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all Class A ordinary shares submitted for redemption will be returned to the holders thereof.
Manner of conducting redemptions
We will provide our public shareholders with the opportunity to redeem all or a portion of their Class A ordinary shares upon the completion of our initial business combination either (i) in connection with a general meeting called to approve the business combination or (ii) by means of a tender offer. The decision as to whether we will seek shareholder 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 shareholder approval under applicable law or stock exchange listing requirements or whether we were deemed to be a foreign private issuer (which would require a tender offer rather than seeking shareholder approval under SEC rules). Asset acquisitions and share purchases would not typically require shareholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our issued and outstanding ordinary shares (excluding the private placement shares underlying the private placement units) or seek to amend our amended and restated memorandum and articles of association would typically require shareholder approval. We currently intend to conduct redemptions in connection with a shareholder vote unless shareholder approval is not required by applicable law or stock exchange rule or we choose to conduct redemptions pursuant to the tender offer rules of the SEC for business or other reasons.
If we held a shareholder vote to approve our initial business combination, we will, pursuant to our amended and restated memorandum and articles of association:
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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.
In the event that we seek shareholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public shareholders with the redemption rights described above upon completion of the initial business combination.
If we seek shareholder approval, we will complete our initial business combination only if we receive approval pursuant to an ordinary resolution under Cayman Islands law, which requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the company. In such case, our sponsor and each member of our founding team have agreed to vote their founder shares, private placement shares and public shares purchased during or after this offering in favor of our initial business combination. As a result, in addition to our initial shareholders’ founder shares and private placement shares, we would need 3,525,001, or 35.3%, of the 10,000,000 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 issued and outstanding shares are voted, the private placement shares to be issued to our sponsor are voted in favor of the transaction and the over-allotment option is not exercised). Each public shareholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction or vote at all. In addition, our sponsor and our founding team have entered into an agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares, private placement shares and any public shares purchased during or after this offering in connection with (i) the completion of our initial business combination and (ii) a shareholder vote to approve an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity.
If we conduct redemptions pursuant to the tender offer rules of the SEC, we will, pursuant to our amended and restated memorandum and articles of association:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers; and
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file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
Upon the public announcement of our initial business combination, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase Class A ordinary shares in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public shareholders not tendering more than the number of public shares we are permitted to redeem. If public shareholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
Limitation on redemption upon completion of our initial business combination if we seek shareholder approval
If we seek shareholder 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 memorandum and articles of association provides 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 Exchange Act), will be restricted from seeking redemption rights with respect to Excess Shares, without our prior consent. We believe this restriction will discourage shareholders 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 founding to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public shareholder 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
founding team at a premium to the then-current market price or on other undesirable terms. By limiting our shareholders’ 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 shareholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with a business combination with a partner 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 shareholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Tendering share certificates in connection with a tender offer or redemption rights
Public shareholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” will be required to either tender their certificates (if any) to our transfer agent prior to the date set forth in the proxy solicitation or tender offer materials, as applicable, mailed to such holders, or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/ Withdrawal At Custodian) System, at the holder’s option, in each case up to two business days prior to the initially scheduled vote to approve the business combination. The proxy solicitation or tender offer materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will indicate the applicable delivery requirements, which may include the requirement that a beneficial holder must identify itself in order to validly redeem its shares. Accordingly, a public shareholder would have from the time we send out our tender offer materials until the close of the tender offer period, or up to two business days prior to the initially scheduled vote on the proposal to approve the business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights.
Given the relatively short period in which to exercise redemption rights, it is advisable for shareholders to use electronic delivery of their public shares.
There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker 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 tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
The foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many blank check companies would distribute proxy materials for the shareholders’ vote on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise his or her redemption rights. After the business combination was approved, the company would contact such shareholder to arrange for him or her to deliver his or her certificate to verify ownership. As a result, the shareholder then had an “option window” after the completion of the business combination during which he or she could monitor the price of the company’s shares in the market. If the price rose above the redemption price, he or she could sell his or her shares in the open market before actually delivering his or her shares to the company for cancellation. As a result, the redemption rights, to which shareholders were aware they needed to commit before the general meeting, would become “option” rights surviving past the completion of the business combination until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming shareholder’s election to redeem is irrevocable once the business combination is approved.
Any request to redeem such shares, once made, may be withdrawn at any time up to two business days prior to the initially scheduled vote on the proposal to approve the business combination, unless otherwise agreed to by us.
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 shareholders who elected to exercise their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If our initial proposed business combination is not completed, we may continue to try to complete a business combination with a different partner until 24 months from the closing of this offering.
Redemption of public shares and liquidation if no initial business combination
Our amended and restated memorandum and articles of association provides that we will have only 24 months from the closing of this offering to consummate an initial business combination. If we do not consummate 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 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 and not previously released to us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii) to our obligations under Cayman Islands 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 consummate an initial business combination within 24 months from the closing of this offering. Our amended and restated memorandum and articles of association provides that, if we wind up for any other reason prior to the consummation of our initial business combination, we will follow the foregoing procedures with respect to the liquidation of the trust account as promptly as reasonably possible but not more than 10 business days thereafter, subject to applicable Cayman Islands law.
Our sponsor and each member of our founding team have entered into an agreement with us, pursuant to which they have agreed to waive their rights to liquidating distributions from the trust account with respect to any founder shares or private placement shares they hold if we fail to consummate an initial business combination within 24 months from the closing of this offering (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 24 months from the closing of this offering).
Our sponsor, executive officers, directors and director nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated memorandum and articles of association (A)that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity, unless we provide our public shareholders 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 and not previously released to us to pay our income taxes, if any, divided by the number of the then-outstanding public shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock” rules). 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. This redemption right shall apply in
the event of the approval of any such amendment, whether proposed by our sponsor, any executive officer, director or director nominee, or any other person.
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 $1,500,000 of proceeds held outside the trust account plus up to $100,000 of funds from the trust account available to us to pay dissolution expenses, although we cannot assure you that there will be sufficient funds for such purpose.
If we were to expend all of the net proceeds of this offering and the sale of the private placement units, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption amount received by shareholders upon our dissolution would be $10.00. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public shareholders. We cannot assure you that the actual per-share redemption amount received by shareholders will not be less than $10.00. 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 (excluding our independent registered public accounting firm), prospective partner 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 shareholders, 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 founding team will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if our founding team believes that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by our founding team to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where our founding team is unable to find a service provider willing to execute a waiver. The underwriters 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 vendor for services rendered or products sold to us, or a prospective partner business with which we have discussed entering into a transaction agreement, reduce the amounts in the trust account to below the lesser of (i) $10.00 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 $10.00 per public share due to reductions in the value of the trust assets, in each case net of the interest that may be withdrawn to pay our tax obligations, provided that such liability will not apply to any claims by a third party or prospective partner business who executed a waiver of any and all rights to seek access to the trust account 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. 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. 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. Our sponsor may not be able to satisfy those obligations. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective partner businesses.
In the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per public share and the actual amount per public share held in the trust account as of the date of the liquidation of the trust account
if less than $10.00 per public share due to reductions in the value of the trust assets, in each case net of the interest that may be withdrawn to pay our tax obligations, 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 $10.00 per public 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 (excluding our independent registered public accounting firm), prospective partner 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 $1,500,000 from the proceeds of this offering and the sale of the private placement units 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, shareholders who received funds from our trust account could be liable for claims made by creditors; however such liability will not be greater than the amount of funds from our trust account received by any such shareholder. In the event that our offering expenses exceed our estimate of $1,000,000, 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 $1,000,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount.
If we file a bankruptcy or insolvency petition or an involuntary bankruptcy or insolvency 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 shareholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return $10.00 per public share to our public shareholders. Additionally, if we file a bankruptcy or insolvency petition or an involuntary bankruptcy or insolvency petition is filed against us that is not dismissed, any distributions received by shareholders 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 or insolvency court could seek to recover some or all amounts received by our shareholders. 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 shareholders 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 shareholders 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 consummate an initial business combination within 24 months from the closing of this offering, (ii) in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity, and (iii) if they redeem their respective shares for cash upon the completion of the initial business combination. Public shareholders who redeem their Class A ordinary shares in connection with a shareholder vote described in clause (ii) in the preceding sentence shall not be entitled to funds from the trust account upon the subsequent completion of an initial business
combination or liquidation if we have not consummated an initial business combination within 24 months from the closing of this offering, with respect to such Class A ordinary shares so redeemed. In no other circumstances will a shareholder have any right or interest of any kind to or in the trust account. In the event we seek shareholder approval in connection with our initial business combination, a shareholder’s voting in connection with the business combination alone will not result in a shareholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such shareholder must have also exercised its redemption rights described above. These provisions of our amended and restated memorandum and articles of association, like all provisions of our amended and restated memorandum and articles of association, may be amended with a shareholder 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 do not consummate an 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
compelete an inintial
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 shareholder vote. The redemption price will be the same whether we conduct redemptions pursuant to a tender offer or in connection with a shareholder vote. In either case, our public shareholders may redeem their public shares for 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 $10.00 per share), including interest earned on the funds held in the trust account and not previously released to us to pay our income taxes, if any, divided by the number of the 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 and any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms of a proposed business combination.
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If we seek shareholder approval of our initial business combination, our sponsor, 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 sponsor, directors, 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 be required to comply with such rules.
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If we do not consummate an 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 $10.00 per share), including interest earned on the funds held in the trust account and not previously released to us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses) divided by the number of then outstanding public shares.
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Redemptions in connection
with our initial business
combination
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Other permitted purchases
of public shares by our
affiliates
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Redemptions if we fail to
compelete an inintial
business combination
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Impact to remaining shareholders
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The redemptions in connection with our initial business combination will reduce the book value per share for our remaining shareholders, who will bear the burden of the deferred underwriting commissions and taxes payable.
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If the permitted purchases described above are made, there would be no impact to our remaining shareholders 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 sponsor, who will be our only remaining shareholder 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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$100,000,000 of the net proceeds of this offering and the sale of the private placement units will be deposited into a trust account located in the U.S. with Continental Stock Transfer & Trust Company acting as trustee.
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Approximately $88,200,000 of the offering proceeds 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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$100,000,000 of the net proceeds of this offering and the sale of the private placement units 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 U.S.
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Receipt of interest on escrowed funds
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Interest income (if any) on proceeds from the trust account to be paid to shareholders is reduced by (i) any income 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 income 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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Terms of our offering
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Terms under a rule 419 offering
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Limitation on fair value or net assets of partner business
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Our initial business combination must occur with one or more partner businesses that together have an aggregate fair market value of at least 80% of our assets held in the trust account (excluding the amount of deferred underwriting discounts held in trust and taxes payable on the interest earned on the trust account) at the time of signing the agreement to enter into the initial business combination.
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The fair value or net assets of a partner 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 ordinary shares and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless J.P. Morgan Securities LLC informs 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. We will file the Current Report on Form 8-K promptly after the closing of this offering. 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. The units will automatically separate into their component parts and will not be traded after completion of our initial business combination.
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No trading of the units or the underlying Class A ordinary shares 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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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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Terms of our offering
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Terms under a rule 419 offering
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Election to remain an investor
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We will provide our public shareholders 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 and not previously released to us to pay our income taxes, if any, divided by the number of the then-outstanding public shares, upon the completion of our initial business combination, subject to the limitations described herein. We may not be required by applicable law or stock exchange rule to hold a shareholder vote. If we are not required by applicable law or stock exchange rule and do not otherwise decide to hold a shareholder vote, we will, pursuant to our amended and restated memorandum and articles of association, 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 shareholder vote, we will, like many blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If we seek shareholder approval, we will complete our initial business combination only if we receive approval pursuant to an ordinary resolution under Cayman Islands law, which requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the company.
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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 shareholder 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 shareholder. 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. Additionally, each public shareholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction or vote at all. Our amended and restated memorandum and articles of association will require that at least five days’ notice will be given of any such general meeting.
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Terms of our offering
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Terms under a rule 419 offering
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Business combination deadline
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If we do not consummate 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 10 business days thereafter, redeem 100% of the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii) to our obligations under Cayman Islands law to provide for claims of creditors and 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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Terms of our offering
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Terms under a rule 419 offering
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Release of funds
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Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our income taxes, if any, until the earliest of (i) the completion of our initial business combination, (ii) the redemption of our public shares if we have not consummated an 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 shareholder vote to approve an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity. Based on current interest rates, we expect that interest income earned on the trust account (if any) will be sufficient to pay our income taxes.
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The proceeds held in the escrow account are not released until the earlier of the completion of a business combination and the failure to effect a business combination within the allotted time.
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Competition
In identifying, evaluating and selecting a partner business for our initial business combination, we may encounter intense competition from other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, public companies, 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 partner businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition of a partner business. Furthermore, our obligation to pay cash in connection with our public shareholders who properly 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 partner businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.
Facilities
We currently maintain our executive offices at 1 Palmer Square, Suite 305, Princeton, NJ 08540. The cost for our use of this space is included in the $10,000 per month fee we will pay to our sponsor for office space, administrative and support services. We consider our current office space adequate for our current operations.
Employees
We currently only have executive officers. 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 partner 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 ordinary shares 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 shareholders with audited financial statements of the prospective partner business as part of the proxy solicitation or tender offer materials, as applicable, sent to shareholders. These financial statements may be required 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 partner businesses we may acquire because some partners 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 24 months from the closing of this offering. We cannot assure you that any particular partner business identified by us as a potential acquisition candidate will have financial statements prepared in accordance with the requirements outlined above, or that the potential partner 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 partner business. While this may limit the pool of potential acquisition 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 that we are deemed to be a large accelerated filer or an accelerated filer and no longer qualify as an emerging growth company would we be required to comply with the independent registered public accounting firm attestation requirement on internal control over financial reporting. A partner business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
Prior to the date of this prospectus, we will file a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
We are a Cayman Islands exempted company. Exempted companies are Cayman Islands companies conducting business mainly outside the Cayman Islands and, as such, are exempted from complying with certain provisions of the Companies Law. As an exempted company, we have applied for and received a tax exemption undertaking from the Cayman Islands government that, in accordance with Section 6 of the Tax Concessions Law (2018 Revision) of the Cayman Islands, for a period of 20 years from the date of the undertaking, no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations will apply to us or our operations and, in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax will be payable (i) on or in respect of our shares, debentures or other obligations or (ii) by way of the withholding in whole or in part of a payment of dividend or other distribution of
income or capital by us to our shareholders or a payment of principal or interest or other sums due under a debenture or other obligation of us.
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 shareholder 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 ordinary shares 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 during the prior three-year period.
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 ordinary shares held by non-affiliates equals or exceeds $250 million as of the prior June 30, and (2) our annual revenues equaled or exceeded $100 million during such completed fiscal year and the market value of our ordinary shares held by non-affiliates equals or exceeds $700 million as of the prior June 30.
Legal proceedings
There is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our founding team in their capacity as such.
Management
Officers, directors and director nominees
Our officers, directors and director nominees are as follows:
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Name
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|
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Age
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Position
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|
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Dr. Mitchell Blutt, M.D.
|
|
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63
|
|
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Chairman
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|
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Gad Soffer
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44
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Chief Executive Officer
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Kevin Livingston
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49
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Chief Financial Officer
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Dr. Benny Soffer, M.D.
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|
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47
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Director Nominee
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|
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Joshua House
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|
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39
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VP Business Development
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Donald J. Santel
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|
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60
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|
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Director Nominee
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|
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Dr. Christopher Haqq, M.D., Ph.D.
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|
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54
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|
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Director Nominee
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Jennifer Jarrett
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|
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49
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Director Nominee
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Dr. Mitchell Blutt, M.D., our Chairman, is the founder and CEO of Consonance Capital, founder, CEO and Chairman of the Investment Committee of Consonance Capital Management, and a Co-Managing Partner and co-founder of Consonance Capital Partners. Prior to founding Consonance Capital Management in 2007, he was Executive Partner at JP Morgan Partners, or JPMP, from 1992 until 2004. In addition to his general management responsibilities across JPMP, Dr. Blutt founded and led JPMP’s healthcare group for nearly 18 years, including its private equity and venture capital platforms. He was one of the earliest employees at Chemical Venture Partners, the predecessor to JPMP, joining in 1987. Dr. Blutt currently sits on the board of directors of the Commonwealth Fund, a health policy research foundation. He is also on the Board of Overseers of the University of Pennsylvania School of Arts and Sciences as well as the Wharton School. Dr. Blutt currently serves or formerly served on 38 healthcare corporate boards of directors including numerous public and venture stage company boards of directors. He also formerly served on the board of directors of the Michael J. Fox Foundation for Parkinson’s Research, the board of trustees of Penn Medicine (the University of Pennsylvania Health System), the board of trustees of the University of Pennsylvania, and the board of directors of The Brearley School. Dr. Blutt is a Clinical Assistant Professor of Medicine, in the Department of Medicine at Weill Cornell Medical College. He is on the New York Weill Cornell Council and the Dean’s Council of the Weil Cornell Medical College as well as the board of overseers of Weill from Cornell Medical College. Dr. Blutt holds BA and MD degrees from the University of Pennsylvania. He received his MBA from the Wharton School of the University of Pennsylvania through the Clinical Scholars Fellowship sponsored by the Robert Wood Johnson Foundation. He completed his medical residency at the New York Presbyterian Hospital/Weill Cornell Medical College. We believe that Dr. Blutt's experience in the medical and healthcare industries, combined with his extensive investment and management skills, qualifies Dr. Blutt to serve on our board of directors.
Gad Soffer, our CEO, was previously Chief Operating Officer, or COO, at Rheos Medicines, Inc., a Third Rock Ventures-funded startup launched in 2018. Prior to joining Rheos, Mr. Soffer was part of the founding team at Atara Biotherapeutics, a Kleiner, Perkins, Caufield & Byers, Domain Associates-funded startup where he served initially as COO and then Chief Strategy Officer, or CSO. At Atara, Mr. Soffer led the strategic evaluation and in-licensing of the company’s allogeneic T cell therapy platform as well as the subsequent identification and licensing of technologies leading to the development of its off-the-shelf CAR-T programs. Prior to joining Atara, Mr. Soffer worked at Celgene Corporation as Executive Director and Global Project Leader where he led the team responsible for product development and lifecycle management for Abraxane, a breast, lung, and pancreatic cancer treatment also in development for a variety of solid tumors. He also served as Director of Business Development at Celgene where he drove and supported numerous business development transactions including its strategic collaboration with Agios Pharmaceuticals and the acquisition of Abraxis Biosciences while advising on venture investment and strategic partnerships. Earlier, Mr. Soffer was a healthcare consultant with Easton Associates. He earned an MBA. from Harvard Business School, an MS from Columbia University and an AB from Harvard University.
Kevin Livingston, our CFO, is a Co-Founder, Partner, and Member of the Investment Committee of Consonance Capital Management. Prior to joining Consonance Capital Management, Mr. Livingston was a Managing Director in the Investment Management Division at U.S. Trust Company of New York. At U.S. Trust, Mr. Livingston managed client capital in discretionary multi-manager portfolios, and was a Member of the Open Architecture Investment Committee. Mr. Livingston currently serves on the board of directors of DC Safety. He is a trustee of Alfred University and serves as the Chair of the Investment Committee. Kevin is a Certified Public Accountant and a graduate of Alfred University, where he received his BS. He also received his Executive MBA from Columbia Business School.
Dr. Benny Soffer, M.D. has agreed to serve on our Board of Directors following the completion of this offering. Dr. Soffer is a Co-Founder, Partner, CIO, Portfolio Manager, and Member of the Investment Committee of Consonance Capital Management. Prior to joining Consonance Capital Management, Dr. Soffer completed a residency in internal medicine at Yale School of Medicine and served in a variety of managerial roles at Yale New Haven Hospital, including as Medical Director of Clinical Process Improvement and as Interim Medical Director of Medical Information Systems. Dr. Soffer is a Clinical Assistant Professor of Medicine, in the Department of Medicine at Weill Cornell Medical College. He is also a member of the Scientific Advisory Committee of Daedalus Fund for Innovation. Dr. Soffer is a graduate of Williams College, where he received his BA, of Emory University, where he received his MD, and of Yale University, where he received his MBA.
Joshua House serves as our VP Business Development. Mr. House joined Consonance Life Sciences Management in September 2020 where he currently serves as Vice President. Between November 2018 and September 2020, Mr. House held the role of Senior Director, Business Development and Corporate Strategy at Atara Biotherapeutics, where he was responsible for business development, in-licensing and corporate strategic activities. Between April 2017 and November 2018 he held the role of Director of Corporate Strategy at Atara Biotherapeutics. Prior to joining Atara, Mr. House was an Investment Banking Vice President at Citigroup in San Francisco, where he executed capital markets and M&A transactions for clients in the biotechnology sector. Mr. House earned a JD and MBA from Columbia University, and a BA in Public Policy from Stanford University.
Donald J. Santel has agreed to serve on our Board of Directors following the completion of this offering. Mr. Santel served as Executive Chairman of Adicet Bio, Inc., a private allogeneic cell therapy oncology company, from October 2017 through its reverse merger with resTORbio, Inc. in September 2020. From March 2018 through April 2019, Mr. Santel also served as Adicet Bio’s interim Chief Executive Officer. He previously served as Chief Executive Officer of Hyperion Therapeutics (Nasdaq GM: HPTX) from June 2008 until the sale of the company to Horizon Pharma (Nasdaq GM: HZNP) for $1.1B in May 2015. He led Hyperion from a development stage private company through the approval and commercial launch of Ravicti® for the treatment of urea cycle disorders. Mr. Santel was a member of Hyperion’s board of directors from March 2007 through the company’s sale. Previously, Mr. Santel was a co-founder, member of the board of directors and the Chief Executive Officer of CoTherix, Inc., (Nasdaq GM: CTRX) from January 2000 through its sale to Actelion for $419M in January 2007. He led CoTherix from a development stage private company, through the approval and commercial launch of Ventavis® for the treatment of pulmonary arterial hypertension. Prior to joining CoTherix, Mr. Santel was employed by several medical device companies, including Cardiac Pathways Corporation (acquired by Boston Scientific) and Medtronic, Inc. Mr . Santel previously served on the board of directors and the audit and compensation committees of Anthera Pharmaceuticals, Inc. and as a director of ChemGenex Pharmaceuticals, Inc. Mr. Santel holds an MS in electrical engineering from the University of Minnesota and a BSE in biomedical engineering from Purdue University. We believe that Mr. Santel is qualified to serve on our board of directors given his managerial and consultant roles in the biopharmaceutical industry and his experience with bringing companies public.
Dr. Christopher Haqq, M.D., Ph.D., has agreed to serve on our Board of Directors following the completion of this offering. Dr. Haqq brings over 20 years of drug development leadership across large and small biotechnology companies and across cell therapy, small molecule and biologics in large and small biotech settings. Dr. Haqq joined Elicio Therapeutics as Executive Vice President, Head of Research and Development and Chief Medical Officer, or CMO, in October 2019. He was the first employee and CMO of Atara Biotherapeutics, and later CSO, where he was the architect of an innovative allogeneic T cell product candidate pipeline for oncology and autoimmune disease, and led the design of next-generation off-the-shelf CAR T cells for solid tumors. Earlier at Cougar
Biotechnology and Janssen, he was the lead clinician for a pivotal prostate cancer study leading to market approval for Zytiga® (abiraterone acetate). At Amgen, he led early development studies of the anti-insulin like growth factor type 1 receptor AMG 479 (ganitumab) antibody. Dr. Haqq has worked closely with the US Food and Drug Administration, or the FDA, and other global regulatory agencies. He has filed successful applications for INDs, breakthrough therapies, priority medicines, special protocol assessments and their international equivalents, and marketing approvals. Dr. Haqq initially practiced as a medical oncologist and led a translational science laboratory as an Assistant Professor in the Division of Hematology/Oncology at the University of California, San Francisco following his post-graduate training as an Intern and Resident in Internal Medicine, Fellow in Medical Oncology and Fellow in Molecular Medicine. Dr. Haqq completed his MD and PhD in Genetics at Harvard Medical School and his undergraduate training at Stanford University and the University of British Columbia. We believe that Dr. Haqq’s leadership roles in drug development across a broad spectrum of biotechnology companies over the last two decades qualifies Dr. Haqq to serve on our board of directors.
Jennifer Jarrett has agreed to serve on our Board of Directors following the completion of this offering. Ms. Jarrett currently serves as Chief Operating Officer at Arcus Biosciences, Inc. (NYSE: RCUS) where she is responsible for Arcus’s commercial and general and administrative organizations, including finance and human resources. Ms. Jarrett previously served as the Vice President of Corporate Development and Capital Markets at Uber Technologies, Inc. (NYSE: UBER) from January 2019 to September 2020. Prior to Uber, Ms. Jarrett served as the Chief Financial Officer and Chief Operating Officer of Arcus Biosciences, Inc. from March 2017 to January 2019. From March 2016 to October 2016, Ms. Jarrett served as the Chief Financial Officer of Medivation, Inc. until it was acquired by Pfizer Inc. (NYSE: PFE). Ms. Jarrett brings over 20 years of experience in biotechnology investment banking, including her experience as managing director and head of West Coast Life Sciences Investment Banking at Citigroup and managing director and head of U.S. Biotechnology Investment Banking at Credit Suisse. Ms. Jarrett currently serves on the board of directors of Arena Pharmaceuticals, Inc. (NASDAQ: ARNA), Syndax Pharmaceuticals, Inc. (NASDAQ: SNDX) and Arcus Biosciences. Ms. Jarrett is a graduate of Dartmouth College, where she received her BA in economics, and Stanford University, where she received her MBA. We believe that Ms. Jarrett is qualified to serve on our board of directors given her experience in the biotechnology sector and her investment and management skills.
We believe our Board of Directors and management team are well positioned to take advantage of the growing set of investment opportunities focused on the biotechnology sector, and that our contacts, relationships and investment and operating experience will allow us to generate an attractive transaction for our shareholders.
There are no family relationships between any director, executive officer, or person nominated or chosen to become a director or officer, except that Benny Soffer and Gad Soffer are siblings.
Our founding team
Our sponsor, Consonance Life Sciences, combines life sciences and biotechnology investing expertise and market knowledge with industry-based business development, transactional and operational experience. Consonance Life Sciences was formed by the founders of Consonance Capital Management, a leading healthcare-dedicated hedge fund manager, and then partnered with a dedicated team of biotechnology industry professionals with extensive experience identifying attractive and unique acquisition opportunities. Our management team and Board of Directors have significant, meaningful experience as executives, clinicians, project leaders, corporate strategists and business development heads within public and private biotechnology companies. Our Chairman, Mitchell Blutt, is the Founder and Chief Executive Officer, or CEO, of Consonance Capital and Founder, CEO and Chairman of the Investment Committee of Consonance Capital Management, the hedge fund business of Consonance Capital, and a Co-Managing Partner and Co-Founder of Consonance Capital Partners, the private equity business of Consonance Capital, collectively referred to as Consonance Capital, Our CEO, Gad Soffer, is a life sciences and biotechnology industry-experienced business development and operating professional who has held a number of leadership positions at both early-clinical stage and commercial biopharmaceutical companies. Our Chief Financial Officer, or CFO, Kevin Livingston, is a Co-Founder, Partner, and Member of the Investment Committee of Consonance Capital Management. Benny Soffer, a member of our sponsor and Board of Directors, is
a Co-Founder, Partner, Chief Investment Officer, or CIO, Portfolio Manager, and Member of the Investment Committee of Consonance Capital Management. We believe the combination of our investment, business development and operational backgrounds will enable us to identify promising acquisition opportunities and also add substantial value to a target business beyond the initial business combination.
Consonance Capital Management was founded in 2007 with approximately $50 million of assets under management by Mitchell Blutt, Benny Soffer and Kevin Livingston. As of September 1, 2020, the fund has grown to over $1 billion in assets under management and focuses on equity investments in publicly-traded life sciences companies, with an emphasis on small and mid-cap life sciences companies. The founding team of Consonance Capital Management brings significant investment and transactional experience with clinical medical expertise, which we believe will provide a significant advantage as we seek to identify, evaluate and acquire a private company in the life sciences and biotechnology industry. Our team of operating professionals and Board of Directors combine wide therapeutic area experience covering hematology, oncology, autoimmunity, inflammatory diseases, and rare diseases; a strong drug development track record with numerous regulatory filings in the United States and the European Union including Investigational New Drug, or IND, applications, Breakthrough Therapy applications, New Drug Applications, or NDA, and Marketing Authorisation Applications, or MAAs; extensive operating experience spanning different therapeutic modalities including small molecules, biologics, as well as cell therapy; and leadership in the areas of strategic prioritization of external opportunities, diversification and growth through business development, product life cycle management, public and private financings, mergers and acquisitions, scientific, translational, clinical, and regulatory strategy, and manufacturing.
Our sponsor has indicated an interest to purchase up to an aggregate of 2,500,000 of our Class A ordinary shares (for $10.00 per share or $25,000,000 in the aggregate) in a private placement that would occur concurrently with the consummation of our initial business combination. The capital from such private placement would be used as part of the consideration to the sellers in our initial business combination, and any excess capital from such private placement would be used for working capital in the post-transaction company. However, because indications of interest are not binding agreements or commitments to purchase, our sponsor may determine not to purchase any such shares, or to purchase fewer shares than it has indicated an interest in purchasing. We are not under any obligation to sell any such shares. Such investment would be made on terms and conditions determined at the time of the business combination.
Number and terms of office of officers and directors
Our board of directors is divided into three classes, with only one class of directors being appointed in each year, and with each class (except for those directors appointed prior to our first annual general meeting) serving a three-year term. The term of office of the first class of directors, consisting of , will expire at our first general annual meeting. The term of office of the second class of directors, consisting of , will expire at our second annual general meeting. The term of office of the third class of directors, consisting of , will expire at our third annual general meeting.
Prior to the completion of an initial business combination, any vacancy on the board of directors may be filled by a nominee chosen by holders of a majority of our founder shares. In addition, prior to the completion of an initial business combination, holders of a majority of our founder shares may remove a member of the board of directors for any reason.
Pursuant to an agreement to be entered into on or prior to the closing of this offering, our sponsor, upon and following consummation of an initial business combination, will be entitled to nominate three individuals for appointment to our board of directors, as long as the sponsor holds any securities covered by the registration and shareholder rights agreement.
Our officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint persons to the offices set forth in our amended and restated memorandum and articles of association as it deems appropriate. Our amended and restated memorandum and articles of association provides that our officers may consist of one or more chairman
of the board of directors, chief executive officer, chief financial officer, chief business officer, president, vice presidents, secretary, treasurer and such other offices as may be determined by the board of directors.
Director independence
NYSE rules require that a majority of our board of directors be independent. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship with the company which in the opinion of the company’s board of directors, could interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Upon the effectiveness of the registration statement of which this prospectus forms a part, we expect to have “independent directors” as defined in the NYSE listing standards and applicable SEC rules. Our board of directors has determined that are “independent directors” as defined in the NYSE listing standards 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 executive officers or 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 reimburse our sponsor for office space, secretarial and administrative services provided to us in the amount of $10,000 per month. 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 partner businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made by us to our sponsor, executive officers or directors, or our or their affiliates. Any such payments prior to an initial business combination will be made using 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 founding 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 shareholders, to the extent then known, in the proxy solicitation materials or tender offer materials furnished to our shareholders 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 founding 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 founding team’s motivation in identifying or selecting a partner business but we do not believe that the ability of our founding team 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 nominating and corporate governance committee and a compensation committee.
Subject to phase-in rules and a limited exception, NYSE rules 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, NYSE rules require that the compensation committee of a listed company be comprised solely of independent directors. Each committee will operate under a charter that has been approved by our board of directors and will have the composition and responsibilities described below. The charter of each committee will be available on our website.
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. Christopher Haqq, Jennifer Jarrett and Donald J. Santel will serve as members of our audit committee. Our board of directors has determined that each of Christopher Haqq, Jennifer Jarrett and Donald J. Santel are independent. Jennifer Jarrett will serve as chairperson of the audit committee. Each member of the audit committee meets the financial literacy requirements of the NYSE and our board of directors has determined that qualifies as an “audit committee financial expert” as defined in applicable SEC rules and has accounting or related financial management expertise.
The audit committee is responsible for:
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meeting with our independent registered public accounting firm regarding, among other issues, audits, and adequacy of our accounting and control systems;
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monitoring the independence of the independent registered public accounting firm;
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verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law;
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inquiring and discussing with management our compliance with applicable laws and regulations;
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pre-approving all audit services and permitted non-audit services to be performed by our independent registered public accounting firm, including the fees and terms of the services to be performed;
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appointing or replacing the independent registered public accounting firm;
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determining the compensation and oversight of the work of the independent registered public accounting firm (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work;
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establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies;
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monitoring compliance on a quarterly basis with the terms of this offering and, if any noncompliance is identified, immediately taking all action necessary to rectify such noncompliance or otherwise causing compliance with the terms of this offering; and
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reviewing and approving all payments made to our existing shareholders, executive officers or directors and their respective affiliates. Any payments made to members of our audit committee will be reviewed and approved by our board of directors, with the interested director or directors abstaining from such review and approval.
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 our board of directors. The members of our nominating and
corporate governance committee will be Christopher Haqq, Jennifer Jarrett and Donald J. Santel, and Donald J. Santel will serve as chairperson of the nominating and corporate governance committee. Our board of directors has determined that each of Christopher Haqq, Jennifer Jarrett and Donald J. Santel are independent.
The nominating and corporate governance committee is responsible for overseeing the selection of persons to be nominated to serve on our board of directors. The nominating and corporate governance committee considers persons identified by its members, management, shareholders, investment bankers and others.
Guidelines for selecting director nominees
The guidelines for selecting nominees, which will be specified in a charter to be adopted by us, generally provide that persons to be nominated:
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should have demonstrated notable or significant achievements in business, education or public service;
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should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and
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should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the shareholders.
The nominating and corporate governance committee will consider a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy for membership on the board of directors. The nominating and corporate governance committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The nominating and corporate governance committee does not distinguish among nominees recommended by shareholders and other persons.
Compensation committee
Upon the effectiveness of the registration statement of which this prospectus forms a part, we will establish a compensation committee of our board of directors. The members of our compensation committee will be Christopher Haqq, Jennifer Jarrett and Donald J. Santel, and Christopher Haqq will serve as chairperson of the compensation committee.
Our board of directors has determined that each of Christopher Haqq, Jennifer Jarrett and Donald J. Santel are independent. 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;
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reviewing and approving the compensation of all of our other Section 16 executive 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 executive officers and employees;
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producing a report on executive compensation to be included in our annual proxy statement; and reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
The charter will also provide that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, 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.
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.
Code of ethics
Upon the effectiveness of the registration statement of which this prospectus forms a part, we will have adopted a Code of Ethics applicable to our directors, officers and employees. A copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.
Conflicts of interest
Under Cayman Islands law, directors and officers owe the following fiduciary duties:
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duty to act in good faith in what the director or officer believes to be in the best interests of the company as a whole;
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duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose;
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directors should not improperly fetter the exercise of future discretion;
•
duty to exercise powers fairly as between different sections of shareholders;
•
duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests; and
•
duty to exercise independent judgment.
In addition to the above, directors also owe a duty of care which is not fiduciary in nature. This duty has been defined as a requirement to act as a reasonably diligent person having both the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and the general knowledge skill and experience of that director.
As set out above, directors have a duty not to put themselves in a position of conflict and this includes a duty not to engage in self-dealing, or to otherwise benefit as a result of their position. However, in some instances what would otherwise be a breach of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is full disclosure by the directors. This can be done by way of permission granted in the amended and restated memorandum and articles of association or alternatively by shareholder approval at general meetings.
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, including private funds under the management of Consonance Capital and their respective portfolio companies, pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. In addition, existing and future funds managed by Consonance Capital and their respective portfolio companies may compete with us for business combination opportunities and, if such opportunities are pursued by such entities, we may be precluded from pursuing such opportunities. 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, and may only decide to present it to us if such entity rejects the opportunity and consummating the same would not violate any restrictive covenants to which such officers and directors are subject. Notwithstanding the
foregoing, we may pursue an Affiliated Joint Acquisition opportunity with an entity to which an officer or director has a fiduciary or contractual obligation. Any such entity may co-invest with us in the partner business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by issuing to such entity a class of equity or equity-linked securities. Our amended and restated articles of association 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.
Below is a table summarizing the entities to which our executive officers and directors currently have fiduciary duties, contractual obligations or other material management relationships:
|
Individual
|
|
|
Entity
|
|
|
Entity’s business
|
|
|
Affiliation
|
|
|
Mitchell Blutt
|
|
|
Consonance Capital Management LP and Consonance Capital Partners, L.P.
|
|
|
Investment manager to hedge funds and managed accounts and investment manager to private equity funds
|
|
|
Chief Executive Officer, Chairman of the Investment Committee and Partner of Consonance Capital Management LP and Managing Partner and Co-Founder of Consonance Capital Partners
|
|
|
Benny Soffer
|
|
|
Consonance Capital Management LP
|
|
|
Investment manager to hedge funds and managed accounts
|
|
|
Chief Investment Officer, Portfolio Manager, Member of the Investment Committee and Partner
|
|
|
Kevin Livingston
|
|
|
Consonance Capital Management LP
|
|
|
Investment manager to hedge funds and managed accounts
|
|
|
Member of the Investment Committee and Partner
|
|
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 sponsor subscribed for founder shares prior to the date of this prospectus and will purchase private placement units in a transaction that will close simultaneously with the closing of this offering. Our sponsor and our founding team have entered into an agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares, private placement shares and any public shares purchased during or after this offering in connection with (i) the completion of our initial business combination and (ii) a shareholder vote to approve an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity. Additionally, our sponsor has agreed to waive its rights to liquidating distributions from the trust account with respect to its founder shares if we fail to complete our initial business combination within the required time period. If we do not complete our initial business combination within the required time period, the private placement units and the underlying securities will expire worthless. Except as described herein, our sponsor and our founding team have agreed not to
transfer, assign or sell any of their founder shares until the earliest of (A) one year after the completion of our initial business combination and (B) subsequent to our initial business combination, (x) if the closing price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (y) the date on which we complete a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of our public shareholders having the right to exchange their ordinary shares for cash, securities or other property. With certain limited exceptions, the private placement units, the private placement shares, the private placement warrants and the Class A ordinary shares underlying such warrants will not be transferable until 30 days following the completion of our initial business combination. Because each of our executive officers and director nominees will own ordinary shares or warrants directly or indirectly, they may have a conflict of interest in determining whether a particular partner 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 partner business as a condition to any agreement with respect to our initial business combination.
We are not prohibited from pursuing an initial business combination or subsequent transaction with a company that is affiliated with our sponsor, founders, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor or any of our founders, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent valuation or accounting firm that such initial business combination or transaction 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 us 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 the NYSE, we will also reimburse our sponsor for office space, secretarial and administrative services provided to us in the amount of $10,000 per month.
We cannot assure you that any of the above mentioned conflicts will be resolved in our favor.
If we seek shareholder approval, we will complete our initial business combination only if we receive approval pursuant to an ordinary resolution under Cayman Islands law, which requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the company. In such case, our sponsor and each member of our founding team have agreed to vote their founder shares, private placement shares and public shares purchased during or after this offering in favor of our initial business combination.
Limitation on liability and indemnification of officers and directors
Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against willful default, willful neglect, civil fraud or the consequences of committing a crime. Our amended and restated memorandum and articles of association provides for indemnification of our officers and directors to the maximum extent permitted by law, including for any liability incurred in their capacities as such, except through their own actual fraud, willful default or willful neglect. We will enter into agreements with our directors and officers to provide contractual indemnification in addition to the indemnification provided for in our amended and restated memorandum and articles of association.
We expect to 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.
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 have agreed to waive any right, title, interest or claim of any kind they may have in the future as a result of, or arising out of, any services provided to us and will not seek recourse against the trust account for any reason whatsoever (except to the extent they are entitled to funds from the trust account due to their ownership of public shares). Accordingly, any indemnification provided will only be able to be satisfied by us if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination.
Our indemnification obligations may discourage shareholders 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 shareholders. Furthermore, a shareholder’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.
We believe that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.
Principal shareholders
The following table sets forth information regarding the beneficial ownership of our ordinary shares as of the date of this prospectus, and as adjusted to reflect the sale of our Class A ordinary shares 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 issued and outstanding ordinary shares;
•
each of our executive officers, directors and director nominees; 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 ordinary shares 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 September 4, 2020, our sponsor paid $25,000, or approximately $0.00696 per share, to cover for certain offering costs in consideration for 3,593,750 founder shares. On October 8, 2020, 718,750 founder shares were contributed back to the Company for no consideration, resulting in there being 2,875,000 founder shares issued and outstanding (at approximately $0.0087 per share), of which 375,000 shares are subject to forfeiture if the underwriters do not exercise their over-allotment option. In addition, our sponsor has committed, pursuant to a written agreement, to purchase an aggregate of 450,000 private placement units (or 480,000 private placement units if the over-allotment option is exercised in full) for an aggregate purchase price of $4,500,000 in a private placement (or $4,800,000 if the over-allotment option is exercised in full) that will occur simultaneously with the closing of this offering (assuming the underwriters do not exercise their over-allotment option). Prior to the initial investment in the company of $25,000 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 contributed to the company by the number of founder shares issued. The number of shares beneficially owned and post-offering percentages in the following table assume that the underwriters do not exercise their over-allotment option and that there are 12,950,000 ordinary shares issued and outstanding after this offering, consisting of (i) 10,000,000 Class A ordinary shares, (ii) 2,500,000 Class B ordinary shares, and (iii) 450,000 Class A ordinary shares underlying the private placement units.
| |
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Number of
shares
beneficially
owned(2)(3)
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|
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Approxmate percentage of
outstanding ordinary shares
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|
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Name and address of beneficial owner(1)
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Before
offering
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After
offering
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Consonance Life Sciences (our sponsor)
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|
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2,950,000 |
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|
|
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100.00% |
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|
|
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22.8%(4) |
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Gad Soffer(5)
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|
|
|
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— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
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Kevin Livingston(5)
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|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Dr. Mitchell Blutt, M.D.(5)
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|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Dr. Benny Soffer, M.D.(5)
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|
|
|
|
— |
|
|
|
|
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— |
|
|
|
|
|
— |
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|
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Donald J. Santel(5)
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|
|
|
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— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Dr. Christopher Haqq, M.D., Ph.D.(5)
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Jennifer Jarrett
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
All officers, directors and director nominees as a group (7 individuals)
|
|
|
|
|
— |
|
|
|
|
|
—% |
|
|
|
|
|
— |
|
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* Less than one percent.
(1) The business address of each of the following entities and individuals is 1 Palmer Square, Suite 305, Princeton, NJ 08540.
(2) Interests shown consist solely of founder shares (assuming the underwriters do not exercise their over-allotment option), classified as Class B ordinary shares. The Class B ordinary shares will automatically convert into Class A ordinary shares at the time of our initial business combination as described in the section entitled “Description of Securities.”
(3) The shares reported herein are held in the name of our sponsor. Our sponsor is governed by a board of managers consisting of Mitchell J. Blutt, Benny Soffer and Kevin Livingston. As such, Mitchell J. Blutt, Benny Soffer and Kevin Livingston have voting and investment discretion with respect to the Class B ordinary shares held of record by our sponsor and may be deemed to have shared beneficial ownership of the Class B ordinary shares held directly by our sponsor.
(4) Includes 450,000 Class A ordinary shares underlying the private placement units.
(5) Does not include any shares indirectly owned by this individual as a result of his ownership interest in our sponsor.
Immediately after this offering, our initial shareholders will beneficially own approximately 20% of the then issued and outstanding ordinary shares (excluding the private placement shares underlying the private placement units and assuming they do not purchase any units in this offering) and will have the right to appoint all of our directors prior to the completion of our initial business combination. If we increase or decrease the size of this offering, we will effect a share capitalization or a share surrender or other appropriate mechanism, as applicable, with respect to our Class B ordinary shares immediately prior to the consummation of the offering in such amount as to maintain the ownership of our initial shareholders (and their permitted transferees, if any) at 20% of the issued and outstanding ordinary shares (excluding the private placement shares underlying the private placement units) upon the consummation of this offering. Holders of our public shares will not have the right to appoint any directors to our board of directors prior to the completion of our initial business combination. Because of this ownership block, our initial shareholders may be able to effectively influence the outcome of all other matters requiring approval by our shareholders, including amendments to our amended and restated memorandum and articles of association and approval of significant corporate transactions including our initial business combination.
Our sponsor and our founding team have entered into an agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares, private placement shares and any public shares purchased during or after this offering in connection with (i) the completion of our initial business combination and (ii) a shareholder vote to approve an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity. Further, our sponsor and each member of our founding team have agreed to vote their founder shares, private placement shares and public shares purchased during or after this offering in favor of our initial business combination.
Our sponsor is deemed to be our “promoter” as such term is defined under the federal securities laws.
Transfers of founder shares and private placement units
The founder shares, private placement units, private placement shares, private placement warrants and any Class A ordinary shares issued upon conversion or exercise thereof are each subject to transfer restrictions pursuant to lock-up provisions in the agreement entered into by our sponsor and our founding team. Our sponsor and our founding team have agreed not to transfer, assign or sell (i) any of their founder shares until the earliest of (A) one year after the completion of our initial business combination and (B) subsequent to our initial business combination, (x) if the closing price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (y) the date on which we complete a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of our public shareholders having the right to exchange their ordinary shares for cash, securities or other property, and (ii) any of their private placement units, private placement shares, private placement warrants and Class A ordinary shares issued upon conversion or exercise thereof until 30 days after the completion of our initial business combination. The foregoing restrictions are not applicable to transfers (a) to our officers or directors, any affiliates or family members of any of our officers or directors, any members or partners of our sponsor or their affiliates, any affiliates of our sponsor, or any employees of such affiliates; (b) in the case of an individual, by gift to a member of one of the individual’s immediate family or to a trust, the beneficiary of which is a member of the individual’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 the 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 the consummation of a business combination at prices no greater than the price at which the founder shares, private placement warrants or Class A ordinary shares, as applicable, were originally purchased; (f) by virtue of our sponsor’s organizational documents upon liquidation or dissolution of our sponsor; (g) to the Company for no value for cancellation in connection with the consummation of our initial business combination; (h) in the event of our liquidation prior to the completion of our initial business combination; or (i) in the event of our completion of a liquidation, merger, share exchange or other similar transaction which results in all of our public shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property subsequent to our completion of our initial business combination; 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.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
On September 4, 2020, our sponsor paid $25,000, or approximately $0.00696 per share, to cover for certain offering and formation costs in consideration for 3,593,750 founder shares. On October 8, 2020, 718,750 founder shares were contributed back to the Company for no consideration, resulting in there being 2,875,000 founder shares issued and outstanding (at approximately $0.0087 per share). The number of founder shares issued was determined based on the expectation that such founder shares would represent 20% of the issued and outstanding shares (excluding the private placement shares underlying the private placement units) upon completion of this offering. If we increase or decrease the size of this offering, we will effect a share capitalization or a share surrender or other appropriate mechanism, as applicable, with respect to our Class B ordinary shares immediately prior to the consummation of the offering in such amount as to maintain the ownership of our initial shareholders (and their permitted transferees, if any) at 20% of the issued and outstanding ordinary shares (excluding the private placement shares underlying the private placement units) upon the consummation of this offering. Up to 375,000 founder shares held by our sponsor are subject to forfeiture by our sponsor depending on the extent to which the underwriters’ over-allotment option is exercised. The founder shares (including the Class A ordinary shares issuable upon exercise thereof) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holder.
Our sponsor has committed, pursuant to a written agreement, to purchase 450,000 private placement units (or 480,000 if the over-allotment option is exercised in full) for a purchase price of $4,500,000 (or $4,800,000 if the over-allotment option is exercised in full) in a private placement that will occur simultaneously with the closing of this offering. As such, our sponsor’s interest in this transaction is valued at between $4,500,000 and $4,800,000, depending on the number of private placement units purchased. The private placement units (including the private placement shares, private placement warrants and Class A ordinary shares issued upon the exercise or conversion thereof) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holder.
As more fully discussed in the section of this prospectus entitled “Management—Conflicts of Interest,” if any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of any 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 opportunity to such entity. Our officers and directors currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us.
We currently maintain our executive offices at 1 Palmer Square, Suite 305, Princeton, NJ 08540. The cost for our use of this space is included in the $10,000 per month fee we will pay to our sponsor for office space, administrative and support services, commencing on the date that our securities are first listed on the NYSE. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
No compensation of any kind, including finder’s and consulting fees, will be paid to our sponsor, 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 partner businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made by us to our sponsor, officers, directors or our or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
Our sponsor may loan us up to $300,000 in funds to be used for a portion of the expenses of this offering. To date, we have not borrowed any amounts under the promissory note with our sponsor. These loans would be non-interest bearing, unsecured and are due at the earlier of December 31, 2020 and the closing of this offering. The loan will be repaid upon the closing of this offering out of the estimated $1,000,000 of offering proceeds that has been allocated to the payment of offering expenses and that is not held in the trust account.
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 an initial business combination, we may repay such loaned amounts out of the proceeds of the trust account released to us. 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 private placement units at $10.00 per unit at the option of the lender. The private placement units would be identical to the Units, including as to exercise price, exercisability and exercise period. The terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsor, members of our founding team or any of their affiliates as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
After our initial business combination, members of our founding 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 shareholders, to the extent then known, in the tender offer or proxy solicitation materials, as applicable, furnished to our shareholders. 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 general 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 will enter into a registration and shareholder rights agreement pursuant to which our initial shareholders, and their permitted transferees, if any, will be entitled to certain registration rights with respect to the private placement units, private placement shares, the private placement warrants, the securities issuable upon conversion of working capital loans (if any) and the Class A ordinary shares issuable upon exercise of the foregoing and upon conversion of the founder shares. Further, pursuant to an agreement to be entered into on or prior to the closing of this offering, our sponsor, upon and following consummation of an initial business combination, will be entitled to nominate three individuals for appointment to our board of directors, as long as the sponsor holds any securities covered by the registration and shareholder rights agreement, which is described under the section of this prospectus entitled “Description of Securities—Registration and Shareholder Rights.”
Our sponsor has indicated an interest to purchase up to an aggregate of 2,500,000 of our Class A ordinary shares (for $10.00 per share or $25,000,000 in the aggregate) in a private placement that would occur concurrently with the consummation of our initial business combination. The capital from such private placement would be used as part of the consideration to the sellers in our initial business combination, and any excess capital from such private placement would be used for working capital in the post-transaction company. However, because indications of interest are not binding agreements or commitments to purchase, our sponsor may determine not to purchase any such shares, or to purchase fewer shares than it has indicated an interest in purchasing. We are not under any obligation to sell any such shares. Such investment would be made on terms and conditions determined at the time of the business combination.
Policy for Approval of Related Party Transactions
The audit committee of our board of directors will adopt a charter, providing for the review, approval and/or ratification of “related party transactions,” which are those transactions required to be disclosed pursuant to Item 404 of Regulation S-K as promulgated by the SEC, by the audit committee. At its meetings, the audit committee shall be provided with the details of each new, existing, or proposed related party transaction, including the terms of the transaction, any contractual restrictions that the company has already committed to, the business purpose of the transaction, and the benefits of the transaction to the company and to the relevant related party. Any member of the committee who has an interest in the related party transaction under review by the committee shall abstain from voting on the approval of the related party transaction, but may, if so requested by the chairman of the committee, participate in some or all of the committee’s discussions of the related party transaction. Upon completion of its review of the related party transaction, the committee may determine to permit or to prohibit the related party transaction.
DESCRIPTION OF SECURITIES
We are a Cayman Islands exempted company and our affairs will be governed by our amended and restated memorandum and articles of association, the Companies Law and the common law of the Cayman Islands. Pursuant to our amended and restated memorandum and articles of association which will be adopted prior to the consummation of this offering, we will be authorized to issue 350,000,000 Class A ordinary shares and 150,000,000 Class B ordinary shares, as well as 1,000,000 preference shares, $0.0001 par value each. The following description summarizes certain terms of our shares as set out more particularly in our amended and restated memorandum and articles of association. Because it is only a summary, it may not contain all the information that is important to you.
Units
Each unit has an offering price of $10.00 and consists of one Class A ordinary share and one-third of one redeemable warrant. Each whole warrant entitles the holder thereof to purchase one Class A ordinary share 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 company’s Class A ordinary shares. This means only a whole warrant may be exercised at any given time by a warrant holder.
The Class A ordinary shares and warrants comprising the units are expected to begin separate trading on the 52nd day following the date of this prospectus unless J.P. Morgan Securities LLC informs 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 Class A ordinary shares 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 ordinary shares 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 three units, you will not be able to receive or trade a whole warrant.
In no event will the Class A ordinary shares 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 of this offering and the sale of the private placement units. We will file a Current Report on Form 8-K which includes this audited balance sheet promptly after the completion of this offering. 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.
Additionally, the units will automatically separate into their component parts and will not be traded after completion of our initial business combination.
Private Placement Units
The private placement units (including the private placement shares, the private placement warrants and Class A ordinary shares issuable upon exercise of such warrants) will not be transferable or salable until 30 days after the completion of our initial business combination (except, among other limited exceptions as described under “Principal Shareholders—Transfers of Founder Shares and Private Placement Units,” to our officers and directors and other persons or entities affiliated with our sponsor) and the private placement warrants included therein will not be redeemable by us (except as described below under “—Warrants—Public Shareholders’ Warrants—Redemption of warrants for Class A ordinary shares when the price per Class A ordinary share equals or exceeds $10.00”) so long as they are held by our sponsor or its permitted transferees. Holders of our private placement units are entitled to certain registration rights. If we do not consummate an initial business combination within 24 months from the closing of this offering, the proceeds from the sale of the private placement units held in the trust account will be used to fund the redemption of our public shares (subject to the requirements of applicable law) and the private placement units (and the underlying securities) will expire worthless. Further, if
we seek shareholder approval, we will complete our initial business combination only if a majority of the ordinary shares, represented in person or by proxy and entitled to vote thereon, voted at a shareholder meeting are voted in favor of the business combination. In such case, our sponsor and each member of our management team have agreed to vote their founder shares, private placement shares and any public shares purchased during or after this offering in favor of our initial business combination. Otherwise, the private placement units are identical to the units sold in this offering.
Our sponsor and our management team have agreed not to transfer, assign or sell any of their private placement units, private placement shares, the private placement warrants and any Class A ordinary shares issued upon conversion or exercise thereof until 30 days after the completion of our initial business combination, except that, among other limited exceptions as described under the section of this prospectus entitled “Principal Shareholders—Transfers of Founder Shares and Private Placement Units,” transfers may be made to our officers and directors and other persons or entities affiliated with our sponsor.
Ordinary Shares
Prior to the date of this prospectus, there were 2,875,000 Class B ordinary shares (of which 375,000 Class B ordinary shares are subject to forfeiture if the underwriters do not exercise their over-allotment option) issued and outstanding, all of which were held of record by our initial shareholders, so that our initial shareholders will own approximately 20% of our issued and outstanding shares after this offering (excluding the private placement shares underlying the private placement units and assuming our initial shareholders do not purchase any units in this offering). Upon the closing of this offering, 12,950,000 of our ordinary shares will be outstanding (assuming no exercise of the underwriters’ over-allotment option) including:
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10,000,000 Class A ordinary shares underlying the units issued as part of this offering;
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450,000 Class A ordinary shares underlying the private placement units issued simultaneously with the closing of this offering; and
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2,500,000 Class B ordinary shares held by our initial shareholders.
If we increase or decrease the size of this offering, we will effect a share capitalization or share compulsory redemption or redemption or other appropriate mechanism, as applicable, with respect to our Class B ordinary shares immediately prior to the consummation of this offering in such amount as to maintain the ownership of our initial shareholders (and their permitted transferees, if any) at 20% of our issued and outstanding ordinary shares (excluding the private placement shares underlying the private placement units) upon the consummation of this offering.
Ordinary shareholders of record are entitled to one vote for each share held on all matters to be voted on by shareholders. Except as described below, holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all matters submitted to a vote of our shareholders except as required by law. Unless specified in our amended and restated memorandum and articles of association, or as required by applicable provisions of the Companies Law or applicable stock exchange rules, the affirmative vote of a majority of our ordinary shares that are voted is required to approve any such matter voted on by our shareholders. Approval of certain actions will require a special resolution under Cayman Islands law, being the affirmative vote of at least two-thirds of our ordinary shares that are voted, and pursuant to our amended and restated memorandum and articles of association; such actions include amending our amended and restated memorandum and articles of association and approving a statutory merger or consolidation with another company. Our board of directors is divided into three classes, each of which will generally serve for terms of three years with only one class of directors being appointed in each year. There is no cumulative voting with respect to the appointment of directors, with the result that the holders of more than 50% of the shares voted for the appointment of directors can appoint all of the directors. Our shareholders are entitled to receive ratable dividends when, as and if declared by the board of directors out of funds legally available therefor.
Prior to our initial business combination, only holders of our founder shares will have the right to vote on the appointment of directors. Holders of our public shares will not be entitled to vote on the appointment of directors
during such time. In addition, prior to the completion of an initial business combination, holders of a majority of our founder shares may remove a member of the board of directors for any reason. The provisions of our amended and restated memorandum and articles of association governing the appointment or removal of directors prior to our initial business combination may only be amended by a special resolution passed by holders representing at least two-thirds of our issued and outstanding Class B ordinary shares.
Because our amended and restated memorandum and articles of association will authorize the issuance of up to 350,000,000 Class A ordinary shares, 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 Class A ordinary shares which we are authorized to issue at the same time as our shareholders vote on the business combination to the extent we seek shareholder approval in connection with our initial business combination.
Our board of directors is divided into three classes with only one class of directors being appointed in each year and each class (except for those directors appointed prior to our first annual general meeting) serving a three-year term. In accordance with NYSE corporate governance requirements, we are not required to hold an annual general meeting until one year after our first fiscal year end following our listing on the NYSE. As an exempted company, there is no requirement under the Companies Law for us to hold annual or extraordinary general meetings to appoint directors. We may not hold an annual or extraordinary general meeting to appoint new directors prior to the consummation of our initial business combination. Prior to the completion of an initial business combination, any vacancy on the board of directors may be filled by a nominee chosen by holders of a majority of our founder shares. In addition, prior to the completion of an initial business combination, holders of a majority of our founder shares may remove a member of the board of directors for any reason.
We will provide our public shareholders 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 and not previously released to us to pay our income taxes, if any, divided by the number of the then-outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.00 per public share. The per share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. The redemption rights may include the requirement that a beneficial owner must identify itself in order to valid redeem its shares. Our sponsor and our founding team have entered into an agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares, private placement shares and any public shares purchased during or after this offering in connection with (i) the completion of our initial business combination and (ii) a shareholder vote to approve an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity. Unlike many blank check companies that hold shareholder 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 shareholder vote is not required by applicable law or stock exchange rule and we do not decide to hold a shareholder vote for business or other reasons, we will, pursuant to our amended and restated memorandum and articles of association, 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 memorandum and articles of association will require these tender offer documents to contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under the SEC’s proxy rules. If, however, a shareholder approval of the transaction is required by applicable law or stock exchange rule, or we decide to obtain shareholder approval for business or other reasons, we will, like many blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender
offer rules. If we seek shareholder approval, we will complete our initial business combination only if we receive approval pursuant to an ordinary resolution under Cayman Islands law, which requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the company. 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 shareholders vote, or indicate their intention to vote, against such initial business combination unless restricted by applicable NYSE rules. For purposes of seeking approval of the majority of our issued and outstanding ordinary shares, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained. Our amended and restated memorandum and articles of association will require that at least five days’ notice will be given of any general meeting.
If we seek shareholder 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 memorandum and articles of association provides 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 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 shareholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination. Our shareholders’ inability to redeem the Excess Shares will reduce their influence over our ability to complete our initial business combination, and such shareholders could suffer a material loss in their investment if they sell such Excess Shares on the open market.
Additionally, such shareholders will not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. And, as a result, such shareholders 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 shareholder approval, we will complete our initial business combination only if we receive approval pursuant to an ordinary resolution under Cayman Islands law, which requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the company. In such case, our sponsor and each member of our founding team have agreed to vote their founder shares, private placement shares and public shares purchased during or after this offering in favor of our initial business combination. As a result, in addition to our initial shareholders’ founder shares, we would need 3,525,001, or 35.3%, of the 10,000,000 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 issued and outstanding shares are voted, the private placement shares to be issued to our sponsor are voted in favor of the transaction and the over-allotment option is not exercised). The other members of our founding team are subject to the same arrangements with respect to any public shares acquired by them in or after this offering. Additionally, each public shareholder may appoint to redeem their public shares irrespective of whether they vote for or against the proposed transaction or vote at all.
Pursuant to our amended and restated memorandum and articles of association, if we do not consummate 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 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 and not previously released to us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in each case of clause (ii) and (iii), to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. Our sponsor and each member of our founding team have entered into an agreement with us, pursuant to which they have agreed to waive their rights to liquidating distributions from the trust account with respect to any founder shares or private placement shares they hold if we fail to consummate an initial business
combination within 24 months from the closing of this offering (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 24 months from the closing of this offering).
In the event of a liquidation, dissolution or winding up of the company after a business combination, our shareholders 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 ordinary shares. Our shareholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the ordinary shares, except that we will provide our public shareholders 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 and not previously released to us to pay our income taxes, if any, divided by the number of the 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 ordinary shares and, except as described below, are identical to the Class A ordinary shares included in the units being sold in this offering, and holders of founder shares have the same shareholder rights as public shareholders, except that:
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prior to our initial business combination, only holders of our founder shares will have the right to vote on the appointment of directors;
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the founder shares are subject to certain transfer restrictions, as described in more detail below;
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our sponsor and our founding team have entered into an agreement with us, pursuant to which they have agreed to (i) waive their redemption rights with respect to any founder shares, private placement shares and public shares they hold, (ii) to waive their redemption rights with respect to any founder shares, private placement shares and any public shares purchased during or after this offering in connection with a shareholder vote to approve an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity and (iii) waive their rights to liquidating distributions from the trust account with respect to any founder shares or private placement units they hold if we fail to consummate an initial business combination within 24 months from the closing of this offering (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 24 months from the closing of this offering);
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the founder shares will automatically convert into our Class A ordinary shares at the time of our initial business combination as described below adjacent to the caption “Founder shares conversion and anti-dilution rights” and in our amended and restated memorandum and articles of association; and
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the founder shares are entitled to registration rights.
If we submit our initial business combination to our public shareholders for a vote, our sponsor and our founding team have agreed to vote their founder shares, private placement shares and any public shares purchased during or after this offering in favor of our initial business combination. If we seek shareholder approval, we will complete our initial business combination only if a majority of the ordinary shares, represented in person or by proxy and entitled to vote thereon, voted at a general meeting are voted in favor of the business combination. In such case, our sponsor and each member of our founding team have agreed to vote their founder shares, private placement shares 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 shareholders’ founder shares, we would need 3,525,001, or 35.3%, of the 10,000,000 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 issued and outstanding shares are
voted, the private placement shares to be issued to our sponsor are voted in favor of the transaction and the over-allotment option is not exercised);
The founder shares will automatically convert into Class A ordinary shares on the first business day following the consummation of our initial business combination at a ratio such that the number of Class A ordinary shares issuable upon conversion of all founder shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of ordinary shares issued and outstanding (excluding the private placement shares underlying the private placement units) upon completion of this offering, plus (ii) the sum of the total number of Class A ordinary shares 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 Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, deemed issued, or to be issued, to any seller in the initial business combination and any private placement warrants issued to our sponsor, members of our founding team or any of their affiliates upon conversion of working capital loans. In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one to one.
Except as described herein, our sponsor and our founding team have agreed not to transfer, assign or sell any of their founder shares until the earliest of (A) one year after the completion of our initial business combination and (B) subsequent to our initial business combination, (x) if the closing price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (y) the date on which we complete a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of our public shareholders having the right to exchange their ordinary shares for cash, securities or other property. Any permitted transferees will be subject to the same restrictions and other agreements of our sponsor and our founding team with respect to any founder shares, private placement units, private placement shares, private placement warrants and Class A ordinary shares issued upon conversion or exercise thereof. We refer to such transfer restrictions throughout this prospectus as the lock-up. Notwithstanding the foregoing, if the closing price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, the founder shares will be released from the lock-up.
Prior to the completion of our initial business combination, only holders of our founder shares will have the right to vote on the appointment of directors. Holders of our public shares will not be entitled to vote on the appointment of directors during such time. In addition, prior to the completion of an initial business combination, holders of a majority of our founder shares may remove a member of the board of directors for any reason. These provisions of our amended and restated memorandum and articles of association may only be amended by a special resolution passed by holders representing at least two-thirds of our issued and outstanding Class B ordinary shares. With respect to any other matter submitted to a vote of our shareholders, including any vote in connection with our initial business combination, except as required by law, holders of our founder shares and holders of our public shares will vote together as a single class, with each share entitling the holder to one vote.
Register of Members
Under the Companies Law, we must keep a register of members and there should be entered therein:
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the names and addresses of the members of the company, a statement of the shares held by each member, which:
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distinguishes each share by its number (so long as the share has a number);
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confirms the amount paid, or agreed to be considered as paid, on the shares of each member; confirms the number and category of shares held by each member; and
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confirms whether each relevant category of shares held by a member carries voting rights under the Articles, and if so, whether such voting rights are conditional;
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the date on which the name of any person was entered on the register as a member; and
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the date on which any person ceased to be a member.
For these purposes, “voting rights” means rights conferred on shareholders, including the right to appoint or remove directors, in respect of their shares to vote at general meetings of the company on all or substantially all matters. A voting right is conditional where the voting right arises only in certain circumstances.
Under Cayman Islands law, the register of members of our company is prima facie evidence of the matters set out therein (i.e. the register of members will raise a presumption of fact on the matters referred to above unless rebutted) and a member registered in the register of members will be deemed as a matter of Cayman Islands law to have legal title to the shares as set against its name in the register of members. Upon the closing of this public offering, the register of members will be immediately updated to reflect the issue of shares by us. Once our register of members has been updated, the shareholders recorded in the register of members will be deemed to have legal title to the shares set against their name. However, there are certain limited circumstances where an application may be made to a Cayman Islands court for a determination on whether the register of members reflects the correct legal position.
Further, the Cayman Islands court has the power to order that the register of members maintained by a company should be rectified where it considers that the register of members does not reflect the correct legal position. If an application for an order for rectification of the register of members were made in respect of our ordinary shares, then the validity of such shares may be subject to re-examination by a Cayman Islands court.
Preference Shares
Our amended and restated memorandum and articles of association will authorize 1,000,000 preference shares and will provide that preference shares 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 shareholder approval, issue preference shares with voting and other rights that could adversely affect the voting power and other rights of the holders of the ordinary shares and could have anti-takeover effects. The ability of our board of directors to issue preference shares without shareholder approval could have the effect of delaying, deferring or preventing a change of control of us or the removal of our founding team. We have no preference shares issued and outstanding at the date hereof. Although we do not currently intend to issue any preference shares, we cannot assure you that we will not do so in the future. No preference shares are being issued or registered in this offering.
Warrants
Public Shareholders’ Warrants
Each whole warrant entitles the registered holder to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing on the later of one year 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 Class A ordinary shares 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 Class A ordinary shares. 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 three 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 ordinary shares 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 ordinary shares 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, or a valid exemption from registration is available. No warrant will be exercisable and we will not be obligated to issue a Class A ordinary share upon exercise of a warrant unless the Class A ordinary share 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 Class A ordinary share underlying such unit.
We have agreed that as soon as practicable, but in no event later than 20 business days after the closing of our initial business combination, we will use our commercially reasonable efforts to file with the SEC a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants, and we will use our commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of our initial business combination, and to maintain the effectiveness of such registration statement and a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed, as specified in the warrant agreement; provided that if our Class A ordinary shares 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 appoint, we will not be required to file or maintain in effect a registration statement. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the 60th day after the closing of the 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, but 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.
In addition, if (x) we issue additional Class A ordinary shares 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 Class A ordinary share (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 shareholders or their affiliates, without taking into account any founder shares held by our initial shareholders or such affiliates, as applicable, prior to such issuance including any transfer or reissuance of such shares (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, and (z) the volume-weighted average trading price of our Class A ordinary shares during the 10 trading day period starting on the trading day after the day on which we consummate our initial business combination 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 $10.00 and $18.00 per share redemption trigger prices adjacent to “Redemption of warrants for Class A ordinary shares when the price per Class A ordinary share equals or exceeds $10.00.” and “Redemption of warrants for cash when the price per Class A ordinary share equals or exceeds $18.00.” will be adjusted (to the nearest cent) to be equal to 100% and 180% of the higher of the Market Value and the Newly Issued Price, respectively.
Redemption of warrants for cash when the price per Class A ordinary share equals or exceeds $18.00. Once the warrants become exercisable, we may call the warrants for redemption (except as described herein with respect to the private placement warrants):
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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 to each warrant holder; and
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if, and only if, the closing price of the Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which notice of the redemption is given to the warrant holders (the “Reference Value”).
We will not redeem the warrants as described above unless a registration statement under the Securities Act covering the issuance of the Class A ordinary shares issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares is available throughout the 30-day redemption period. 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. As a result, we may redeem the warrants as set forth above even if the holders are otherwise unable to exercise the warrants.
We have established the last of the redemption criteria 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 ordinary shares may fall below the $18.00 redemption trigger price (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) as well as the $11.50 (for whole shares) warrant exercise price after the redemption notice is issued.
Redemption of warrants for Class A ordinary shares when the price per Class A ordinary share equals or exceeds $10.00. Once the warrants become exercisable, we may redeem the outstanding warrants:
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in whole and not in part;
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at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption; provided that during such 30 day period holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to the table below, based on the redemption date and the “fair market value” of our Class A ordinary shares (as defined below) except as otherwise described below; provided, further, that if the warrants are not exercised on a cashless basis or otherwise during such 30 day period, we shall redeem such warrants for $0.10 per share;
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if, and only if, the Reference Value (as defined above under “Redemption of Warrants for Cash When the Price per Class A Ordinary Share Equals or Exceeds $18.00”) equals or exceeds $10.00 per share (as adjusted for share subdivisions, share dividends, reorganizations, recapitalizations and the like) on the trading day before we send the notice of redemption to the warrant holders; and
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if the Reference Value is less than $18.00 per share (as adjusted for share subdivisions, share dividends, reorganizations, recapitalizations and the like), the private placement warrants must also be concurrently called for redemption on the same terms as the outstanding public warrants, as described above.
The numbers in the table below represent the number of Class A ordinary shares that a warrant holder will receive upon exercise in connection with a redemption by us pursuant to this redemption feature, based on the “fair market value” of our Class A ordinary shares on the corresponding redemption date (assuming holders elect to exercise their warrants and such warrants are not redeemed for $0.10 per warrant), determined based on volume-weighted average price of our Class A ordinary shares as reported during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of warrants, and the number of months that the corresponding redemption date precedes the expiration date of the warrants, each as set forth
in the table below. We will provide our warrant holders with the final fair market value no later than one business day after the 10-trading day period described above ends.
Pursuant to the warrant agreement, references above to Class A ordinary shares shall include a security other than Class A ordinary shares into which the Class A ordinary shares have been converted or exchanged for in the event we are not the surviving company in our initial business combination. The numbers in the table below will not be adjusted when determining the number of Class A ordinary shares to be issued upon exercise of the warrants if we are not the surviving entity following our initial business combination.
The share prices set forth in the column headings of the table below will be adjusted as of any date on which the number of shares issuable upon exercise of a warrant or the exercise price of the warrant is adjusted as set forth under the heading “—Anti-dilution Adjustments” below. If the number of shares issuable upon exercise of a warrant is adjusted, the adjusted share prices in the column headings will equal the share prices immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the exercise price of the warrant after such adjustment and the denominator of which is the price of the warrant immediately prior to such adjustment. In such an event, the number of shares in the table below shall be adjusted by multiplying such share amounts by a fraction, the numerator of which is the number of shares deliverable upon exercise of a warrant immediately prior to such adjustment and the denominator of which is the number of shares deliverable upon exercise of a warrant as so adjusted. If the exercise price of the warrant is adjusted as a result of raising capital in connection with the initial business combination, the adjusted share prices in the column headings will by multiplied by a fraction, the numerator of which is the higher of the Market Value and the Newly Issued Price as set forth under the heading “—Anti-dilution Adjustments” and the denominator of which is $10.00.
|
Redemption date
(period to expiration of
warrants)
|
|
|
Fair market value of Class A ordinary shares
|
|
| |
≤$10.00
|
|
|
$11.00
|
|
|
$12.00
|
|
|
$13.00
|
|
|
$14.00
|
|
|
$15.00
|
|
|
$16.00
|
|
|
$17.00
|
|
|
≥$18.00
|
|
|
60 months
|
|
|
|
|
0.261 |
|
|
|
|
|
0.281 |
|
|
|
|
|
0.297 |
|
|
|
|
|
0.311 |
|
|
|
|
|
0.324 |
|
|
|
|
|
0.337 |
|
|
|
|
|
0.348 |
|
|
|
|
|
0.358 |
|
|
|
|
|
0.361 |
|
|
|
57 months
|
|
|
|
|
0.257 |
|
|
|
|
|
0.277 |
|
|
|
|
|
0.294 |
|
|
|
|
|
0.310 |
|
|
|
|
|
0.324 |
|
|
|
|
|
0.337 |
|
|
|
|
|
0.348 |
|
|
|
|
|
0.358 |
|
|
|
|
|
0.361 |
|
|
|
54 months
|
|
|
|
|
0.252 |
|
|
|
|
|
0.272 |
|
|
|
|
|
0.291 |
|
|
|
|
|
0.307 |
|
|
|
|
|
0.322 |
|
|
|
|
|
0.335 |
|
|
|
|
|
0.347 |
|
|
|
|
|
0.357 |
|
|
|
|
|
0.361 |
|
|
|
51 months
|
|
|
|
|
0.246 |
|
|
|
|
|
0.268 |
|
|
|
|
|
0.287 |
|
|
|
|
|
0.304 |
|
|
|
|
|
0.320 |
|
|
|
|
|
0.333 |
|
|
|
|
|
0.346 |
|
|
|
|
|
0.357 |
|
|
|
|
|
0.361 |
|
|
|
48 months
|
|
|
|
|
0.241 |
|
|
|
|
|
0.263 |
|
|
|
|
|
0.283 |
|
|
|
|
|
0.301 |
|
|
|
|
|
0.317 |
|
|
|
|
|
0.332 |
|
|
|
|
|
0.344 |
|
|
|
|
|
0.356 |
|
|
|
|
|
0.361 |
|
|
|
45 months
|
|
|
|
|
0.235 |
|
|
|
|
|
0.258 |
|
|
|
|
|
0.279 |
|
|
|
|
|
0.298 |
|
|
|
|
|
0.315 |
|
|
|
|
|
0.330 |
|
|
|
|
|
0.343 |
|
|
|
|
|
0.356 |
|
|
|
|
|
0.361 |
|
|
|
42 months
|
|
|
|
|
0.228 |
|
|
|
|
|
0.252 |
|
|
|
|
|
0.274 |
|
|
|
|
|
0.294 |
|
|
|
|
|
0.312 |
|
|
|
|
|
0.328 |
|
|
|
|
|
0.342 |
|
|
|
|
|
0.355 |
|
|
|
|
|
0.361 |
|
|
|
39 months
|
|
|
|
|
0.221 |
|
|
|
|
|
0.246 |
|
|
|
|
|
0.269 |
|
|
|
|
|
0.290 |
|
|
|
|
|
0.309 |
|
|
|
|
|
0.325 |
|
|
|
|
|
0.340 |
|
|
|
|
|
0.354 |
|
|
|
|
|
0.361 |
|
|
|
36 months
|
|
|
|
|
0.213 |
|
|
|
|
|
0.239 |
|
|
|
|
|
0.263 |
|
|
|
|
|
0.285 |
|
|
|
|
|
0.305 |
|
|
|
|
|
0.323 |
|
|
|
|
|
0.339 |
|
|
|
|
|
0.353 |
|
|
|
|
|
0.361 |
|
|
|
33 months
|
|
|
|
|
0.205 |
|
|
|
|
|
0.232 |
|
|
|
|
|
0.257 |
|
|
|
|
|
0.280 |
|
|
|
|
|
0.301 |
|
|
|
|
|
0.320 |
|
|
|
|
|
0.337 |
|
|
|
|
|
0.352 |
|
|
|
|
|
0.361 |
|
|
|
30 months
|
|
|
|
|
0.196 |
|
|
|
|
|
0.224 |
|
|
|
|
|
0.250 |
|
|
|
|
|
0.274 |
|
|
|
|
|
0.297 |
|
|
|
|
|
0.316 |
|
|
|
|
|
0.335 |
|
|
|
|
|
0.351 |
|
|
|
|
|
0.361 |
|
|
|
27 months
|
|
|
|
|
0.185 |
|
|
|
|
|
0.214 |
|
|
|
|
|
0.242 |
|
|
|
|
|
0.268 |
|
|
|
|
|
0.291 |
|
|
|
|
|
0.313 |
|
|
|
|
|
0.332 |
|
|
|
|
|
0.350 |
|
|
|
|
|
0.361 |
|
|
|
24 months
|
|
|
|
|
0.173 |
|
|
|
|
|
0.204 |
|
|
|
|
|
0.233 |
|
|
|
|
|
0.260 |
|
|
|
|
|
0.285 |
|
|
|
|
|
0.308 |
|
|
|
|
|
0.329 |
|
|
|
|
|
0.348 |
|
|
|
|
|
0.361 |
|
|
|
21 months
|
|
|
|
|
0.161 |
|
|
|
|
|
0.193 |
|
|
|
|
|
0.223 |
|
|
|
|
|
0.252 |
|
|
|
|
|
0.279 |
|
|
|
|
|
0.304 |
|
|
|
|
|
0.326 |
|
|
|
|
|
0.347 |
|
|
|
|
|
0.361 |
|
|
|
18 months
|
|
|
|
|
0.146 |
|
|
|
|
|
0.179 |
|
|
|
|
|
0.211 |
|
|
|
|
|
0.242 |
|
|
|
|
|
0.271 |
|
|
|
|
|
0.298 |
|
|
|
|
|
0.322 |
|
|
|
|
|
0.345 |
|
|
|
|
|
0.361 |
|
|
|
15 months
|
|
|
|
|
0.130 |
|
|
|
|
|
0.164 |
|
|
|
|
|
0.197 |
|
|
|
|
|
0.230 |
|
|
|
|
|
0.262 |
|
|
|
|
|
0.291 |
|
|
|
|
|
0.317 |
|
|
|
|
|
0.342 |
|
|
|
|
|
0.361 |
|
|
|
12 months
|
|
|
|
|
0.111 |
|
|
|
|
|
0.146 |
|
|
|
|
|
0.181 |
|
|
|
|
|
0.216 |
|
|
|
|
|
0.250 |
|
|
|
|
|
0.282 |
|
|
|
|
|
0.312 |
|
|
|
|
|
0.339 |
|
|
|
|
|
0.361 |
|
|
|
9 months
|
|
|
|
|
0.090 |
|
|
|
|
|
0.125 |
|
|
|
|
|
0.162 |
|
|
|
|
|
0.199 |
|
|
|
|
|
0.237 |
|
|
|
|
|
0.272 |
|
|
|
|
|
0.305 |
|
|
|
|
|
0.336 |
|
|
|
|
|
0.361 |
|
|
|
6 months
|
|
|
|
|
0.065 |
|
|
|
|
|
0.099 |
|
|
|
|
|
0.137 |
|
|
|
|
|
0.178 |
|
|
|
|
|
0.219 |
|
|
|
|
|
0.259 |
|
|
|
|
|
0.296 |
|
|
|
|
|
0.331 |
|
|
|
|
|
0.361 |
|
|
|
3 months
|
|
|
|
|
0.034 |
|
|
|
|
|
0.065 |
|
|
|
|
|
0.104 |
|
|
|
|
|
0.150 |
|
|
|
|
|
0.197 |
|
|
|
|
|
0.243 |
|
|
|
|
|
0.286 |
|
|
|
|
|
0.326 |
|
|
|
|
|
0.361 |
|
|
|
0 months
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
0.042 |
|
|
|
|
|
0.115 |
|
|
|
|
|
0.179 |
|
|
|
|
|
0.233 |
|
|
|
|
|
0.281 |
|
|
|
|
|
0.323 |
|
|
|
|
|
0.361 |
|
|
The exact fair market value and redemption date may not be set forth in the table above, in which case, if the fair market value is between two values in the table or the redemption date is between two redemption dates in the table, the number of Class A ordinary shares to be issued for each warrant exercised will be determined by a straight-line interpolation between the number of shares set forth for the higher and lower fair market values and the earlier and later redemption dates, as applicable, based on a 365 or 366-day year, as applicable. For example, if
the volume-weighted average price of our Class A ordinary shares as reported during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of the warrants is $11.00 per share, and at such time there are 57 months until the expiration of the warrants, holders may choose to, in connection with this redemption feature, exercise their warrants for 0.277 Class A ordinary shares for each whole warrant. For an example where the exact fair market value and redemption date are not as set forth in the table above, if the volume-weighted average price of our Class A ordinary shares as reported during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of the warrants is $13.50 per share, and at such time there are 38 months until the expiration of the warrants, holders may choose to, in connection with this redemption feature, exercise their warrants for 0.298 Class A ordinary shares for each whole warrant. In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 Class A ordinary shares per warrant (subject to adjustment).
This redemption feature is structured to allow for all of the outstanding warrants to be redeemed when the Class A ordinary shares are trading at or above $10.00 per share, which may be at a time when the trading price of our Class A ordinary shares is below the exercise price of the warrants. We have established this redemption feature to provide us with the flexibility to redeem the warrants without the warrants having to reach the $18.00 per share threshold set forth above under “—Redemption of warrants for cash when the price per Class A ordinary share equals or exceeds $18.00.” Holders choosing to exercise their warrants in connection with a redemption pursuant to this feature will, in effect, receive a number of shares for their warrants based on an option pricing model with a fixed volatility input as of the date of this prospectus. This redemption right provides us with an additional mechanism by which to redeem all of the outstanding warrants, and therefore have certainty as to our capital structure as the warrants would no longer be outstanding and would have been exercised or redeemed. We will be required to pay the applicable redemption price to warrant holders if we choose to exercise this redemption right and it will allow us to quickly proceed with a redemption of the warrants if we determine it is in our best interest to do so. As such, we would redeem the warrants in this manner when we believe it is in our best interest to update our capital structure to remove the warrants and pay the redemption price to the warrant holders.
As stated above, we can redeem the warrants when the Class A ordinary shares are trading at a price starting at $10.00, which is below the exercise price of $11.50, because it will provide certainty with respect to our capital structure and cash position while providing warrant holders with the opportunity to exercise their warrants on a cashless basis for the applicable number of shares. If we choose to redeem the warrants when the Class A ordinary shares are trading at a price below the exercise price of the warrants, this could result in the warrant holders receiving fewer Class A ordinary shares than they would have received if they had chosen to wait to exercise their warrants for Class A ordinary shares if and when such Class A ordinary shares were trading at a price higher than the exercise price of $11.50.
No fractional Class A ordinary shares will be issued upon exercise. If, upon exercise, a holder would be entitled to receive a fractional interest in a share, we will round down to the nearest whole number of the number of Class A ordinary shares to be issued to the holder. If, at the time of redemption, the warrants are exercisable for a security other than the Class A ordinary shares pursuant to the warrant agreement (for instance, if we are not the surviving company in our initial business combination), the warrants may be exercised for such security. At such time as the warrants become exercisable for a security other than the Class A ordinary shares, the Company (or surviving company) will use its commercially reasonable efforts to register under the Securities Act the security issuable upon the exercise of the warrants.
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 ordinary shares issued and outstanding immediately after giving effect to such exercise.
Anti-dilution adjustments. If the number of outstanding Class A ordinary shares is increased by a capitalization or share dividend payable in Class A ordinary shares, or by a sub-divisions of ordinary shares or other similar event,
then, on the effective date of such capitalization or share dividend, sub-divisions or similar event, the number of Class A ordinary shares issuable on exercise of each warrant will be increased in proportion to such increase in the outstanding ordinary shares. A rights offering made to all or substantially all holders of ordinary shares entitling holders to purchase Class A ordinary shares at a price less than the “historical fair market value” (as defined below) will be deemed a share dividend of a number of Class A ordinary shares equal to the product of (i) the number of Class A ordinary shares 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 ordinary shares) and (ii) one minus the quotient of (x) the price per Class A ordinary share paid in such rights offering and (y) the historical fair market value. For these purposes, (i) if the rights offering is for securities convertible into or exercisable for Class A ordinary shares, in determining the price payable for Class A ordinary shares, 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) “historical fair market value” means the volume-weighted average price of Class A ordinary shares as reported during the 10 trading day period ending on the trading day prior to the first date on which the Class A ordinary shares trade 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 all or substantially all the holders of Class A ordinary shares on account of such Class A ordinary shares (or other securities into which the warrants are convertible), other than (a) as described above, (b) any cash dividends or cash distributions which, when combined on a per share basis with all other cash dividends and cash distributions paid on the Class A ordinary shares during the 365-day period ending on the date of declaration of such dividend or distribution does not exceed $0.50 (as adjusted to appropriately reflect any other adjustments and excluding cash dividends or cash distributions that resulted in an adjustment to the exercise price or to the number of Class A ordinary shares issuable on exercise of each warrant) but only with respect to the amount of the aggregate cash dividends or cash distributions equal to or less than $0.50 per share, (b) to satisfy the redemption rights of the holders of Class A ordinary shares in connection with a proposed initial business combination, (d) to satisfy the redemption rights of the holders of Class A ordinary shares in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity, or (e) 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 Class A ordinary share in respect of such event.
If the number of outstanding Class A ordinary shares is decreased by a consolidation, combination, reverse share sub-division or reclassification of Class A ordinary shares or other similar event, then, on the effective date of such consolidation, combination, reverse share sub-division, reclassification or similar event, the number of Class A ordinary shares issuable on exercise of each warrant will be decreased in proportion to such decrease in outstanding Class A ordinary shares.
Whenever the number of Class A ordinary shares 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 Class A ordinary shares purchasable upon the exercise of the warrants immediately prior to such adjustment and (y) the denominator of which will be the number of Class A ordinary shares so purchasable immediately thereafter.
In case of any reclassification or reorganization of the outstanding Class A ordinary shares (other than those described above or that solely affects the par value of such Class A ordinary shares), 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 issued and
outstanding Class A ordinary shares), 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 ordinary shares immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of Class A ordinary shares 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 ordinary shares in such a transaction is payable in the form of Class A ordinary shares 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 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 or correct any mistake, including to conform the provisions of the warrant agreement to the description of the terms of the warrants and the warrant agreement set forth in this prospectus, 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. 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 warrant holders do not have the rights or privileges of holders of ordinary shares and any voting rights until they exercise their warrants and receive Class A ordinary shares. After the issuance of Class A ordinary shares 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 shareholders.
No fractional warrants will be issued upon separation of the units and only whole warrants 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 Class A ordinary shares to be issued to the warrant holder.
We have agreed that, subject to applicable law, any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement will be brought and enforced in the courts of the State of New York or the U.S. District Court for the Southern District of New York, and we irrevocably submit to such jurisdiction, which jurisdiction will be the exclusive forum for any such action, proceeding or claim. See “Risk Factors—Our warrant agreement will designate the courts of the State of New York or the U.S. 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.” This provision applies to claims under the Securities Act but does not apply to claims under the Exchange Act or any claim for which the federal district courts of the U.S. of America are the sole and exclusive forum.
Private Placement Warrants
Except as described below, 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. The private placement warrants (including the Class A ordinary shares 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 pursuant to limited exceptions as described under “Principal Shareholders—Transfers of Founder Shares and Private Placement Units,” 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 (except as described above under “—Public Shareholders’ Warrants—Redemption of warrants for Class A ordinary shares when the price per Class A ordinary share equals or exceeds $10.00”) so long as they are held by our sponsor or its permitted transferees. Our sponsor, or its permitted transferees, has the option to exercise the private placement warrants on a cashless basis. If the private placement warrants are held by holders other than our sponsor or its permitted transferees, the private placement warrants will be redeemable by us in all redemption scenarios and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. Any amendment to the terms of the private placement warrants or any provision of the warrant agreement with respect to the private placement warrants will require a vote of holders of at least 50% of the number of the then outstanding private placement warrants.
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 Class A ordinary shares equal to the quotient obtained by dividing (x) the product of the number of Class A ordinary shares underlying the warrants, multiplied by the excess of the “historical fair market value” (defined below) over the exercise price of the warrants by (y) the historical fair market value. The “historical fair market value” will mean the average reported closing price of the Class A ordinary shares 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 our sponsor and 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 restrict 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 shareholders who could exercise their warrants and sell the Class A ordinary shares 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 fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. Up to $1,500,000 of such loans may be convertible into private placement units of the post-business combination company at a price of $10.00 per private placement unit at the option of the lender. Such private placement units would be identical to the Units.
Dividends
We have not paid any cash dividends on our ordinary shares 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, and we will only pay such dividend out of our profits or share premium (subject to solvency requirements) as permitted under Cayman Islands law. If we increase the size of this offering, we will effect a share capitalization or other appropriate mechanism immediately prior to the consummation of this offering in such amount as to maintain the number of founder shares, on an as-converted basis, at 20% of our issued and outstanding ordinary shares upon the consummation of this offering (excluding the private placement shares underlying the private placement units). Further, if we incur any indebtedness in connection with a business combination, 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 ordinary shares 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 shareholders, 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 claims and losses due to any gross negligence or intentional misconduct of the indemnified person or entity.
Certain Differences in Corporate Law
Cayman Islands companies are governed by the Companies Law. The Companies Law is modeled on English Law but does not follow recent English Law statutory enactments, and differs from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of the material differences between the provisions of the Companies Law applicable to us and the laws applicable to companies incorporated in the U.S. and their shareholders.
Mergers and Similar Arrangements. In certain circumstances, the Companies Law allows for mergers or consolidations between two Cayman Islands companies, or between a Cayman Islands exempted company and a company incorporated in another jurisdiction (provided that is facilitated by the laws of that other jurisdiction) so as to form a single surviving company.
Where the merger or consolidation is between two Cayman Islands companies, the directors of each company must approve and enter into a written plan of merger or consolidation containing certain prescribed information. That plan or merger or consolidation must then be authorized by either (a) a special resolution (usually a majority of two-thirds in value of the voting shares voted at a general meeting) of the shareholders of each company; or (b) such other authorization, if any, as may be specified in such constituent company’s articles of association. No shareholder resolution is required for a merger between a parent company (i.e., a company that owns at least 90% of the issued shares of each class in a subsidiary company) and its subsidiary company. The consent of each holder of a fixed or floating security interest of a constituent company must be obtained, unless the court waives such requirement. If the Cayman Islands Registrar of Companies is satisfied that the requirements of the Companies Law (which includes certain other formalities) have been complied with, the Registrar of Companies will register the plan of merger or consolidation.
Where the merger or consolidation involves a foreign company, the procedure is similar, save that with respect to the foreign company, the directors of the Cayman Islands exempted company are required to make a declaration to the effect that, having made due enquiry, they are of the opinion that the requirements set out below have been met: (i) that the merger or consolidation is permitted or not prohibited by the constitutional documents of the foreign company and by the laws of the jurisdiction in which the foreign company is incorporated, and that those laws and any requirements of those constitutional documents have been or will be complied with; (ii) that no petition or other similar proceeding has been filed and remains outstanding or order made or resolution adopted to wind up or liquidate the foreign company in any jurisdictions; (iii) that no receiver, trustee, administrator or other similar person has been appointed in any jurisdiction and is acting in respect of the foreign company, its affairs or its property or any part thereof; and (iv) that no scheme, order, compromise or other similar arrangement has been entered into or made in any jurisdiction whereby the rights of creditors of the foreign company are and continue to be suspended or restricted.
Where the surviving company is the Cayman Islands exempted company, the directors of the Cayman Islands exempted company are further required to make a declaration to the effect that, having made due enquiry, they are of the opinion that the requirements set out below have been met: (i) that the foreign company is able to pay its debts as they fall due and that the merger or consolidated is bona fide and not intended to defraud unsecured creditors of the foreign company; (ii) that in respect of the transfer of any security interest granted by the foreign company to the surviving or consolidated company (a) consent or approval to the transfer has been obtained, released or waived; (b) the transfer is permitted by and has been approved in accordance with the constitutional documents of the foreign company; and (c) the laws of the jurisdiction of the foreign company with respect to
the transfer have been or will be complied with; (iii) that the foreign company will, upon the merger or consolidation becoming effective, cease to be incorporated, registered or exist under the laws of the relevant foreign jurisdiction; and (iv) that there is no other reason why it would be against the public interest to permit the merger or consolidation.
Where the above procedures are adopted, the Companies Law provides certain limited appraisal rights for dissenting shareholders to be paid a payment of the fair value of his shares upon their dissenting to the merger or consolidation if they follow a prescribed procedure. In essence, that procedure is as follows: (a) the shareholder must give his written objection to the merger or consolidation to the constituent company before the vote on the merger or consolidation, including a statement that the shareholder proposes to demand payment for his shares if the merger or consolidation is authorized by the vote; (b) within 20 days following the date on which the merger or consolidation is approved by the shareholders, the constituent company must give written notice to each shareholder who made a written objection; (c) a shareholder must within 20 days following receipt of such notice from the constituent company, give the constituent company a written notice of his intention to dissent including, among other details, a demand for payment of the fair value of his shares; (d) within seven days following the date of the expiration of the period set out in paragraph (b) above or seven days following the date on which the plan of merger or consolidation is filed, whichever is later, the constituent company, the surviving company or the consolidated company must make a written offer to each dissenting shareholder to purchase his shares at a price that the company determines is the fair value and if the company and the shareholder agree the price within 30 days following the date on which the offer was made, the company must pay the shareholder such amount; and (e) if the company and the shareholder fail to agree a price within such 30 day period, within 20 days following the date on which such 30 day period expires, the company (and any dissenting shareholder) must file a petition with the Cayman Islands Grand Court to determine the fair value and such petition must be accompanied by a list of the names and addresses of the dissenting shareholders with whom agreements as to the fair value of their shares have not been reached by the company. At the hearing of that petition, the court has the power to determine the fair value of the shares together with a fair rate of interest, if any, to be paid by the company upon the amount determined to be the fair value. Any dissenting shareholder whose name appears on the list filed by the company may participate fully in all proceedings until the determination of fair value is reached. These rights of a dissenting shareholder are not available in certain circumstances, for example, to dissenters holding shares of any class in respect of which an open market exists on a recognized stock exchange or recognized interdealer quotation system at the relevant date or where the consideration for such shares to be contributed are shares of any company listed on a national securities exchange or shares of the surviving or consolidated company.
Moreover, Cayman Islands law has separate statutory provisions that facilitate the reconstruction or amalgamation of companies in certain circumstances, schemes of arrangement will generally be more suited for complex mergers or other transactions involving widely held companies, commonly referred to in the Cayman Islands as a “scheme of arrangement” which may be tantamount to a merger.
In the event that a merger was sought pursuant to a scheme of arrangement (the procedures for which are more rigorous and take longer to complete than the procedures typically required to consummate a merger in the U.S.), the arrangement in question must be approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made and who must in addition represent three-fourth in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meeting summoned for that purpose. The convening of the meetings and subsequently the terms of the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder would have the right to express to the court the view that the transaction should not be approved, the court can be expected to approve the arrangement if it satisfies itself that:
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we are not proposing to act illegally or beyond the scope of our corporate authority and the statutory provisions as to majority vote have been complied with;
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the shareholders have been fairly represented at the meeting in question; the arrangement is such as a businessman would reasonably approve; and
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the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Law or that would amount to a “fraud on the minority.”
If a scheme of arrangement or takeover offer (as described below) is approved, any dissenting shareholder would have no rights comparable to appraisal rights (providing rights to receive payment in cash for the judicially determined value of the shares), which would otherwise ordinarily be available to dissenting shareholders of U.S. corporations.
Squeeze-out provisions. When a tender offer is made and accepted by holders of 90% of the shares to whom the offer relates within four months, the offeror may, within a two-month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands, but this is unlikely to succeed unless there is evidence of fraud, bad faith, collusion or inequitable treatment of the shareholders.
Further, transactions similar to a merger, reconstruction and/or an amalgamation may in some circumstances be achieved through means other than these statutory provisions, such as a share capital exchange, asset acquisition or control, or through contractual arrangements of an operating business.
Shareholders’ suits. Campbells, our Cayman Islands legal counsel, is not aware of any reported class action having been brought in a Cayman Islands court. Derivative actions have been brought in the Cayman Islands courts, and the Cayman Islands courts have confirmed the availability for such actions. In most cases, we will be the proper plaintiff in any claim based on a breach of duty owed to us, and a claim against (for example) our officers or directors usually may not be brought by a shareholder. However, based both on Cayman Islands authorities and on English authorities, which would in all likelihood be of persuasive authority and be applied by a court in the Cayman Islands, exceptions to the foregoing principle apply in circumstances in which:
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a company is acting, or proposing to act, illegally or ultra vires (beyond the scope of its authority);
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the act complained of, although not beyond the scope of the authority, could be effected if duly authorized by more than the number of votes which have actually been obtained; or
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those who control the company are perpetrating a “fraud on the minority.”
A shareholder may have a direct right of action against us where the individual rights of that shareholder have been infringed or are about to be infringed.
Enforcement of civil liabilities. The Cayman Islands has a different body of securities laws as compared to the U.S. and provides less protection to investors. Additionally, Cayman Islands companies may not have standing to sue before the Federal courts of the U.S.
We have been advised by Campbells, our Cayman Islands legal counsel, that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the U.S. predicated upon the civil liability provisions of the federal securities laws of the U.S. or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal securities laws of the U.S. or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the U.S., the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
Special considerations for exempted companies. We are an exempted company with limited liability (meaning our public shareholders have no liability, as members of the company, for liabilities of the company over and above the amount paid for their shares) under the Companies Law. The Companies Law distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except for the exemptions and privileges listed below:
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annual reporting requirements are minimal and consist mainly of a statement that the company has conducted its operations mainly outside of the Cayman Islands and has complied with the provisions of the Companies Law;
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an exempted company’s register of members is not open to inspection;
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an exempted company does not have to hold an annual general meeting;
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an exempted company may issue negotiable shares or shares with no par value;
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an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);
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an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;
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an exempted company may register as a limited duration company; and an exempted company may register as a segregated portfolio company.
Amended and Restated Memorandum and Articles of Association
Our amended and restated memorandum and articles of association will contain provisions designed to provide certain rights and protections relating to this offering that will apply to us until the completion of our initial business combination. These provisions cannot be amended without a special resolution. As a matter of Cayman Islands law, a resolution is deemed to be a special resolution where it has been approved by either (i) the affirmative vote of at least two-thirds (or any higher threshold specified in a company’s articles of association) of a company’s shareholders entitled to vote and so voting at a general meeting for which notice specifying the intention to propose the resolution as a special resolution has been given; or (ii) if so authorized by a company’s articles of association, by a unanimous written resolution of all of the company’s shareholders. Our amended and restated memorandum and articles of association provides that special resolutions must be approved either by at least two-thirds of our shareholders who attend and vote at a general meeting of the company (i.e., the lowest threshold permissible under Cayman Islands law), or by a unanimous written resolution of all of our shareholders.
Further, our amended and restated memorandum and articles of association provides that a quorum at our general meetings will consist of one-third of the ordinary shares entitled to vote at such meeting and present in person or by proxy; provided that a quorum in connection with any meeting that is convened to vote on a business combination or any amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity shall be a majority of the ordinary shares entitled to vote at such meeting being individuals present in person or by proxy or if a corporation or other non-natural person by its duly authorized representative or proxy.
Our initial shareholders and their permitted transferees, if any, who will collectively beneficially own approximately 20% of our ordinary shares (excluding the private placement shares underlying the private placement units and assuming they do not purchase any units in this offering) upon the closing of this offering, will participate in any vote to amend our amended and restated memorandum and articles of association and will have the discretion
to vote in any manner they choose. Specifically, our amended and restated memorandum and articles of association provides, among other things, that:
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if we do not consummate 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 no more than 10 business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our income taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii) to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law;
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prior to the completion of 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 on any other proposal presented to shareholders prior to or in connection with the completion of an initial business combination or (b) to approve an amendment to our amended and restated memorandum and articles of association 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 partner 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 an independent valuation or accounting firm that such a business combination or transaction is fair to our company from a financial point of view;
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if a shareholder vote on our initial business combination is not required by applicable law or stock exchange rule and we do not decide to hold a shareholder vote for business or other reasons, we will offer to redeem our public shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, and will file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about our initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act;
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our initial business combination must occur with one or more partner businesses that together have an aggregate fair market value of at least 80% of the net assets held in the trust account (excluding the amount of deferred underwriting discounts held in trust and taxes payable on the interest earned on the trust account) at the time of signing the agreement to enter into the initial business combination;
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if our shareholders approve an amendment to our amended and restated memorandum and articles of association (A) that would modify the substance or timing of our obligation to provide holders of our Class A ordinary shares the right to have their shares redeemed in connection with our initial business combination or 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 the rights of holders of our Class A ordinary shares or pre-initial business combination activity, we will provide our public shareholders with the opportunity to redeem all or a portion of their ordinary shares 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 and not previously released to us to pay our income taxes, if any, divided by the number of the then-outstanding public shares, subject to the limitations described herein; and
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we will not effectuate our initial business combination solely with another blank check company or a similar company with nominal operations.
In addition, our amended and restated memorandum and articles of association 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.
The Companies Law permits a company incorporated in the Cayman Islands to amend its memorandum and articles of association with the approval of a special resolution. A company’s articles of association may specify that the approval of a higher majority is required but, provided the approval of the required majority is obtained, any Cayman Islands exempted company may amend its memorandum and articles of association regardless of whether its memorandum and articles of association provides otherwise. Accordingly, although we could amend any of the provisions relating to our proposed offering, structure and business plan which are contained in our amended and restated memorandum and articles of association, we view all of these provisions as binding obligations to our shareholders and neither we, nor our officers or directors, will take any action to amend or waive any of these provisions unless we provide dissenting public shareholders with the opportunity to redeem their public shares.
Anti-money laundering—Cayman Islands
In order to comply with legislation or regulations aimed at the prevention of money laundering, we are required to adopt and maintain anti-money laundering procedures, and may require subscribers to provide evidence to verify their identity and source of funds. Where permitted, and subject to certain conditions, we may also delegate the maintenance of our anti-money laundering procedures (including the acquisition of due diligence information) to a suitable person.
We reserve the right to request such information as is necessary to verify the identity of a subscriber. In some cases the directors may be satisfied that no further information is required since an exemption applies under the Anti-Money Laundering Regulations (2020 Revision) of the Cayman Islands, as amended and revised from time to time (the “Regulations”). Depending on the circumstances of each application, a detailed verification of identity might not be required where:
(a) the subscriber makes the payment for their investment from an account held in the subscriber’s name at a recognized financial institution;
(b) the subscriber is regulated by a recognized regulatory authority and is based or incorporated in, or formed under the law of, a recognized jurisdiction; or
(c) the application is made through an intermediary which is regulated by a recognized regulatory authority and is based in or incorporated in, or formed under the law of a recognized jurisdiction and an assurance is provided in relation to the procedures undertaken on the underlying investors.
For the purposes of these exceptions, recognition of a financial institution, regulatory authority or jurisdiction will be determined in accordance with the Regulations by reference to those jurisdictions recognized by the Cayman Islands Monetary Authority as having equivalent anti-money laundering regulations.
In the event of delay or failure on the part of the subscriber in producing any information required for verification purposes, we may refuse to accept the application, in which case any funds received will be returned without interest to the account from which they were originally debited.
We also reserve the right to refuse to make any distribution payment to a shareholder if our directors or officers suspect or are advised that the payment of such distribution to such shareholder might result in a breach of applicable anti-money laundering or other laws or regulations by any person in any relevant jurisdiction, or if such refusal is considered necessary or appropriate to ensure our compliance with any such laws or regulations in any applicable jurisdiction.
If any person resident in the Cayman Islands knows or suspects, or has reasonable grounds for knowing or suspecting, that another person is engaged in criminal conduct or is involved with terrorism or terrorist property and the information for that knowledge or suspicion came to their attention in the course of business in the
regulated sector or other trade, profession, business or employment, the person will be required to report such knowledge or suspicion to (i) the Financial Reporting Authority of the Cayman Islands, pursuant to the Proceeds of Crime Law (2020 Revision) of the Cayman Islands if the disclosure relates to criminal conduct or money laundering or (ii) a police officer of the rank of constable or higher, or the Financial Reporting Authority, pursuant to the Terrorism Law (2018 Revision) of the Cayman Islands, if the disclosure relates to involvement with terrorism or terrorist financing and property. Such a report will not be treated as a breach of confidence or of any restriction upon the disclosure of information imposed by any enactment or otherwise.
Data protection in the Cayman Islands—privacy notice
We have certain duties under the Data Protection Law, 2017 of the Cayman Islands (the “DPL”) based on internationally accepted principles of data privacy.
Introduction
This privacy notice puts our shareholders on notice that through your investment in the company you will provide us with certain personal information which constitutes personal data within the meaning of the DPL (“personal data”).
In the following discussion, the “company” refers to us and our affiliates and/or delegates, except where the context requires otherwise.
Investor Data
We will collect, use, disclose, retain and secure personal data to the extent reasonably required only and within the parameters that could be reasonably expected during the normal course of business. We will only process, disclose, transfer or retain personal data to the extent legitimately required to conduct our activities of on an ongoing basis or to comply with legal and regulatory obligations to which we are subject. We will only transfer personal data in accordance with the requirements of the DPL, and will apply appropriate technical and organizational information security measures designed to protect against unauthorized or unlawful processing of the personal data and against the accidental loss, destruction or damage to the personal data.
In our use of this personal data, we will be characterized as a “data controller” for the purposes of the DPL, while our affiliates and service providers who may receive this personal data from us in the conduct of our activities may either act as our “data processors” for the purposes of the DPL or may process personal information for their own lawful purposes in connection with services provided to us.
We may also obtain personal data from other public sources. Personal data includes, without limitation, the following information relating to a shareholder and/or any individuals connected with a shareholder as an investor: name, residential address, email address, contact details, corporate contact information, signature, nationality, place of birth, date of birth, tax identification, credit history, correspondence records, passport number, bank account details, source of funds details and details relating to the shareholder’s investment activity.
Who this Affects
If you are a natural person, this will affect you directly. If you are a corporate investor (including, for these purposes, legal arrangements such as trusts or exempted limited partnerships) that provides us with personal data on individuals connected to you for any reason in relation your investment in the Company, this will be relevant for those individuals and you should transmit the content of this Privacy Notice to such individuals or otherwise advise them of its content.
How the Company May Use Your Personal Data
The company, as the data controller, may collect, store and use personal data for lawful purposes, including, in particular:
(i) where this is necessary for the performance of our rights and obligations under any purchase agreements;
(ii) where this is necessary for compliance with a legal and regulatory obligation to which we are subject (such as compliance with anti-money laundering and FATCA/CRS requirements); and/or
(iii) where this is necessary for the purposes of our legitimate interests and such interests are not overridden by your interests, fundamental rights or freedoms.
Should we wish to use personal data for other specific purposes (including, if applicable, any purpose that requires your consent), we will contact you.
Why We May Transfer Your Personal Data
In certain circumstances, we may be legally obliged to share personal data and other information with respect to your shareholding with the relevant regulatory authorities such as the Cayman Islands Monetary Authority or the Tax Information Authority. They, in turn, may exchange this information with foreign authorities, including tax authorities.
We anticipate disclosing personal data to persons who provide services to us and their respective affiliates (which may include certain entities located outside the US, the Cayman Islands or the European Economic Area), who will process your personal data on our behalf.
The Data Protection Measures We Take
Any transfer of personal data by us or our duly authorized affiliates and/or delegates outside of the Cayman Islands shall be in accordance with the requirements of the DPL.
We and our duly authorized affiliates and/or delegates shall apply appropriate technical and organizational information security measures designed to protect against unauthorized or unlawful processing of personal data, and against accidental loss or destruction of, or damage to, personal data.
We shall notify you of any personal data breach that is reasonably likely to result in a risk to your interests, fundamental rights or freedoms or those data subjects to whom the relevant personal data relates.
If you consider that your personal data has not been handled correctly, or you are not satisfied with the company’s responses to any requests you have made regarding the use of your personal data, you have the right to complain to the Cayman Islands’ Ombudsman. The Ombudsman can be contacted by calling +1 (345) 946-6283 or by email at info@ombudsman.ky.
Certain Anti-Takeover Provisions of our Amended and Restated Memorandum and Articles of Association
Our amended and restated memorandum and articles of association provides 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 of directors only by successfully engaging in a proxy contest at two or more annual general stock meetings.
Our authorized but unissued Class A ordinary shares and preference shares are available for future issuances without shareholder 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 Class A ordinary shares and preference shares could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
Securities Eligible for Future Sale
Immediately after this offering we will have 12,950,000 Class A ordinary shares (or 14,855,000 Class A ordinary shares if the underwriters’ over-allotment option is exercised in full) issued and outstanding on an as-converted basis. Of these shares, the Class A ordinary shares sold in this offering (10,000,000 Class A ordinary shares if the underwriters’ over-allotment option is not exercised and 11,500,000 Class A ordinary 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 ordinary shares purchased by one of our affiliates within the meaning of Rule 144 under the Securities Act. All of the outstanding founder shares (2,500,000 founder shares if the underwriters’ over-allotment option is not exercised and 2,875,000 founder shares if the underwriters’ over-allotment option is exercised in full) and all of the outstanding private placement units (450,000 private placement units if the underwriters’ over-allotment option is not exercised and 480,000 private placement units if the underwriters’ over-allotment option is exercised in full), and the securities underlying the foregoing, 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 ordinary shares then outstanding, which will equal 129,500 shares immediately after this offering (or 148,550 shares if the underwriters exercise their over-allotment option in full); and
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the average weekly reported trading volume of the Class A ordinary shares 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 shareholders will be able to sell their founder shares and our sponsor will be able to sell its private placement units, and the securities underlying the foregoing, pursuant to Rule 144 without registration one year after we have completed our initial business combination.
Registration and Shareholder Rights
The holders of the founder shares, private placement units, private placement shares, private placement warrants, Class A ordinary shares underlying the private placement warrants and warrants that may be issued upon conversion of working capital loans (and any Class A ordinary shares issuable upon the exercise of the private
placement warrants and warrants that may be issued upon conversion of working capital loans) will be entitled to registration rights pursuant to a registration and shareholder rights agreement to be signed prior to or on the effective date of this offering. 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. However, the registration and shareholder rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period, which occurs (i) in the case of the founder shares, as described in the following paragraph, and (ii) in the case of the private placement warrants and the respective Class A ordinary shares underlying such warrants, 30 days after the completion of our initial business combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
Except as described herein, our sponsor and our founding team have agreed not to transfer, assign or sell (i) any of their founder shares until the earliest of (A) one year after the completion of our initial business combination and (B) subsequent to our initial business combination, (x) if the closing price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (y) the date on which we complete a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of our public shareholders having the right to exchange their ordinary shares for cash, securities or other property, and (ii) any of their private placement units, private placement shares, private placement warrants and Class A ordinary shares issued upon conversion or exercise thereof until 30 days after the completion of our initial business combination. Any permitted transferees will be subject to the same restrictions and other agreements of our sponsor and founding team with respect to any founder shares, private placement units, private placement shares, private placement warrants and Class A ordinary shares issued upon conversion or exercise thereof. We refer to such transfer restrictions throughout this prospectus as the lock-up.
In addition, pursuant to an agreement to be entered into on or prior to the closing of this offering, our sponsor, upon and following consummation of an initial business combination, will be entitled to nominate three individuals for appointment to our board of directors, as long as the sponsor holds any securities covered by the registration and shareholder rights agreement.
Listing of Securities
We intend to apply to have our units listed on the NYSE under the symbol “CHFW.U.” Once the securities comprising the units begin separate trading, we expect that the Class A ordinary shares and warrants will be listed on the NYSE under the symbols “CHFW” and “CHFW.W,” respectively. The units will automatically separate into their component parts and will not be traded following the completion of our initial business combination.
TAXATION
The following summary of certain Cayman Islands and U.S. federal income tax considerations of an investment in our units, each consisting of one Class A ordinary share and one-third of one redeemable warrant, which we refer to collectively as our securities, is based upon laws and relevant interpretations thereof in effect as of the date of this prospectus, all of which are subject to change. This summary does not deal with all possible tax consequences relating to an investment in our Class A ordinary shares and warrants, such as the tax consequences under state, local and other tax laws.
Prospective investors should consult their advisors on the possible tax consequences of investing in our securities under the laws of their country of citizenship, residence or domicile.
Cayman Islands Tax Considerations
The following is a discussion on certain Cayman Islands income tax consequences of an investment in the securities of the Company. The discussion is a general summary of present law, which is subject to prospective and retroactive change. It is not intended as tax advice, does not consider any investor’s particular circumstances, and does not consider tax consequences other than those arising under Cayman Islands law.
Under existing Cayman Islands laws
Payments of dividends and capital in respect of our securities will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of the securities nor will gains derived from the disposal of the securities be subject to Cayman Islands income or corporation tax. The Cayman Islands currently has no income, corporation or capital gains tax and no estate duty, inheritance tax or gift tax.
No stamp duty is payable in respect of the issue of the warrants. An instrument of transfer in respect of a warrant is stampable if executed in or brought into the Cayman Islands.
No stamp duty is payable in respect of the issue of our Class A ordinary shares or on an instrument of transfer in respect of such shares.
The Company has been incorporated under the laws of the Cayman Islands as an exempted company with limited liability and, as such, has applied for and received an undertaking from the Financial Secretary of the Cayman Islands in the following form:
THE TAX CONCESSIONS LAW
(2018 Revision)
UNDERTAKING AS TO TAX CONCESSIONS
In accordance with the provision of Section 6 of The Tax Concessions Law (2018 Revision), the Financial Secretary undertakes with Consonance-HFW Acquisition Corp. (the “Company”):
2. That no law which is hereafter enacted in the Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply to the Company or its operations; and 3. In addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable:
3.2 On or in respect of the shares, debentures or other obligations of the Company; or
3.3 by way of the withholding in whole or part, of any relevant payment as defined in Section 6(3) of the Tax Concessions Law (2018 Revision).
These concessions shall be for a period of 20 years from the date hereof.
U.S. Federal Income Tax Considerations
General
The following discussion summarizes certain U.S. federal income tax considerations generally applicable to the ownership and disposition of our units (each consisting of one Class A ordinary share and one-third of one redeemable warrant), other than private placement units, that are purchased in this offering by U.S. Holders (as defined below) and Non-U.S. Holders (as defined below). Because the components of a unit are generally 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 ordinary share and warrant components of the unit. As a result, the discussion below with respect to holders of Class A ordinary shares and warrants should also apply to holders of units (as the deemed owners of the underlying Class A ordinary shares and warrants that constitute the units).
This discussion is limited to certain U.S. federal income tax considerations to beneficial owners of our securities who are initial purchasers of a unit (other than a private placement unit) pursuant to this offering and hold the unit and each component of the unit as a capital asset under the U.S. Internal Revenue Code of 1986, as amended (the “Code”). This discussion assumes that the Class A ordinary shares and warrants will trade separately and that any distributions made (or deemed made) by us on our Class A ordinary shares and any consideration received (or deemed received) by a holder in consideration for the sale or other disposition of our securities will be in U.S. dollars. This discussion is a summary only and does not consider all aspects of U.S. federal income taxation that may be relevant to the ownership and disposition of a unit by a prospective investor subject to special rules, including:
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our sponsor, founders, officers or directors;
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banks, financial institutions or financial services entities;
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brokers;
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dealers or traders in securities that are subject to a mark-to-market method of tax accounting for their securities holdings;
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S-corporations, partnerships, or other entities or arrangements classified as partnerships for U.S. federal income tax purposes;
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tax-exempt entities;
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governments or agencies or instrumentalities thereof;
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insurance companies;
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regulated investment companies;
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real estate investment trusts;
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persons that hold our securities as part of a straddle, constructive sale, conversion or other integrated or similar transaction; and
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persons whose functional currency is not the U.S. dollar.
Moreover, the discussion below is based upon the provisions of the Code, the Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all as of the date hereof.
Those authorities may be repealed, revoked, modified or subject to differing interpretations, possibly on a retroactive basis, so as to result in U.S. federal income tax consequences different from those discussed below. Furthermore, this discussion does not address any aspect of U.S. federal non-income tax laws, such as gift, estate or Medicare contribution tax laws, or state, local or non-U.S. tax laws.
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.
As used herein, the term “U.S. Holder” means a beneficial owner of units, Class A ordinary shares or warrants that is for U.S. federal income tax purposes: (i) an individual citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source or (iv) a trust if (A) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust, or (B) it has in effect a valid election to be treated as a United States person.
This discussion does not consider the tax treatment of partnerships or other pass-through entities or persons who hold our securities through such entities. If a partnership (or other entity or arrangement classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our securities, the U.S. federal income tax treatment of a partner in the partnership generally will depend on the status of the partner and the activities of the partner and the partnership. A U.S. Holder who is a partner of a partnership holding our securities is urged to consult its tax advisor.
THIS DISCUSSION IS ONLY A SUMMARY OF CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS ASSOCIATED WITH THE OWNERSHIP AND DISPOSITION OF OUR SECURITIES. EACH PROSPECTIVE INVESTOR IN OUR SECURITIES IS URGED TO CONSULT ITS TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO SUCH INVESTOR OF THE OWNERSHIP AND DISPOSITION OF OUR SECURITIES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, AND NON-U.S. TAX LAWS.
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 Class A ordinary share and one-third of one warrant, three of which may be combined into a whole warrant exercisable to acquire one Class A ordinary share. We intend to treat the acquisition of a unit in this manner and, by purchasing a unit, U.S. Holders will agree to adopt such treatment for applicable tax purposes. For U.S. federal income tax purposes, each holder of a unit must agree to allocate the purchase price paid by it for such unit between the one Class A ordinary share and the one-third of one warrant based on the relative fair market value of each at the time of
issuance. The price allocated to each Class A ordinary share and one-third of one warrant should constitute the U.S. Holder’s initial tax basis in such share or warrant. Any disposition of a unit should be treated for U.S. federal income tax purposes as a disposition of the Class A ordinary share and one-third of one warrant composing or constituting the unit, and the amount realized on the disposition should be allocated between the Class A ordinary share and one-third of one warrant based on their respective relative fair market values at the time of disposition (as determined by each U.S. Holder based on all the relevant facts and circumstances). Neither the separation of the Class A ordinary share and the one-third of one warrant constituting a unit nor the combination of quarters of warrants into a single warrant should be a taxable event for U.S. federal income tax purposes.
The foregoing treatment of the units, Class A ordinary shares and warrants and purchase price allocation are not binding on the 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 tax advisor 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
Taxation of Distributions
Subject to the PFIC rules discussed below, a U.S. Holder generally will be required to include in gross income as dividends the amount of any cash and the fair market value of any other property (other than certain distributions of the Company’s shares or rights to acquire the Company’s shares distributed with respect to our Class A ordinary shares) to the extent the distribution is paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Such dividends paid by us will be taxable to a corporate U.S. Holder at regular rates and will not be eligible for the dividends-received deduction generally allowed to domestic corporations in respect of dividends received from other domestic corporations. Distributions in excess of such earnings and profits generally will be applied against and reduce the U.S. Holder’s basis in its Class A ordinary shares (but not below zero) and, to the extent in excess of such basis, will be treated as gain from the sale or exchange of such Class A ordinary shares (see “—Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Ordinary Shares and Warrants” below).
With respect to non-corporate U.S. Holders, under tax laws currently in effect and subject to certain exceptions (including, but not limited to, dividends treated as investment income for purposes of investment interest deduction limitations), dividends generally will be taxed at the lower applicable long-term capital gains rate (see “—Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Ordinary Shares and Warrants” below) only if our Class A ordinary shares are readily tradable on an established securities market in the U.S., the Company is not treated as a PFIC at the time the dividend was paid or in the preceding taxable year and certain holding period requirements are met. It is unclear, however, whether certain redemption rights described in this prospectus may suspend the running of the applicable holding period for this purpose. U.S. Holders should consult their tax advisors regarding the availability of such lower rate for any dividends paid with respect to our Class A ordinary shares.
Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Ordinary Shares and Warrants
Subject to the PFIC rules discussed below, a U.S. Holder generally will recognize capital gain or loss on the sale or other taxable disposition of our Class A ordinary shares or warrants (including on our dissolution and liquidation if we do not consummate an initial business combination within the required time period). Any such capital gain or loss generally will be long-term capital gain or loss if the U.S. Holder’s holding period for such Class A ordinary shares or warrants exceeds one year. It is unclear, however, whether certain redemption rights described in this prospectus may suspend the running of the applicable holding period for this purpose.
The amount of gain or loss recognized on a sale or other taxable disposition generally will be equal to the difference between (i) the sum of the amount of cash and the fair market value of any property received on such
disposition (or, if the Class A ordinary shares 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 ordinary shares or warrants based upon the then relative fair market values of the Class A ordinary shares and the warrants included in the units) and (ii) the U.S. Holder’s adjusted tax basis in its Class A ordinary shares or warrants so disposed of. A U.S. Holder’s adjusted tax basis in its Class A ordinary shares and warrants generally will equal the U.S. Holder’s acquisition cost (that is, the portion of the purchase price of a unit allocated to a Class A ordinary share and one-third of one warrant, as described above in “—Allocation of Purchase Price and Characterization of a Unit”) increased by prior deemed distributions under Section 305 that are treated as dividends (as described below in “—Possible Constructive Distributions”), and reduced by any prior distributions treated as a return of capital. Long-term capital gain realized by a non-corporate U.S. Holder is currently eligible to be taxed at reduced rates. See “—Exercise, Lapse or Redemption of a Warrant” below for a discussion regarding a U.S. Holder’s tax basis in the Class A ordinary share acquired pursuant to the exercise of a warrant. The deduction of capital losses is subject to certain limitations.
Redemption of Class A Ordinary Shares
Subject to the PFIC rules discussed below, in the event that a U.S. Holder’s Class A ordinary shares are redeemed pursuant to the redemption provisions described in this prospectus under “Description of Securities—Ordinary Shares” or if we purchase a U.S. Holder’s Class A ordinary shares in an open market transaction (referred to herein as a “redemption”), the treatment of the redemption for U.S. federal income tax purposes will depend on whether it qualifies as a sale of the Class A ordinary shares under Section 302 of the Code. If the redemption qualifies as a sale of Class A ordinary shares, the U.S. Holder will be treated as described in “—Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Ordinary Shares and Warrants” above. If the redemption does not qualify as a sale of Class A ordinary shares, the U.S. Holder will be treated as receiving a corporate distribution with the tax consequences described above under “—Taxation of Distributions.” Whether a redemption qualifies for sale treatment will depend largely on the total number of our shares treated as held by the U.S. Holder (including any shares constructively owned by the U.S. Holder described in the following paragraph) relative to all of our shares outstanding both before and after such redemption. The redemption of Class A ordinary shares generally will be treated as a sale of the Class A ordinary shares (rather than as a corporate distribution) if such redemption (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 is satisfied, a U.S. Holder takes into account not only Class A ordinary shares actually owned by the U.S. Holder, but also our shares that are constructively owned by it. A U.S. Holder may constructively own, in addition to shares owned directly, shares 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 shares the U.S. Holder has a right to acquire by exercise of an option, which would generally include Class A ordinary shares which could be acquired pursuant to the exercise of the warrants. In order to meet the substantially disproportionate test, the percentage of our issued and outstanding voting shares actually and constructively owned by the U.S. Holder immediately following the redemption of Class A ordinary shares must, among other requirements, be less than 80% of the percentage of our issued and outstanding voting shares actually and constructively owned by the U.S. Holder immediately before the redemption. Prior to the completion of our initial business combination, the Class A ordinary shares may not be treated as voting stock for this purpose and, consequently, this substantially disproportionate test may not be applicable. There will be a complete termination of a U.S. Holder’s interest if either (i) all of our shares actually and constructively owned by the U.S. Holder are redeemed or (ii) all of our shares 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 shares owned by certain family members and the U.S. Holder does not constructively own any other shares of ours. The redemption of the Class A ordinary shares will not be essentially equivalent to a dividend with respect to a U.S. Holder if it results in a “meaningful reduction” of the U.S. Holder’s proportionate interest in us. Whether the redemption will result in a meaningful reduction of 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 shareholder in a publicly held corporation that exercises no control over corporate affairs may constitute such a “meaningful reduction.” A U.S. Holder should consult its tax advisor 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 in “—Taxation of Distributions” above. After the application of those rules, any remaining tax basis of the U.S. Holder in the redeemed Class A ordinary shares will be added to the U.S. Holder’s adjusted tax basis in its remaining shares, or, if it has none, to the U.S. Holder’s adjusted tax basis in its warrants or possibly in other shares constructively owned by it.
Exercise, Lapse or Redemption of a Warrant
Subject to the PFIC rules discussed below and except as discussed below with respect to the cashless exercise of a warrant, a U.S. Holder generally will not recognize gain or loss upon the acquisition of a Class A ordinary share on the exercise of a warrant for cash. A U.S. Holder’s initial tax basis in a Class A ordinary share received upon exercise of the warrant generally will equal the sum of the U.S. Holder’s initial investment in the warrant (that is, the portion of the U.S. Holder’s purchase price for the units that is allocated to the warrant, as described above in “—Allocation of Purchase Price and Characterization of a Unit”) and the exercise price. It is unclear whether a U.S. Holder’s holding period for the Class A ordinary share will commence on the date of exercise of the warrant or the day following the date of exercise of the warrant; in either case, the holding period will not include the period during which the U.S. Holder held the warrant. If a warrant is allowed to lapse unexercised, a U.S. Holder generally will recognize a capital loss equal to its tax basis in the warrant.
The tax consequences of a cashless exercise of a warrant are not clear under current law. A cashless exercise may not be taxable, 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 situation, a U.S. Holder’s tax basis in the Class A ordinary shares received generally would equal the U.S. Holder’s tax basis in the warrants surrendered. If the cashless exercise were not a realization event, it is unclear whether a U.S. Holder’s holding period for the Class A ordinary share will commence on the date of exercise of the warrant or the day following the date of exercise of the warrant. If the cashless exercise were treated as a recapitalization, the holding period of the Class A ordinary shares would include the holding period of the warrants.
It is also possible that a cashless exercise may be treated as a taxable exchange of some of the warrants surrendered in which gain or loss would be recognized. In such event, a U.S. Holder may be deemed to have surrendered a number of warrants having a value equal to the exercise price for the total number of warrants to be exercised in exchange for the exercise price. Subject to the PFIC rules discussed below, the U.S. Holder would recognize capital gain or loss in an amount equal to the difference between the exercise price and the U.S. Holder’s tax basis in such warrants. In this case, a U.S. Holder’s tax basis in the Class A ordinary shares received would equal the sum of the U.S. Holder’s initial investment in the warrants exercised (i.e., the portion of the U.S. Holder’s purchase price for the units that is allocated to the warrant, as described above in “—Allocation of Purchase Price and Characterization of a Unit”) and the exercise price of such warrants. It is unclear whether a U.S. Holder’s holding period for the Class A ordinary share would commence on the date of exercise of the warrant or the day following the date of exercise of the warrant.
Due to the absence of authority on the U.S. federal income tax treatment of a cashless exercise, there can be no assurance which of the alternative tax consequences and holding periods described above would be adopted by the IRS or a court of law. Accordingly, a U.S. Holder should consult its tax advisor regarding the tax consequences of a cashless exercise.
Subject to the PFIC rules described below, if we redeem warrants for cash pursuant to the redemption provisions described in the section of this prospectus entitled “Description of Securities—Warrants—Public Shareholders’ 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 in “—Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Ordinary Shares and Warrants.”
Possible Constructive Distributions
The terms of each warrant provide for an adjustment to the number of Class A ordinary shares 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 Shareholders’ 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 increases the U.S. Holder’s proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of Class A ordinary shares that would be obtained upon exercise) as a result of a distribution of cash or other property to the holders of our Class A ordinary shares which is taxable to the U.S. Holders of such Class A ordinary shares as described in “—Taxation of Distributions” above. Such constructive distribution would be subject to tax as described in 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 and would increase a U.S. Holder’s adjusted tax basis in its warrants to the extent that such distribution is treated as a dividend.
Passive Foreign Investment Company Rules
A non-U.S. corporation will be classified as a PFIC for U.S. federal income tax purposes if either (i) at least 75% of its gross income in a taxable year, including its pro rata share of the gross income of any corporation in which it is considered to own at least 25% of the shares by value, is passive income or (ii) at least 50% of its assets in a taxable year (ordinarily determined based on fair market value and averaged quarterly over the year), including its pro rata share of the assets of any corporation in which it is considered to own at least 25% of the shares by value, are held for the production of, or produce, passive income. Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets.
Because we are a blank check company, with no current active business, we believe that it is likely that we will meet the PFIC asset and/or income test for our current taxable year. However, pursuant to a start-up exception, a corporation will not be a PFIC for the first taxable year the corporation has gross income (the “start-up year”), if (1) no predecessor of the corporation was a PFIC; (2) the corporation satisfies the IRS that it will not be a PFIC for either of the two taxable years following the start-up year; and (3) the corporation is not in fact a PFIC for either of those years. The applicability of the start-up exception to us is uncertain and will not be known until after the close of our current taxable year or, possibly, after the close of our two subsequent taxable years. After the acquisition of a company or assets in a business combination, we may still meet one of the PFIC tests depending on the timing of the acquisition and the amount of our passive income and assets as well as the passive income and assets of the acquired business. If the company that we acquire in a business combination is a PFIC (or we do not complete a business acquisition by the end of the first taxable year after the taxable year of our formation), then we will likely not qualify for the start-up exception and will be a PFIC for the year of our formation. Our actual PFIC status for the year of our formation or any subsequent taxable year, however, will not be determinable until after the end of such taxable year (or possibly later, as indicated above). Accordingly, there can be no assurance with respect to our status as a PFIC for our current taxable year or any future taxable year.
Although our PFIC status is determined annually, an initial determination that our company is a PFIC will generally apply for subsequent years to a U.S. Holder who held Class A ordinary shares or warrants while we were a PFIC, whether or not we meet the test for PFIC status in those subsequent years. If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of our Class A ordinary shares or warrants and, in the case of our Class A ordinary shares, the U.S. Holder did not make either a timely qualified electing fund (“QEF”) election or a mark-to-market election for our first taxable year as a PFIC, and in which the U.S. Holder held Class A ordinary shares, as described below, such U.S. Holder generally would be subject to special and adverse rules with respect to (i) any gain recognized by the U.S. Holder on the sale or other disposition of its Class A ordinary shares or warrants and (ii) any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of the
Class A ordinary shares during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s holding period for the Class A ordinary shares).
Under these rules:
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the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the Class A ordinary shares or warrants;
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the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution, or to the period in the U.S. Holder’s holding period before the first day of our first taxable year in which we are a PFIC, will be taxed as ordinary income;
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the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and
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an additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed on the U.S. Holder with respect to the tax attributable to each such other taxable year of the U.S. Holder.
PFIC Elections
In general, if we are determined to be a PFIC, a U.S. Holder may avoid the adverse PFIC tax consequences described above in respect of our Class A ordinary shares (but not our warrants) by making and maintaining a timely and valid QEF election (if eligible to do so) to include in income its pro rata share of our net capital gains (as long-term capital gain) and other earnings and profits (as ordinary income), on a current basis, in each case whether or not distributed, in the taxable year of the U.S. Holder in which or with which our taxable year ends. U.S. Holder generally may make a separate election to defer the payment of taxes on undistributed income inclusions under the QEF rules, but if deferred, any such taxes will be subject to an interest charge.
It is not entirely clear how various aspects of the PFIC rules apply to the warrants. However, a U.S. Holder may not make a QEF election with respect to its warrants to acquire our Class A ordinary shares. As a result, if a U.S. Holder sold or otherwise disposed of such warrants (other than upon exercise of such warrants for cash) and we were a PFIC at any time during the U.S. Holder’s holding period of such warrants, any gain recognized generally would be treated as an excess distribution, taxed as described above. If a U.S. Holder that exercises such warrants properly makes and maintains a QEF election with respect to the newly acquired Class A ordinary shares (or has previously made a QEF election with respect to our Class A ordinary shares), the QEF election will apply to the newly acquired Class A ordinary shares. Notwithstanding such QEF election, the adverse tax consequences relating to PFIC shares, adjusted to take into account the current income inclusions resulting from the QEF election, will continue to apply with respect to such newly acquired Class A ordinary shares (which generally will be deemed to have a holding period for purposes of the PFIC rules that includes the period the U.S. Holder held the warrants), unless the U.S. Holder makes a purging election under the PFIC rules. Under one type of purging election, the U.S. Holder will be deemed to have sold such shares at their fair market value and any gain recognized on such deemed sale will be treated as an excess distribution, as described above. Under another type of purging election, an electing U.S. Holder will be treated as having received as an excess distribution its ratable share of our earnings and profits determined for U.S. federal income tax purposes. In order for a U.S. Holder to make the second election, we must also be a “controlled foreign corporation” as defined in the Code, and there are no assurances that we will so qualify. As a result of either purging election, the U.S. Holder will have a new basis and holding period in the Class A ordinary shares acquired upon the exercise of the warrants for purposes of the PFIC rules.
The QEF election is made on a shareholder-by-shareholder basis and, once made, can be revoked only with the consent of the IRS. A U.S. Holder generally makes a QEF election by attaching a completed IRS Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund), including the information provided in a PFIC Annual Information Statement, to a timely filed U.S. federal income tax return for the tax year to which the election relates. Retroactive QEF elections generally may be made only by filing a protective statement with such return and if certain other conditions are met or with the consent of the
IRS. U.S. Holders should consult their tax advisors regarding the availability and tax consequences of a retroactive QEF election under their particular circumstances.
In order to comply with the requirements of a QEF election, a U.S. Holder must receive a PFIC Annual Information Statement from us. If we determine we are a PFIC for any taxable year, upon written request, we will endeavor to provide to a U.S. Holder such information as the IRS may require, including a PFIC Annual Information Statement, in order to enable the U.S. Holder to make and maintain a QEF election, but there is no assurance that we will timely provide such required information. There is also no assurance that we will have timely knowledge of our status as a PFIC in the future or of the required information to be provided.
If a U.S. Holder has made a QEF election with respect to our Class A ordinary shares, and the excess distribution rules discussed above do not apply to such shares (because of a timely QEF election for our first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) such shares or a purge of the PFIC taint pursuant to a purging election, as described above), any gain recognized on the sale of our Class A ordinary shares generally will be taxable as capital gain and no additional tax charge will be imposed under the PFIC rules. As discussed above, if we are a PFIC for any taxable year, a U.S. Holder of our Class A ordinary shares that has made a QEF election will be currently taxed on its pro rata share of our earnings and profits, whether or not distributed for such year. A subsequent distribution of such earnings and profits that were previously included in income generally should not be taxable when distributed to such U.S. Holder. The tax basis of a U.S. Holder’s shares in a QEF will be increased by amounts that are included in income, and decreased by amounts distributed but not taxed as dividends, under the above rules. In addition, if we are not a PFIC for any taxable year, such U.S. Holder will not be subject to the QEF inclusion regime with respect to our Class A ordinary shares for such taxable year. Alternatively, if we are a PFIC and our Class A ordinary shares constitute “marketable stock,” a U.S. Holder may avoid the adverse PFIC tax consequences discussed above if such U.S. Holder, at the close of the first taxable year in which it holds our Class A ordinary shares, makes a mark-to-market election with respect to such shares for such taxable year. Such U.S. Holder generally will include for each of its taxable years as ordinary income the excess, if any, of the fair market value of its Class A ordinary shares at the end of such year over its adjusted basis in its Class A ordinary shares. The U.S. Holder also will recognize an ordinary loss in respect of the excess, if any, of its adjusted basis of its Class A ordinary shares over the fair market value of its Class A ordinary shares at the end of its taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). The U.S. Holder’s basis in its Class A ordinary shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of its Class A ordinary shares will be treated as ordinary income. Currently, a mark-to-market election may not be made with respect to warrants.
The mark-to-market election is available only for “marketable stock,” generally, stock that is regularly traded on a national securities exchange that is registered with the SEC, including the NYSE (on which we intend to list the Class A ordinary shares), or on a foreign exchange or market that the IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. U.S. Holders should consult their tax advisors regarding the availability and tax consequences of a mark-to-market election with respect to our Class A ordinary shares under their particular circumstances.
If we are a PFIC and, at any time, have a foreign subsidiary that is classified as a PFIC, U.S. Holders generally would be deemed to own a portion of the shares of such lower-tier PFIC, and generally could incur liability for the deferred tax and interest charge described above if we receive a distribution from, or dispose of all or part of our interest in, the lower-tier PFIC or the U.S. Holders otherwise were deemed to have disposed of an interest in the lower-tier PFIC. Upon written request, we will endeavor to cause any lower-tier PFIC to provide to a U.S. Holder the information that may be required to make or maintain a QEF election with respect to the lower-tier PFIC. There can be no assurance that we will have timely knowledge of the status of any such lower-tier PFIC. In addition, we may not hold a controlling interest in any such lower-tier PFIC and thus there can be no assurance we will be able to cause the lower-tier PFIC to provide such required information. A mark-to-market election generally would not be available with respect to such lower-tier PFIC. U.S. Holders are urged to consult their tax advisors regarding the tax issues raised by lower-tier PFICs.
A U.S. Holder that owns (or is deemed to own) shares in a PFIC during any taxable year of the U.S. Holder, may have to file an IRS Form 8621 (whether or not a QEF or mark-to-market election is made) and such other information as may be required by the U.S. Treasury Department. Failure to do so, if required, will extend the statute of limitations until such required information is furnished to the IRS.
The rules dealing with PFICs and with the QEF and mark-to-market elections are very complex and are affected by various factors in addition to those described above. Accordingly, U.S. Holders of our Class A ordinary shares and warrants should consult their tax advisors concerning the application of the PFIC rules to our securities under their particular circumstances.
Tax Reporting
Certain U.S. Holders may be required to file an IRS Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation) to report a transfer of property (including cash) to us. Substantial penalties may be imposed on a U.S. Holder that fails to comply with this reporting requirement and the period of limitations on assessment and collection of U.S. federal income taxes will be extended in the event of a failure to comply. Furthermore, certain U.S. Holders who are individuals and certain entities will be required to report information with respect to such U.S. Holder’s investment in “specified foreign financial assets” on IRS Form 8938 (Statement of Specified Foreign Financial Assets), subject to certain exceptions. Specified foreign financial assets generally include any financial account maintained with a non-U.S. fianancial institution and should also include the Class A ordinary shares and warrants if they are not held in an account maintained with a U.S. financial institution. Persons who are required to report specified foreign financial assets and fail to do so may be subject to substantial penalties and the period of limitations on assessment and collection of U.S. federal income taxes will be extended in the event of a failure to comply. Potential investors are urged to consult their tax advisors regarding the foreign financial asset and other reporting obligations and their application to an investment in our Class A ordinary shares and warrants.
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 holder who or that, for U.S. federal income tax purposes, is a beneficial owner of units, Class A ordinary shares or warrants (other than a partnership or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) that is not a U.S. Holder.
Dividends (including constructive dividends) paid or deemed paid to a Non-U.S. Holder in respect of our Class A ordinary shares generally will not be subject to U.S. federal income tax, unless the dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States. (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains in the United States). In addition, a Non-U.S. Holder generally will not be subject to U.S. federal income tax on any gain attributable to a sale or other disposition of our Class A ordinary shares or warrants unless such gain is effectively connected with its conduct of a trade or business in the United States. (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base that such holder maintains in the United States.), or the Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of sale or other disposition and certain other conditions are met (in which case, such gain from the U.S. sources generally is subject to tax at a 30% rate or a lower applicable treaty rate).
Dividends (including constructive dividends) and gains that are effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base in the United States) generally will be subject to U.S. federal income tax at the same regular U.S. federal income tax rates applicable to a comparable U.S. Holder and, in the case of a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes, also may be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate.
The characterization for U.S. federal income tax purposes of the redemption of a Non-U.S. Holder’s Class A ordinary shares will generally correspond to the U.S. federal income tax characterization of such a redemption of
a U.S. Holder’s Class A ordinary shares, as described in “U.S. Holders—Redemption of Class A Ordinary Shares” above, and the consequences of the redemption to the Non-U.S. Holder will be as described in the paragraphs above under the heading “Non-U.S. Holders” based on such characterization.
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 in “—U.S. Holders—Exercise, Lapse or Redemption of a Warrant,” above, although to the extent a cashless exercise results in a taxable exchange, the consequences would be similar to those described in the preceding paragraphs above for a Non-U.S. Holder’s gain on the sale or other disposition of our Class A ordinary shares and warrants.
Information Reporting and Backup Withholding
Dividend payments with respect to our Class A ordinary shares and proceeds from the sale, exchange or redemption of our Class A ordinary shares may be subject to information reporting to the IRS and possible U.S. backup withholding. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes other required certifications, or who is otherwise exempt from backup withholding and establishes such exempt status. A Non-U.S. Holder generally will eliminate the requirement for information reporting and backup withholding by providing certification of its foreign status, under penalties of perjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption. Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a holder’s U.S. federal income tax liability, and a holder generally may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the IRS and furnishing any required information.
The U.S. federal income tax discussion set forth above is included for general information only and may not be applicable depending upon a holder’s particular situation. Holders are urged to consult their tax advisors with respect to the tax consequences to them of the acquisition, ownership and disposition of our Class A ordinary shares and warrants, including the tax consequences under state, local, estate, non-U.S. and other tax laws and tax treaties and the possible effects of changes in U.S. or other tax laws.
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement, the underwriters named below have severally agreed to purchase from us on a firm commitment basis the following respective number of units at a public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus:
|
Name
|
|
|
Number of units
|
|
|
J.P. Morgan Securities LLC
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
10,000,000 |
|
|
| |
The underwriting agreement provides that the obligations of the underwriters to purchase the units included in this offering are subject to approval of legal matters by counsel and to other conditions. The underwriters are obligated to purchase all of the units (other than those covered by the option to purchase additional units described below) if it purchases any of the units.
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. Certain of the underwriters may offer and sell the units through one or more of their respective affiliates or selling agents. If all of the units are not sold at the initial offering price, the underwriters may change the offering price and the other selling terms. J.P. Morgan Securities LLC has advised us that the underwriters do not intend to make sales to discretionary accounts.
If the underwriters sell more units than the total number set forth in the table above, we have granted to the underwriters an option, exercisable for 45 days from the date of this prospectus, to purchase up to 1,500,000 additional units at the public offering price less the underwriting discount. To the extent the option is exercised, the underwriters must purchase a number of additional units approximately proportionate to their initial purchase commitment. Any units issued or sold under the option will be issued and sold on the same terms and conditions as the other units that are the subject of this offering.
We, our sponsor and our officers and directors have agreed that, for a period of 180 days from the date of this prospectus, we and they will not, without the prior written consent of J.P. Morgan Securities LLC, offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any units, warrants, Class A ordinary shares or any other securities convertible into, or exercisable, or exchangeable for, Class A ordinary shares; provided, however, that we may (i) issue and sell the private placement units, (ii) issue and sell the additional units to cover our underwriters’ option to purchase additional units (if any), (iii) 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 units and the securities underlying the foregoing or the warrants and Class A ordinary shares issuable upon exercise of the warrants and (iv) issue securities in connection with an initial business combination, including the forward purchase securities. J.P. Morgan Securities LLC in its sole discretion may release any of the securities subject to these lock-up agreements at any time without notice.
Our initial shareholders have agreed not to transfer, assign or sell any of their founder shares until the earlier to occur of: (i) one year after the completion of our initial business combination; or (ii) the date on which we complete a liquidation, merger, share exchange or other similar transaction after our initial business combination that results in all of our shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property (except as described herein under “Principal Shareholders—Transfers of Founder Shares and Private Placement Units”). Any permitted transferees will be subject to the same restrictions and other agreements of our initial shareholders with respect to any founder shares, private placement units, private placement shares, private placement warrants and Class A ordinary shares issued upon conversion or exercise thereof. We refer to such transfer restrictions throughout this prospectus as the lock-up. Notwithstanding the foregoing, if the closing price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, the founder shares will be released from the lock-up.
The private placement units (including the private placement shares, private placement warrants and Class A ordinary shares 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 with respect to permitted transferees as described herein under “Principal Shareholders—Transfers of Founder Shares and Private Placement Units”).
Prior to this offering, there has been no public market for our securities. Consequently, the initial public offering price for the units was determined by negotiations between us and the underwriters.
The determination of our per unit offering price was more arbitrary than would typically be the case if we were 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, our management, our capital structure, and currently prevailing general conditions in equity securities markets, including current market valuations of publicly traded companies considered comparable to our company. We cannot assure you, however, that the price at which the units, Class A ordinary shares or warrants will sell in the public market after this offering will not be lower than the initial public offering price or that an active trading market in our units, Class A ordinary shares or warrants will develop and continue after this offering.
We have applied to have our units approved for listing on the NYSE under the symbol “CHFW.U.” Once the securities comprising the units begin separate trading, we expect that the Class A ordinary shares and warrants will be listed on the NYSE under the symbols “CHFW” and “CHFW.W,” respectively.
The following table shows the underwriting discounts and commissions that we are to pay to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional units.
| |
|
|
Paid by Consonance-HFW Acquisition Corp.
|
|
| |
|
|
No exercise
|
|
|
Full exercise
|
|
|
Per Unit(1)
|
|
|
|
$ |
0.55 |
|
|
|
|
$ |
0.55 |
|
|
|
Total(1)
|
|
|
|
$ |
5,500,000 |
|
|
|
|
$ |
6,325,000 |
|
|
(1) $0.20 per unit, or $2,000,000 in the aggregate (or $2,300,000 in the aggregate if the option to purchase additional units is exercised in full), is payable upon the closing of this offering. $0.35 per unit, or $3,500,000 in the aggregate (or $4,025,000 in the aggregate if the option to purchase additional units is exercised in full) payable to the underwriters for deferred underwriting commissions will be placed in a trust account located in the United States as described herein. The deferred commissions will be released to the underwriters only on and concurrently with completion of an initial business combination.
The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.
If we do not complete our initial business combination within 24 months from the closing of this offering, the underwriters have agreed that (i) they will forfeit any rights or claims to their deferred underwriting discounts and commissions, including any accrued interest thereon, then in the trust account and (ii) that the deferred underwriters’ discounts and commissions will be distributed on a pro rata basis, together with any accrued interest thereon (which interest will be net of taxes paid or payable) to the public shareholders.
In connection with the offering, the underwriters may purchase and sell units in the open market. Purchases and sales in the open market may include short sales, purchases to cover short positions, which may include purchases pursuant to the option to purchase additional units, and stabilizing purchases.
•
Short sales involve secondary market sales by the underwriters of a greater number of units than it is required to purchase in the offering.
•
“Covered” short sales are sales of units in an amount up to the number of units represented by the underwriters’ option to purchase additional units.
•
“Naked” short sales are sales of units in an amount in excess of the number of units represented by the underwriters’ option to purchase additional units.
•
Covering transactions involve purchases of units either pursuant to the option to purchase additional units or in the open market after the distribution has been completed in order to cover short positions.
•
To close a naked short position, the underwriters must purchase units in the open market after the distribution has been completed. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the units in the open market after pricing that could adversely affect investors who purchase in the offering.
•
To close a covered short position, the underwriters must purchase units in the open market after the distribution has been completed or must exercise the option to purchase additional units. In determining the source of units to close 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 units through the option to purchase additional units.
•
Stabilizing transactions involve bids to purchase units so long as the stabilizing bids do not exceed a specified maximum.
Purchases to cover short positions and stabilizing purchases, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of the units. They may also cause the price of the units to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The underwriters may conduct these transactions in the over-the-counter market or otherwise. If the underwriters commence any of these transactions, they may discontinue them at any time.
We estimate that the total expenses of this offering payable by us will be $1,000,000, excluding underwriting discounts and commissions.
We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make because of any of those liabilities. We have also agreed to pay for the FINRA-related fees and expenses of the underwriters’ legal counsel, not to exceed $25,000.
We are not under any contractual obligation to engage the underwriters to provide any services for us after this offering, and have no present intent to do so. However, the underwriters may introduce us to potential partner businesses or assist us in raising additional capital in the future. If the underwriters provide services to us after this offering, we may pay the underwriters fair and reasonable fees that would be determined at that time in an arm’s length negotiation; provided that no agreement will be entered into with the underwriters and no fees for such services will be paid to the underwriters prior to the date that is 90 days from the date of this prospectus, unless FINRA determines that such payment would not be deemed underwriters’ compensation in connection with this offering and we may pay the underwriters of this offering or any entity with which it is affiliated a finder’s fee or other compensation for services rendered to us in connection with the completion of a business combination.
In addition, in the ordinary course of their business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Notices to certain international prospective investors
These securities are being offered for sale in the United States and certain jurisdictions outside the United States in which such offer and sale is permitted.
Australia
No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission (“ASIC”), in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001 (the “Corporations Act”), and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.
Any offer in Australia of the securities may only be made to persons (the “Exempt Investors”) who are “sophisticated investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the securities without disclosure to investors under Chapter 6D of the Corporations Act.
The securities applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring securities must observe such Australian on-sale restrictions.
This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.
Canada
The securities may be sold 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 from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.
Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.
Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
Cayman Islands
No offer or invitation to subscribe for these securities may be made to the public in the Cayman Islands.
Dubai International Financial Centre
This document relates to an Exempt Offer in accordance with the Markets Rules 2012 of the Dubai Financial Services Authority (“DFSA”). This document is intended for distribution only to persons of a type specified in the Markets Rules 2012 of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has
no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for this document. The securities to which this document relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the securities offered should conduct their own due diligence on the securities. If you do not understand the contents of this document you should consult an authorized financial advisor.
In relation to its use in the DIFC, this document is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose. The interests in the securities may not be offered or sold directly or indirectly to the public in the DIFC.
European Economic Area and the United Kingdom
In relation to each Member State of the European Economic Area and the United Kingdom (each, a “Relevant State”), no securities have been offered or will be offered pursuant to the offering to the public in that Relevant State prior to the publication of a prospectus in relation to the securities which has been approved by the competent authority in that Relevant State or, where appropriate, approved in another Relevant State and notified to the competent authority in that Relevant State, all in accordance with the Prospectus Regulation, except that offers of the securities may be made to the public in that Relevant 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 representative; or
(c) in any other circumstances falling within Article 1(4) of the Prospectus Regulation,
provided that no such offer of the securities shall require us 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 the securities in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and any securities to be offered so as to enable an investor to decide to purchase or subscribe for any securities, and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129.
France
Neither this prospectus nor any other offering material relating to the securities described in this prospectus has been submitted to the clearance procedures of the Autorité des Marchés Financiers or by the competent authority of another member state of the European Economic Area and notified to the Autorité des Marchés Financiers.
The securities have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France. Neither this prospectus nor any other offering material relating to the securities has been or will be:
•
released, issued, distributed or caused to be released, issued or distributed to the public in France; or
•
used in connection with any offer for subscription or sale of the securities to the public in France. Such offers, sales and distributions will be made in France only:
•
to qualified investors (investisseurs qualifiés) and/or to a restricted circle of investors (cercle restreint d’investisseurs), in each case investing for their own account, all as defined in, and in accordance with, Article L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code monétaire et financier;
•
to investment services providers authorized to engage in portfolio management on behalf of third parties; or
•
in a transaction that, in accordance with article L.411-2-II-1°-or-2°-or 3° of the French Code monétaire et financier and article 211-2 of the General Regulations (Règlement Général) of the Autorité des Marchés Financiers, does not constitute a public offer (appel public à l’épargne).
The securities may be resold directly or indirectly, only in compliance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French Code monétaire et financier.
Hong Kong
The securities have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (the “SFO”) of Hong Kong and any rules made thereunder; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong) (the “CO”) or which do not constitute an offer to the public within the meaning of the CO. No advertisement, invitation or document relating to the securities has been or may be issued or has been or may be in the possession of any person for the purposes of issue, 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 of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to securities which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the SFO and any rules made thereunder.
Japan
The securities have not been and will not be registered pursuant to Article 4, Paragraph 1 of the Financial Instruments and Exchange Act. Accordingly, none of the securities nor any interest therein may be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any “resident” of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to or for the benefit of a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and any other applicable laws, regulations and ministerial guidelines of Japan in effect at the relevant time.
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 securities may not be circulated or distributed, nor may the securities 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 in Section 4A of the Securities and Futures Act (Chapter 289) of Singapore, as modified or amended from time to time (the “SFA”)), pursuant to 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.
Where the securities are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities or securities-based derivatives
contracts (each term as defined in Section 2(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares pursuant to an offer made under Section 275 of the SFA except:
(i) to an institutional investor or to a relevant person, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
(ii) where no consideration is or will be given for the transfer;
(iii) where the transfer is by operation of law;
(iv) as specified in Section 276(7) of the SFA; or
(v) as specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018.
Notification under Section 309B(1) of the SFA—The securities shall be prescribed capital markets products (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).
Switzerland
The securities may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This document does not constitute a prospectus within the meaning of, and has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the securities or the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither this document nor any other offering or marketing material relating to the offering, the Company, the securities have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of securities will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA (FINMA), and the offer of securities has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (“CISA”). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of securities.
United Kingdom
This document is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are “qualified investors” (as defined in the Prospectus Regulation) (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”) or otherwise in circumstances which have not resulted and will not result in an offer to the public of the securities in the United Kingdom within the meaning of the Financial Services and Markets Act 2000.
Any person in the United Kingdom that is not a relevant person should not act or rely on the information included in this document or use it as basis for taking any action. In the United Kingdom, any investment or investment activity that this document relates to may be made or taken exclusively by relevant persons.
LEGAL MATTERS
Goodwin Procter LLP, Boston, Massachusetts will pass upon the validity of the securities offered in this prospectus with respect to units and warrants. Campbells will pass upon the validity of the securities offered in this prospectus with respect to the ordinary shares and matters of Cayman Islands law. In connection with this offering, Davis Polk & Wardwell LLP, New York, New York advised the underwriters in connection with the offering of the securities.
EXPERTS
The financial statements of Consonance-HFW Acquisition Corp. as of September 4, 2020 and for the period from August 21, 2020 (inception) through September 4, 2020 appearing in this prospectus have been audited by Marcum LLP, independent registered public accounting firm, as set forth in their report, thereon (which contains an explanatory paragraph relating to substantial doubt about the ability of Consonance-HFW Acquisition Corp. to continue as a going concern as described in Note 1 to the financial statements), appearing elsewhere in this prospectus, and are included in reliance on such report given on the authority of such firm as an expert in auditing and accounting.
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, on the SEC’s website at www.sec.gov.
INDEX TO FINANCIAL STATEMENTS
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Page
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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 Shareholder and the Board of Directors of
Consonance-HFW Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Consonance-HFW Acquisition Corp. (the “Company”) as of September 4, 2020, and the related statements of operations, changes in shareholder’s equity and cash flows for the period from August 21, 2020 (inception) through September 4, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 4, 2020, and the results of its operations and its cash flows for the period from August 21, 2020 (inception) through September 4, 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 deficiency as of September 4, 2020 and lacks the financial resources it needs to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regard to these matters are also described in Notes 1 and 3. The financial statements do not include any adjustments that might become necessary should the Company be unable to continue as a going concern.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (the “PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2020.
New York, NY
September 18, 2020, except for Note 3, Note 4, Note 5, Note 6,
the second paragraph of Note 7 and Note 8 as to which the date is October 8, 2020.
CONSONANCE-HFW ACQUISITION CORP.
BALANCE SHEET
SEPTEMBER 4, 2020
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ASSETS
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Deferred offering costs
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|
|
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$ |
50,039 |
|
|
| |
Total Assets
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|
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|
$ |
50,039 |
|
|
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LIABILITIES AND SHAREHOLDER’S EQUITY
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Current liabilities:
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|
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Accrued offering costs
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|
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|
$ |
30,000 |
|
|
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Total Current Liabilities
|
|
|
|
|
30,000 |
|
|
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Commitments
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Shareholder’s Equity
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Class A ordinary shares, $0.0001 par value; 350,000,000 shares authorized; none issued and outstanding
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— |
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|
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Class B ordinary shares, $0.0001 par value; 150,000,000 shares authorized; 2,875,000 shares issued and outstanding(1)
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|
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|
|
|
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Additional paid-in capital
|
|
|
|
|
24,712 |
|
|
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Accumulated deficit
|
|
|
|
|
(4,961) |
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|
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Total Shareholder’s Equity
|
|
|
|
|
20,039 |
|
|
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Total Liabilities and Shareholder’s Equity
|
|
|
|
$ |
50,039 |
|
|
(1) Includes an aggregate of up to 375,000 Class B ordinary shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (see Note 5). On October 8, 2020, 718,750 Class B ordinary shares were contributed back to the Company for no consideration, resulting in there being 2,875,000 Class B ordinary shares issued and outstanding (see note 5).
The accompanying notes are an integral part of the financial statements.
CONSONANCE-HFW ACQUISITION CORP.
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM AUGUST 21, 2020 (INCEPTION) THROUGH SEPTEMBER 4, 2020
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Formation costs
|
|
|
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$ |
4,961 |
|
|
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Net Loss
|
|
|
|
$ |
(4,961) |
|
|
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Weighted average shares outstanding, basic and diluted(1)
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|
|
|
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2,500,000 |
|
|
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Basic and diluted net loss per share
|
|
|
|
$ |
(0.00) |
|
|
(1) Excludes an aggregate of up to 468,750 Class B ordinary shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (see Note 5). On October 8, 2020, 718,750 Class B ordinary shares were contributed back to the Company for no consideration, resulting in there being 2,875,000 Class B ordinary shares issued and outstanding (see note 5).
The accompanying notes are an integral part of the financial statements.
CONSONANCE-HFW ACQUISITION CORP.
STATEMENT OF CHANGES IN SHAREHOLDER’S EQUITY
FOR THE PERIOD FROM AUGUST 21, 2020 (INCEPTION) THROUGH SEPTEMBER 4, 2020
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|
|
Class B
Ordinary Shares(1)
|
|
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Additional
Paid-In
Capital
|
|
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Accumulated
Deficit
|
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Total
Shareholder’s
Equity
|
|
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|
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Shares
|
|
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Amount
|
|
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Balance−August 21, 2020
(inception)
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|
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|
|
— |
|
|
|
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$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
Issuance of Class B ordinary shares to Sponsor(1)
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|
|
|
|
2,875,000 |
|
|
|
|
|
288 |
|
|
|
|
|
24,712 |
|
|
|
|
|
— |
|
|
|
|
|
25,000 |
|
|
|
Net loss
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
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(4,961) |
|
|
|
|
|
(4,961) |
|
|
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Balance−September 4, 2020
|
|
|
|
|
2,875,000 |
|
|
|
|
$ |
288 |
|
|
|
|
$ |
24,712 |
|
|
|
|
$ |
(4,961) |
|
|
|
|
$ |
20,039 |
|
|
(1) Includes an aggregate of up to 375,000 Class B ordinary shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (see Note 5). On October 8, 2020, 718,750 Class B ordinary shares were contributed back to the Company for no consideration, resulting in there being 2,875,000 Class B ordinary shares issued and outstanding (see note 5).
The accompanying notes are an integral part of the financial statements.
CONSONANCE-HFW ACQUISITION CORP.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM AUGUST 21, 2020 (INCEPTION) THROUGH SEPTEMBER 4, 2020
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Cash Flows from Operating Activities
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|
|
|
|
|
|
|
| |
Net loss
|
|
|
|
$ |
(4,961) |
|
|
| |
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
| |
Payment of formation costs through issuance of Class B ordinary shares
|
|
|
|
|
4,961 |
|
|
| |
Net cash used in operating activities
|
|
|
|
|
— |
|
|
| |
Net Change in Cash
|
|
|
|
|
— |
|
|
| |
Cash−beginning of the period
|
|
|
|
|
— |
|
|
| |
Cash−end of the period
|
|
|
|
$ |
— |
|
|
| |
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
| |
Deferred offering costs paid by Sponsor in exchange for the issuance of Class B ordinary shares
|
|
|
|
$ |
20,039 |
|
|
| |
Offering costs included in accrued offering costs
|
|
|
|
$ |
30,000 |
|
|
The accompanying notes are an integral part of the financial statements.
NOTE 1—ORGANIZATION AND PLAN OF BUSINESS OPERATIONS
Consonance-HFW Acquisition Corp. (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on August 21, 2020. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (“Business Combination”).
The Company is not limited to a particular industry or geographic region for purposes of completing a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of September 4, 2020, the Company had not commenced any operations. All activity for the period from August 21, 2020 (inception) through September 4, 2020 relates to the Company’s formation and the proposed initial public offering (“Proposed Public Offering”), which is described below. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Proposed Public Offering. The Company has selected December 31 as its fiscal year end.
The Company’s ability to commence operations is contingent upon obtaining adequate financial resources through a Proposed Public Offering of 10,000,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units being offered, the “Public Shares”) at $10.00 per Unit (or 11,500,000 Units if the underwriters’ over-allotment option is exercised in full), which is discussed in Note 3, and the sale of 450,000 units (or 480,000 units if the underwriters’ over-allotment option is exercised on full) (the “Private Placement Units”) at a price of $10.00 per Private Placement Unit in a private placement to Consonance Life Sciences (the “Sponsor”), that will close simultaneously with the Proposed Public Offering.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Proposed Public Offering and the sale of the Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward completing a Business Combination. The Company must complete its initial Business Combination 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) (excluding any deferred underwriting commissions held in the Trust Account and taxes payable on the interest earned on the Trust Account) at the time of the agreement to enter into a Business Combination. The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). There is no assurance that the Company will be able to successfully effect a Business Combination. Upon the closing of the Proposed Public Offering, management has agreed that $10.00 per Unit sold in the Proposed Public Offering, including proceeds of the sale of the Private Placement Units, 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 certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as described below.
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. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company. The shareholders will be entitled to redeem their shares for a pro rata portion of the amount held in the Trust Account (initially $10.00 per share), calculated as of two business days prior to the completion of a Business Combination, 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. The Class A ordinary shares will be recorded at redemption value and classified as temporary equity upon the completion of the Proposed Public Offering, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”
The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 upon such completion of a Business Combination and, if the Company seeks shareholder approval in connection with a Business Combination, it receives an ordinary resolution under Cayman Islands law approving a Business Combination, which requires the affirmative vote of a majority of the shareholders who vote at a general meeting of the Company. If a shareholder vote is not required under applicable law or stock exchange listing requirements and the Company does not decide to hold a shareholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association, conduct the redemptions 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. If the Company seeks shareholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) , Private Placement Shares (as defined in Note 4) and any Public Shares purchased in or after the Proposed Public Offering in favor of approving a Business Combination and to waive its redemption rights with respect to any such shares in connection with a shareholder vote to approve a Business Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. Additionally, each public shareholder may elect to redeem its Public Shares, without voting, and if they do vote, irrespective of whether they vote for or against a proposed Business Combination.
Notwithstanding the foregoing, 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 Memorandum and Articles of Association provides 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 redeeming its shares with respect to more than an aggregate of 15% of the Public Shares without the Company’s prior written consent.
The Sponsor has agreed (a) to waive its redemption rights with respect to any Founder Shares, Private Placement Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Memorandum and Articles of Association (i) to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to shareholders’ rights or pre-initial business combination activity, unless the Company provides the public shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment and (iii) to waive its rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination.
The Company will have until 24 months from the closing of the Proposed Public Offering (the “Combination Period”) to complete a Business Combination. 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 winding up, (ii) as promptly as reasonably possible but no more than 10 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 (less 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 shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), 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, dissolve and liquidate, subject in each case to its obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares and Private Placement Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the
Sponsor acquires Public Shares in or after the Proposed Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Proposed Public Offering price per Unit ($10.00).
The Sponsor has agreed that it will be liable to the Company, if and to the extent any claims by a third party for services rendered or products sold to the Company, or by a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.00 per Public Share or (2) 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 the value of trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account nor will it apply to any claims under the Company’s indemnity of the underwriters of the Proposed Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent auditors), 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 September 4, 2020, the Company had no cash and a working capital deficit of $30,000. The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management plans to address this uncertainty through a Proposed Public Offering as discussed in Note 3. There is no assurance that the Company’s plans to raise capital or to consummate a Business Combination will be successful within the Combination Period. 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 conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.
Emerging growth company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, 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 expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
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 equivalents as of September 4, 2020.
Deferred offering costs
Deferred offering costs consist of legal, accounting and other expenses incurred through the balance sheet date that are directly related to the Proposed Public Offering and that will be charged to shareholder’s equity upon the completion of the Proposed Public Offering. Should the Proposed Public Offering prove to be unsuccessful, these deferred costs, as well as additional expenses incurred, will be charged to operations.
Income taxes
The Company accounts for income taxes under ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 4, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The Company is considered an exempted Cayman Islands Company and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the period presented.
Net loss per share
Net loss per share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture. Weighted average shares were reduced for the effect of an aggregate of 375,000 ordinary shares that are subject to forfeiture if the over-allotment option is not exercised by the underwriters (see Note 5). At September 4, 2020, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares 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 sheet, primarily due to their short-term nature.
Recently issued accounting standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
NOTE 3—PROPOSED PUBLIC OFFERING
Pursuant to the Proposed Public Offering, the Company will offer for sale up to 10,000,000 Units (or 11,500,000 Units if the underwriters’ over-allotment option is exercised in full) at a purchase price of $10.00 per Unit. Each Unit will consist of one Class A ordinary share and one-third of one redeemable warrant (“Public Warrant”). Each whole Public Warrant will entitle the holder to purchase one Class A ordinary share at an exercise price of $11.50 per share, subject to adjustment (see Note 7).
NOTE 4—PRIVATE PLACEMENT
The Sponsor has committed to purchase an aggregate of 450,000 Private Placement Units (or 480,000 Private Placement Units if the underwriters’ over-allotment option is exercised in full) at a price of $10.00 per Private Placement Unit (for an aggregate purchase price of $4,500,000 or $4,800,000 in the aggregate if the underwriters’ over-allotment option is exercised in full) from the Company in a private placement that will occur simultaneously with the closing of the Proposed Public Offering. Each Private Placement Unit will consist of one Class A ordinary share (“Private Placement Share” or, collectively, “Private Placement Shares”) and one-third of one redeemable warrant (each, a “Private Placement Warrant”). Each whole Private Placement Warrant is exercisable for one Class A ordinary share at a price of $11.50 per share, subject to adjustment (see Note 7). The proceeds from the sale of the Private Placement Units will be added to the net proceeds from the Proposed Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Units held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Units and all underlying securities will expire worthless.
NOTE 5—RELATED PARTY TRANSACTIONS
Founder Shares
On September 4, 2020, the Sponsor paid $25,000 to cover certain offering and formation costs of the Company in consideration for 3,593,750 Class B ordinary shares. On October 8, 2020, 718,750 Class B ordinary shares were contributed back to the Company for no consideration, resulting in there being 2,875,000 Class B ordinary shares (the “Founder Shares”) being issued and outstanding. All share and per-share amounts have been retroactively restated to reflect the share capitalization. The Founder Shares include an aggregate of up to 375,000 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment is not
exercised in full or in part, so that the number of Founder Shares will collectively represent 20% of the Company’s issued and outstanding shares upon the completion of the Proposed Public Offering (not including the Private Placement Shares).
The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination; and (B) subsequent to a Business Combination, (x) if the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, amalgamation, share exchange, reorganization or other similar transaction that results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.
Promissory Note—Related Party
On September 4, 2020, the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal amount of $300,000. The Promissory Note is non-interest bearing and payable on the earlier of (i) December 31, 2021 or (i) the consummation of the Proposed Public Offering. As of September 4, 2020, there were no amounts outstanding under the Promissory Note.
Administrative Services Agreement
The Company intends to enter into an agreement, commencing on the effective date of the Proposed Public Offering through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay the Sponsor a total of up to $50,000 per month for office space and administrative support services.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s directors and officers may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into Private Placement Units of the post-Business Combination entity at a price of $10 per Private Placement Unit. The Private Placement Units would be identical to the Units.
NOTE 6—COMMITMENTS
Registration and Shareholder Rights
The holders of the Founder Shares, Private Placement Units (including securities contained therein) and warrants that may be issued upon conversion of the Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration and shareholder rights agreement to be signed prior to or on the effective date of the Proposed Public Offering. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination.
However, the registration and shareholder rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company will grant the underwriters a 45-day option to purchase up to 1,500,000 additional Units to cover over-allotments at the Proposed Public Offering price, less the underwriting discounts and commissions.
The underwriters will be entitled to a cash underwriting discount of $0.20 per Unit, or $2,000,000 in the aggregate (or $2,300,000 if the underwriters’ over-allotment is exercised in full), payable upon the closing of the Proposed Public Offering. In addition, the underwriters will be entitled to a deferred fee of $0.35 per Unit, or $3,500,000 in the aggregate (or $4,025,000 if the underwriters’ over-allotment is exercised in full). The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Risks and Uncertainties
Management is currently evaluating the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, close of the Proposed Public Offering, and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 7—SHAREHOLDER’S EQUITY
Class A ordinary shares—The Company is authorized to issue 350,000,000 Class A ordinary shares, with a par value of $0.0001 per share. Holders of Class A ordinary shares are entitled to one vote for each share. At September 4, 2020, there were no Class A ordinary shares issued or outstanding.
Class B ordinary shares—The Company is authorized to issue 150,000,000 Class B ordinary shares, with a par value of $0.0001 per share. Holders of the Class B ordinary shares are entitled to one vote for each share. At September 4, 2020, there were 2,875,000 Class B ordinary shares issued and outstanding, of which an aggregate of up to 375,000 shares are subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part so that the number of Founder Shares will equal 20% of the Company’s issued and outstanding ordinary shares (excluding the Private Placement Shares and assuming the initial shareholders do not purchase any units in the Proposed Public Offering) after the Proposed Public Offering.
Only holders of the Class B ordinary shares will have the right to vote on the election of directors prior to the Business Combination. Holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all other matters submitted to a vote of the Company’s shareholders except as otherwise required by law.
The Class B ordinary shares will automatically convert into Class A ordinary shares on the first business day following the consummation of a Business Combination at a ratio such that the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of ordinary shares issued and outstanding (excluding the Private Placement Shares underlying the Private Placement Units) upon completion of the Proposed Public Offering, plus (ii) the sum of the total number of Class A ordinary shares 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 a Business Combination, excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, deemed issued, or to be issued, to any seller in a Business Combination and any Private Placement Warrants issued to the Sponsor, members of the Company’s
founding team or any of their affiliates upon conversion of Working Capital Loans. In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one to one.
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. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) one year from the closing of the Proposed Public Offering. The Public Warrants will expire five years from the completion of a Business Combination or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A ordinary shares issuable upon exercise of the warrants is then effective and a current prospectus relating thereto is available, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable for cash or on a cashless basis, and the Company 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 is available.
The Company has agreed that as soon as practicable, but in no event later than 20 business days, after the closing of a Business Combination, it will use its commercially reasonable efforts to file with the SEC a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants, and the Company will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of a Business Combination, and to maintain the effectiveness of such registration statement and a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed, as specified in the warrant agreement; if the Class A ordinary shares 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, the Company may, at its 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 the Company so appoint, the Company will not be required to file or maintain in effect a registration statement. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the 60th day after the closing of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company 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, but will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $18.00—Once the warrants become exercisable, the Company may redeem the outstanding Public Warrants (except with respect to the Private Placement Warrants):
•
in whole and not in part;
•
at a price of $0.01 per Public Warrant;
•
upon not less than 30 days’ prior written notice of redemption to each warrant holder; and
•
if, and only if, the closing price of the Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which notice of the redemption is given to the warrant holders (the “Reference Value”).
If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $10.00—Once the warrants become exercisable, the Company may redeem the outstanding warrants:
•
in whole and not in part;
•
at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption; provided that during such 30 day period holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares, based on the redemption date and the fair market value of the Class A ordinary shares, that if the warrants are not exercised on a cashless basis or otherwise during such 30 day period, the Company shall redeem such warrants for $0.10 per share;
•
if, and only if, the Reference Value equals or exceeds $10.00 per share (as adjusted for share subdivisions, share dividends, reorganizations, recapitalizations and the like) on the trading day before the Company sends the notice of redemption to the warrant holders; and
•
if the Reference Value is less than $18.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.
The exercise price and number of ordinary shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public 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 Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per Class A ordinary share (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor 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 a Business Combination on the date of the consummation of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of its Class A ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its 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 $10.00 and $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 100% and 180% of the higher of the Market Value and the Newly Issued Price, respectively.
The Private Placement Warrants will be identical to the Public Warrants underlying the Units being sold in the Proposed Public Offering, except that the Private Placement Warrants and the Class A ordinary shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable, except as described above, so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
NOTE 8—SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to October 8, 2020, the date that the financial statements were issued. Based upon this review, other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
On October 8, 2020, 718,750 Class B ordinary shares were contributed back to the Company for no consideration, resulting in there being 2,875,000 Class B ordinary shares issued and outstanding. All share and per-share amounts have been retroactively restated to reflect the share capitalization.
10,000,000 UNITS
PRELIMINARY PROSPECTUS
, 2020
J.P. Morgan
Until , 2020 (25 days after the date of this prospectus), all dealers that buy, sell or trade our ordinary shares, 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.
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 and FINRA expenses
|
|
|
|
$ |
33,000 |
|
|
| |
Accounting fees and expenses
|
|
|
|
|
60,000 |
|
|
| |
Printing and engraving expenses
|
|
|
|
|
40,000 |
|
|
| |
Travel and road show expenses
|
|
|
|
|
20,000 |
|
|
| |
Legal fees and expenses
|
|
|
|
|
300,000 |
|
|
| |
NYSE listing and filing fees
|
|
|
|
|
75,000 |
|
|
| |
Director & Officers liability insurance premiums(1)
|
|
|
|
|
125,000 |
|
|
| |
Miscellaneous
|
|
|
|
|
347,000 |
|
|
| |
Total
|
|
|
|
$ |
1,000,000 |
|
|
| |
(1) This amount represents the approximate amount of annual director and officer liability insurance premiums the registrant anticipates paying following the completion of its initial public offering and until it completes a business combination.
Item 14. Indemnification of Directors and Officers.
Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against willful default, willful neglect, civil fraud or the consequences of committing a crime. Our amended and restated memorandum and articles of association provides for indemnification of our officers and directors to the maximum extent permitted by law, including for any liability incurred in their capacities as such, except through their own actual fraud, willful default or willful neglect. We may 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.
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 have agreed to waive any right, title, interest or claim of any kind they may have in the future as a result of, or arising out of, any services provided to us and will not seek recourse against the trust account for any reason whatsoever. Accordingly, any indemnification provided will only be able to be satisfied by us if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Item 15. Recent Sales of Unregistered Securities.
On September 4, 2020, Consonance Life Sciences, our sponsor, paid $25,000 or approximately $0.00696 per share, to cover for certain offering costs in consideration for 3,593,750 of our Class B ordinary shares. On October 8, 2020, 718,750 Class B ordinary shares were contributed back to the Company for no consideration, resulting in there being 2,875,000 Class B ordinary shares being issued and outstanding (at approximately $0.0087 per share). 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.
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 Consonance Life Sciences is to act as the company’s sponsor in connection with this offering.
Our sponsor has committed, pursuant to a written agreement, to purchase 450,000 private placement units (or 480,000 private placement warrants if the underwriters’ over-allotment option is exercised in full) at a purchase price of $4,500,000 (or $4,800,000 if the underwriters’ over- allotment option is exercised in full), in a private placement that will close simultaneously with the closing of this offering. These issuances will be made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
No underwriting discounts or commissions were paid with respect to such sales.
Item 16. Exhibits and Financial Statement Schedules.
(a)
The Exhibit Index is incorporated herein by reference.
Item 17. Undertakings.
(a)
The undersigned registrant hereby undertakes:
(1) That for the purpose of determining any liability under the Securities Act of 1933 in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(2) That for the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(b) The undersigned hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
(c) 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.
(d)
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.
EXHIBIT INDEX
*
To be filed by amendment.
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 Princeton, New Jersey, on the 8th day of October, 2020.
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Consonance-HFW Acquisition Corp.
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By:
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/s/ Gad Soffer
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Name: Gad Soffer
Title: Chief Executive Officer
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Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
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NAME
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POSITION
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DATE
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/s/ Gad Soffer
Gad Soffer
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Chief Executive Officer
(Principal Executive Officer and the Registrant’s authorized signatory in the United States)
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October 8, 2020
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/s/ Kevin Livingston
Kevin Livingston
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Chief Financial Officer and Director
(Principal Financial and Accounting Officer)
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October 8, 2020
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Exhibit 1.1
CONSONANCE-HFW ACQUISITION CORP.
10,000,000 Units
UNDERWRITING AGREEMENT
[●], 2020
J.P.
Morgan Securities LLC
As
Representative of the
several Underwriters listed
in Schedule 1 hereto
c/o J.P. Morgan Securities LLC
383 Madison Avenue
New York, New York 10179
Ladies and Gentlemen:
Consonance-HFW
Acquisition Corp., a Cayman Islands corporation (the “Company”), proposes to issue and sell to the several
underwriters listed in Schedule 1 hereto (collectively, the “Underwriters”), for whom you are
acting as representative (the “Representative”), an aggregate of 10,000,000 units of the Company (the
“Underwritten Units”) and, at the option of the Underwriters, up to an additional 1,500,000 units of
the Company (the “Option Units”). The Underwritten Units and the Option Units are herein referred to
as the “Units.” To the extent that there are no additional Underwriters listed on Schedule 1 hereto other
than you, the term “Representative” as used herein shall mean you, as Underwriter, and the term “Underwriters”
shall mean either the singular or plural as the context requires.
Each Unit consists of
one share of the Company’s Class A ordinary shares, par value $0.0001 per share (the “Ordinary Shares”),
and one-third of one redeemable warrant, where each whole warrant entitles the holder to purchase one Ordinary Share (the “Warrant(s)”).
The Ordinary Shares and the Warrants included in the Units will not trade separately until the 52nd day following the date of the
Prospectus (as defined below) (unless the Representative informs the Company of its decision to allow earlier separate trading),
subject to (a) the Company’s preparation of an audited balance sheet reflecting the receipt by the Company of the proceeds
of the Offering (as defined below), (b) the filing of such audited balance sheet with the Securities and Exchange Commission (the
“Commission”) on a Current Report on Form 8-K or similar form by the Company that includes such audited
balance sheet and (c) the Company having issued a press release announcing when such separate trading will begin. No fractional
Warrants will be issued upon separation of the Units, and only whole Warrants will trade. Each whole Warrant entitles its holder,
upon exercise, to purchase one Ordinary Share at a price of $11.50 per share during the period commencing on the later of thirty
days after the completion of the Company’s initial Business Combination (as defined below) and twelve months from the date
of the consummation of the Offering and terminating on the five-year anniversary of the date of the completion of such initial
Business Combination or earlier upon redemption or liquidation of the Company; provided, however, that pursuant to
the Warrant Agreement (as defined below), a fractional Warrant may not be exercised, so that only a whole Warrant may be exercised
at any given time by a holder thereof. As used herein, the term “Business Combination” (as described
more fully in the Prospectus) shall mean a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or
similar business combination with one or more businesses involving the Company.
The
Company has entered into an Investment Management Trust Agreement, effective as of [·],
2020 (the “Trust Agreement”), with Continental Stock Transfer & Trust Company (“CST”),
as trustee (the “Trustee”), in substantially the form filed as Exhibit 10.1 to the Registration Statement
(as defined below), pursuant to which proceeds from the sale of the Private Placement Units (as defined below) and proceeds of
the Offering will be deposited and held in a trust account (the “Trust Account”) for the benefit of the
Company, the Underwriters and the Public Stockholders (as defined below).
The
Company has entered into a Warrant Agreement, effective as of [·], 2020
(the “Warrant Agreement”), with respect to the Warrants and the Private Placement Warrants with CST,
as warrant agent, in substantially the form filed as Exhibit 4.4 to the Registration Statement, pursuant to which CST will act
as warrant agent in connection with the issuance, registration, transfer, exchange, redemption, and exercise of the Warrants and
the Private Placement Warrants.
The
Company has entered into a Securities Subscription Agreement, dated as of [·],
2020 (the “Founder’s Purchase Agreement”), with Consonance Life Sciences, a Cayman Islands limited
liability company (the “Sponsor”), pursuant to which the Sponsor purchased an aggregate of 3,593,750
shares of the Company’s Class B ordinary shares, par value $0.0001 per share (the “Class B Ordinary Shares”),
for an aggregate purchase price of $25,000. On October 8, 2020, 718,750 Class B Ordinary Shares were contributed back to the Company
for no consideration, resulting in there being 2,875,000 Class B Ordinary Shares issued and outstanding (including the Ordinary
Shares issuable upon conversation thereof, the “Founder Shares”). Up to 375,000 Founder Shares are subject
to forfeiture depending on the extent to which the Underwriters’ over-allotment option is exercised. The Founder Shares are
substantially similar to the Ordinary Shares included in the Units, except as described in the Registration Statement, the Pricing
Disclosure Package (as defined below) and the Prospectus.
The
Company has entered into a Private Placement Unit Agreement, effective as of [·],
2020 (the “Unit Purchase Agreement”), with the Sponsor, in substantially the form filed as Exhibit 10.3
to the Registration Statement, pursuant to which the Sponsor agreed to purchase an aggregate of 450,000 units (or up to 480,000
units if the over-allotment option is exercised in full), at a price of $10.00 per unit (the “Private Placement Units”),
each Private Placement Unit consisting of one Ordinary Share and one-third of one redeemable warrant, where each whole warrant
entitles the holder to purchase one Ordinary Share (the “Private Placement Warrants”), for $11.50 per
share. The Private Placement Units are substantially similar to the Units, except as described in the Registration Statement, the
Pricing Disclosure Package and the Prospectus.
The
Company has entered into a Registration and Shareholder Rights Agreement, dated as of [·],
2020 (the “Registration Rights Agreement”), with the Sponsor and the other parties thereto, in substantially
the form filed as Exhibit 10.2 to the Registration Statement, pursuant to which the Company has granted certain registration rights
in respect of the Private Placement Units, the Private Placement Warrants, the Ordinary Shares included in the Private Placement
Units and the Ordinary Shares underlying the Founder Shares and certain warrants (which will be substantially similar to the Private
Placement Warrants), if any, that may be issued upon conversion of working capital loans.
The
Company has caused to be duly executed and delivered a letter agreement, dated as of [·],
2020 (the “Insider Letter”), by and among the Sponsor and each of the Company’s officers, directors
and director nominees, in substantially the form filed as Exhibit 10.8 to the Registration Statement.
The
Company has entered into an Administrative Services Agreement, dated as of [·],
2020 (the “Administrative Services Agreement” and, collectively with this Agreement, the Trust Agreement,
the Warrant Agreement, the Founder’s Purchase Agreement, the Unit Purchase Agreement, the Registration Rights Agreement and
the Insider Letter, the “Transaction Documents”), with the Sponsor, in substantially the form filed as
Exhibit 10.5 to the Registration Statement, pursuant to which the Company will, subject to the terms of the Administrative Services
Agreement, pay to an affiliate of the Sponsor, an aggregate monthly fee of $50,000 for office space, secretarial and administrative
services from the date that the Units are first listed on the New York Stock Exchange (the “NYSE”) until
the earlier of (x) the consummation of an initial Business Combination and (y) the Liquidation (as defined below).
The Company hereby confirms
its agreement with the several Underwriters concerning the purchase and sale of the Units, as follows:
1.
Registration Statement. The Company has prepared and filed with the Commission under the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder (collectively, the “Securities Act”),
a registration statement (File No. 333-[·]), including a prospectus, relating to
the Units and the Warrants and Ordinary Shares included therein. Such registration statement, as amended at the time it became
effective, including the information, if any, deemed pursuant to Rule 430A, 430B or 430C under the Securities Act to be part of
the registration statement at the time of its effectiveness (“Rule 430 Information”), is referred to
herein as the “Registration Statement”; and as used herein, the term “Preliminary Prospectus”
means each prospectus included in such registration statement (and any amendments thereto) before effectiveness, any prospectus
filed with the Commission pursuant to Rule 424(a) under the Securities Act and the prospectus included in the Registration Statement
at the time of its effectiveness that omits Rule 430 Information, and the term “Prospectus” means the
prospectus in the form first used (or made available upon request of purchasers pursuant to Rule 173 under the Securities Act)
in connection with confirmation of sales of the Units. If the Company has filed an abbreviated registration statement pursuant
to Rule 462(b) under the Securities Act (the “Rule 462 Registration Statement”), then any reference herein
to the term “Registration Statement” shall be deemed to include such Rule 462 Registration Statement.
At
or prior to the Applicable Time (as defined below), the Company had prepared the following information (collectively with
the pricing information set forth on Annex A, the “Pricing Disclosure Package”): a Preliminary Prospectus
dated [·], 2020.
“Applicable
Time” means [·] [A/P].M., New York City time, on [·],
2020.
2.
Purchase of the Units.
(a)
The Company agrees to issue and sell the Underwritten Units to the several Underwriters as provided in this underwriting
agreement (this “Agreement”), and each Underwriter, on the basis of the representations, warranties and
agreements set forth herein and subject to the conditions set forth herein, agrees, severally and not jointly, to purchase at a
price per unit of $9.80 (the “Purchase Price”) from the Company the respective number of Underwritten
Units set forth opposite such Underwriter’s name in Schedule 1 hereto.
(b)
In addition, the Company agrees to issue and sell the Option Units to the several Underwriters as provided in this Agreement,
and the Underwriters, on the basis of the representations, warranties and agreements set forth herein and subject to the conditions
set forth herein, shall have the option to purchase, severally and not jointly, from the Company the Option Units at the Purchase
Price less an amount per unit equal to any dividends or distributions declared by the Company and payable on the Firm Units but
not payable on the Option Units.
If
any Option Units are to be purchased, the number of Option Units to be purchased by each Underwriter shall be the number of Option
Units which bears the same ratio to the aggregate number of Option Units being purchased as the number of Underwritten Units set
forth opposite the name of such Underwriter in Schedule 1 hereto (or such number increased as set forth in Section 10
hereof) bears to the aggregate number of Underwritten Units being purchased from the Company by the several Underwriters, subject,
however, to such adjustments to eliminate any fractional Units as the Representative in its sole discretion shall make.
The
Underwriters may exercise the option to purchase Option Units at any time in whole, or from time to time in part, on or before
the forty-fifth day following the date of the Prospectus, by written notice from the Representative to the Company. Such notice
shall set forth the aggregate number of Option Units as to which the option is being exercised and the date and time when the Option
Units are to be delivered and paid for, which may be the same date and time as the Closing Date (as defined below) but shall not
be earlier than the Closing Date nor later than the tenth full business day (as defined below) after the date of such notice (unless
such time and date are postponed in accordance with the provisions of Section 10 hereof). Any such notice shall be
given at least two business days prior to the date and time of delivery specified therein.
(c)
In addition to the discount from the public offering price represented by the Purchase Price, the Company hereby agrees
to pay to the Underwriters a deferred discount of $0.35 per Unit (including both Underwritten Units and Option Units) purchased
hereunder (the “Deferred Discount”). The Deferred Discount will be paid directly to the Representative
(subject to the provisions of Section 4(ii)), on behalf of the Underwriters, by the Trustee from amounts on deposit in the Trust
Account (without accrued interest) by wire transfer payable in same-day funds if and when the Company consummates an initial Business
Combination. The Underwriters hereby agree that if no Business Combination is consummated within the time period provided in the
Trust Agreement, as such time period may be extended, and the funds held under the Trust Agreement are distributed to the holders
of the Ordinary Shares included in the Units sold pursuant to this Agreement (the “Public Stockholders”),
(i) the Underwriters will forfeit any rights or claims to the Deferred Discount and (ii) the Trustee is authorized to distribute
the Deferred Discount to the Public Stockholders on a pro rata basis.
(d)
The Company understands that the Underwriters intend to make a public offering of the Units (the “Offering”),
and initially to offer the Units on the terms set forth in the Pricing Disclosure Package. The Company acknowledges and agrees
that the Underwriters may offer and sell Units to or through any affiliate of an Underwriter.
(e)
Payment for the Units shall be made by wire transfer in immediately available funds to the account specified by the Company
to the Representative in the case of the Underwritten Units, through the offices of Davis Polk & Wardwell, LLP, 450 Lexington
Avenue, New York, NY 10017 at 10:00 A.M. New York City time on [·], 2020, or at
such other time or place on the same or such other date, not later than the fifth business day thereafter, as the Representative
and the Company may agree upon in writing or, in the case of the Option Units, on the date and at the time and place specified
by the Representative in the written notice of the Underwriters’ election to purchase such Option Units. The Company shall
not be obligated to sell or deliver any of the Underwritten Units, except upon tender of payment by the Representative for all
Underwritten Units. The time and date of such payment for the Underwritten Units is referred to herein as the “Closing
Date,” and the time and date for such payment for the Option Units, if other than the Closing Date, is herein referred
to as the “Additional Closing Date.”
Payment for the Units
to be purchased on the Closing Date or the Additional Closing Date, as the case may be, shall be made against delivery to the Representative
for the respective accounts of the several Underwriters of the Units to be purchased on such date in definitive or book-entry form
registered in such names and in such denominations as the Representative shall request in writing not later than two full business
days prior to the Closing Date or the Additional Closing Date, as the case may be, with any transfer taxes payable in connection
with the sale of such Units duly paid by the Company. Delivery of the Units shall be made through the facilities of The Depository
Trust Company (“DTC”) unless the Representative shall otherwise instruct.
(f)
The Company acknowledges and agrees that the Representative and the other Underwriters are acting solely in the capacity
of an arm’s length contractual counterparty to the Company with respect to the Offering contemplated hereby (including in
connection with determining the terms of the Offering) and not as a financial advisor or a fiduciary to, or an agent of, the Company
or any other person. Additionally, neither the Representative nor any other Underwriter is advising the Company or any other person
as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. The Company shall consult with its own
advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions
contemplated hereby, and neither the Representative nor the other Underwriters shall have any responsibility or liability to the
Company with respect thereto. Any review by the Representative and the other Underwriters of the Company, the transactions contemplated
hereby or other matters relating to such transactions will be performed solely for the benefit of the Underwriters and shall not
be on behalf of the Company.
3.
Representations and Warranties of the Company. The Company represents and warrants to each Underwriter that:
(a)
Preliminary Prospectus. No order preventing or suspending the use of any Preliminary Prospectus has been issued by
the Commission, and each Preliminary Prospectus included in the Pricing Disclosure Package, at the time of filing thereof, complied
in all material respects with the Securities Act, and no Preliminary Prospectus, at the time of filing thereof, contained any untrue
statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that the Company makes no representation or warranty
with respect to any statements or omissions made in reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the Representative expressly for use in any Preliminary Prospectus,
it being understood and agreed that the only such information furnished by any Underwriter consists of the information described
as such in Section 7(b) hereof.
(b)
Pricing Disclosure Package. The Pricing Disclosure Package as of the Applicable Time did not, and as of the Closing
Date and as of the Additional Closing Date, as the case may be, will not, contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that the Company makes no representation or warranty with respect to any statements
or omissions made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing
by such Underwriter through the Representative expressly for use in such Pricing Disclosure Package, it being understood and agreed
that the only such information furnished by any Underwriter consists of the information described as such in Section 7(b)
hereof. No statement of material fact included in the Prospectus has been omitted from the Pricing Disclosure Package and no statement
of material fact included in the Pricing Disclosure Package that is required to be included in the Prospectus has been omitted
therefrom.
(c)
Issuer Free Writing Prospectus. Other than the Registration Statement, the Preliminary Prospectus and the Prospectus,
the Company (including its agents and representatives, other than the Underwriters in their capacity as such) has not prepared,
made, used, authorized, approved or referred to and will not prepare, make, use, authorize, approve or refer to any “written
communication” (as defined in Rule 405 under the Securities Act) that constitutes an offer to sell or solicitation
of an offer to buy the Units other than any document not constituting a prospectus pursuant to Section 2(a)(10)(a) of the Securities
Act or Rule 134 under the Securities Act.
(d)
Form 8-A. The Company has filed with the Commission a Form 8-A (file number 001-[·])
providing for the registration under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
of the Units, the Ordinary Shares and the Warrants, which registration is currently effective on the date hereof. The Units and
the Ordinary Shares and the Warrants included as part of the Units 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.
(e)
Emerging Growth Company. From the time of the initial confidential submission of the Registration Statement to the
Commission (or, if earlier, the first date on which the Company engaged directly or through any person authorized to act on its
behalf in any Testing-the-Waters Communication) through the date hereof, the Company has been and is an “emerging growth
company,” as defined in Section 2(a) of the Securities Act (an “Emerging Growth Company”).
“Testing-the-Waters Communication” means any oral or written communication with potential investors undertaken
in reliance on Section 5(d) of the Securities Act.
(f)
Testing-the-Waters Materials. The Company (i) has not alone engaged in any Testing-the-Waters Communications other
than Testing-the-Waters Communications with the consent of the Representative with entities that are qualified institutional buyers
within the meaning of Rule 144A under the Securities Act or institutions that are accredited investors within the meaning of Rule
501 under the Securities Act and (ii) has not authorized anyone other than the Representative to engage in Testing-the-Waters Communications.
The Company reconfirms that the Representative has been authorized to act on its behalf in undertaking Testing-the-Waters Communications.
The Company has not distributed or approved for distribution any Written Testing-the-Waters Communications other than those listed
on Annex B hereto. “Written Testing-the-Waters Communication” means any Testing-the-Waters Communication
that is a written communication within the meaning of Rule 405 under the Securities Act. Any individual Written Testing-the-Waters
Communication does not conflict with the information contained in the Registration Statement or the Pricing Disclosure Package,
complied in all material respects with the Securities Act, and when taken together with the Pricing Disclosure Package as of the
Applicable Time, did not, and as of the Closing Date and as of the Additional Closing Date, as the case may be, will not, contain
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.
(g)
Registration Statement and Prospectus. The Registration Statement has been declared effective by the Commission.
No order suspending the effectiveness of the Registration Statement has been issued by the Commission, and no proceeding for that
purpose or pursuant to Section 8A of the Securities Act against the Company or related to the Offering has been initiated or threatened
by the Commission; as of the applicable effective date of the Registration Statement and any post-effective amendment thereto,
the Registration Statement and any such post-effective amendment complied and will comply in all material respects with the Securities
Act, and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading; and as of the date of the Prospectus and any amendment
or supplement thereto and as of the Closing Date and as of the Additional Closing Date, as the case may be, the Prospectus will
comply in all material respects with the Securities Act and will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading; provided that the Company makes no representation or warranty with respect to any statements or omissions
made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Representative expressly for use in the Registration Statement and the Prospectus and any amendment or
supplement thereto, it being understood and agreed that the only such information furnished by any Underwriter consists of the
information described as such in Section 7(b) hereof.
(h)
Financial Statements. The financial statements (including the related notes thereto) of the Company included in the
Registration Statement, the Pricing Disclosure Package and the Prospectus comply in all material respects with the applicable requirements
of the Securities Act and present fairly the financial position of the Company as of the dates indicated and the results of their
operations and the changes in their cash flows for the periods specified; such financial statements have been prepared in conformity
with generally accepted accounting principles (“GAAP”) in the United States applied on a consistent basis
throughout the periods covered thereby, and any supporting schedules included in the Registration Statement present fairly the
information required to be stated therein; and the other financial information included in the Registration Statement, the Pricing
Disclosure Package and the Prospectus has been derived from the accounting records of the Company and presents fairly the information
shown thereby; all disclosures included in the Registration Statement, the Pricing Disclosure Package and the Prospectus regarding
“non-GAAP financial measures” (as such term is defined by the rules and regulations of Commission), if
any, comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K of the Securities Act, to the extent applicable.
(i)
No Material Adverse Change. Since the date of the most recent financial statements of the Company included in the
Registration Statement, the Pricing Disclosure Package and the Prospectus, (i) there has not been any change in the capital stock,
short-term debt or long-term debt of the Company, or any dividend or distribution of any kind declared, set aside for payment,
paid or made by the Company on any class of capital stock, or any material adverse change, or any development involving a prospective
material adverse change, in or affecting the business, properties, management, financial position, stockholders’ equity,
results of operations or prospects of the Company; (ii) the Company has not entered into any transaction or agreement (whether
or not in the ordinary course of business) that is material to the Company or incurred any liability or obligation, direct or contingent,
that is material to the Company; and (iii) the Company has not sustained any loss or interference with its business that is material
to the Company and that is either from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any
labor disturbance or dispute or any action, order or decree of any court or arbitrator or governmental or regulatory authority,
except in each case as otherwise disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
(j)
Organization and Good Standing. The Company has been duly organized and is validly existing and in good standing
under the laws of its jurisdiction of organization, is duly qualified to do business and is in good standing in each jurisdiction
in which its ownership or lease of property or the conduct of its business requires such qualification, and has all power and authority
necessary to own or hold its properties and to conduct the business in which it is engaged, except where the failure to be so qualified
or in good standing or have such power or authority would not, individually or in the aggregate, have a material adverse effect
on the business, properties, management, financial position, stockholders’ equity, results of operations or prospects of
the Company or on the performance by the Company of its obligations under the Transaction Documents (a “Material Adverse
Effect”).
(k)
Capitalization. The Company has an authorized capitalization as set forth in the Registration Statement, the Pricing
Disclosure Package and the Prospectus under the heading “Capitalization”; all the outstanding shares
of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable and are
not subject to any pre-emptive or similar rights; except as described in or expressly contemplated by the Registration Statement,
the Pricing Disclosure Package and the Prospectus, there are no outstanding rights (including, without limitation, pre-emptive
rights), warrants or options to acquire, or instruments convertible into or exchangeable for, any shares of capital stock or other
equity interest in the Company or any contract, commitment, agreement, understanding or arrangement of any kind relating to the
issuance of any capital stock of the Company, any such convertible or exchangeable securities or any such rights, warrants or options;
the capital stock of the Company conforms in all material respects to the description thereof contained in the Registration Statement,
the Pricing Disclosure Package and the Prospectus. The offers and sales of the outstanding securities of the Company were at all
relevant times either registered under the Securities Act, the applicable state securities and blue sky laws or, based in part
on the representations and warranties of the purchasers of such securities, exempt from such registration requirements.
(l)
Due Authorization. The Company has full right, power and authority to execute and deliver this Agreement and the
other Transaction Documents and to perform its obligations hereunder and thereunder; and all action required to be taken for the
due and proper authorization, execution and delivery by it of this Agreement and each of the other Transaction Documents and the
consummation by it of the transactions contemplated hereby and thereby has been duly and validly taken.
(m)
Underwriting Agreement. This Agreement has been duly authorized, executed and delivered by the Company.
(n)
The Units. The Units to be issued and sold by the Company hereunder have been duly authorized by the Company and,
when issued and delivered and paid for as provided herein, will be duly and validly issued, will constitute valid and legally binding
obligations of the Company enforceable against the Company in accordance with their terms, except as enforceability may be limited
by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by equitable
principles relating to enforceability, and will conform to the descriptions thereof in the Registration Statement, the Pricing
Disclosure Package and the Prospectus; and the issuance of the Units is not subject to any preemptive or similar rights.
(o)
The Private Placement Units. The Private Placement Units to be issued and sold by the Company under the Unit Purchase
Agreement have been duly authorized by the Company and, when issued and delivered in the manner set forth in the Unit Purchase
Agreement against payment therefor by the Sponsor pursuant to the Unit Purchase Agreement, will be duly and validly issued and
delivered, will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with
their terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement
of creditors’ rights generally or by equitable principles relating to enforceability, and will conform to the descriptions
thereof in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
(p)
The Units Shares. The Ordinary Shares included in the Units have been duly authorized by the Company and, when issued
and delivered against payment for the Units by the Underwriters pursuant to this Agreement, will be duly and validly issued and
delivered, will be fully paid and nonassessable, and will conform to the descriptions thereof in the Registration Statement, the
Pricing Disclosure Package and the Prospectus.
(q)
The Private Placement Units Shares. The Ordinary Shares included in the Private Placement Units have been duly authorized
by the Company and, when issued and delivered against payment for the Private Placement Units by the Sponsor pursuant to the Unit
Purchase Agreement, will be duly and validly issued and delivered, will be fully paid and nonassessable, and will conform to the
descriptions thereof in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
(r)
The Units Warrants. The Warrants included in the Units to be issued and sold by the Company hereunder have been duly
authorized by the Company and, when issued and delivered in the manner set forth in the Warrant Agreement against payment for the
Units by the Underwriters pursuant to this Agreement, will be duly and validly issued and delivered, will constitute valid and
legally binding obligations of the Company enforceable against the Company in accordance with their terms, except as enforceability
may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally
or by equitable principles relating to enforceability, and will conform to the descriptions thereof in the Registration Statement,
the Pricing Disclosure Package and the Prospectus.
(s)
The Private Placement Units Warrants. The Private Placement Warrants included in the Private Placement Units to be
issued and sold by the Company under the Unit Purchase Agreement have been duly authorized by the Company and, when issued and
delivered in the manner set forth in the Warrant Agreement against payment for the Private Placement Units by the Sponsor pursuant
to the Unit Purchase Agreement, will be duly and validly issued and delivered, will constitute valid and legally binding obligations
of the Company enforceable against the Company in accordance with their terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles
relating to enforceability, and will conform to the descriptions thereof in the Registration Statement, the Pricing Disclosure
Package and the Prospectus.
(t)
The Warrants Shares. The Ordinary Shares issuable upon exercise of the Warrants included in the Units and the Private
Placement Warrants included in the Private Placement Units have been duly authorized by the Company and, when issued and delivered
against payment therefor pursuant to the Warrants and the Private Placement Warrants, as applicable, and the Warrant Agreement,
will be duly and validly issued and delivered, will be fully paid and nonassessable; and such Ordinary Shares have been duly authorized
by the Company and validly reserved for issuance. The holders of such Ordinary Shares will not be subject to personal liability
by reason of being such holders; such Ordinary Shares are not, and at the time such shares are issued will not be, subject to any
preemptive or other similar contractual rights granted by the Company; and all corporate action required to be taken for the authorization,
issuance and sale of such Ordinary Shares (other than such delivery at the time of issuance) has been duly and validly taken.
(u)
The Trust Agreement. The Trust Agreement has been duly authorized, executed and delivered by the Company and constitutes
a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally
or by equitable principles relating to enforceability.
(v)
The Warrant Agreement. The Warrant Agreement has been duly authorized, executed and delivered by the Company and
constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally or by equitable principles relating to enforceability.
(w)
The Founder’s Purchase Agreement. The Founder’s Purchase Agreement has been duly authorized, executed
and delivered by the Company and the Sponsor and constitutes a valid and legally binding obligation of the Company and the Sponsor
enforceable against the Company and the Sponsor in accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles
relating to enforceability.
(x)
The Unit Purchase Agreement. The Unit Purchase Agreement has been duly authorized, executed and delivered by the
Company and the Sponsor and constitutes a valid and legally binding obligation of the Company and the Sponsor enforceable against
the Company and the Sponsor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency
or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.
(y)
The Registration Rights Agreement. The Registration Rights Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance
with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement
of creditors’ rights generally or by equitable principles relating to enforceability.
(z)
The Insider Letter. The Insider Letter has been duly authorized, executed and delivered by the Company, the Sponsor
and, to the Company’s knowledge, each officer, director and director nominee of the Company and constitutes a valid and legally
binding obligation of the Company, the Sponsor and, to the Company’s knowledge, each officer, director and director nominee
of the Company enforceable against the Company, the Sponsor and, to the Company’s knowledge, each officer, director and director
nominee of the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency
or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.
(aa)
The Administrative Services Agreement. The Administrative Services Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding obligation of the Company enforceable against the Company
in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting
the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.
(bb)
Descriptions of the Transaction Documents. Each Transaction Document conforms in all material respects to the description
thereof contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
(cc)
No Violation or Default. The Company is not (i) in violation of its charter or by-laws or similar organizational
documents; (ii) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default,
in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a party or by which the Company is bound or to which any property
or asset of the Company is subject; or (iii) in violation of any law or statute or any judgment, order, rule or regulation of any
court or arbitrator or governmental or regulatory authority, except, in the case of clauses (ii) and (iii) above, for
any such default or violation that would not, individually or in the aggregate, have a Material Adverse Effect.
(dd)
No Conflicts. The execution, delivery and performance by the Company of each of the Transaction Documents, the issuance
and sale of the Units and the consummation of the transactions contemplated by the Transaction Documents or the Pricing Disclosure
Package and the Prospectus will not (i) conflict with or result in a breach or violation of any of the terms or provisions of,
or constitute a default under, result in the termination, modification or acceleration of, or result in the creation or imposition
of any lien, charge or encumbrance upon any property, right or asset of the Company pursuant to, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which the Company is a party or by which the Company is bound or to
which any property, right or asset of the Company is subject, (ii) result in any violation of the provisions of the charter or
by-laws or similar organizational documents of the Company or (iii) result in the violation of any law or statute or any judgment,
order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (i)
and (iii) above, for any such conflict, breach, violation, default, lien, charge or encumbrance that would not, individually
or in the aggregate, have a Material Adverse Effect.
(ee)
No Consents Required. No consent, approval, authorization, order, registration or qualification of or with any court
or arbitrator or governmental or regulatory authority is required for the execution, delivery and performance by the Company of
each of the Transaction Documents, the issuance and sale of the Units and the consummation of the transactions contemplated by
the Transaction Documents, except for the registration of the Units under the Securities Act and such consents, approvals, authorizations,
orders and registrations or qualifications as may be required by the Financial Industry Regulatory Authority, Inc. (“FINRA”)
and under applicable state securities laws in connection with the purchase and distribution of the Units by the Underwriters.
(ff)
Legal Proceedings. There are no legal, governmental or regulatory investigations, actions, demands, claims, suits,
arbitrations, inquiries or proceedings (“Actions”) pending to which the Company is or may be a party
or to which any property of the Company is or may be the subject that, individually or in the aggregate, if determined adversely
to the Company, could reasonably be expected to have a Material Adverse Effect; no such Actions are threatened or, to the knowledge
of the Company, contemplated by any governmental or regulatory authority or threatened by others; and (i) there are no current
or pending Actions that are required under the Securities Act to be described in the Registration Statement, the Pricing Disclosure
Package or the Prospectus that are not so described in the Registration Statement, the Pricing Disclosure Package and the Prospectus
and (ii) there are no statutes, regulations or contracts or other documents that are required under the Securities Act to be filed
as exhibits to the Registration Statement or described in the Registration Statement, the Pricing Disclosure Package or the Prospectus
that are not so filed as exhibits to the Registration Statement or described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus.
(gg)
Independent Accountants. Marcum LLP, who have certified certain financial statements of the Company, is an independent
registered public accounting firm with respect to the Company within the applicable rules and regulations adopted by the Commission
and the Public Company Accounting Oversight Board (United States) and as required by the Securities Act.
(hh)
Disclosure. There is no franchise, contract or other document of a character required to be described in the Registration
Statement or Prospectus, or to be filed as an exhibit thereto, which is not described or filed as required (and the Pricing Disclosure
Package contains in all material respects the same description of the foregoing matters contained in the Prospectus); and the statements
in the Registration Statement, the Pricing Disclosure Package and the Prospectus under the headings “Principal Shareholders,”
“Certain Relationships and Related Party Transactions,” “Description of Securities,” “Underwriting”
and “Taxation” insofar as such statements summarize legal matters, agreements, documents or proceedings discussed therein,
are in all material respects accurate and fair summaries of such legal matters, agreements, documents or proceedings. There are
no business relationships or related party transactions involving the Company or any other person required by the Securities Act
to be described in the Registration Statement or Prospectus that have not been described as required.
(ii)
No Undisclosed Relationships. No relationship, direct or indirect, exists between or among the Company, on the one
hand, and the directors, officers, stockholders, customers, suppliers or other affiliates of the Company, on the other, that is
required by the Securities Act to be described in each of the Registration Statement and the Prospectus and that is not so described
in such documents and in the Pricing Disclosure Package.
(jj)
Investment Company Act. The Company is not and, after giving effect to the offering and sale of the Units and the
application of the proceeds thereof as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus,
will not be required to register as an “investment company” or an entity “controlled”
by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and
the rules and regulations of the Commission thereunder (collectively, the “Investment Company Act”).
(kk)
Taxes. The Company has paid all federal, state, local and foreign taxes and filed all tax returns required to be
paid or filed through the date hereof; and except as otherwise disclosed in each of the Registration Statement, the Pricing Disclosure
Package and the Prospectus, there is no tax deficiency that has been, or could reasonably be expected to be, asserted against the
Company or any of its properties or assets.
(ll)
Licenses and Permits. The Company possesses all licenses, sub-licenses, certificates, permits and other authorizations
issued by, and has made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory
authorities that are necessary for the ownership or lease of its properties or the conduct of its business as described in each
of the Registration Statement, the Pricing Disclosure Package and the Prospectus, except where the failure to possess or make the
same would not, individually or in the aggregate, have a Material Adverse Effect; and except as described in each of the Registration
Statement, the Pricing Disclosure Package and the Prospectus, the Company has not received notice of any revocation or modification
of any such license, sub-license, certificate, permit or authorization or has any reason to believe that any such license, sub-license,
certificate, permit or authorization will not be renewed in the ordinary course.
(mm)
Disclosure Controls. The Company maintains an effective system of “disclosure controls and procedures”
(as defined in Rule 13a-15(e) of the Exchange Act) that complies with the requirements of the Exchange Act to the extent required
by Rule 13a-15(e) of the Exchange Act.
(nn)
Cybersecurity; Data Protection. The Company’s information technology assets and equipment, computers, systems,
networks, hardware, software, websites, applications, and databases (collectively, “IT Systems”) are
adequate for, and operate and perform in all material respects as required in connection with the operation of the business of
the Company as currently conducted, free and clear of all material bugs, errors, defects, Trojan horses, time bombs, malware and
other corruptants. The Company has implemented and maintained commercially reasonable controls, policies, procedures, and safeguards
to maintain and protect its material confidential information and the integrity, continuous operation, redundancy and security
of all IT Systems and data (including all personal, personally identifiable, sensitive, confidential or regulated data (“Personal
Data”)) used in connection with its business, and there have been no breaches, violations, outages or unauthorized
uses of or accesses to same, except for those that have been remedied without material cost or liability or the duty to notify
any other person, nor any incidents under internal review or investigations relating to the same. The Company is presently in material
compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or
governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT
Systems and Personal Data and to the protection of such IT Systems and Personal Data from unauthorized use, access, misappropriation
or modification, except where the failure to be in compliance would not, individually or in the aggregate, have a Material Adverse
Effect.
(oo)
No Unlawful Payments. Neither the Company nor any director, officer or employee of the Company nor, to the knowledge
of the Company, any agent, affiliate or other person associated with or acting on behalf of the Company has (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made or
taken an act in furtherance of an offer, promise or authorization of any direct or indirect unlawful payment or benefit to any
foreign or domestic government official or employee, including of any government-owned or controlled entity or of a public international
organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or
party official or candidate for political office; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977, as amended, or any applicable law or regulation implementing the OECD Convention on Combating Bribery of Foreign Public
Officials in International Business Transactions, or committed an offence under the Bribery Act 2010 of the United Kingdom or any
other applicable anti-bribery or anti-corruption law; or (iv) made, offered, agreed, requested or taken an act in furtherance of
any unlawful bribe or other unlawful benefit, including, without limitation, any rebate, payoff, influence payment, kickback or
other unlawful or improper payment or benefit. The Company has instituted, maintains and enforces, and will continue to maintain
and enforce policies and procedures designed to promote and ensure compliance with all applicable anti-bribery and anti-corruption
laws.
(pp)
Compliance with Anti-Money Laundering Laws. The operations of the Company are and have been conducted at all times
in compliance with applicable financial recordkeeping and reporting requirements, including those of the Currency and Foreign Transactions
Reporting Act of 1970, as amended, the applicable money laundering statutes of all jurisdictions where the Company conducts business,
the rules and regulations thereunder and any related or similar rules, regulations or guidelines issued, administered or enforced
by any governmental agency (collectively, the “Anti-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 Anti-Money
Laundering Laws is pending or, to the knowledge of the Company, threatened.
(qq)
No Conflicts with Sanctions Laws. Neither the Company nor any of its directors, officers, or employees, nor, to the
knowledge of the Company, any agent, affiliate or other person associated with or acting on behalf of the Company is currently
the subject or the target of any sanctions administered or enforced by the U.S. government, (including, without limitation, the
Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State and including, without
limitation, the designation as a “specially designated national” or “blocked person”),
the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority (collectively,
“Sanctions”), nor is the Company located, organized or resident in a country or territory that is the
subject or target of Sanctions, including, without limitation, Crimea, Cuba, Iran, North Korea and Syria (each, a “Sanctioned
Country”); and the Company will not directly or indirectly use the proceeds of the Offering hereunder, or lend, contribute
or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity (i) to fund or facilitate
any activities of or business with any person that, at the time of such funding or facilitation, is the subject or target of Sanctions,
(ii) to fund or facilitate any activities of or business in any Sanctioned Country or (iii) in any other manner that will result
in a violation by any person (including any person participating in the transaction, whether as underwriter, advisor, investor
or otherwise) of Sanctions. For the past five years, the Company has not knowingly engaged in and are not now knowingly engaged
in any dealings or transactions with any person that at the time of the dealing or transaction is or was the subject or the target
of Sanctions or with any Sanctioned Country.
(rr)
No Registration Rights. No person has the right to require the Company to register any securities for sale under
the Securities Act by reason of the filing of the Registration Statement with the Commission or the issuance and sale of the Units.
(ss)
Compliance with NYSE. There is and has been no failure on the part of the Company or, to the knowledge of the Company,
any of the Company’s officers or directors, in their capacities as such, to comply with (as and when applicable), and immediately
following the initial effective date of the Registration Statement the Company will be in compliance with, the requirements of
NYSE Section 303A.01. Further, there is and has been no failure on the part of the Company or, to the knowledge of the Company,
any of the Company’s officers or directors, in their capacities as such, to comply with (as and when applicable), and immediately
following the initial effective date of the Registration Statement the Company will be in compliance with, the phase-in requirements
and all other provisions of the NYSE corporate governance requirements set forth in the NYSE Listed Company Manual.
(tt)
Taxes. There are no transfer, stamp, issue, registration, documentary or other similar taxes, duties, fees or charges
under U.S. federal law or the laws of any state, or any political subdivision thereof, or under the laws of any non-U.S. jurisdiction,
required to be paid in connection with the execution and delivery of this Agreement or the issuance or sale by the Company of the
Units.
(uu)
Questionnaires. All information contained in the questionnaires (the “Questionnaires”)
completed by the Company and the Sponsor and, to the knowledge of the Company, the Company’s officers, directors and director
nominees and provided to the Underwriters, is true and correct and the Company has not become aware of any information that would
cause the information disclosed in the Questionnaires completed by the Company, the Sponsor or the Company’s officers, directors
and director nominees to become inaccurate and incorrect.
(vv)
Acquisition Target Not Identified. Prior to the date hereof, the Company has not identified any acquisition target
and has not, nor, to its knowledge, has anyone on its behalf, initiated any substantive discussions, directly or indirectly, with
respect to a possible initial Business Combination, or engaged or retained any agent or other representative to identify or locate
any such acquisition candidate.
(ww)
No Broker’s Fees. Except as described in the Registration Statement, the Pricing Disclosure Package and the
Prospectus, there are no claims, payments, arrangements, contracts, agreements or understandings relating to the payment of a brokerage
commission or finder’s, consulting, origination or similar fee by the Company, the Sponsor or any officer, director or director
nominee of the Company with respect to the sale of the Units hereunder or any other arrangements, agreements or understandings
of the Company, the Sponsor or any such officer, director or director nominee of the Company, or their respective affiliates, that
may affect the Underwriters’ compensation, as determined by the FINRA.
(xx)
No Direct or Indirect Payments. Except as described in the Registration Statement, the Pricing Disclosure Package
and the Prospectus, the Company has not made any direct or indirect payments (in cash, securities or any other “underwriting
compensation” as defined in Rule 5110(j)(22) of FINRA’s Conduct Rules): (i) to any person, as a finder’s
fee, consulting fee or otherwise, in consideration of such person raising capital for the Company or introducing to the Company
persons who raised or provided capital to the Company; (ii) to any person that, to the Company’s knowledge, has been accepted
by FINRA as a member of FINRA (a “Member”); or (iii) to any person or entity that, to the Company’s
knowledge, has any direct or indirect affiliation or association with any Member, within the twelve months prior to the initial
effective date of the Registration Statement, other than payments to the Underwriters pursuant to this Agreement.
(yy)
No Investment Banking, Financial Advisory and/or Consulting Services. Except as described in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, during the period beginning 180 days prior to the initial confidential submission
of the Registration Statement and ending on the initial effective date of the Registration Statement, no Member and/or any person
associated or affiliated with a Member has provided any investment banking, financial advisory and/or consulting services to the
Company.
(zz)
Affiliation with FINRA. Except as disclosed in the Questionnaires provided to the Representative, to the Company’s
knowledge, no officer, director, director nominee or beneficial owner of any class of the Company’s securities (whether debt
or equity, registered or unregistered, regardless of the time acquired or the source from which derived) (any such individual or
entity, a “Company Affiliate”) is a Member or a person associated or affiliated with a Member.
(aaa)
Ownership of FINRA Member Securities. Except as disclosed in the Questionnaires provided to the Representative, to
the Company’s knowledge, no Company Affiliate is an owner of stock or other securities of any Member (other than securities
purchased on the open market).
(bbb)
Subordinated Loans to FINRA Members. To the Company’s knowledge, no Company Affiliate has made a subordinated
loan to any Member.
(ccc)
Non-Compete/Non-Solicitation. Except as described in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, to the Company’s knowledge, none of the Sponsor, officers, directors or director nominees
of the Company is subject to a non-competition agreement or non-solicitation agreement with any employer or prior employer that
could materially affect its, his or her ability to be and act in the capacity of stockholder, officer or director of the Company,
as applicable.
(ddd)
Related Party Transactions. No relationship, direct or indirect, exists between or among any of the Company or any
affiliate of the Company, on the one hand, and any director, director nominee, officer, stockholder, special advisor, customer
or supplier of the Company or any affiliate of the Company, on the other hand, which is required by the Securities Act or the Exchange
Act to be described in the Registration Statement, Pricing Disclosure Package or the Prospectus that is not described as required.
There are no outstanding loans, advances (except normal advances for business expenses in the ordinary course of business) or guarantees
of indebtedness by the Company to or for the benefit of any of the officers, directors or director nominees of the Company or any
of their respective family members. 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 officer, director or director nominee of the Company.
(eee)
No Unlawful Influence. The Company has not offered, or caused the Underwriters to offer, the 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.
(fff)
Applicability of Rule 419. Upon delivery and payment for the Units on the Closing Date and each Additional Closing
Date, the Company will not be subject to Rule 419 under the Securities Act and none of the Company’s outstanding securities
will be deemed to be a “penny stock” as defined in Rule 3a51-1 under the Exchange Act.
(ggg)
Absence of Manipulation. The Company has not taken, directly or indirectly, any action designed to or that would
constitute or that might reasonably be expected to cause or result in, under the Exchange Act or otherwise, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of the Units.
(hhh)
Margin Rules. Neither the issuance, sale and delivery of the Units nor the application of the proceeds thereof by
the Company as described in each of the Registration Statement, the Pricing Disclosure Package and the Prospectus will violate
Regulation T, U or X of the Board of Governors of the Federal Reserve System or any other regulation of such Board of Governors.
(iii)
Statistical and Market Data. Nothing has come to the attention of the Company that has caused the Company to believe
that the statistical and market-related data included in each of the Registration Statement, the Pricing Disclosure Package and
the Prospectus is not based on or derived from sources that are reliable and accurate in all material respects.
(jjj)
Sarbanes-Oxley Act. Solely to the extent that the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations
promulgated by the Commission thereunder (the “Sarbanes-Oxley Act”) have been applicable to the Company,
there is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities
as such, to comply with any provision of the Sarbanes-Oxley Act, including Section 402 related to loans and Sections 302 and 906
related to certifications.
(kkk)
Status under the Securities Act. At the time of filing the Registration Statement and any post-effective amendment
thereto the Company was an “ineligible issuer,” as defined in Rule 405 under the Securities Act solely
because of subclause (B) of clause (ii) of the definition thereof. The Company has paid the registration fee for this offering
pursuant to Rule 456(b)(1) under the Securities Act.
(lll)
No Ratings. There are (and prior to the Closing Date, will be) no debt securities, convertible securities or preferred
stock issued or guaranteed by the Company that are rated by a “nationally recognized statistical rating organization,”
as such term is defined in Section 3(a)(62) under the Exchange Act.
(mmm) Company Ownership of Other Entities. The Company does not own, and since its incorporation has not owned, an interest
in any corporation, partnership, limited liability company, joint venture, trust or other entity.
4.
Further Agreements of the Company. The Company covenants and agrees with each Underwriter that:
(a)
Required Filings. The Company will file the final Prospectus with the Commission within the time periods specified
by Rule 424(b) and Rule 430A, 430B or 430C under the Securities Act; and the Company will furnish copies of the Prospectus (to
the extent not previously delivered) to the Underwriters in New York City prior to 10:00 A.M., New York City time, on the
business day next succeeding the date of this Agreement in such quantities as the Representative may reasonably request.
(b)
Delivery of Copies. The Company will deliver, upon request, without charge, (i) to the Representative, signed copies
of the Registration Statement as originally filed and each amendment thereto, in each case including all exhibits and consents
filed therewith; and (ii) to each Underwriter (A) a conformed copy of the Registration Statement as originally filed and each amendment
thereto (without exhibits) and (B) during the Prospectus Delivery Period (as defined below), as many copies of the Prospectus (including
all amendments and supplements thereto) as the Representative may reasonably request. As used herein, the term “Prospectus
Delivery Period” means such period of time after the first date of the public offering of the Units as in the opinion
of counsel for the Underwriters a prospectus relating to the Units is required by law to be delivered (or required to be delivered
but for Rule 172 under the Securities Act) in connection with sales of the Units by any Underwriter or dealer.
(c)
Amendments or Supplements. Before making, preparing, using, authorizing, approving, referring to or filing any amendment
or supplement to the Registration Statement, the Pricing Disclosure Package or the Prospectus, the Company will furnish to the
Representative and counsel for the Underwriters a copy of the proposed amendment or supplement for review and will not make, prepare,
use, authorize, approve, refer to or file any such proposed amendment or supplement to which the Representative reasonably objects.
(d)
Notice to the Representative. The Company will advise the Representative promptly, and confirm such advice in writing,
(i) when the Registration Statement has become effective; (ii) when any amendment to the Registration Statement has been filed
or becomes effective; (iii) when any supplement to the Pricing Disclosure Package, the Prospectus or any Written Testing-the-Waters
Communication or any amendment to the Prospectus has been filed or distributed; (iv) of any request by the Commission for any amendment
to the Registration Statement or any amendment or supplement to the Prospectus or the receipt of any comments from the Commission
relating to the Registration Statement or any other request by the Commission for any additional information, including, but not
limited to, any request for information concerning any Testing-the-Waters Communication; (v) of the issuance by the Commission
or any other governmental or regulatory authority of any order suspending the effectiveness of the Registration Statement or preventing
or suspending the use of any Preliminary Prospectus, any of the Pricing Disclosure Package, the Prospectus or any Written Testing-the-Waters
Communication or the initiation or threatening of any proceeding for that purpose or pursuant to Section 8A of the Securities Act;
(vi) of the occurrence of any event or development within the Prospectus Delivery Period as a result of which the Prospectus, any
of the Pricing Disclosure Package or any Written Testing-the-Waters Communication as then amended or supplemented would 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 existing when the Prospectus, the Pricing Disclosure Package or any Written Testing-the-Waters Communication
is delivered to a purchaser, not misleading; and (vii) of the receipt by the Company of any notice with respect to any suspension
of the qualification of the Units for offer and sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose; and the Company will use its reasonable best efforts to prevent the issuance of any such order suspending the effectiveness
of the Registration Statement, preventing or suspending the use of any Preliminary Prospectus, any of the Pricing Disclosure Package
or the Prospectus or any Written Testing-the-Waters Communication or suspending any such qualification of the Units and, if any
such order is issued, will obtain as soon as possible the withdrawal thereof.
(e)
Ongoing Compliance. (1) If during the Prospectus Delivery Period (i) any event or development shall occur or condition
shall exist as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances existing
when the Prospectus is delivered to a purchaser, not misleading or (ii) it is necessary to amend or supplement the Prospectus to
comply with law, the Company will immediately notify the Underwriters thereof and forthwith prepare and, subject to paragraph (c)
above, file with the Commission and furnish to the Underwriters and to such dealers as the Representative may designate such amendments
or supplements to the Prospectus as may be necessary so that the statements in the Prospectus as so amended or supplemented will
not, in the light of the circumstances existing when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus
will comply with law and (2) if at any time prior to the Closing Date (i) any event or development shall occur or condition shall
exist as a result of which the Pricing Disclosure Package as then amended or supplemented would include any untrue statement of
a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances
existing when the Pricing Disclosure Package is delivered to a purchaser, not misleading or (ii) it is necessary to amend or supplement
the Pricing Disclosure Package to comply with law, the Company will immediately notify the Underwriters thereof and forthwith prepare
and, subject to paragraph (c) above, file with the Commission (to the extent required) and furnish to the Underwriters and
to such dealers as the Representative may designate such amendments or supplements to the Pricing Disclosure Package as may be
necessary so that the statements in the Pricing Disclosure Package as so amended or supplemented will not, in the light of the
circumstances existing when the Pricing Disclosure Package is delivered to a purchaser, be misleading or so that the Pricing Disclosure
Package will comply with law.
(f)
Blue Sky Compliance. The Company will qualify the Units for offer and sale under the securities or Blue Sky laws
of such jurisdictions as the Representative shall reasonably request and will continue such qualifications in effect so long as
required for distribution of the Units; provided that the Company shall not be required to (i) qualify as a foreign corporation
or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii)
file any general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction
if it is not otherwise so subject.
(g)
Earning Statement. The Company will make generally available to its security holders and the Representative as soon
as practicable an earning statement that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 of the Commission
promulgated thereunder covering a period of at least twelve months beginning with the first fiscal quarter of the Company occurring
after the “effective date” (as defined in Rule 158) of the Registration Statement.
(h)
Clear Market. For a period of 180 days after the date of the Prospectus, the Company will not (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, or submit to, or file with, the Commission
a registration statement under the Securities Act relating to, any Units, Ordinary Shares, Founder Shares, Warrants or any securities
convertible into or exercisable or exchangeable for any Units, Ordinary Shares, Founder Shares or Warrants, or publicly disclose
the intention to undertake any of the foregoing, or (ii) enter into any swap or other agreement that transfers, in whole or in
part, any of the economic consequences of ownership of any Units, Ordinary Shares, Founder Shares or Warrants or any such other
securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Units
or such other securities, in cash or otherwise, without the prior written consent of J.P. Morgan Securities LLC, except, in each
case, that the Company may (a) issue and sell the Private Placement Units, (b) issue and sell the Option Units on exercise of the
option provided for in Section 2(b) hereof, (c) register with the Commission pursuant to the Registration Rights Agreement,
in accordance with the terms of the Registration Rights Agreement, the resale of the Founder Shares, the Private Placement Units,
Ordinary Shares included in the Private Placement Units, the Private Placement Warrants and warrants that may be issued upon conversion
of working capital loans (and any Ordinary Shares issued or issuable upon the exercise of any such Private Placement Warrants or
warrants issued upon conversion of the working capital loans and upon conversion of the Founder Shares), and (d) issue securities
in connection with a Business Combination. The Company agrees not to waive or amend the Insider Letter without the written consent
of the Representative.
(i)
Use of Proceeds. The Company will apply the net proceeds from the sale of the Private Placement Units received by
it in a manner materially consistent with the applications described under the caption “Use of Proceeds” in the Pricing
Disclosure Package and the Prospectus.
(j)
No Stabilization. Neither the Company nor its affiliates will take, directly or indirectly, any action designed to
or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Units.
(k)
Exchange Listing. The Company will use its reasonable best efforts to list, subject to notice of issuance, the Units,
the Ordinary Shares and the Warrants on the NYSE.
(l)
Reports. For a period commencing on the initial effective date of the Registration Statement and ending five years
from the date of the consummation of the Business Combination or until such earlier time at which the Liquidation occurs, the Company
shall, to the extent such information or documents are not otherwise publicly available, upon written request from the Representative,
furnish to the Representative 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 securities, and, to the extent such information or documents are not otherwise
publicly available, upon written request from the Representative, promptly furnish to the Representative: (i) a copy of such registration
statements, financial statements and periodic and special reports as the Company shall be required to file with the Commission
and from time to time furnishes generally to holders of any such class of its securities in their capacities as such; and (ii)
such additional documents and information with respect to the Company and the affairs of any future subsidiaries of the Company
as the Representative may from time to time reasonably request, all subject to the execution of a satisfactory confidentiality
agreement. Any registration statements, financial statements, periodic and special reports or other additional documents referred
to in the preceding sentence filed or furnished on the Commission’s EDGAR website and publicly available will be considered
furnished for the purposes of this Section 4(l).
(m)
Filings. The Company will file with the Commission such reports as may be required by Rule 463 under the Securities
Act.
(n)
Emerging Growth Company. The Company will promptly notify the Representative if the Company ceases to be an Emerging
Growth Company at any time prior to the later of (i) completion of the distribution of Units within the meaning of the Securities
Act and (ii) completion of the 180-day restricted period referred to in Section 4(h) hereof.
(o)
Exchange Act Registration. For a period commencing on the initial effective date of the Registration Statement and
ending five years from the date of the consummation of the Business Combination or until such earlier time at which the Liquidation
occurs, the Company will use its best efforts to maintain the registration of the Ordinary Shares (or such other security into
which such Ordinary Shares may be exchanged in connection with a Business Combination) under the provisions of the Exchange Act,
except after giving effect to a going private transaction after the completion of an initial Business Combination. During such
period, the Company will not deregister the Ordinary Shares under the Exchange Act (except in connection with an exchange of the
Ordinary Shares pursuant to a Business Combination or a going private transaction after the completion of an initial Business Combination)
without the prior written consent of the Representative.
(p)
Current Report on Form 8-K. The Company shall, on the date hereof, retain its independent registered public accounting
firm to audit the balance sheet of the Company as of the Closing Date (the “Audited Balance Sheet”) reflecting
the receipt by the Company of the proceeds of the Offering on the Closing Date. As soon as the Audited Balance Sheet becomes available,
the Company shall promptly, but not later than four business days after the Closing Date, file a Current Report on Form 8-K with
the Commission, which Current Report shall contain the Company’s Audited Balance Sheet. Additionally, upon the Company’s
receipt of the proceeds from the exercise of all or any portion of the option provided for in Section 2(b) hereof, the Company
shall promptly, but not later than four business days after the receipt of such proceeds, file a Current Report on Form 8-K with
the Commission, which report shall disclose the Company’s sale of the Option Units and its receipt of the proceeds therefrom,
unless the receipt of such proceeds are reflected in the Current Report on Form 8-K referenced in the immediately prior sentence.
(q)
Quarterly Review. For a period commencing on the initial effective date of the Registration Statement and ending
five years from the date of the consummation of the Business Combination or until such earlier time at which the Liquidation occurs
or the Ordinary Shares and Warrants cease to be publicly traded, the Company, at its expense, shall cause its regularly engaged
independent registered public accounting firm to review (but not audit) the Company’s financial statements for each of the
first three fiscal quarters prior to the announcement of quarterly financial information, the filing of the Company’s Form
10-Q quarterly report and the mailing, if any, of quarterly financial information to stockholders.
(r)
Rule 462(b) Registration Statement. If the Company elects to rely upon Rule 462(b), the Company shall file a Rule
462(b) Registration Statement with the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date
of this Agreement, and the Company shall at the time of filing either pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the payment of such fee pursuant to Rule 111(b) under the Securities
Act.
(s)
Transfer and Warrant Agent. For a period commencing on the initial effective date of the Registration Statement and
ending five years from the date of the consummation of the Business Combination or until such earlier time at which the Liquidation
occurs or the Ordinary Shares and Warrants cease to be publicly traded, the Company shall retain a transfer and warrant agent.
(t)
Initial Business Combination. The Company will not consummate an initial Business Combination with any entity that
is affiliated with the Sponsor or any of the Company’s officers or directors unless it or a committee of independent and
disinterested members of its board of directors obtains an opinion from an independent investment banking firm that is a member
of FINRA, or from an independent accounting firm, that such initial Business Combination is fair to the Company from a financial
point of view. The Company shall not pay the Sponsor or its affiliates or any of the Company’s officers, directors or any
of their respective affiliates any fees or compensation of any kind for services rendered to the Company prior to, or in connection
with, the consummation of an initial Business Combination; provided, however, that (x) such officers, directors and
affiliates (i) may receive reimbursement for out-of-pocket expenses incurred by them in connection with activities on the Company’s
behalf related to identifying, investigating, negotiating and completing an initial Business Combination and (ii) may be repaid
loans as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus and (y) an affiliate of the
Sponsor may receive up to $50,000 per month pursuant to the Administrative Services Agreement for office space, utilities, administrative
and support services provided to the Company, none of which payments described in (x) or (y) will be made from the proceeds held
in the Trust Account prior to completion of the initial Business Combination.
(u)
FINRA Submissions. For a period of 60 days following the effective date of the Registration Statement, in the event
any person or entity (regardless of any FINRA affiliation or association) is engaged to assist the Company in its search for a
merger candidate or to provide any other merger and acquisition services, or has provided or will provide any investment banking,
financial, advisory and/or consulting services to the Company, the Company agrees that it shall promptly provide to FINRA (via
a FINRA submission), the Representative and its counsel a notification prior to entering into the agreement or transaction relating
to a potential Business Combination: (i) the identity of the person or entity providing any such services; (ii) complete details
of all such services and copies of all agreements governing such services prior to entering into the agreement or transaction;
and (iii) justification as to why the value received by any person or entity for such services is not underwriting compensation
for the Offering. The Company also agrees that proper disclosure of such arrangement or potential arrangement will be made in the
tender offer materials or proxy statement, as applicable, which the Company may file in connection with the Business Combination
for purposes of offering redemption of shares held by its stockholders or for soliciting stockholder approval, as applicable.
(v)
Affiliates or Associated Persons of Members. The Company shall advise FINRA, the Representative and its counsel if
it is aware that any 10% or greater stockholder of the Company becomes an affiliate or associated person of a Member participating
in the distribution of the Units.
(w)
Trust Account Investments. The Company shall cause the proceeds of the Offering and the sale of the Private Placement
Units to be held in the Trust Account to be invested only in United States government treasury bills with a maturity of 180 days
or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act as set forth in the
Trust Agreement and disclosed in the Pricing Disclosure Package and the Prospectus. The Company will otherwise conduct its business
in a manner so that it will not become subject to the Investment Company Act. Furthermore, once the Company consummates an initial
Business Combination, it will not be required to register as an investment company under the Investment Company Act.
(x)
Use of Funds in Trust Account. During the period prior to the Company’s initial Business Combination or Liquidation,
the Company may instruct the Trustee to release from the Trust Account, (i) solely from interest income earned on the funds held
in the Trust Account, the amounts necessary to pay taxes, if any, and (ii) to pay Public Stockholders who properly redeem their
Public Shares (as defined below) in connection with a stockholder vote to approve an amendment to the Company’s Amended and
Restated Memorandum and Articles of Association (x) to modify the substance or timing of the Company’s obligation to redeem
100% of the outstanding Public Shares if the Company does not consummate an initial Business Combination within 24 months from
the closing of the Offering or (y) which adversely affects the rights of Public Stockholders. Otherwise, all funds held in the
Trust Account (including any interest income earned on the amounts held in the Trust Account (net of taxes payable thereon in accordance
with the preceding sentence)) will remain in the Trust Account until the earlier of the consummation of the Company’s initial
Business Combination and the Liquidation; provided, however, that in the event of the Liquidation, up to $100,000
of interest income may be released to the Company if the proceeds of the Offering held by the Company outside of the Trust Account
are not sufficient to cover the costs and expenses associated with implementing the Company’s plan of dissolution.
(y)
Availability of Authorized but Unissued Securities. The Company will reserve and keep available that maximum number
of its authorized but unissued securities that are issuable upon the exercise of any of the Warrants and the Private Placement
Warrants outstanding from time to time and the conversion of the Founder Shares.
(z)
No Additional Issuances prior to the Business Combination. Prior to the earlier of the consummation of an initial
Business Combination and the Liquidation, the Company shall not issue (other than in replacement for lost, stolen or mutilated
certificates) any Ordinary Shares, Warrants or any options or other securities convertible into Ordinary Shares, or any preferred
stock, in each case, that (1) receive funds from the Trust Account or (2) vote as a class with the Public Shares (a) on any initial
Business Combination or (b) to approve an amendment to the Company’s Amended and Restated Memorandum and Articles of Association
to (i) extend the time the Company has to consummate a Business Combination beyond 24 months from the Closing Date or (ii) amend
the foregoing provisions.
(aa)
Audit Committee Review. Prior to the earlier of the consummation of an initial Business Combination and the Liquidation,
the Company’s audit committee will review on a quarterly basis all payments made to the Sponsor, to the Company’s officers
or directors, or to the Company’s or any of such other persons’ respective affiliates.
(bb)
Penny Stock. The Company agrees that it will use commercially reasonable efforts to prevent the Company from becoming
subject to Rule 419 under the Securities 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 3a51-1 under the Exchange Act during such period.
(cc)
Internal Controls. To the extent required by Rule 13a-15(e) under the Exchange Act, the Company will maintain “disclosure
controls and procedures” (as defined under Rule 13a-15(e) under the Exchange Act) and a system of internal accounting
controls sufficient to provide reasonable assurances that (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.
(dd)
Maintenance of Listing. The Company will use commercially reasonable efforts to effect and maintain the listing of
(x) the Units and Warrants on the NYSE (or another national securities exchange) until the consummation of the Business Combination
or until such earlier time at which the Liquidation occurs, and (y) the Ordinary Shares on the NYSE (or another national securities
exchange) until five years from the date of the consummation of the Business Combination or until such earlier time at which Liquidation
occurs.
(ee)
Sarbanes Oxley. As soon as legally required to do so, the Company and its directors and officers, in their capacities
as such, shall take all actions necessary to comply with any applicable provisions of the Sarbanes-Oxley Act, including Section
402 related to loans and Sections 302 and 906 related to certifications, and to comply with the rules of the NYSE.
(ff)
Memorandum and Articles of Association. The Company shall not take any action or omit to take any action that would
cause the Company to be in breach or violation of its Amended and Restated Memorandum and Articles of Association.
(gg)
Consummate the Initial Business Combination. The Company, subject to any applicable provision of the Company’s
Amended and Restated Memorandum and Articles of Association, may consummate the initial Business Combination and conduct redemptions
of Public Shares for cash upon consummation of such Business Combination without a stockholder vote pursuant to Rule 13e-4 and
Regulation 14E under the Exchange Act, including the filing of tender offer documents with the Commission. Such tender offer documents
will contain substantially the same financial and other information about the initial Business Combination and the redemption rights
as is required under the Commission’s proxy rules and will provide each stockholder of the Company with the opportunity prior
to the consummation of the initial Business Combination to redeem the Ordinary Shares held by such stockholder for an amount of
cash equal to (A) the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of
the initial Business Combination, representing (x) the proceeds held in the Trust Account from the Offering and the sale of the
Private Placement Units and (y) any interest income earned on the funds held in the Trust Account (which interest shall be net
of taxes payable), divided by (B) the total number of Ordinary Shares sold as part of the Units in the Offering (the “Public
Shares”) then outstanding. If, however, a stockholder vote is required by law or applicable stock exchange listing
requirement in connection with the initial Business Combination, or the Company decides to hold a stockholder vote for business
or other reasons, the Company will submit such Business Combination to the Company’s stockholders for their approval (“Business
Combination Vote”). With respect to the initial Business Combination Vote, if any, each of the Sponsor and the Company’s
directors and officers has agreed to vote all of the Founder Shares and Public Shares it then holds, if any, in favor of the Company’s
initial Business Combination. If the Company seeks stockholder approval of the initial Business Combination, the Company will offer
to each Public Stockholder the right to have its shares redeemed in conjunction with a proxy solicitation pursuant to the proxy
rules of the Commission at a per share redemption price (the “Redemption Price”) equal to (I) the aggregate
amount then on deposit in the Trust Account as of two business days prior to the consummation of the initial Business Combination,
representing (1) the proceeds held in the Trust Account from the Offering and the sale of the Private Placement Units and (2) interest
income earned on the funds held in the Trust Account (which interest shall be net of any taxes payable), divided by (II) the total
number of Public Shares then outstanding. If the Company seeks stockholder approval of the initial Business Combination, the Company
may proceed with such Business Combination only if a majority of the outstanding shares voted by the stockholders at a duly held
stockholders meeting are voted to approve such Business Combination. If, after seeking and receiving such stockholder approval,
the Company elects to so proceed, it will redeem shares, at the Redemption Price, from those Public Stockholders who validly and
affirmatively requested such redemption. Only Public Stockholders who properly exercise their redemption rights, in accordance
with the applicable tender offer or proxy materials related to such Business Combination and the Amended and Restated Memorandum
and Articles of Association, shall be entitled to receive distributions from the Trust Account in connection with an initial Business
Combination, and the Company shall pay no distributions with respect to any other holders of shares of capital stock of the Company
in connection therewith. In the event that the Company does not effect a Business Combination by twenty-four months from the closing
of the Offering (or such later date as has been approved pursuant to a valid amendment to the Company’s Amended and Restated
Memorandum and Articles of Association), the Company will (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but not more than ten 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 (which interest
shall be net of taxes payable and less up to $100,000 of such net interest to pay dissolution expenses), divided by the number
of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders
(including the right to receive further liquidation distributions, if any), and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors,
dissolve and liquidate, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims
of creditors and the requirements of other applicable law. Only Public Stockholders holding Ordinary Shares included in the Units
shall be entitled to receive such redemption amounts and the Company shall pay no such redemption amounts or any distributions
in liquidation with respect to any other shares of capital stock of the Company. The Sponsor and the Company’s officers and
directors have agreed that they will not propose any amendment to the Company’s Amended and Restated Memorandum and Articles
of Association (A) to modify the substance or timing of the Company’s obligation to redeem 100% of the outstanding Public
Shares if the Company has not consummated a Business Combination within twenty-four months from the closing of the Offering or
(B) which adversely affects the rights of Public Stockholders, unless the Company offers to the Public Stockholders the right to
redeem their Public Shares in connection with such amendment, as described in the Pricing Disclosure Package and Prospectus.
(hh)
Business Combination Announcement. In the event that the Company desires or is required by an applicable law or regulation
to cause an announcement (a “Business Combination Announcement”) to be placed in The Wall Street Journal,
The New York Times or any other news or media publication or outlet or to be made via a public filing or submission with the Commission
announcing the consummation of an initial Business Combination that indicates that the Underwriters were the underwriters in the
Offering, the Company shall supply the Representative with a draft of the Business Combination Announcement and provide the Representative
with a reasonable advance opportunity to comment thereon, subject to the agreement of the Underwriters to keep confidential such
draft announcement in accordance with the Representative’s standard policies regarding confidential information.
(ii)
Deferred Discount Payment. Upon the consummation of the initial Business Combination, the Company will direct the
Trustee to pay the Representative (subject to the fifth and sixth sentences of this Section 4(ii)), on behalf of the Underwriters,
the Deferred Discount out of the proceeds of the Offering held in the Trust Account. The Underwriters shall have no claim to payment
of any interest earned on the portion of the proceeds held in the Trust Account representing the Deferred Discount. If the Company
fails to consummate its initial Business Combination within the time period required by its Amended and Restated Memorandum and
Articles of Association, the Deferred Discount will not be paid to the Representative and will, instead, be included in the Liquidation
distribution of the proceeds held in the Trust Account made to the Public Stockholders. In connection with any such Liquidation,
the Underwriters forfeit any rights or claims to the Deferred Discount.
(jj)
Forfeiture. Upon the earlier to occur of the expiration and termination of the Underwriters’ over-allotment
option, the Company shall cancel or otherwise effect the forfeiture of Founder Shares from the Sponsor, in an aggregate amount
equal to the number of Founder Shares determined by multiplying (a) 375,000 by (b) a fraction, (i) the numerator of which is 1,500,000
minus the number of Option Units purchased by the Underwriters upon the exercise of their over-allotment option, and (ii) the denominator
of which is 1,500,000. For the avoidance of doubt, if the Underwriters exercise their over-allotment option in full, the Company
shall not cancel or otherwise effect the forfeiture of the Founder Shares pursuant to this Section 4(jj).
(kk)
Written Testing-the-Waters Communication. If at any time following the distribution of any Written Testing-the-Waters
Communication, there occurred or occurs an event or development as a result of which such Written Testing-the-Waters Communication
included or would include any untrue statement of a material fact or omitted or would omit to state any material fact necessary
to make the statements therein in the light of the circumstances existing at that subsequent time, not misleading, the Company
will promptly (i) notify the Representative so that use of the Written Testing-the-Waters Communication may cease until it is amended
or supplemented; (ii) amend or supplement, at its own expense, such Written Testing-the-Waters Communication to eliminate or correct
such untrue statement or omission; and (iii) supply any amendment or supplement to the Representative in such quantities as may
be reasonably requested.
(ll)
Emerging Growth Company. The Company will promptly notify the Representative if the Company ceases to be an Emerging
Growth Company at any time prior to the later of (i) completion of the distribution of the Units within the meaning of the Securities
Act and (ii) completion of the 180-day restricted period referred to in Section 4(h) hereof.
(mm)
Delivery of Agreements. The Company will deliver to the Representative executed copies of the Trust Agreement, the
Warrant Agreement, the Founder’s Purchase Agreement, the Unit Purchase Agreement, the Registration Rights Agreement, the
Insider Letter and the Administrative Services Agreement.
(nn)
Trust Account Waiver. The Company will seek to have all vendors, service providers (other than its independent registered
public accounting firm), prospective target businesses or other entities with which it does business enter into an agreement waiving
any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of the Public Stockholders.
The Company may forego obtaining such waivers only if the Company’s management shall have determined that such third party’s
engagement would be significantly more beneficial to the Company than any alternative.
(oo)
Certification of Beneficial Ownership. The Company will deliver to each Underwriter (or its agent), on the date of
execution of this Agreement, a properly completed and executed Certification Regarding Beneficial Owners and Key Controllers of
Legal Entity Customers, together with copies of identifying documentation, and the Company undertakes to provide such additional
supporting documentation as each Underwriter may reasonably request in connection with the verification of the foregoing Certification.
5.
Certain Agreements of the Underwriters. Each Underwriter hereby represents and agrees that it is not subject to any
pending proceeding under Section 8A of the Securities Act with respect to the Offering (and will promptly notify the Company if
any such proceeding against it is initiated during the Prospectus Delivery Period).
6.
Conditions of Underwriters’ Obligations. The obligation of each Underwriter to purchase the Underwritten Units
on the Closing Date or the Option Units on the Additional Closing Date, as the case may be, as provided herein is subject to the
performance by the Company of its covenants and other obligations hereunder and to the following additional conditions:
(a)
Registration Compliance; No Stop Order. No order suspending the effectiveness of the Registration Statement shall
be in effect, and no proceeding for such purpose or pursuant to Section 8A under the Securities Act shall be pending before or
threatened by the Commission; the Prospectus shall have been timely filed with the Commission under the Securities Act and in accordance
with Section 4(a) hereof; and all requests by the Commission for additional information shall have been complied with to the
reasonable satisfaction of the Representative.
(b)
Representations and Warranties. The representations and warranties of the Company contained herein shall be true
and correct on the date hereof and on and as of the Closing Date or the Additional Closing Date, as the case may be; and the statements
of the Company and its officers made in any certificates delivered pursuant to this Agreement shall be true and correct on and
as of the Closing Date or the Additional Closing Date, as the case may be.
(c)
Material Adverse Change. No event or condition of a type described in Section 3(i) hereof shall have occurred
or shall exist, which event or condition is not described in the Pricing Disclosure Package (excluding any amendment or supplement
thereto) and the Prospectus (excluding any amendment or supplement thereto) and the effect of which in the judgment of the Representative
makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Units on the Closing Date or the Additional
Closing Date, as the case may be, on the terms and in the manner contemplated by this Agreement, the Pricing Disclosure Package
and the Prospectus.
(d)
Officer’s Certificate. The Representative shall have received on and as of the Closing Date or the Additional
Closing Date, as the case may be, a certificate of the chief financial officer or chief accounting officer of the Company and one
additional senior executive officer of the Company who is satisfactory to the Representative (i) confirming that such officers
have carefully reviewed the Registration Statement, the Pricing Disclosure Package and the Prospectus and, to the knowledge of
such officers, the representations set forth in Sections 3(b) and 3(c) hereof are true and correct, (ii) confirming that the
other representations and warranties of the Company in this Agreement are true and correct and that the Company has complied with
all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date
or the Additional Closing Date, as the case may be, and (iii) to the effect set forth in paragraphs (a) and (c) above.
(e)
Comfort Letters. On the date of this Agreement and on the Closing Date or the Additional Closing Date, as the case
may be, Marcum LLP shall have furnished to the Representative, at the request of the Company, letters, dated the respective dates
of delivery thereof and addressed to the Underwriters, in form and substance reasonably satisfactory to the Representative, containing
statements and information of the type customarily included in accountants’ “comfort letters” to underwriters
with respect to the financial statements and certain financial information contained in each of the Registration Statement, the
Pricing Disclosure Package and the Prospectus; provided, that the letter delivered on the Closing Date or the Additional Closing
Date, as the case may be, shall use a “cut-off” date no more than two business days prior to such Closing Date or such
Additional Closing Date, as the case may be.
(f)
Opinion and 10b-5 Statement of U.S. Counsel for the Company. Goodwin Procter LLP, counsel for the Company, shall
have furnished to the Representative, at the request of the Company, their written opinion and 10b-5 statement, dated the Closing
Date or the Additional Closing Date, as the case may be, and addressed to the Underwriters, in form and substance reasonably satisfactory
to the Representative.
(g)
Opinion of Cayman Islands Counsel for the Company. The Company shall have requested and caused Campbells, Cayman
Islands counsel for the Company, to have furnished to the Representative their opinion, dated the Closing Date and addressed to
the Representative. In rendering such opinion, such counsel may rely as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. References to the Prospectus in this paragraph (g) shall
also include any supplements thereto at the Closing Date.
(h)
Opinion and 10b-5 Statement of Counsel for the Underwriters. The Representative shall have received on and as of
the Closing Date or the Additional Closing Date, as the case may be, an opinion and 10b-5 statement, addressed to the Underwriters,
of Davis Polk & Wardwell LLP, counsel for the Underwriters, with respect to such matters as the Representative may reasonably
request, and such counsel shall have received such documents and information as they may reasonably request to enable them to pass
upon such matters.
(i)
No Legal Impediment to Issuance and Sale. No action shall have been taken and no statute, rule, regulation or order
shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as
of the Closing Date or the Additional Closing Date, as the case may be, prevent the issuance or sale of the Units; and no injunction
or order of any federal, state or foreign court shall have been issued that would, as of the Closing Date or the Additional Closing
Date, as the case may be, prevent the issuance or sale of the Units.
(j)
Good Standing. The Representative shall have received on and as of the Closing Date or the Additional Closing Date,
as the case may be, satisfactory evidence of the good standing of the Company in its jurisdiction of organization and its good
standing in such other jurisdictions as the Representative may reasonably request, in each case in writing or any standard form
of telecommunication from the appropriate governmental authorities of such jurisdictions.
(k)
Exchange Listing. The Units to be delivered on the Closing Date or the Additional Closing Date, as the case may be,
shall have been approved for listing on the NYSE, subject to official notice of issuance.
(l)
Delivery of Transaction Documents. On or prior to the Closing Date, the Company shall have delivered to the Representative
executed copies of the Trust Agreement, the Warrant Agreement, the Founder’s Purchase Agreement, the Unit Purchase Agreement,
the Registration Rights Agreement, the Insider Letter and the Administrative Services Agreement, and each of the Transaction Documents
shall be in full force and effect on the Closing Date or the Additional Closing Date, as the case may be.
(m)
Funding of Private Placement Units. At least one business day prior to the Closing Date or the Additional Closing
Date, as applicable, the Company shall have caused proceeds from the sale of the Private Placement Units to be deposited into the
Trust Account such that the cumulative amount deposited into the Trust Account as of such Closing Date or Additional Closing Date
shall equal the product of the number of Units sold in the public offering as of such Closing Date or Additional Closing Date and
the public offering price per Unit as set forth on the cover of the Prospectus.
(n)
Additional Documents. On or prior to the Closing Date or the Additional Closing Date, as the case may be, the Company
shall have furnished to the Representative such further certificates and documents as the Representative may reasonably request.
All opinions, letters,
certificates and evidence mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions
hereof only if they are in form and substance reasonably satisfactory to counsel for the Underwriters.
7.
Indemnification and Contribution.
(a)
Indemnification of the Underwriters. The Company agrees to indemnify and hold harmless each Underwriter, its affiliates,
directors and officers and each person, if any, who controls such Underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without
limitation, legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as
such fees and expenses are incurred), joint or several, that arise out of, or are based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary in order to make the statements therein, not misleading, or
(ii) any untrue statement or alleged untrue statement of a material fact contained in the Prospectus (or any amendment or supplement
thereto), any Preliminary Prospectus, any Written Testing-the-Waters Communication, any road show as defined in Rule 433(h) under
the Securities Act (a “road show”) or any Pricing Disclosure Package (including any Pricing Disclosure
Package that has subsequently been amended), or caused by any omission or alleged omission to state therein a material fact necessary
in order to make the statements therein, in light of the circumstances under which they were made, not misleading, in each case
except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the Representative expressly for use therein, it being understood
and agreed that the only such information furnished by any Underwriter consists of the information described as such in paragraph
(b) below.
(b)
Indemnification of the Company. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless
the Company, its directors, its officers 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 to the same extent as the indemnity set
forth in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are
based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with
any information relating to such Underwriter furnished to the Company in writing by such Underwriter through the Representative
expressly for use in the Registration Statement, the Prospectus (or any amendment or supplement thereto), any Preliminary Prospectus,
any Written Testing-the-Waters Communication, any road show or any Pricing Disclosure Package (including any Pricing Disclosure
Package that has subsequently been amended), it being understood and agreed upon that the only such information furnished by any
Underwriter consists of the following information in the Prospectus furnished on behalf of each Underwriter: the [fourteenth and
fifteenth paragraphs] under the caption “Underwriting.”
(c)
Notice and Procedures. If any suit, action, proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against any person in respect of which indemnification may be sought pursuant to the
preceding paragraphs of this Section 7, such person (the “Indemnified Person”) shall promptly notify
the person against whom such indemnification may be sought (the “Indemnifying Person”) in writing; provided
that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under the preceding
paragraphs of this Section 7 except to the extent that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and provided, further, that the failure to notify the Indemnifying Person shall
not relieve it from any liability that it may have to an Indemnified Person otherwise than under the preceding paragraphs of this
Section 7. If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the
Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person (who
shall not, without the consent of the Indemnified Person, be counsel to the Indemnifying Person) to represent the Indemnified Person
and any others entitled to indemnification pursuant to this Section that the Indemnifying Person may designate in such proceeding
and shall pay the fees and expenses in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding,
as incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person
shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded that there may
be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person; or (iv)
the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests
between them. It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall be paid or reimbursed as they are incurred. Any
such separate firm for any Underwriter, its affiliates, directors and officers and any control persons of such Underwriter shall
be designated in writing by J.P. Morgan Securities LLC and any such separate firm for the Company, its directors, its officers
who signed the Registration Statement and any control persons of the Company shall be designated in writing by the Company. The
Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled
with such consent, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by
reason of such settlement. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested that
an Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as contemplated by this paragraph, the
Indemnifying Person shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement
is entered into more than 30 days after receipt by the Indemnifying Person of such request and (ii) the Indemnifying Person shall
not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement. No Indemnifying
Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding
in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by
such Indemnified Person, unless such settlement (x) includes an unconditional release of such Indemnified Person, in form and substance
reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding
and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any
Indemnified Person.
(d)
Contribution. If the indemnification provided for in paragraphs (a) or (b) above is unavailable to an Indemnified
Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person
under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable
by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company, on the one hand, and the Underwriters on the other, from the Offering
or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company, on the one
hand, and the Underwriters on the other, in connection with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one
hand, and the Underwriters on the other, shall be deemed to be in the same respective proportions as the net proceeds (before deducting
expenses) received by the Company from the sale of the Units and the total underwriting discounts and commissions received by the
Underwriters in connection therewith, in each case as set forth in the table on the cover of the Prospectus, bear to the aggregate
offering price of the Units. The relative fault of the Company, on the one hand, and the Underwriters on the other, shall be determined
by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties’
relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
(e)
Limitation on Liability. The Company and the Underwriters agree that it would not be just and equitable if contribution
pursuant to paragraph (d) above were determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred
to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages
and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses incurred by such Indemnified Person in connection with any such action or claim. Notwithstanding the provisions
of paragraphs (d) and (e), in no event shall an Underwriter be required to contribute any amount in excess of the amount
by which the total underwriting discounts and commissions received by such Underwriter with respect to the Offering exceeds the
amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’
obligations to contribute pursuant to paragraphs (d) and (e) are several in proportion to their respective purchase obligations
hereunder and not joint.
(f)
Non-Exclusive Remedies. The remedies provided for in this Section 7 are not exclusive and shall not limit any
rights or remedies which may otherwise be available to any Indemnified Person at law or in equity.
8.
Effectiveness of Agreement. This Agreement shall become effective as of the date first written above.
9.
Termination. This Agreement may be terminated in the absolute discretion of the Representative, by notice to the
Company, if after the execution and delivery of this Agreement and on or prior to the Closing Date or, in the case of the Option
Units, prior to the Additional Closing Date (i) trading generally shall have been suspended or materially limited on or by any
of the New York Stock Exchange or The Nasdaq Stock Market; (ii) trading of any securities issued or guaranteed by the Company shall
have been suspended on any exchange or in any over-the-counter market; (iii) a general moratorium on commercial banking activities
shall have been declared by federal or New York State authorities; or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis, either within or outside the United States, that,
in the judgment of the Representative, is material and adverse and makes it impracticable or inadvisable to proceed with the offering,
sale or delivery of the Units on the Closing Date or the Additional Closing Date, as the case may be, on the terms and in the manner
contemplated by this Agreement, the Pricing Disclosure Package and the Prospectus.
10.
Defaulting Underwriter.
(a)
If, on the Closing Date or the Additional Closing Date, as the case may be, any Underwriter defaults on its obligation to
purchase the Units that it has agreed to purchase hereunder on such date, the non-defaulting Underwriters may in their discretion
arrange for the purchase of such Units by other persons satisfactory to the Company on the terms contained in this Agreement. If,
within 36 hours after any such default by any Underwriter, the non-defaulting Underwriters do not arrange for the purchase of such
Units, then the Company shall be entitled to a further period of 36 hours within which to procure other persons satisfactory to
the non-defaulting Underwriters to purchase such Units on such terms. If other persons become obligated or agree to purchase the
Units of a defaulting Underwriter, either the non-defaulting Underwriters or the Company may postpone the Closing Date or the Additional
Closing Date, as the case may be, for up to five full business days in order to effect any changes that in the opinion of counsel
for the Company or counsel for the Underwriters may be necessary in the Registration Statement and the Prospectus or in any other
document or arrangement, and the Company agrees to promptly prepare any amendment or supplement to the Registration Statement and
the Prospectus that effects any such changes. As used in this Agreement, the term “Underwriter” includes,
for all purposes of this Agreement unless the context otherwise requires, any person not listed in Schedule 1 hereto that, pursuant
to this Section 10, purchases Units that a defaulting Underwriter agreed but failed to purchase.
(b)
If, after giving effect to any arrangements for the purchase of the Units of a defaulting Underwriter or Underwriters by
the non-defaulting Underwriters and the Company as provided in paragraph (a) above, the aggregate number of Units that remain
unpurchased on the Closing Date or the Additional Closing Date, as the case may be, does not exceed one-eleventh of the aggregate
number of Units to be purchased on such date, then the Company shall have the right to require each non-defaulting Underwriter
to purchase the number of Units that such Underwriter agreed to purchase hereunder on such date plus such Underwriter’s pro
rata share (based on the number of Units that such Underwriter agreed to purchase on such date) of the Units of such defaulting
Underwriter or Underwriters for which such arrangements have not been made.
(c)
If, after giving effect to any arrangements for the purchase of the Units of a defaulting Underwriter or Underwriters by
the non-defaulting Underwriters and the Company as provided in paragraph (a) above, the aggregate number of Units that remain
unpurchased on the Closing Date or the Additional Closing Date, as the case may be, exceeds one-eleventh of the aggregate amount
of Units to be purchased on such date, or if the Company shall not exercise the right described in paragraph (b) above, then
this Agreement or, with respect to any Additional Closing Date, the obligation of the Underwriters to purchase Units on the Additional
Closing Date, as the case may be, shall terminate without liability on the part of the non-defaulting Underwriters. Any termination
of this Agreement pursuant to this Section 10 shall be without liability on the part of the Company, except that the Company
will continue to be liable for the payment of expenses as set forth in Section 11 hereof and except that the provisions of
Section 7 hereof shall not terminate and shall remain in effect.
(d)
Nothing contained herein shall relieve a defaulting Underwriter of any liability it may have to the Company or any non-defaulting
Underwriter for damages caused by its default.
11.
Payment of Expenses.
(a)
Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, the Company
will pay or cause to be paid all costs and expenses incident to the performance of its obligations hereunder, including without
limitation, (i) the costs incident to the authorization, issuance, sale, preparation and delivery of the Units and any taxes payable
in that connection; (ii) the costs incident to the preparation, printing and filing under the Securities Act of the Registration
Statement, the Preliminary Prospectus, any Pricing Disclosure Package and the Prospectus (including all exhibits, amendments and
supplements thereto) and the distribution thereof; (iii) the costs of reproducing and distributing each of the Transaction Documents;
(iv) the fees and expenses of the Company’s counsel and independent accountants; (v) the fees and expenses incurred in connection
with the registration or qualification and determination of eligibility for investment of the Units under the laws of such jurisdictions
as the Representative may designate and the preparation, printing and distribution of a Blue Sky Memorandum (including the related
fees and expenses of counsel for the Underwriters, not to exceed $10,000); (vi) the cost of preparing stock certificates; (vii)
the costs and charges of any transfer agent, trustee, warrant agent and registrar; (viii) all expenses and application fees incurred
in connection with any filing with, and clearance of the offering by, FINRA (including the reasonable and documented fees and expenses
of counsel for the Underwriters relating to such filings up to $25,000); (ix) all expenses incurred by the Company in connection
with any “road show” presentation to potential investors; and (x) all expenses and application fees related
to the listing of the Units on the NYSE.
(b)
(b) If (i) this Agreement is terminated pursuant to Section 9 (other than clauses (iii) and (iv)), (ii)
the Company for any reason fails to tender the Units for delivery to the Underwriters or (iii) the Underwriters decline to purchase
the Units for any reason permitted under this Agreement, the Company agrees to reimburse the Underwriters for all out-of-pocket
costs and expenses (including the fees and expenses of their counsel) reasonably incurred by the Underwriters in connection with
this Agreement and the Offering.
12.
Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and the officers and directors and any controlling persons referred to herein, and the affiliates
of each Underwriter referred to in Section 7 hereof. Nothing in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein.
No purchaser of Units from any Underwriter shall be deemed to be a successor merely by reason of such purchase.
13.
Survival. The respective indemnities, rights of contribution, representations, warranties and agreements of the Company
and the Underwriters contained in this Agreement or made by or on behalf of the Company or the Underwriters pursuant to this Agreement
or any certificate delivered pursuant hereto shall survive the delivery of and payment for the Units and shall remain in full force
and effect, regardless of any termination of this Agreement or any investigation made by or on behalf of the Company or the Underwriters
or the directors, officers, controlling persons or affiliates referred to in Section 7 hereof.
14.
Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise expressly provided, the term “affiliate”
has the meaning set forth in Rule 405 under the Securities Act; and (b) the term “business day” means
any day other than a day on which banks are permitted or required to be closed in New York City; and (c) the term “Liquidation”
means the distributions of the Trust Account to the Public Stockholders in connection with the redemption of the Ordinary Shares
held by the Public Stockholders pursuant to the terms of the Company’s Amended and Restated Memorandum and Articles of Association,
as amended, if the Company fails to consummate a Business Combination with the time period provided therein.
15.
Compliance with USA Patriot Act. In accordance with the requirements of the USA Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)), the Underwriters are required to obtain, verify and record information that identifies
their respective clients, including the Company, which information may include the name and address of their respective clients,
as well as other information that will allow the Underwriters to properly identify their respective clients.
16.
Miscellaneous.
(a)
Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly
given if mailed or transmitted and confirmed by any standard form of telecommunication.
Notices to the Underwriters shall be given
to the Representative:
J.P. Morgan Securities LLC
383 Madison Avenue
New York, New York 10179 (fax: (212) 622-8358)
Attention: Equity Syndicate Desk
with a copy to:
Davis Polk & Wardwell LLP,
450 Lexington Avenue
New York, New York 10017 (fax: (212) 701-5322)
Attention: Deanna L. Kirkpatrick and Roshni Banker Cariello
Notices to the Company shall be given to it at:
Consonance-HFW Acquisition Corp.
1 Palmer Square, Suite 305
Princeton, NJ 08540
Attention: Gad Soffer
with a copy to:
Goodwin Procter LLP
100 Northern Avenue
Boston, Massachusetts 02210 (fax: 617-523-1231)
Attention: Jocelyn Arel
(b)
Governing Law. This Agreement and any claim, controversy or dispute arising under or related to this Agreement shall
be governed by and construed in accordance with the laws of the State of New York.
(c)
Judgment Currency. The Company agrees to indemnify each Underwriter, its directors, officers, affiliates and each
person, if any, who controls such Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, against any loss incurred by such Underwriter as a result of any judgment or order being given or made for any amount due
hereunder and such judgment or order being expressed and paid in a currency (the “Judgment Currency”)
other than U.S. dollars and as a result of any variation as between (i) the rate of exchange at which the U.S. dollar amount is
converted into the Judgment Currency for the purpose of such judgment or order, and (ii) the rate of exchange at which such indemnified
person is able to purchase U.S. dollars with the amount of the Judgment Currency actually received by the indemnified person. The
foregoing indemnity shall constitute a separate and independent obligation of the Company and shall continue in full force and
effect notwithstanding any such judgment or order as aforesaid. The term “rate of exchange” shall include any premiums
and costs of exchange payable in connection with the purchase of, or conversion into, the relevant currency.
(d)
Waiver of Immunity. To the extent that the Company has or hereafter may acquire any immunity (sovereign or otherwise)
from jurisdiction of any court of (i) the Cayman Islands, or any political subdivision thereof, (ii) the United States or the State
of New York, (iii) any jurisdiction in which it owns or leases property or assets or from any legal process (whether through service
of notice, attachment prior to judgment, attachment in aid of execution, execution, set-off or otherwise) with respect to themselves
or their respective property and assets or this Agreement, the Company hereby irrevocably waives such immunity in respect of its
obligations under this Agreement to the fullest extent permitted by applicable law.
(e)
Submission to Jurisdiction. The Company hereby submits to the exclusive jurisdiction of the U.S. federal and New
York state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby. The Company waives any objection which it may now or hereafter have to the laying
of venue of any such suit or proceeding in such courts. The Company agrees that final judgment in any such suit, action or proceeding
brought in such court shall be conclusive and binding upon the Company and may be enforced in any court to the jurisdiction of
which Company is subject by a suit upon such judgment.
(f)
Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY SUIT OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(g)
Recognition of the U.S. Special Resolution Regimes.
(i)
In the event that any Underwriter that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution
Regime, the transfer from such Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will
be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement,
and any such interest and obligation, were governed by the laws of the United States or a state of the United States.
(ii)
In the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to
a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against such Underwriter
are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution
Regime if this Agreement were governed by the laws of the United States or a state of the United States.
As
used in this Section 16(g):
“BHC Act Affiliate”
has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12
U.S.C. § 1841(k).
“Covered Entity”
means any of the following:
(i) a
“covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
(ii) a
“covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b);
or
(iii) a
“covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right”
has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1,
as applicable.
“U.S. Special Resolution
Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title
II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.
(h)
Counterparts. This Agreement may be signed in counterparts (which may include counterparts delivered by any standard
form of telecommunication), each of which shall be an original and all of which together shall constitute one and the same instrument.
(i)
Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent or approval to
any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.
(j)
Headings. The headings herein are included for convenience of reference only and are not intended to be part of,
or to affect the meaning or interpretation of, this Agreement.
(k)
Integration. This Agreement supersedes all prior agreements and understandings (whether written or oral) between
the Company and the Underwriters, or any of them, with respect to the subject matter hereof.
If the foregoing is in
accordance with your understanding, please indicate your acceptance of this Agreement by signing in the space provided below.
| |
Very truly yours, |
| |
|
| |
CONSONANCE-HFW ACQUISITION CORP. |
| |
|
| |
By: |
|
| |
|
Name: Gad Soffer |
| |
|
Title: Chief Executive Officer |
[Signature Page
to Underwriting Agreement]
Accepted: As of the date first written above
J.P. MORGAN SECURITIES LLC
For
itself and on behalf of the
several Underwriters listed
in Schedule 1 hereto.
|
J.P. MORGAN SECURITIES LLC
|
| By: |
|
|
| |
Authorized Signatory |
|
[Signature Page
to Underwriting Agreement]
SCHEDULE 1
| Underwriter | |
Number of Units | |
| J.P. Morgan Securities LLC | |
| | |
| Total | |
| 10,000,000 | |
ANNEX A
Pricing Information Provided Orally by Underwriters
The initial public offering price per Unit
for the Units is $10.00.
The
number of Units purchased by the Underwriters is [10,000,000].
ANNEX B
Written Testing-the-Waters Communications
Reference is made to the materials used in the testing the waters
presentation made to potential investors by the Company, to the extent such materials are deemed to be a “written communication”
within the meaning of Rule 405 under the Securities Act.
Exhibit 3.1
Consonance-HFW Acquisition Corp.
Memorandum
and Articles of Association
Floor 4, Willow House, Cricket Square
Grand Cayman KY1-9010
Cayman Islands
campbellslegal.com
(19037-33624)
Consonance-HFW Acquisition Corp.
Companies Law (as revised)
Company Limited by Shares
Memorandum
of Association
The name of the Company
is Consonance-HFW Acquisition Corp.
The registered
office of the Company will be situate at the offices of Campbells Corporate Services Limited, Floor 4, Willow House, Cricket Square,
Grand Cayman KY1-9010, Cayman Islands or such other place as the Directors may from time to time decide.
| 3.1 | The objects for which the Company is established are unrestricted and the Company shall have full
power and authority to carry out any object not prohibited by law as provided by Section 7(4) of the Companies Law (as revised)
as amended and in particular but without limitation: |
| (a) | To carry on the business of an investment company and for that purpose to purchase, subscribe for,
acquire, hold and deal either in the name of the Company or in that of any nominee, in shares, stocks, debentures, bonds, securities
and obligations generally of any government, company, corporation or body; and to promote, finance, advance money on hire purchase
or otherwise assist any company or companies, whether corporate or incorporate, or persons as may be thought fit; and to act as
agents for the issue and placing of, and to underwrite shares, debentures and other securities or obligations. |
| (b) | To carry on the business of financiers, capitalists, financial agents, bill discounters and company
promoters; to carry on business as mortgage brokers and insurance agents, and to undertake and carry on any business transaction
or obligation commonly undertaken or carried on by financiers, company promoters, concessionaires, contractors, or merchants, and
generally to enter into, assist or participate in financial, commercial, mercantile, industrial and other undertakings and business
of all kinds and to carry on, develop and extend the same, or sell, dispose of and deal with or otherwise turn the same to account. |
| (c) | To acquire by original subscription, tender, purchase or otherwise and hold, sell deal with or dispose of any shares, stocks,
debentures, debenture stocks, bonds, obligations and securities guaranteed by any company constituted or carrying on business in
any part of the world and debentures, debenture stock, bonds, obligations and securities guaranteed by any government or authority,
municipal, local or otherwise, whether at home or abroad, and to subscribe for the same either conditionally or otherwise and to
guarantee the subscription thereof and to exercise and enforce all rights and powers conferred by the ownership thereof. |
| (d) | To purchase or otherwise acquire, hold, pledge, turn to account in any manner, import, export,
sell, distribute or otherwise dispose of, and generally to deal in commodities and products (including any future interest therein)
and merchandise, articles of commerce, materials, personal property and real property of every kind, character and description
whatsoever, and wheresoever situated, and any interest therein, at any place or places in the Cayman Islands or abroad, either
as principal or as a factor or broker, or as a commercial, sales, business or financial agent or representative, general or special,
or in any other capacity whatsoever for its own account or for the account of any domestic or foreign person or public authority,
and in connection therewith or otherwise to acquire and hold membership in or otherwise secure trading privileges on any board
of trade, exchange or other similar institution where any such products or commodities or personal or real property are dealt in,
and to comply with the rules of any such institution. |
| (e) | To engage in any mercantile, manufacturing or trading business of any kind or character whatsoever,
within or without the Cayman Islands and in any part of the world, and to do all things incidental to such business. |
| (f) | To purchase, sell, hold, take on lease, or in exchange, or otherwise acquire and hold any lands
or buildings wherever situate, or rights or interests therein or connected therewith, and to manage or let the same or any part
thereof for any period, and at such rent and on such conditions as the Company shall think fit, or to develop the same or any part
thereof. |
| (g) | To finance and assist persons purchasing or taking leases from or otherwise having dealings with
the Company. |
| (h) | To purchase, sell, take in exchange, charter, hire, build, construct or otherwise acquire and to
own, work, manage, and to deal in and trade with steam, diesel, sailing, motor and other ships, trawlers, drifters, tugs, vessels,
aircraft and motor and other vehicles with all necessary and convenient equipment, engines, tackle, gear, furniture, and stores,
or any interests in ships, vessels, aircraft, motor and other vehicles, and to maintain, repair, fit out, refit, improve, insure,
alter, sell, exchange, or let out on hire or hire purchase, or charter or otherwise deal with and dispose of any of the ships,
vessels, aircraft and vehicles, or any of the engines, tackle, gear, furniture, equipment and stores of the Company. |
| (i) | To undertake and carry on all or any of the business or businesses of ship owners, ship brokers,
shipping agents, aircraft owners, brokers or agents and insurance brokers, underwriters, ship and aircraft managers, carriers by
land, water and air transport, ship builders, ship repairers, and generally to carry on the said business or businesses in all
their branches, and to carry on the said business or businesses either as principals or agents or on commission or otherwise and
to undertake and execute agencies and commissions of all kinds. |
| (j) | To receive money on loan and borrow or raise money in such manner as the Company shall think fit
and in particular by the issue of bonds, debentures, or debenture stock (perpetual or otherwise) and to secure the repayment of
any money borrowed, raised or owing by mortgage, charge or lien upon all or any of the property or assets of the Company (both
present and future) including its uncalled capital, and also by a similar mortgage, charge or lien to secure and guarantee the
performance by the Company or any other person or company of any obligation undertaken by the Company or any other person or company
as the case may be. |
| (k) | To grant pensions, allowances, gratuities and bonuses to officers or ex-officers, employees or
ex-employees of the Company or its predecessors in business or the dependents of such persons and to establish and maintain or
concur in maintaining trusts, funds or schemes (whether contributory or non-contributory) with a view to providing pensions or
other funds for any such persons as aforesaid or their dependents. |
| (l) | To do all or any of the above things in any part of the world, and either as principals, agents,
trustees, contractors or otherwise, and either alone or in conjunction with others, and either by or through agents, trustees,
sub-contractors or otherwise. |
| (m) | To do all such other things as are incidental or conducive to the above objects or any of them. |
| (n) | To engage in or carry on any other lawful trade, business or enterprise which may at any time appear
to the directors of the Company capable of being conveniently carried on in conjunction with any of the aforementioned businesses
or activities or which may appear to the directors of the Company likely to be profitable to the Company. |
| 3.2 | It is hereby declared that the objects of the Company as specified in each of the foregoing paragraphs
of this clause shall be separate and distinct objects of the Company and shall not be in any way limited by reference to any other
paragraphs or the order in which the same occur. |
Except as
prohibited or limited by the Companies Law (as revised) (as amended from time to time), the Company shall have and be capable
of from time to time and all times exercising any and all of the powers at any time or from time to time exercisable by a
natural person or body corporate in doing in any part of the world whether as principal, agent, contractor or otherwise
whatever may be considered by it necessary for the attainment of its objects and whatever else may be considered by it as
incidental or conducive thereto or consequential thereon, including, but without in any way restricting the generality of the
foregoing, the power to make any alterations or amendments to this memorandum of association and the articles of association
of the Company and the power to pay all expenses of and incidental to the promotion, formation and incorporation of the
Company; to register the Company to do business in any other jurisdiction; to sell, lease or dispose of any property of the
Company; to draw, make, accept, endorse, discount, execute and issue promissory notes, debentures, bills of exchange, bills
of lading, options, warrants and other negotiable or transferable instruments; to lend money or other assets and to act as
guarantors; to borrow or raise money on the security of the undertaking or on all or any of the assets of the Company or
without security; to invest monies of the Company in such manner as the directors determine; to promote other companies; to
sell the undertaking of the Company for cash or any other consideration; to distribute assets in specie to shareholders of
the Company; to make charitable or benevolent donations; to pay pensions or gratuities or provide other benefits in cash or
kind to directors, officers, employees, past or present, and their families; to carry on any trade or business and generally
to do all acts and things which, in the opinion of the Company or the directors, may be conveniently or profitably or
usefully acquired and dealt with, carried on, executed or done by the Company in connection with the business aforesaid.
The liability of each member
is limited to the amount from time to time unpaid on such member’s shares.
The capital of the Company is
USD 50,000.00 divided into 350,000,000.00 Class A Ordinary shares with a nominal or par value of USD 0.0001 each and 150,000,000.00
Class B Ordinary shares with a nominal or par value of USD 0.0001 each provided always that the Company acting by its board of
directors shall have power to purchase and/or redeem any or all of such shares and to increase or reduce the said capital of the
Company and to sub-divide or consolidate the said shares or any of them subject to the provisions of the Companies Law and the
articles of association and to issue all or any part of its capital whether original, purchased, redeemed, increased or reduced
with or without any preference, priority or special privilege or subject to any restrictions whatsoever and so that unless the
conditions of issue shall otherwise expressly provide every issue of shares whether stated to be ordinary, preference or otherwise
shall be subject to the powers on the part of the Company hereinbefore provided.
| 7 | Part VII of the Companies Law (as revised) |
If the Company
is registered as an exempted company in accordance with Part VII of the Companies Law (as revised), the Company will comply with
the provisions of such law relating to exempted companies and, subject to the provisions of the Companies Law and the Articles
of Association, it shall have the power to register by way of continuation as a body corporate limited by shares under the laws
of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.
The Company shall have power
to amend this memorandum of association by special resolution.
We are desirous of being formed into a
company in pursuance of this memorandum of association and we agree to take the number of shares in the capital of the Company
set opposite our name.
Name, Address and Description
of Subscriber |
Number of Shares Taken
by Subscriber |
| |
|
Campbells Nominees Limited
Floor 4, Willow House
Cricket Square
Grand Cayman KY1-9010
Cayman Islands |
1 |
Jennifer
Reilly
Authorised
Signatory
Tenecia
Ebanks
Witness
Date: 21 August 2020
Consonance-HFW
Acquisition Corp.
Companies
Law (as revised)
Company Limited
by Shares
Articles
of Association
| 1.1 | The regulations
contained in Table A of the Companies Law (as revised) do not apply to the Company and
the following are the articles of association of the Company. |
| (a) | the
following terms shall have the meanings set opposite if not inconsistent with the subject
context: |
| |
"Articles" |
means
the articles of association of the Company as originally framed as from time to time amended by Special Resolution; |
| |
|
|
| |
"Auditors" |
means
the persons for the time being performing the duties of auditors of the Company; |
| |
|
|
| |
"Company" |
means
the above-named Company; |
| |
|
|
| |
"debenture" |
includes
debenture stock, mortgages, bonds and any other securities of the Company whether constituting a charge on the assets of the
Company or not; |
| |
|
|
| |
"Directors" |
means
the persons for the time being occupying the position of directors of the Company, or as the case may be, the directors assembled
as a board and the term a "Director" shall be construed accordingly and shall, where the context admits, include
an alternate Director; |
| |
|
|
| |
"dividend" |
includes
a distribution or interim dividend or interim distribution; |
| |
|
|
| |
"Electronic
Record" |
has
the same meaning as in the Electronic Transactions Law; |
| |
|
|
| |
"Electronic Transactions Law" |
means
the Electronic Transactions Law of the Cayman Islands; |
| |
"Issue
Price" |
means
the total consideration payable for the issue of Shares including for the avoidance of doubt both the par value and any premium
payable; |
| |
|
|
| |
"Law" |
means
the Companies Law of the Cayman Islands; |
| |
|
|
| |
"member" |
has
the meaning assigned to it in the Law and the term “shareholder” shall also mean a member; |
| |
|
|
| |
"month" |
means
calendar month; |
| |
|
|
| |
"Ordinary
Resolution" |
means
a resolution: |
| (i) | passed
by simple majority of such members as, being entitled to do so, vote in person or, where
proxies are allowed, by proxy at a general meeting of the Company on a show of hands
or a poll and where a poll is taken regard shall be had in computing a majority to the
number of votes to which each member is entitled; or |
| (ii) | approved
in writing by all of the members entitled to vote at a general meeting of the Company
in one or more instruments each signed by one or more of the members and the effective
date of the resolution so adopted shall be the date on which the instrument, or the last
of such instruments, if more than one, is executed. |
| |
"paid-up" |
has
the meaning assigned to it in the Law currently meaning paid-up and/or credited as paid-up as to the nominal or par value
only excluding any premium payable in respect of the issue of any shares; |
| |
|
|
| |
"Register" |
means
the register of members of the Company required to be kept by the Law; and includes (except where otherwise stated or the
context otherwise requires) any branch or duplicate register of members; |
| |
|
|
| |
"registered
office" |
means
the registered office for the time being of the Company; |
| |
|
|
| |
"Seal" |
means
the common seal of the Company and includes every duplicate seal; |
| |
"Secretary" |
includes
an assistant secretary and any persons appointed to perform the duties of the secretary of the Company; |
| |
|
|
| |
"share" |
means
a share in the Company and shall, where the context so permits, includes fractions of a share in the Company; |
| |
|
|
| |
"Special
Resolution" |
has
the meaning assigned to it in the Law; |
| |
|
|
| |
"Treasury
Share" |
means
a share held in the name of the Company as a treasury share in accordance with the Law. |
| (b) | words
importing the singular include the plural and vice versa; |
| (c) | words
importing any gender include all genders; |
| (d) | words
importing persons include corporations as well as any other legal or natural person; |
| (e) | expressions
referring to writing shall, unless the contrary intention appears, be construed as including
references to printing, lithography, photography and other modes of representing or reproducing
words in a visible form and include all modes of representing or reproducing words in
visible form, including in the form of an Electronic Record; |
| (f) | references
to provisions of any law or regulation shall be construed as references to those provisions
as amended, modified, re-enacted or replaced; |
| (g) | any
phrase commencing with the words "including", "include", "in
particular" or any similar expression shall be deemed to be followed by the words
“without limitation; |
| (h) | headings
are inserted for reference only and shall be ignored in construing the Articles; |
| (i) | subject
as aforesaid, any words or expressions defined in the Law shall, if not inconsistent
with the subject or context hereof, bear the same meanings as in the Articles; |
| (j) | the
word “may” shall be construed as permissive and the word “shall”
shall be construed as imperative; |
| (k) | where
an Ordinary Resolution is expressed to be required for any purpose, a Special Resolution
is also effective for that purpose; and |
| (l) | where
any period to lapse under the provisions of these Articles is counted by a number of
days, the first day of such period counted shall be the day immediately after the notice
is given
or deemed to be given and the period of such notice shall be deemed to be complete and final at the end of the last day of such
period. The relevant then permitted actions shall be effected the day immediately following such last day. |
| 2 | Commencement
of Business |
| 2.1 | The business
of the Company may be commenced as soon after incorporation as the Directors shall see
fit, notwithstanding that part only of its shares may have been allotted. |
| 2.2 | The Directors
may pay, out of the capital or any other monies of the Company, all expenses incurred
in or about the formation and establishment of the Company including the expenses of
registration. |
| 4. | The Company may from time
to time alter or add to these Articles by passing a Special Resolution. |
| 4 | Issue
of Shares, Principal and Branch Registers and Offices |
| 4.1 | Subject
to the Law and to any direction that may be given by the Company in general meeting and
without prejudice to any special rights previously conferred on the holders of any existing
shares or class of shares, the shares of the Company shall be under the Directors’
general and unconditional authority to allot and/or issue (with or without rights of
renunciation), grant options over, offer or otherwise deal with or dispose of any unissued
shares of the Company (whether forming part of the original or any increased share capital),
either at a premium or at par, with or without preferred, deferred or other special rights
or restrictions, whether in regard to dividend, voting, return of capital or otherwise
and to such persons, on such terms and conditions, and at such times as the Directors
may decide and they may allot or otherwise dispose of them to such persons (including
any Director) on such terms and conditions and at such time as the Directors may determine. |
| 4.2 | The Company
may issue fractions of a share and, save where the Articles otherwise provide, a fraction
of a share shall rank pari passu and shall have proportionately the same rights as a
whole share of the same class. |
| 4.3 | The Directors
may accept non-cash consideration for the issue of Shares. |
| 4.4 | The Company
shall be prohibited from issuing shares, certificates or coupons in bearer form. |
| 4.5 | The Directors
may accept contributions to the capital of the Company otherwise than in consideration
of the issue of shares and the amount of any such contribution may be treated as share
premium (in which case it shall be subject to the provisions of the Law and these Articles applicable to share premium). |
| 4.6 | The Company
shall maintain or cause to be maintained the Register in accordance with the Law. |
| 4.7 | The Directors
may determine that the Company shall maintain one or more branch registers of members
in accordance with the Law provided that a duplicate of such branch registers shall be
maintained with the principal register in accordance with the Law. The Directors shall
also determine which register of members shall constitute the principal register and
which shall constitute the branch register or registers, and may vary such determination
from time to time. |
| 4.8 | Subject
to the provisions of the Law, the Company by resolution of the Directors may change the
location of its registered office. |
| 4.9 | The Company,
in addition to its registered office, may establish and maintain such other offices,
places of business and agencies in the Islands and elsewhere as the Directors may from
time to time determine. |
| 5.1 | The Directors
may, prior to the purchase, redemption or surrender of any share, determine that such
share shall be held as a Treasury Share. |
| 5.2 | The Directors
may resolve to cancel a Treasury Share or transfer a Treasury Share on such terms as
they think proper (including, without limitation, for nil consideration). |
| 6 | Redemption,
Purchase and Surrender of Own Shares |
| 6.1 | Subject
to the provisions of the Law, the memorandum of association of the Company and these
Articles: |
| (a) | shares
may be issued on the terms that they are, or at the option of the Company or the member
are, liable to be redeemed on such terms and in such manner as the Company, by resolution,
or as the Directors, before the issue of the shares, may determine; and |
| (b) | the
Company may purchase shares, including any redeemable shares, issued by the Company upon
the terms and in such manner as the Directors or the Company, by resolution, may from
time to time determine, and such authority may be general in respect of any number of
purchases, for a set period, or indefinite; |
| (c) | the
Company may make payment in respect of any redemption or purchase of its own shares
in any manner authorised by the Law, including out of capital |
| (d) | Subject
to the provisions of these Articles, the rights attaching to any issued shares may, by
Special Resolution, be varied so as to provide that such shares are, or at the option
of the Company or the member are, liable to be redeemed on such terms and in such manner
as the Company may, determine. |
| 6.2 | The Directors
may accept the surrender for no consideration of any fully paid-up share. |
| 6.3 | The Directors
may, when making a payment in respect of the redemption or purchase of shares, make such
payment in cash or in specie (or partly in one and partly in the other). |
| 6.4 | Upon
the date of redemption or purchase of a share, the holder shall cease to be entitled
to any rights in respect thereof (excepting always the right to receive (i) the price
therefor and (ii) any dividend which had been declared in respect thereof prior to such
redemption or purchase being effected) and accordingly his name shall be removed from
the Register with respect thereto and the share shall be cancelled. |
| 7 | Variation
of Rights of Shares |
| 7.1 | If at
any time the share capital of the Company is divided into different classes of shares,
the rights attached to any class (unless otherwise provided by the terms of issue of
the shares of that class) may, whether or not the Company is being wound up, be varied
with the consent in writing of the holders of at least two-thirds of the issued shares
of that class or with the sanction of a resolution passed at a meeting of the holders
of such class of shares by the holder or holders of at least two-thirds of such shares
present in person or by proxy at such meeting. To the extent not inconsistent with this
Article, the provisions of these Articles relating to general meetings shall apply to
every such meeting of the holders of one class of shares except that the necessary quorum
shall be one person holding or representing by proxy at least one third of the issued
shares of the class and that any holder of shares of the class present in person or by
proxy may demand a poll. |
| 7.2 | The rights
conferred upon the holders of the shares of any class issued with preferred or other
rights shall not, unless otherwise expressly provided by the terms of the issue of the
shares of that class, be deemed to be varied by the creation or issue of further shares
ranking pari passu therewith. |
| 7.3 | For the
purposes of a separate class meeting, the Directors may treat two or more or all the
classes of Shares as forming one class of Shares if the Directors consider that such
class of Shares would be affected in the same way by the proposals under consideration,
but in any other case shall treat them as separate classes of Shares. |
| 8 | Commission
on Sale of Shares |
5.
When permitted by law the Company may pay to any person a commission in consideration of his subscribing or agreeing to subscribe
(whether absolute or conditional) for any shares or debentures of the Company. Any such commission may be satisfied by the payment
of cash or in fully paid-up shares or debentures of the Company or partly in one way and partly in the other.
| 9 | Non-Recognition
of Trusts |
6.
Except as required by law or otherwise provided by these Articles, no person shall be recognised by the Company as holding any
shares upon any trust, and the Company shall not be bound by or be compelled in any way to recognise (even when having notice
thereof) any equitable, contingent, future or partial interest in any share or any interest in any fractional part of a share
or any other rights in respect of any share except an absolute right to the entirety thereof in the registered holder.
| 10 | Certificates
for Shares |
| 10.1 | Every
person whose name is entered as a member in the Register shall be entitled without payment
to receive one certificate for all his shares or several certificates each for one or
more of his shares. A certificate may be issued under Seal or executed in such other
manner as the Directors may prescribe. Provided that in respect of a share or shares
held jointly by several persons the Company shall not be bound to issue more than one
certificate and delivery of a certificate for a share to one of several joint holders
shall be sufficient delivery to all such holders. |
| 10.2 | Certificates
representing shares shall be in such form as shall be determined by the Directors. Such
certificates shall be signed by such person or persons as are authorised from time to
time by the Directors or by the Articles. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue, shall be
entered in the Register. All certificates surrendered to the Company for transfer shall
be cancelled and no new certificate shall be issued until the former certificate for
a like number of shares shall have been surrendered and cancelled. Notwithstanding the
foregoing, if a share certificate is defaced, lost or destroyed, it may be renewed on
such terms (if any) as to evidence and indemnity and the payment of out of pocket expenses
of the Company incurred in investigating evidence as the Directors think fit. |
| 11 | Joint
Ownership of Shares |
7.
If several persons are registered as joint holders of any shares they shall be severally as well as jointly liable for any
liability in respect of such shares, but the first named upon the Register shall, as regards service or notices, be
deemed the sole owner thereof. Any of such persons may give effectual receipt for any dividend or other distribution.
| 12.1 | The
Company shall have a first and paramount lien and charge on every share for all monies,
whether presently payable or not, called or payable at a fixed time in respect of that
share, and the Company shall also have a first and paramount lien and charge on all shares
standing registered in the name of a member (whether solely or jointly with others) for
all monies, liabilities or engagements presently owing by him or his estate to the Company
either alone or jointly with any other person, whether a member or not; but the Directors
may at any time declare any share to be wholly or in part exempt from the provisions
of this Article. The Company’s lien and charge, if any, on a share shall extend
to all dividends or other monies payable in respect thereof. The registration of a transfer
of any such share shall operate as a waiver of the Company’s lien and charge (if
any) thereon. |
| 12.2 | The
Company may sell, in such manner as the Directors think fit, any shares on which the
Company has a lien and charge, but no sale shall be made unless a sum in respect of which
the lien and charge exists is presently payable, nor until the expiration of fourteen
days after a notice in writing, stating and demanding payment of such part of the amount
in respect of which the lien and charge exists as is presently payable, has been given
to the registered holder or holders for the time being of the share, or the person, of
which the Company has notice, entitled thereto by reason of his death or bankruptcy. |
| 12.3 | To give
effect to any such sale the Directors may authorise some person to transfer the shares
sold to the purchaser thereof. The purchaser shall be registered as the holder of the
shares comprised in any such transfer, and he shall not be bound to see to the application
of the purchase money, nor shall his title to the shares be affected by any irregularity
or invalidity in the proceedings in reference to the sale. |
| 12.4 | The
proceeds of the sale shall be received by the Company and applied in payment of such
part of the amount in respect of which the lien and charge exists as is presently payable,
and the residue, if any, shall (subject to a like lien and charge for sums not presently
payable as existed upon the shares before the sale) be paid to the person entitled to
the shares prior to the sale. |
| 13.1 | The
Directors may from time to time make calls upon the members in respect of any monies
unpaid on their shares for the Issue Price (whether on account of the nominal value of
the shares or by way of premium or otherwise) and not by the conditions of allotment
thereof made payable at fixed times.
Each member shall (subject to receiving at least fourteen days’ notice specifying the time or times and place of payment)
pay to the Company at the time or times and place so specified the amount called on his shares. A call may be revoked or postponed
as the Directors may determine. A person upon whom a call is made shall
remain liable for calls made upon him notwithstanding the subsequent transfer of the shares in respect of which the call was made. |
| 13.2 | A call
shall be deemed to have been made at the time when the resolution of the Directors authorising
the call was passed and may be required to be paid by instalments. The joint holders
of a share shall be jointly and severally liable to pay all calls in respect thereof. |
| 13.3 | If a
sum called in respect of a share is not paid before or on the day appointed for payment
thereof, the person from whom the sum is due shall pay interest on the sum from the day
appointed for payment thereof to the time of actual payment at such rate fixed by the
terms of allotment or issue of the share or in the notice of the call or as the Directors
may otherwise determine, but the Directors shall be at liberty to waive payment of such
interest wholly or in part. |
| 13.4 | Any
sum which by the terms of issue of a share becomes payable on allotment or at any fixed
date (whether on account of the nominal value of the share or by way of premium or otherwise)
shall for the purposes of the Articles be deemed to be a call duly made and payable on
the date on which by the terms of issue the same becomes payable, and in case of non-payment
all the relevant provisions of the Articles as to payment of interest and expenses, forfeiture
or otherwise shall apply as if such sum had become payable by virtue of a call duly made
and notified. |
| 13.5 | The
Directors may, on the issue of shares, differentiate between the holders as to the amount
of calls or interest to be paid and the times of payment. |
| 13.6 | The
Directors may, if they think fit, receive from any member willing to advance the same,
all or any part of the monies uncalled and unpaid upon any shares held by him, and upon
all or any of the monies so advanced may (until the same would, but for such advance,
become payable) pay interest at such rate as may be agreed upon between the Directors
and the member paying such sum in advance. |
| 13.7 | No such
sum paid in advance of calls shall entitle the member paying such sum to any portion
of a dividend declared in respect of any period prior to the date upon which such sum
would but for such payment become presently payable. |
| 14.1 | Every
instrument of transfer shall be left at the registered office for registration, accompanied
by the certificate (if any) covering the shares to be transferred and such other evidence
as the Directors may require to prove the title of the transferor to, or his right to
transfer, the shares. |
| 14.2 | The
instrument of transfer of any share (which need not be under Seal) shall be signed by
or on behalf of the transferor and, unless the share is fully paid up or the transferee
otherwise consents or agrees thereto, by or on behalf of the transferee. The transferor
shall be deemed to remain the holder of the share until the name of the transferee is
entered in the Register in respect thereof. |
| 14.3 | Subject
to such of the restrictions of the Articles as may be applicable, any member may transfer
all or any of his shares by instrument in writing in any usual or common form or any
other form which the Directors may approve. Upon every transfer of shares the certificate
held by the transferor shall be given up to be cancelled and shall forthwith be cancelled
accordingly and a new certificate shall be issued without charge to the transferee in
respect of the shares transferred to him, and if any of the shares included in the certificate
so given up shall be retained by the transferor a new certificate in respect thereof
shall be issued to him without charge. The Company shall also retain the transfer. |
| 14.4 | The
Directors may, in their absolute discretion and without assigning any reason therefor,
refuse to register any transfer of any share, whether or not it is a fully paid up share
as to Issue Price. |
8.
Without limitation, the Directors may decline to recognise any instrument of transfer if:
9.
(a) the instrument of transfer is not accompanied by the certificate covering shares to which it relates, and/or such other
evidence as the Directors may require to prove the title of the transferor to, or his right to transfer, the shares; or
10.
(b) the instrument of transfer is in respect of more than one class of share.
| 14.5 | If the
Directors refuse to register a transfer they shall within two months after the date on
which the transfer was lodged with the Company send to the transferee notice of the refusal. |
| 14.6 | The
registration of transfers may be suspended at such times and for such periods as the
Directors may from time to time determine, provided always that such registration shall
not be suspended for more than thirty days in any year. |
| 15.1 | In case
of the death of a member, the survivor or survivors where the deceased was a joint holder,
and the legal personal representatives of the deceased where he was a sole holder, shall
be the only persons recognised by the Company as having any title to his interest in
the shares but nothing herein contained shall release the estate of a deceased holder
from any liability in respect of any share which had been held by him solely or jointly
with other persons. |
| 15.2 | Any
person becoming entitled to a share in consequence of the death or bankruptcy of a member may,
upon such evidence being produced as may from time to time be properly required by the Directors to show his title to the share,
elect either to be registered himself as holder of the share or to make such transfer of the share to such other person nominated
by him as the aforesaid member could have made and to have such person registered as the transferee thereof, but the Directors
shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer
of the share by that member before his death or bankruptcy, as the case may be. |
| 15.3 | A person
becoming entitled to a share by reason of the death or bankruptcy of a member shall be
entitled to the same dividends and other advantages to which he would be entitled if
he were the registered holder of the share, except that he shall not, before being registered
as a member in respect of the share, be entitled in respect of it to exercise any right
conferred by membership in relation to meetings of the Company; provided always that
the Directors may at any time give notice requiring any such person to elect either to
be registered himself or to transfer the share, and if the notice is not complied with
within fourteen days the Directors may thereafter withhold payment of all dividends,
bonuses or other monies payable in respect of the share until the requirements of the
notice have been complied with. |
| 16.1 | If a
member fails to pay any call or instalment of a call for any part of the Issue Price
on the day appointed for payment thereof, the Directors may, at any time thereafter during
such time as any part of the call or instalment remains unpaid, serve a notice on him
requiring payment of so much of the call or instalments together with any interest which
may have accrued and all expenses that may have been incurred by the Company by reason
of such non-payment. |
| 16.2 | The
aforesaid notice shall name a further day (not earlier than the expiration of fourteen
days from the date of service of the notice) on or before which the payment required
by the notice is to be made, and shall state that in the event of non-payment at or before
the time appointed the shares in respect of which the call was made will be liable to
be forfeited. |
| 16.3 | If the
requirements of any such notice as aforesaid are not complied with, any share in respect
of which the notice has been given may at any time thereafter, before the payment required
by the notice has been made, be forfeited, by a resolution of the Directors to that effect.
Such forfeiture shall include all dividends declared or other monies due in respect of
the forfeited shares and not actually paid before forfeiture. |
| 16.4 | A forfeited
share may be sold or otherwise disposed of on such terms and in such manner as the Directors
think fit, and at any time before a sale or disposition the forfeiture may be cancelled
on such terms as the Directors think fit. |
| 16.5 | A person
whose shares have been forfeited shall cease to be a member in respect of the forfeited
shares but shall, notwithstanding, remain liable to pay to the Company all monies (including
any unpaid component of the Issue Price and interest which shall continue to accrue)
which, at the date of forfeiture, were payable by him to the Company in respect of the
shares, but his liability shall cease if and when the Company shall have received payment
in full of all such monies in respect of the shares. The Directors may waive payment
wholly or in part or enforce payment without any allowance for the value of the shares
at the time of forfeiture or for any consideration received on their disposal. When any
share shall have been forfeited, notice of the Directors' resolution to that effect shall
be given to the member in whose name it stood immediately prior to the forfeiture, and
an entry of the forfeiture, with the date thereof, shall forthwith be made in the Register.
Where for the purposes of its disposal a forfeited share is to be transferred to any
person the Directors may authorize any person to execute an instrument of transfer of
the share to that person. |
| 16.6 | A declaration
in writing that the declarant is a Director or Secretary of the Company, and that a share
in the Company has been duly forfeited on a date stated in the declaration, shall be
conclusive evidence of the facts therein stated as against all persons claiming to be
entitled to the share. The Company may receive the consideration, if any, given for the
share on any sale or disposition thereof and may execute a transfer of the share in favour
of the person to whom the share is sold or disposed of and he shall thereupon be registered
as the holder of the share, and shall not be bound to see to the application of the purchase
money, if any, nor shall his title to the share be affected by any irregularity or invalidity
in the proceedings in reference to the forfeiture, sale or disposal of the share. |
| 17 | Amendment
of Memorandum of Association and Alteration of Capital |
| 17.1 | Subject
to and insofar as permitted by provisions of the Law, the Company may from time to time
by Ordinary Resolution (or where an Ordinary Resolution is disallowed by the Law and
a Special Resolution is required, by Special Resolution) alter or amend its memorandum
of association otherwise than with respect to its name and objects and may hereby, without
restricting the generality of the foregoing: |
| (a) | increase
the share capital by such sum to be divided into shares of such amount or without nominal
or par value as the resolution shall prescribe and with such rights priorities and privileges
annexed thereto as may be determined; |
| (b) | consolidate
and divide all or any of its share capital into shares of larger amount than its existing
shares; |
| (c) | convert
all or any of its paid-up shares into stock, and reconvert that stock into paid-up shares
of any denomination; |
| (d) | by
subdivision of its existing shares or any of them divide the whole or any part of its
share capital into shares of smaller amount than is fixed by the memorandum of association
of the Company or into shares without nominal or par value; |
| (e) | cancel
any shares which at the date of the passing of the resolution have not been taken or
agreed to be taken by any person and diminish the amount of its share capital by the
amount of any shares so cancelled; and |
| (f) | reduce
its share capital and any capital redemption reserve fund subject to any consent, order,
Court approval or other matter required by law. |
| 17.2 | All
new shares created hereunder shall be subject to the same provisions with reference to
the payment of calls, liens, transfer, transmission, forfeiture and otherwise as the
shares in the original share capital. |
| 17.3 | Subject
to the provisions of the Law, the Company may by Special Resolution change its name or
alter its objects. |
| 18.1 | The
Directors may, whenever they think fit, convene an extraordinary general meeting. If
at any time there are not sufficient Directors capable of acting to form a quorum, any
Director or any one or more members may convene an extraordinary general meeting in the
same manner as nearly as possible as that in which meetings may be convened by the Directors. |
| 18.2 | The
Directors shall, upon the requisition in writing of one or more members holding in the
aggregate not less than one-tenth of such paid-up capital (as to Issue Price) of the
Company as at the date of the requisition carries the right of voting at general meetings,
convene an extraordinary general meeting. Any such requisition shall express the object
of the meeting proposed to be called, and shall be left at or posted to the registered
office and may consist of several documents in like form each signed by one or more requisitionists. |
| 18.3 | If the
Directors do not proceed to convene a general meeting within twenty-one days from the
date of such requisition being left as aforesaid, the requisitionist(s) or any one or
more of them or any other member or members holding in the aggregate not less than one-tenth
of such paid-up capital (as to Issue Price) of the Company as at the date of the requisition
carries the right of voting at general meetings, may convene an extraordinary general
meeting to be held at the registered office or at some convenient place at such time,
subject to the Articles as to notice, as the person(s) convening the meeting fix. The
requisitionists shall be reimbursed by the Company for all reasonable expenses incurred
by them as a result of the failure by the Directors to convene the general meeting. |
| 18.4 | Subject to the provisions of the Law relating to Special Resolutions, seven days’ notice
at the least specifying the place, the day and the hour of meeting and, in case of special business, the general nature of that
business shall be given in manner hereinafter provided, or in such other manner (if any) as may be prescribed by the Company in
general meeting, to such persons as are, under the Articles, entitled to receive such notices from the Company; but with the consent
of members entitled to receive notice of some particular meeting or their proxies holding at least in the aggregate not less than
ninety percent (90%) of the paid-up share capital of the Company (as to Issue Price) giving the right to attend and vote at general
meetings of the Company, that meeting may be convened by such shorter notice and in such manner as those members or their proxies
may think fit. |
| 18.5 | The accidental omission to give notice of a meeting to, or the non-receipt of a notice of a meeting
by, any member entitled to receive notice shall not invalidate the proceedings at any meeting. |
| 18.6 | All business that is transacted at an extraordinary general meeting and all that is transacted
at any annual general meeting, with the exception of the sanctioning of a dividend and the consideration of the accounts, balance
sheet, the annual report of the Directors and the Auditors' report shall be deemed to be special. |
| 18.7 | When all members entitled to be present and vote sign either personally or by proxy the minutes
of a general meeting, the same shall be deemed to have been duly held notwithstanding that the members have not actually come together
or that there may have been technical defects in the proceedings and a resolution in writing (in one or more counterparts) signed
by all members personally, or in the case of a company or other entity which is a member, by any person authorised to sign on its
behalf, shall be as valid and effectual as if it had been passed at a meeting of the members duly called and constituted. |
| 19 | Proceedings at General Meetings |
| 19.1 | No business shall be transacted at any general meeting unless a quorum of members is present at
the time when the meeting proceeds to business; two (2) members present in person or by proxy shall be a quorum provided always
that if the Company has one member of record the quorum shall be that one (1) member present in person or by proxy. |
| 19.2 | If, within half an hour from the time appointed for the meeting a quorum is not present, the meeting,
if convened upon the requisition of member(s), shall be dissolved; in any other case it shall stand adjourned to the same day in
the next week, at the same time and place or to such other day and at such other time and place as the Directors may determine
and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting the members
present shall be a quorum. |
| 19.3 | The chairman, if any, of the board of Directors shall preside as Chairman at every general meeting
of the Company, or if there is no such chairman, or if he shall not be present within fifteen minutes after the time appointed
for the holding of the meeting or is unwilling to act, the Directors present shall elect one of their number to be chairman of
the meeting. |
| 19.4 | If at any meeting no Director is willing to act as chairman or if no Director is present within
fifteen minutes after the time appointed for holding the meeting, the members present shall choose one of their number to be chairman
of the meeting. |
| 19.5 | The chairman may, with the consent of any meeting at which a quorum is present (and shall if so
directed by the meeting), adjourn the meeting from time to time and from place to place but no business shall be transacted at
any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a meeting
is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Save
as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned
meeting. |
| 19.6 | At any general meeting a resolution put to the vote of the meeting shall be decided on a show of
hands unless a poll is (before or on the declaration of the result of the show of hands) demanded |
| (b) | by any member or members present in person or by proxy and representing not less than one tenth
of the total voting rights of all the members having the right to vote at the meeting; or |
| (c) | by a member or members holding shares conferring a right to vote at the meeting being shares on
which an aggregate sum has been paid-up (as to Issue Price) equal to not less than one tenth of the total sum paid up (as to Issue
Price) on all the shares conferring that right. |
| 19.7 | Unless a poll be so demanded a declaration by the chairman that a resolution has on a show of hands
been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book containing
the minutes of the proceedings of the Company shall be conclusive evidence of the fact without proof of the number or portion of
the votes recorded in favour of or against such resolution. A demand for a poll may be withdrawn. |
| 19.8 | In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the
meeting at which the show of hands takes place or at which the poll is demanded, shall be entitled to a casting vote. |
| 19.9 | A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith.
A poll demanded on any other question shall be taken at such time and in such manner as the chairman of the meeting directs and
the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. Any business other than
that upon which a poll has been demanded may be proceeded with pending the taking of the poll. |
| 19.10 | If for so long as the Company has only one member: |
| (a) | in relation to a general meeting, the sole member or a proxy for that member or (if the member
is a corporation) a duly authorized representative of that member is a quorum; and |
| (b) | the sole member may agree that any general meeting be called by shorter notice than that provided
for by the Articles; and |
| (c) | all other provisions of the Articles apply with any necessary modification (unless the provision
expressly provides otherwise). |
| 20.1 | Subject to any rights or restrictions for the time being attached to any class or classes of shares,
on a show of hands every member present in person or by proxy at a general meeting shall have one vote and on a poll every member
present in person or by proxy shall have one vote for each share registered in his name on the Register. |
| 20.2 | In the case of joint holders the vote of the senior who tenders a vote, whether in person or by
proxy, shall be accepted to the exclusion of the votes of the other joint holders; and for this purpose seniority shall be determined
by the order in which the names stand in the Register. |
| 20.3 | A member of unsound mind, or in respect of whom an order has been made by any court having jurisdiction
in lunacy, may vote, whether on a show of hands or on a poll, by his committee, receiver, curator bonis, or other person in the
nature of a committee, receiver or curator bonis appointed by that court, and any such committee, receiver, curator bonis or other
person may, on a poll, vote by proxy. |
| 20.4 | No person shall be entitled to vote at any general meeting unless he is registered as a member
in the Register on the date of such meeting and unless all calls or other sums presently payable by him in respect of shares of
the Company have been paid. |
| 20.5 | No objection shall be raised to the qualifications of any voter except at the meeting or adjourned
meeting at which the vote objected to is given or tendered and every vote not disallowed at such meeting shall be valid for all
purposes. Any such objection made in due time shall be referred to the chairman of the meeting, whose decision shall be final and
conclusive. |
| 20.6 | On a poll or on a show of hands votes may be given either personally or by proxy. On a poll, a
member entitled to more than one vote need not, if he votes, use all his votes or cast all votes he uses the same way. |
| 21.1 | The instrument appointing a proxy shall be in writing under the hand of the appointor or of his
attorney duly authorised in writing or, if the appointor is a corporation, either under seal or under the hand of an officer or
attorney duly authorised. A proxy need not be a member of the Company. Deposit or delivery of a form of appointment of a proxy
does not preclude a member from attending and voting at the meeting or at any adjournment of it. |
| 21.2 | The instrument appointing a proxy shall be deposited at the registered office or at such other
place as is specified for that purpose in the notice convening the meeting no later than the time for holding the meeting, or adjourned
meeting, provided that the chairman of the meeting may at his discretion direct that an instrument of proxy shall be deemed to
have been duly deposited upon receipt of confirmation from the appointor that the instrument of proxy duly signed is in the course
of transmission to the Company. The Directors may require the production of any evidence which they consider necessary to determine
the validity of any appointment pursuant to this Article. |
| 21.3 | The instrument appointing a proxy may be in any form acceptable to the Directors and may be expressed
to be for a particular meeting and/or any adjournment thereof or generally until revoked. |
| 21.4 | The instrument appointing a proxy shall be deemed to confer authority to demand and to join in
demanding a poll. |
| 21.5 | A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding
the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed
or the transfer of the share in respect of which the proxy is given, provided that no intimation in writing of such death, insanity,
revocation or transfer as aforesaid shall have been received by the Company at the registered office before the commencement of
the meeting or adjourned meeting at which the proxy is used. |
| 22 | Corporations Acting by Representatives at Meetings |
11.
Any corporation which is a member may by resolution of its directors or other governing body authorise such person as it thinks
fit to act as its representative at any meeting of the Company or of any class of members and the person so authorised shall be
entitled to exercise the same powers on behalf of the
corporation which he represents as that corporation could exercise if it were an individual member.
| 23.1 | There shall be a board of Directors consisting of at least one person. There is no age limit for
Directors. |
| 23.2 | The first Directors shall be determined in writing by the subscriber to the memorandum of association
of the Company. |
| 23.3 | The remuneration to be paid to the Directors shall be such remuneration as the Directors shall
determine. Such remuneration shall be deemed to accrue from day to day. The Directors may also be paid travelling, hotel and other
expenses properly incurred by them in attending and returning from meetings of the Directors or any committee of the Directors
or general meetings of the Company or in connection with the business of the Company or the discharge of their duties as a Director,
or receive a fixed allowance in respect thereof as may be determined by the Directors from time to time or a combination of partly
of one such method and partly the other. The Directors may provide benefits, whether by the payment of gratuities or pensions or
by insurance or otherwise, for any existing Director or any Director who has held but no longer holds any executive office or employment
with the Company or with any body corporate which is or has been a subsidiary of the Company or a predecessor in business of the
Company or of any such subsidiary, and for any member of his family (including a spouse and a former spouse) or any person who
is or was dependent on him, and may (as well before as after he ceases to hold such office or employment) contribute to any fund
and pay premiums for the purchase or provision of any such benefit. |
| 23.4 | The shareholding qualification for Directors may be fixed by the Company in general meeting, and
unless and until so fixed no qualification shall be required. |
| 23.5 | A Director or alternate Director may be or become a Director or other officer of, or otherwise
interested in, any company promoted by the Company or in which the Company may be interested as shareholder or otherwise, and no
such Director shall be accountable to the Company for any remuneration or other benefits received by him as a Director or officer
of, or from his interest in, such other company unless the Company otherwise directs in general meeting. |
| 23.6 | The Directors may by resolution award special remuneration to any Director undertaking any special
work or services which in the opinion of the Directors are beyond his ordinary routine work as a Director. Any fees paid to a Director
who is also counsel or attorney-at-law to the Company, or otherwise serves it in a professional capacity, shall be in addition
to his remuneration as a Director. |
| 23.7 | A Director or alternate Director may act by himself or his firm in a professional capacity for
the Company, and he or his firm shall be entitled to remuneration for professional services as if he were not a Director or alternate
Director; provided that nothing herein obtained shall authorise a Director or alternate Director or his firm to act as Auditor
of the Company. |
| 24 | Alternate Directors and Proxy Directors |
| 24.1 | A Director may by writing appoint any person to be an alternate Director in his place. Any appointment
or removal of an alternate Director shall be by notice to the Company signed by the Director making or revoking the appointment
or in any other manner approved by the Directors. The person so appointed shall be entitled to attend, speak and vote at meetings
of the Directors, and at all meetings of committees of Directors that his appointor is a member of, when the Director appointing
him is not personally present and to sign any written resolution of the Directors and shall automatically vacate his office on
the expiration of the term for or the happening of the event until which he is by the terms of his appointment to hold office or
if the appointor in writing revokes the appointment or himself ceases for any reason to hold office as a Director. An appointment
of an alternate Director under this Article shall not prejudice the right of the appointor to attend and vote at meetings of the
Directors and the powers of the alternate Director shall automatically be suspended during such time as the Director appointing
him is himself present in person at a meeting of the Directors. An alternate Director shall be deemed to be appointed by the Company
and not deemed to be the agent of the Director appointing him and shall alone be responsible for his own acts and defaults. |
| 24.2 | A Director may be represented at any meetings of the Directors by a proxy appointed by him in which
event the presence or vote of the proxy shall for all purposes be deemed to be that of the Director. |
| 24.3 | The provisions of these Articles applicable to alternate Directors shall mutatis mutandis
apply to the appointment of proxies by Directors, save that any person appointed as a proxy pursuant to the immediately preceding
Article shall be the agent of the Director, and not an officer of the Company. |
| 25 | Powers and Duties of Directors |
| 25.1 | The business of the Company shall be managed by the Directors (or a sole Director if only one is
appointed) who may exercise all the powers of the Company save where inconsistent with the Law or these Articles PROVIDED HOWEVER
that no regulations made by the Company in general meeting shall invalidate any prior act of the Directors which would have been
valid if that regulation had not been made. The powers given by this Article shall not be limited by any special power given to
the Directors by the Articles and a meeting of Directors at which a quorum is present may exercise all powers exercisable by the
Directors. |
| 25.2 | Without limitation, the Directors may exercise all the powers of the Company to borrow or raise
monies, and to mortgage or charge its undertaking, property and uncalled capital, or any part thereof, and to issue debentures,
debenture stock, and other securities whether outright or as security for any debt liability or obligation of the Company or of
any third party. |
| 25.3 | All cheques, promissory notes, drafts, bills of exchange or other negotiable instruments, and all
receipts for monies paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in
such manner as the Directors shall from time to time determine by resolution. |
| 25.4 | The Directors shall cause minutes to be made in books provided for the purpose: |
| (a) | of all appointments of officers made by the Directors; |
| (b) | of the names of the Directors or their alternates present at each meeting of the Directors and
of any committee of the Directors; |
| (c) | of all resolutions and proceedings at all meetings of the Company, and of the Directors, and of
committees of Directors. |
| 25.5 | The Directors on behalf of the Company may pay a gratuity or pension or allowance on retirement
to any Director who has held any other salaried office or place of profit with the Company or to his widow or dependents and make
contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance. |
| 26 | Director or Officer Contracting with Company |
| 26.1 | No Director or officer shall be disqualified by his office from contracting and/or dealing with
the Company as vendor, purchaser or otherwise; nor shall any such contract or any contract or arrangement entered into by or on
behalf of the Company in which any Director or officer shall be in any way interested be or be liable to be avoided; nor shall
any Director or officer so contracting or being so interested be liable to account to the Company for any profit realised by any
such contract or arrangement by reason of such Director or officer holding that office or the fiduciary relationship thereby established;
provided that the nature of his interest must be disclosed by him at the meeting of the Directors at which the contract or arrangement
is considered if his interest then exists, or in any other case, at the first meeting of the Directors after the acquisition of
his interest. A Director, having disclosed his interest as aforesaid, shall be counted in the quorum and shall be entitled to vote
as a Director in respect of any contract or arrangement in which he is so interested as aforesaid. |
| 26.2 | A general notice that a Director is a member of a specified firm or company and is to be
regarded as interested in all transactions
with that firm or company shall be a sufficient disclosure under the immediately preceding Article as regards such Director and
the said transactions and after such general notice it shall not be necessary for such Director to give a special notice relating
to any particular transaction with that firm or company. An
interest of which a Director has no knowledge and of which it is unreasonable to expect him to have knowledge shall not be treated
as an interest of his. |
| 26.3 | A Director may hold any other office or place of profit under the Company (other than the office
of Auditor) in conjunction with his office of Director for such period and on such terms (as to remuneration and otherwise) as
the Directors may determine. |
| 26.4 | A Director may act by himself or by, through or on behalf of his firm in a professional capacity
for the Company and he or his firm shall be entitled to remuneration for professional services as if he were not a Director. |
| 27 | Appointment and Removal of Directors |
| 27.1 | The Directors shall have power at any time and from time to time to appoint any person to be a
Director, either to fill a casual vacancy or as an addition to the existing Directors but so that the total number of Directors
(exclusive of alternate Directors) shall not at any time exceed the number fixed in accordance with these Articles. |
| 27.2 | The holder or holders of more than half of the paid-up share capital of the Company (as to Issue
Price) giving the right to attend and vote at general meetings of the Company may appoint any person to be a Director and may in
like manner remove any Director and may in like manner appoint another person in his stead. |
| 27.3 | The Company may from time to time, by Ordinary Resolution, set, increase or reduce the maximum
number of Directors who may constitute the board of Directors. |
| 27.4 | The office of Director shall be vacated if the Director: |
| (a) | is prohibited by law from serving as Director; |
| (b) | becomes bankrupt or makes any arrangement or composition with his creditors; or |
| (c) | dies or is found to be or becomes of unsound mind; or |
| (d) | resigns his office by notice in writing to the Company or otherwise pursuant to any agreement between
the Company and such Director; or |
| (e) | is removed from office by notice of the holder or holders of more than half of the paid-up share
capital of the Company (as to Issue Price) giving the right to attend and vote at general meetings of the Company notwithstanding
anything in the Articles or any agreement between the Company and such Director; |
| (f) | is requested by all the other Directors (numbering at least two) to resign; or |
| (g) | if he absents himself (without being represented by proxy or an alternate Director appointed by
him) from three consecutive meetings of the board of Directors without special leave of absence from the Directors, and they pass
a resolution that he has by reason of such absence vacated office. |
| 28 | Proceedings of Directors |
| 28.1 | The Directors may meet together for the dispatch of business, adjourn and otherwise regulate their
meetings as they think fit. Questions arising at any meeting shall be decided by a majority of votes. In case of an equality of
votes, the chairman shall have a second or casting vote. A Director may, and the Secretary on the requisition of a Director shall,
at any time summon a meeting of the Directors. Every Director shall receive notice of a board meeting. Notice of a board
meeting is deemed to be duly given to a Director if it is given to him personally or by word of mouth or by electronic communication
to an address given by him to the Company for that purpose or sent in writing to him at his last known address or other address
given by him to the Company for that purpose. A Director or his alternate may waive the requirement that notice be given
to the Director of a meeting of the board of Directors or committee of the Directors, either prospectively or retrospectively. |
| 28.2 | The quorum necessary for the transaction of the business of the Directors may be fixed by the Directors
and unless so fixed shall be two, a Director and his appointed alternate Director being considered only one person for this purpose,
PROVIDED ALWAYS that if there shall at any time be only a sole Director the quorum shall be one. One person may represent more
than one Director by alternate and for the purposes of determining whether or not a quorum is present and voting each appointment
of an alternate shall be counted. |
| 28.3 | The continuing Directors or sole continuing Director may act notwithstanding any vacancy in their
body but, if and so long as their number is reduced below the number fixed by or pursuant to the Articles as the necessary quorum
of Directors, the continuing Directors or Director may act for the purpose of increasing the number of Directors to that number,
or of summoning a general meeting of the Company, but for no other purpose. |
| 28.4 | The Directors may elect a chairman of their meetings and determine the period for which he is to
hold office; but if no such chairman is elected, or if at any meeting the chairman is not present within five minutes after the
time appointed for holding the same, the Directors present may choose one of their number to be chairman of the meeting. |
| 28.5 | A committee may elect a chairman of its meetings; if no such chairman is elected, or if at any
meeting the chairman is not present the members present may choose one of their number to be chairman of the Meeting. |
| 28.6 | A committee may meet and adjourn as it thinks proper. Questions arising at any meeting shall be
determined by a majority of votes of the members present, and in the case of an equality of votes the chairman shall have a second
or casting vote. |
| 28.7 | All acts done by any meeting of the Directors or of a committee of the Directors (including any
person acting as an alternate Director) shall, notwithstanding that it is afterwards discovered that there was some defect in the
appointment of any Director or alternate Director, and/or that they or any of them were disqualified, and/or had vacated their
office and/or were not entitled to vote, be as valid as if every such person had been duly appointed and/or not disqualified to
be a Director or alternate Director and/or had not vacated their office and/or had been entitled to vote, as the case may be. |
| 28.8 | A resolution in writing (in one or more counterparts), signed by all the Directors for the time
being or all the members of a committee of Directors (a person being an alternate Director for one or more Directors being entitled
to sign such resolution on behalf of each appointor) shall be as valid and effectual as if it had been passed at a meeting of the
Directors or committee as the case may be duly convened and held. |
| 28.9 | Any Director or Directors or any committee thereof may participate in any meeting of the board
of Directors or of such committee by means of conference telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other and participation in a meeting pursuant to this provision shall constitute presence
in person at such meeting. All business transacted in this way by the Directors or a committee of Directors is for the purpose
of the Articles deemed to be validly and effectively transacted at a meeting of the Directors or of a committee of Directors although
fewer than two Directors or alternate Directors are physically present at the same place. |
| 28.10 | If and for so long as there is a sole Director of the Company: |
| (a) | he may exercise all powers conferred on the Directors by the Articles by any means permitted by
the Articles or the Law; |
| (b) | the quorum for the transaction of business is one; and |
| (c) | all other provisions of the Articles apply with any necessary modification (unless the provision
expressly provides otherwise). |
| 29.1 | The Directors may from time to time appoint one or more of their body to the office of managing
director for such period and on such terms as they think fit and, subject to the terms of any agreement entered into in any particular
case, may revoke such appointment. A Director so appointed shall be subject to the same provisions as regards removal and disqualification
as the other Directors and his appointment shall be automatically determined if he ceases for any cause to be a Director. |
| 29.2 | A managing director shall receive such remuneration (whether by way of salary, commission or participation
in profits, or partly in one way and partly in another) as the Directors may determine. |
| 29.3 | The Directors may entrust to and confer upon a managing director any powers, authorities and discretions
exercisable by them upon such terms and conditions and with such restrictions as they may think fit, and either collaterally with
or to the exclusion of their own powers and may from time to time revoke, alter, withdraw or vary all or any of such powers. |
12.
A Director who is present at a meeting of the board of Directors at which action on any Company matter is taken shall be presumed
to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file
his written dissent to such action with the person acting as secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the Secretary immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a Director who voted in favour of such action.
| 31.1 | The Directors may from time to time provide for the management of the affairs of the Company in
such manner as they think fit and the provisions contained in the three next following Articles shall be without prejudice to the
general powers conferred by this Article. |
| 31.2 | The Directors from time to time and at any time may establish any committees, boards or agencies,
may appoint any persons to be members of such committees or boards, may appoint any managers or agents, and may fix their remuneration.
Any committee so formed shall in the exercise of powers so delegated conform to any regulations that may be imposed on it by the
Directors. |
| 31.3 | The
Directors from time to time and at any time may delegate to any such committee, board,
manager or agent any of the powers, authorities and discretions for the time being vested
in the Directors and may authorise the members for the time being of any such board,
or any of them, to fill up any vacancy therein, and to act notwithstanding vacancies,
and any such appointment or delegation may be made on such terms and subject to such
conditions as the Directors may think fit, and the Directors may at any time remove any
person so appointed, and may annul or vary any such delegation, but no person dealing
in good faith and without notice of any such annulment or variation shall be affected
thereby. Where a provision of the Articles refers to the
exercise of a power, authority or discretion by the Directors and that power, authority
or discretion has been delegated by the Directors to a committee, the provision shall
be construed as permitting the exercise of the power, authority or discretion by the
committee. |
| 31.4 | The
Directors may from time to time and at any time by power of attorney appoint any company,
firm or person or body of persons, whether nominated directly or indirectly by the Directors,
to be the attorney or attorneys of the Company for such purposes and with such powers,
authorities and discretions (not exceeding those vested in or exercisable by the Directors
under the Articles) and for such period and subject to such conditions as they may think
fit, and any such powers of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorney as the Directors may think fit
and may also authorise any such attorney to delegate all or any of the powers, authorities
and discretions vested in him. |
| 31.5 | Any
such delegates as aforesaid may be authorised by the Directors to sub-delegate all or
any of the powers, authorities and discretions for the time being vested in them. |
32
Officers
| 32.1 | Officers
of the Company may be elected by the Company in general meeting or appointed by the Directors
and may consist of a president, one or more vice presidents, a Secretary, one or more
assistant secretaries, a treasurer, one or more assistant treasurers and such other officers
as the Company in general meeting or the Directors may from time to time think necessary
and all such officers shall perform such duties as may be prescribed by the Company in
general meeting or the Directors. They shall hold office until their successors are elected
or appointed but any officer may be removed at any time by the Company in general meeting
or by the Directors. If any office becomes vacant the Company in general meeting or the
Directors may fill the same. Any person may hold more than one of these offices and no
officer need be a member or Director. |
| 33.1 | The
Company may, if the Directors so determine, have a Seal. The Directors shall provide
for the safe custody of the Seal which shall only be used with the authority of the Directors
or a committee of the Directors authorised in that regard. Every instrument to which
the Seal shall be affixed shall be signed by a Director or other person authorised by
the Directors for that purpose. Notwithstanding the provisions hereof, a Director, Secretary
or other officer may affix the Seal to returns, lists, notices, certificates or any other
documents required to be authenticated by him under Seal or to be filed with the Registrar
of Companies in the Cayman Islands or elsewhere under his signature alone. |
| 33.2 | The
Company may exercise the powers conferred by the Law with regard to having a duplicate
seal for use abroad and such powers shall be vested in the Directors. |
| 34.1 | Subject
to the Law and these Articles, the Directors may from time to time declare dividends
(including interim dividends) and distributions on issued shares of the Company and authorise
payment of the same out of funds of the Company lawfully available therefor. |
| 34.2 | No
dividend or distribution shall be paid except out of the profits of the Company, realised
or unrealised, or out of the share premium account or as otherwise permitted by the Law. |
| 34.3 | The
Directors may, before declaring any dividends or distributions, set aside such sums as
they think proper as a reserve or reserves which shall at the discretion of the Directors
be applicable for any purpose of the Company and pending such application may, at the
like discretion, be employed in the business of the Company. |
| 34.4 | Subject
to the rights of persons, if any, entitled to shares with special rights as to dividends
or distributions, if dividends or distributions are to be declared on a class of shares
they shall be declared and paid according to the amounts paid or credited as paid on
the shares of such class issued on the record date for such dividend or distribution
but no amount paid or credited as paid on a share in advance of calls shall be treated
for the purposes of this Article as paid on the share. If at any time the share capital
is divided into different classes of shares the Directors may pay dividends on shares
which confer deferred or non-preferred rights with regard to dividends as well as on
shares which confer preferential rights with regard to dividends, but no dividend shall
be paid on shares carrying deferred or non-preferred rights if, at the time of payment,
any preferential dividend is in arrears. The Directors may also pay at intervals settled
by them any dividend payable at a fixed rate if it appears that there are sufficient
funds of the Company lawfully available for distribution to justify the payment. Provided
the Directors act in good faith they shall not incur any liability to the holders of
shares conferring preferred rights for any loss they may suffer by the lawful payment
of a dividend on any shares having deferred or non-preferred rights. |
| 34.5 | The
Directors may deduct from any dividend or distribution payable to any member all sums
of money (if any) presently payable by him to the Company on account of calls or otherwise. |
| 34.6 | The
Directors may declare that any dividend or distribution be paid wholly or partly by the
distribution of specific assets and in particular of paid-up shares (as to issue price),
debentures or debenture stock of any other company or in any one or more of such ways
and where any difficulty arises in regard to such distribution, the Directors may settle
the same as they think expedient and in particular may issue fractional certificates
and fix the value for distribution of such specific assets or any part thereof and may
determine that cash payments shall be made to any members upon the footing of the value
so fixed in order to adjust the rights of all members and may vest any such specific
assets in trustees as may seem expedient to the Directors. |
| 34.7 | Any
dividend, distribution, interest or other monies payable in cash in respect of shares
may be paid by cheque or warrant sent through the post directed to the registered address
of the holder, or, in the case of joint holders, to the holder who is first named on
the Register or to such person and to such address as such holder or joint holders may
in writing direct. Every such cheque or warrant shall be made payable to the order of
the person to whom it is sent. Any one of two or more joint holders may give effectual
receipts for any dividends, distributions, bonuses or other monies payable in respect
of the shares held by them as joint holders. |
| 34.8 | No
dividend or distribution shall bear interest against the Company, save as otherwise provided. |
| 34.9 | Except
as otherwise provided by the rights attached to any shares, dividends and other distributions
may be paid in any currency. The Directors may determine the basis of conversion for
any currency conversions that may be required and how any costs involved are to be met. |
| 34.10 | The
Directors may, before resolving to pay any dividend or other distribution, set aside
such sums as they think proper as a reserve or reserves which shall, at the discretion
of the Directors, be applicable for any purpose of the Company and pending such application
may, at the discretion of the Directors, be employed in the business of the Company. |
| 34.11 | Any
dividend or distribution which cannot be paid to a member and/or which remains unclaimed
after six months from the date on which such dividend or distribution becomes payable
may, in the discretion of the Directors, be paid into a separate account in the Company's
name, provided that the Company shall not be constituted as a trustee in respect of that
account and the dividend or distribution shall remain as a debt due to the Member. Any
dividend or distribution which remains unclaimed after a period of six years from the
date on which such dividend or distribution becomes payable shall be forfeited and shall
revert to the Company. |
| 35.1 | The
Directors shall cause proper books of account to be kept with respect to: |
| (a) | all
sums of money received and expended by the Company and the matters in respect of which
the receipt and expenditure takes place; |
| (b) | all
sales and purchases of goods by the Company; and |
| (c) | the
assets and liabilities of the Company. |
| 35.2 | Proper
books shall not be deemed to be kept if there are not kept such books of account as are
necessary to give a true and fair view of the state of the Company’s affairs and
to explain its transactions. |
| 35.3 | The
books of account shall be kept at such place or places as the Directors think fit, and
shall always be open to the inspection of the Directors. The books of accounts shall
be retained for five (5) years from the date of their preparation, or such other period
as specified by the Law. |
| 35.4 | The
Directors shall from time to time determine whether and to what extent and at what times
and places and under what conditions or regulations the accounts and books of the Company
or any of them shall be open to the inspection of members not being Directors and no
member (not being a Director) shall have any right of inspecting any account or book
or document of the Company except as conferred by Law or authorised by the Directors
or by the Company in general meeting. |
| 35.5 | The
Directors shall from time to time cause to be prepared and to be laid before the Company
in general meeting profit and loss accounts, balance sheets, group accounts (if any)
and such other reports and accounts as may be required by Law. |
| 36.1 | The
Directors may appoint an Auditor or Auditors on such terms as the Directors determine
who shall hold office until otherwise resolved. |
| 36.2 | Every
Auditor shall have the right of access at all times to the books and accounts and vouchers
of the Company and shall be entitled to require from the Directors and officers of the
Company such information and explanation as may be necessary for the performance of the
duties of the auditors. |
| 36.3 | Auditors
shall at any time during their term of office, upon request of the Directors or any general
meeting of the members, make a report on the accounts of the Company in general meeting
during their tenure of office. |
13.
The fiscal year of the Company shall end on the 31st day of December in each year unless the Directors prescribe some other period
therefor.
| 38 | Capitalisation
of Profit and Share Premium |
| 38.1 | The
Directors or the Company in general meeting, by Ordinary Resolution upon the recommendation
of the Directors, may resolve that it is desirable to capitalise any part of the amount
for the time being standing to the credit of any of the Company’s reserve accounts
(including, without limitation, the share premium account and capital redemption reserve
fund) or to the credit of the profit and loss account or otherwise available for distribution,
and accordingly that such sum be set free from distribution amongst the members who would
have been entitled thereto if distributed by way of dividend and in the same proportions
on condition that the same be not paid in cash but be applied in or towards paying up
any amounts for the time being unpaid on any shares held by such members respectively
or paying up in full unissued shares or debentures of the Company to be allotted and
distributed credited as fully paid-up (as to Issue Price) to and amongst such members
in the proportions aforesaid, or partly in the one way and partly in the other, and the
Directors shall give effect to such resolution. Provided that a share premium account
and a capital redemption reserve fund may, for the purpose of this Article, only be applied
in the paying up of unissued shares to be issued to members of the Company as fully paid
bonus shares. |
| 38.2 | Whenever
such a resolution as aforesaid shall have been passed, the Directors shall make all appropriations
and applications of the undivided profits resolved to be capitalised thereby, and all
allotments and issues of fully paid shares or debentures, if any, and generally shall
do all acts and things required to give effect thereto, with full power to the Directors
to make such provision by the issue of fractional certificates or by payment in cash
or otherwise as they think fit for the class of shares or debentures becoming distributable
in fractions, and also to authorise any person to enter into, on behalf of all the members
entitled thereto, an agreement with the Company providing for the allotment to them respectively,
credited as fully paid-up (as to Issue Price), of any further shares or debentures to
which they may be entitled upon such capitalisation, or (as the case may require) for
the payment up by the Company on their behalf, by the application thereto of their respective
proportions of the profits resolved to be capitalised of the amounts or any part of the
amounts remaining unpaid on their existing shares, and any agreement made under such
authority shall be effective and binding on all such members. |
| 38.3 | The
Directors shall in accordance with the Law establish a share premium account and shall
carry to the credit of such account from time to time a sum equal to the amount or value
of the premium paid on the issue of any share and may treat any contributed capital or
capital surplus as if it were credited to such account. There shall be debited to any
share premium account: |
| (a) | on
the redemption or purchase of a share the difference between the nominal value of such
share and the redemption or purchase price provided always that at the discretion of
the Directors such sum may be paid out of the profits of the Company or, if permitted
by the Law, out of capital; and |
| (b) | any
other amounts paid out of any share premium account as permitted by the Law. |
| 39.1 | A
notice may be given by the Company to any member either personally or by sending it by
courier, post, cable, telex, telefax or e-mail to him or to his registered address, or
(if he has no registered address) to the address, if any, within or without the Cayman
Islands supplied by him to the Company for the giving of notice to him. |
| 39.2 | Where
a notice is sent by courier, service of the notice shall be deemed to be effected by
delivery of the notice to a courier company, and shall be deemed to have been received
on the third day (not including Saturdays or Sundays or public holidays) following the
day on which the notice was delivered to the courier. Where a notice is sent by post,
service of the notice shall be deemed to be effected by properly addressing, pre-paying
and posting a letter containing the notice, and to have been effected in the case of
a notice of a meeting at the expiration of fourteen days after the letter containing
the same is posted, and in any other case at the time at which the letter would be delivered
in the ordinary course of post. Any letter sent to an address outside the Cayman Islands
shall be sent by courier or airmail. |
| 39.3 | Where
a notice is sent by cable, telex, telefax or e-mail, service of the notice shall be deemed
to be effected by properly addressing and sending such notice and to have been effected
on the day received or, if such day is not a working day, on the next working day. |
| 39.4 | A
notice may be given by the Company to the person or persons where the Company has been
advised are entitled to a share in consequence of the death or bankruptcy of a member
by sending it through the post in prepaid letter addressed to them by name, or by the
title of representatives of the deceased or trustee of the bankrupt, or by any like description,
at the address, if any, within or without the Cayman Islands supplied for that purpose
by the persons claiming to be so entitled, or (until such an address has been supplied)
by giving the notice in any manner in which the same might have been given if the death
or bankruptcy had not occurred. |
| 39.5 | A
notice shall be sufficiently given by the Company to the joint holders of record of a
share by giving the notice to the joint holder first named on the Register in respect
of the share. |
| 39.6 | Notice
of every general meeting shall be given in any manner hereinbefore authorised to: |
| (a) | every
person shown as a member in the Register subject, in each case, to the immediately preceding
Article; and |
| (b) | every
person upon whom the ownership of a share devolves by reason of his being a legal personal
representative or a trustee in bankruptcy of a member where the member but for his death
or bankruptcy would be entitled to receive notice of the meeting. |
| 39.7 | No
other person shall be entitled to receive notices of general meetings. |
| 39.8 | A
member who is present, either in person or by proxy, at any meeting of the Company or
of the holders of any class of shares in the Company shall be deemed to have received
notice of the meeting, and, where requisite, of the purpose for which it was called. |
| 39.9 | Every
person who becomes entitled to any share shall be bound by any notice in respect of that
share which, before his name is entered in the Register, has been given to the person
from whom he derives his title. |
| 39.10 | Subject
to the rights attached to shares, the Directors may fix any date as the record date for
a dividend, allotment or issue. The record date may be on or at any time before or after
a date on which the dividend, allotment or issue is declared, made or paid. |
| 40.1 | If
the Company is, or is likely to become, unable to pay its debts, the Directors shall
have power to present a winding up petition in the name of the Company and/or to apply
for the appointment of provisional liquidators in respect of the Company. |
| 40.2 | If
the Company shall be wound up, the liquidator may, with the sanction of an Ordinary Resolution
of the Company and any other sanction required by law, divide amongst the members in
specie or kind the whole or any part of the assets of the Company (whether they shall
consist of property of the same kind or not) and may, for such purpose, set such value
as he deems fair upon any property to be divided as aforesaid and may determine how such
division shall be carried out as between the members or different classes of members.
The liquidator may, with the like sanction, vest the whole or any part of such assets
in trustees upon such trusts for the benefit of the members as the liquidator, with the
like sanction, shall think fit, but so that no member shall be compelled to accept any
shares or other securities whereon there is any liability. |
| 40.3 | If
the Company shall be wound up and the assets available for distribution amongst the members
as such shall be insufficient to repay the whole of the paid-up capital, such assets
shall be distributed so that, as nearly as may be, the losses shall be borne by the members
in proportion to the capital paid up, or which ought to have been paid up, at the commencement
of the winding up on the shares held by them respectively. And if in a winding up the
assets available for distribution amongst the members shall be more than sufficient to
repay the whole of the capital at the commencement of the winding up, the excess shall
be distributed amongst the members in proportion to the capital at the commencement of
the winding up paid up on the shares held by them respectively. But this Article is to
be without prejudice to the rights of the holders of shares issued upon special terms
and conditions. |
| 41.1 | Every
Director, Secretary, or other officer of the Company (including alternate directors,
proxy directors and former directors and officers), any trustee for the time being acting
in relation to the Company (including any nominee shareholder holding shares in the Company)
and their heirs and personal representatives (each an "Indemnified Person")
shall be entitled to be indemnified out of the assets of the Company against all actions,
proceedings, costs, damages, expenses, claims, losses or liabilities which they or any
of them may sustain or incur by reason of any act done or omitted in or about the execution
of the duties of their respective offices or trusts or otherwise in relation thereto,
including any liability incurred by him in defending any proceedings, whether civil or
criminal, in which judgement is given in his favour or in which he is acquitted except
to the extent that any of the foregoing arise through his dishonesty. |
| 41.2 | No
Indemnified Person shall be liable (a) for any loss, damage or misfortune whatsoever
which may happen to or be incurred by the Company in the execution of the duties, powers,
authorities or discretions of his office or in relation thereto, (b) for the acts, receipts,
neglects, defaults or omissions of any other such Director or person or (c) by reason
of his having joined in any receipt for money not received by him personally or (d) for
any loss on account of defect of title to any property of the Company or (e) on account
of the insufficiency of any security in or upon which any money of the Company shall
be invested or (f) for any loss incurred through any bank, broker or other agent or (g)
for any loss occasioned by any negligence, default, breach of duty, breach of trust,
error of judgement or oversight on his part or (h) for any other loss or damage due to
any such cause as aforesaid except to the extent that any of the foregoing arise through
his dishonesty. |
| 41.3 | The
Company shall advance to each Indemnified Person reasonable attorneys' fees and other
costs and expenses incurred in connection with the defence of any action, suit, proceeding
or investigation involving such Indemnified Person for which indemnity will or could
be sought. In connection with any advance of any expenses hereunder, the Indemnified
Person shall execute an undertaking to repay the advanced amount to the Company if it
shall be determined by final judgment or other final adjudication that such Indemnified
Person was not entitled to indemnification pursuant to this Article. If it shall be determined
by a final judgment or other final adjudication that such Indemnified Person was not
entitled to indemnification with respect to such judgment, costs or expenses, then such
party shall not be indemnified with respect to such judgment, costs or expenses and any
advancement shall be returned to the Company (without interest) by the Indemnified Person. |
| 41.4 | The
Directors, on behalf of the Company, may purchase and maintain insurance for the benefit
of any Director or other officer of the Company against any liability which, by virtue
of any rule of law, would otherwise attach to such person in respect of any negligence,
default, breach of duty or breach of trust of which such person may be guilty in relation
to the Company. |
| 42 | Registration
by Way of Continuation |
| 42.1 | The
Company, if registered as an exempted company under the Law, may by Special Resolution
resolve to be registered by way of continuation in a jurisdiction outside the Cayman
Islands which permits or does not prohibit the transfer of the Company to such jurisdiction. |
| 42.2 | In
furtherance of a resolution passed pursuant to the immediately preceding Article, the
Directors shall cause an application to be made to the Registrar of Companies to de-register
the Company in the Cayman Islands or such other jurisdiction in which it is for the time
being incorporated, registered or existing and may cause all further steps as they consider
appropriate to be taken to effect the transfer by way of continuation of the Company. |
14.
The Directors and the officers including any secretary or assistant secretary and/or any its service providers (including the
registered office provider for the Company), shall be entitled to disclose to any regulatory or judicial authority, or to any
stock exchange on which the shares may from time to time be listed, any information regarding the affairs of the Company including,
without limitation, any information contained in the Register and books of the Company.
| 44 | Merger
and Consolidation |
15.
The Company shall, with the approval of a Special Resolution, have the power to merge or consolidate with one or more constituent
companies (as defined in the Law), upon such terms as the Directors may determine.
Name
and Address of Subscriber
Campbells
Nominees Limited
Floor 4, Willow House
Cricket Square
Grand Cayman KY1-9010
Cayman Islands |
Jennifer
Reilly
Authorised
Signatory
Tenecia
Ebanks
Witness
Date:
21 August 2020
Table
of Contents
| 1 |
Preliminary |
7 |
| |
|
| 2 |
Commencement of Business |
10 |
| |
|
| 3 |
Alteration of Articles |
10 |
| |
|
| 4 |
Issue of Shares, Principal and Branch Registers and Offices |
10 |
| |
|
| 5 |
Treasury Shares |
11 |
| |
|
| 6 |
Redemption, Purchase and Surrender of Own Shares |
11 |
| |
|
| 7 |
Variation of Rights of Shares |
12 |
| |
|
| 8 |
Commission on Sale of Shares |
13 |
| |
|
| 9 |
Non-Recognition of Trusts |
13 |
| |
|
| 10 |
Certificates for Shares |
13 |
| |
|
| 11 |
Joint Ownership of Shares |
13 |
| |
|
| 12 |
Lien |
14 |
| |
|
| 13 |
Calls on Shares |
15 |
| |
|
| 14 |
Transfer of Shares |
15 |
| |
|
| 15 |
Transmission of Shares |
16 |
| |
|
| 16 |
Forfeiture of Shares |
17 |
| |
|
| 17 |
Amendment of Memorandum of Association and Alteration of Capital |
18 |
| |
|
| 18 |
General Meetings |
19 |
| |
|
| 19 |
Proceedings at General Meetings |
20 |
| |
|
| 20 |
Votes of Members |
22 |
| |
|
| 21 |
Proxies |
23 |
| |
|
| 22 |
Corporations Acting by Representatives at Meetings |
23 |
| |
|
| 23 |
Directors |
24 |
| |
|
| 24 |
Alternate Directors and Proxy Directors |
25 |
| |
|
| 25 |
Powers and Duties of Directors |
25 |
| |
|
| 26 |
Director of Officer Contracting with Company |
26 |
| |
|
| 27 |
Appointment and Removal of Directors |
27 |
| |
|
| 28 |
Proceedings of Directors |
28 |
| |
|
| 29 |
Managing Director |
30 |
| 30 |
Presumption of Assent |
30 |
| |
|
| 31 |
Management |
30 |
| |
|
| 32 |
Officers |
31 |
| |
|
| 33 |
The Seal |
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Dividends and Reserve |
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Accounts |
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Audit |
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Fiscal Year |
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Capitalisation of Profit and Share Premium |
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Notices |
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Winding Up |
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Indemnity |
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Registration by Way of Continuation |
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Disclosure |
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Merger and Consolidation |
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Exhibit 4.1
SPECIMEN UNIT CERTIFICATE
NUMBER UNITS U-[__]
Consonance-HFW Acquisition Corp.
| SEE REVERSE FOR |
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| CERTAIN |
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| DEFINITIONS |
CUSIP – G2445M 129 |
UNITS CONSISTING OF ONE CLASS
A ORDINARY SHARE AND ONE-THIRD OF ONE REDEEMABLE WARRANT TO PURCHASE ONE CLASS A ORDINARY SHARE
THIS CERTIFIES THAT
is the owner of Units.
Each Unit (“Unit”) consists
of one (1) Class A ordinary share, par value $0.0001 per share (“Ordinary Shares”), of Consonance-HFW Acquisition Corp.,
a Cayman Islands exempted company (the “Company”), and one-third (1/3) of one redeemable warrant (each whole warrant,
a “Warrant”). Each Warrant entitles the holder to purchase one (1) Ordinary Share for $11.50 per share (subject to
adjustment). Each Warrant will become exercisable on the later of (i) thirty (30) days after the Company’s completion of
a merger, share exchange, asset acquisition, share purchase, reorganization or other similar business combination with one or more
businesses (each, a “Business Combination”), and (ii) twelve (12) months from the closing of the Company’s initial
public offering, and will expire unless exercised before 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, or earlier upon redemption or liquidation (the “Expiration
Date”). The Ordinary Shares and Warrants comprising the Units represented by this certificate are not transferable separately
prior to [_____], 2020, unless J.P. Morgan Securities LLC elects to allow earlier separate trading, subject to the Company’s
filing with the Securities and Exchange Commission of a Current Report on Form 8-K containing an audited balance sheet reflecting
the Company’s receipt of the gross proceeds of the initial public offering and issuing a press release announcing when separate
trading will begin. No fractional warrants will be issued upon separation of the Units and only whole warrants are exercisable.
The terms of the Warrants are governed by a Warrant Agreement, dated as of [_____], 2020, between the Company and Continental Stock
Transfer & Trust Company, as Warrant Agent, and are subject to the terms and provisions contained therein, all of which terms
and provisions the holder of this certificate consents to by acceptance hereof.
Copies of the Warrant Agreement are on
file at the office of the Warrant Agent at 1 State Street, 30th Floor, New York, New York 10004, and are available to any Warrant
holder on written request and without cost.
Upon the consummation
of the Business Combination, the Units represented by this certificate will automatically separate into the Class A Ordinary Shares
and Warrants comprising such Units.
This certificate is not valid unless countersigned
by the Registrar and Transfer Agent of the Company.
This certificate shall be governed by and
construed in accordance with the internal laws of the State of New York.
Witness the facsimile signatures of its
duly authorized officers.
| By: |
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Chief Executive Officer |
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Chief
Operating Officer |
Consonance-HFW Acquisition Corp.
The Company will furnish
without charge to each unitholder who so requests, a statement of the powers, designations, preferences and relative, participating,
optional or other special rights of each class of shares or series thereof of the Company and the qualifications, limitations,
or restrictions of such preferences and/or rights.
The following abbreviations,
when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according
to applicable laws or regulations:
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as tenants in common |
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as tenants by the entireties |
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as joint tenants with right of survivorship and not as tenants in common |
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under Uniform Gifts to Minors Act |
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Additional abbreviations may also be used
though not in the above list.
For value received,
hereby sells, assigns and transfers unto
(PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE)
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING
ZIP CODE, OF ASSIGNEE)
Units represented by the within Certificate,
and does hereby irrevocably constitute and appoint Attorney to transfer the said Units on the books of the within named
Company with full power of substitution in the premises.
Dated ____________
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Notice: The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular, without alteration or enlargement or any change whatever. |
Signature(s) Guaranteed:
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| THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15 OR ANY SUCCESSOR RULES). |
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In each case, as more fully described in
the Company’s final prospectus dated , 2020, the holder(s) of this certificate shall be entitled to receive a pro-rata
portion of certain funds held in the trust account established in connection with the Company’s initial public offering only
(i) in the event of the redemption of the Company’s Ordinary Shares sold in its initial public offering if the Company does
not consummate an initial business combination within the period of time set forth in the Company’s amended and restated
memorandum and articles of association, as the same may be amended from time to time, (ii) in connection with a shareholder vote
to amend the Company’s amended and restated memorandum and articles of association (A) to modify the substance or timing
of the Company’s obligation to provide holders of the Ordinary Shares the right to have their shares redeemed in connection
with the Company’s initial business combination or to redeem 100% of the Ordinary Shares if the Company does not complete
its initial business combination within the time period set forth therein or (B) with respect to any other provision relating to
the rights of holders of the Ordinary Shares, and (iii) if the holder(s) seek(s) to redeem for cash his, her, its or their respective
Ordinary Shares in connection with a tender offer (or proxy solicitation, solely in the event the Company seeks shareholder approval
of the proposed initial business combination) setting forth the details of a proposed initial business combination. In no other
circumstances shall the holder(s) have any right or interest of any kind to or in the trust account.
Exhibit 10.3
PRIVATE
PLACEMENT UNITS PURCHASE AGREEMENT
THIS
PRIVATE PLACEMENT UNITS PURCHASE AGREEMENT (as it may from time to time be amended and including all exhibits referenced
herein, this “Agreement”), dated as of [●], 2020, is entered into by and between Consonance-HFW
Acquisition Corp., a Cayman Islands exempted company (the “Company”), and Consonance Life Sciences, a
Cayman Islands exempted limited company (the “Purchaser”).
WHEREAS,
the Company intends to consummate an initial public offering (the “Public Offering”) of units of the
Company’s equity securities, each such unit comprised of one Class A ordinary share of the Company, par value $0.0001 per
share (each, a “Share”) and one-third of a redeemable warrant, each whole warrant entitling the
holder to purchase one Share at an exercise price of $11.50 per Share, as set forth in the Company’s Registration Statement
on Form S-1, filed with the U.S. Securities and Exchange Commission (the “SEC”), File Number 333-____,
under the Securities Act of 1933, as amended (the “Securities Act”).
WHEREAS,
the Purchaser has agreed to purchase an aggregate of 450,000 units (and up to 480,000 additional units if the
underwriters in the Public Offering exercise their option to purchase additional units in full) (the “Private
Placement Units”), each Private Placement Unit, including an aggregate of 150,000 private placement warrants
(the “Private Placement Warrants”) (or up to 160,000 Private Placement Warrants if the underwriters
exercise their option to purchase additional units in full) and 450,000 Shares (or up to 480,000 Shares if the underwriters
exercise their option to purchase additional units in full).
NOW THEREFORE, in consideration of the mutual
promises contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement hereby, intending legally to be bound, agree as follows:
AGREEMENT
Section
1. Authorization, Purchase and Sale; Terms of the Private
Placement Units.
A. Authorization
of the Private Placement Units. The Company has duly authorized the issuance and sale of the Private Placement Units,
including the Shares and Private Placement Warrants underlying the Private Placement Units, to the Purchaser.
B. Purchase
and Sale of the Private Placement Units.
(i) On
the date of the consummation of the Public Offering (the “IPO Closing Date”), the Company shall
issue and sell to the Purchaser, and the Purchaser shall purchase from the Company, 450,000 Private Placement Units
at a price of $10.00 per Private Placement Unit for an aggregate purchase price of $4,500,000 (the “Purchase
Price”). The Purchaser shall pay the Purchase Price by wire transfer of immediately available funds in the
following amounts: (i) $500,000 to the Company at a financial institution to be chosen by the Company, and (ii) $4,000,000 to
the trust account (the “Trust Account”) maintained by Continental Stock Transfer & Trust
Company, acting as trustee, in each case in accordance with the Company’s wiring instructions, at least one (1)
business day prior to the IPO Closing Date. On the IPO Closing Date, subject to the receipt of funds pursuant to the
immediately prior sentence, the Company, at its option, shall deliver a certificate evidencing the Private Placement Units
purchased by the Purchaser on such date duly registered in the Purchaser’s name to the Purchaser or effect such
delivery in book-entry form.
(ii) On
the date of any closing of the option to purchase additional units, if any, in connection with the Public Offering or on
such earlier time and date as may be mutually agreed by the Purchaser and the Company (each such date, an “Option Closing
Date”, and each Option Closing Date (if any) and the IPO Closing Date, a “Closing Date”),
the Company shall issue and sell to the Purchaser, and the Purchaser shall purchase from the Company, up to 30,000 Private Placement
Units (or, to the extent the option to purchase additional units is not exercised in full, a lesser number of Private Placement
Units in proportion to portion of the option that is exercised) at a price of $10.00 per Private Placement Unit for an aggregate
purchase price of up to $300,000 (the “Option Purchase Price”). The Purchaser shall pay the Option Purchase
Price in accordance with the Company’s wire instruction by wire transfer of immediately available funds to the Trust Account,
at least one (1) business day prior to any Option Closing Date. On each Option Closing Date (if any), subject to the receipt of
funds pursuant to the immediately prior sentence, the Company shall, at its option, deliver a certificate evidencing the Private
Placement Units purchased on such date duly registered in the Purchaser’s name to the Purchaser or effect such delivery in
book-entry form.
C. Terms
of the Private Placement Units.
(i) The
Private Placement Units are substantially identical to the units to be offered in the Public Offering except: (a) as provided
in that letter agreement, dated as of the date hereof (the “Letter Agreement”), by and among the Company,
the Purchaser and each of the Company’s officers, directors and director nominees, and (b) the Private Placement Units are
being purchased pursuant to an exemption from the registration requirements of the Securities Act and will become freely tradable
only after the expiration of the lockup described above in the Letter Agreement and they are registered pursuant to the Registration
and Shareholder Rights Agreement (as defined below) or an exemption from registration is available, and the restrictions described
above in clause (a) have expired.
(ii) Each
Private Placement Warrant included in the Private Placement Units shall have the terms set forth in a Warrant Agreement to be entered
into by the Company and a warrant agent, in connection with the Public Offering (the “Warrant Agreement”).
(iii) On
the IPO Closing Date, the Company and the Purchaser shall enter into a registration and shareholder rights agreement (the “Registration
and Shareholder Rights Agreement”) pursuant to which the Company will grant certain registration rights to the Purchaser
relating to the Private Placement Units, the Private Placement Warrants and the Shares underlying the Private Placement Warrants
and the Private Placement Units.
Section
2. Representations and Warranties of the Company.
As a material inducement to the Purchaser to enter into this Agreement and purchase the Private Placement Units, the Company hereby
represents and warrants to the Purchaser (which representations and warranties shall survive each Closing Date) that:
A. Incorporation
and Corporate Power. The Company is an exempted company duly incorporated, validly existing and in good standing under the
laws of the Cayman Islands and is qualified to do business in every jurisdiction in which the failure to so qualify would reasonably
be expected to have a material adverse effect on the financial condition, operating results or assets of the Company. The Company
possesses all requisite corporate power and authority necessary to carry out the transactions contemplated by this Agreement
and the Warrant Agreement.
B. Authorization;
No Breach.
(i) The
execution, delivery and performance of this Agreement and the Private Placement Units, including the Shares and the Private
Placement Warrants included in the Private Placement Units, have been duly authorized by the Company as of the Closing Date. This
Agreement constitutes the valid and binding obligation of the Company, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other laws of general applicability relating to or affecting
creditors’ rights and to general equitable principles (whether considered in a proceeding in equity or law). Upon issuance
in accordance with, and payment pursuant to, the terms of this Agreement and the Warrant Agreement, the Private Placement Units
and the Private Placement Warrants included in the Private Placement Units will constitute valid and binding obligations of the
Company, enforceable in accordance with their terms as of the Closing Date.
(ii) The
execution and delivery by the Company of this Agreement and the Private Placement Units, the issuance and sale of the Private Placement
Units, the issuance of the Private Placement Warrants and the Shares included in the Private Placement Units, the issuance
of the Shares upon exercise of the Private Placement Warrants and the fulfillment of and compliance with the respective terms hereof
and thereof by the Company, do not and will not as of each Closing Date (a) conflict with or result in a breach of the terms, conditions
or provisions of, (b) constitute a default under, (c) result in the creation of any lien, security interest, charge or encumbrance
upon the Company’s share capital or assets under, (d) result in a violation of, or (e) require any authorization, consent,
approval, exemption or other action by or notice or declaration to, or filing with, any court or administrative or governmental
body or agency pursuant to the amended and restated memorandum and articles of association of the Company (in effect on the date
hereof or as may be amended prior to completion of the contemplated Public Offering) or any material law, statute, rule or regulation
to which the Company is subject, or any agreement, order, judgment or decree to which the Company is subject, except for any filings
required after the date hereof under federal or state securities laws.
C. Title
to Securities. Upon issuance in accordance with, and payment pursuant to, the terms hereof and the Warrant Agreement,
and upon registration in the Company’s register of members, the Shares included in the Private Placement Units and issuable
upon exercise of the Private Placement Warrants will be duly and validly issued, fully paid and nonassessable. On the date of issuance
of the Private Placement Units, the Shares included in the Private Placement Units and issuable upon exercise of the Private Placement
Warrants shall have been reserved for issuance. Upon issuance in accordance with, and payment pursuant to, the terms hereof and
the Warrant Agreement, and upon registration in the Company’s register of members, the Purchaser will have good title to
the Private Placement Units purchased by it, the Private Placement Warrants and Shares included in the Private Placement Units
and the Shares issuable upon exercise of such Private Placement Warrants, free and clear of all liens, claims and encumbrances
of any kind, other than (i) transfer restrictions hereunder and under the other agreements contemplated hereby, (ii) transfer restrictions
under federal and state securities laws, and (iii) liens, claims or encumbrances imposed due to the actions of the Purchaser.
D. Governmental
Consents. No permit, consent, approval or authorization of, or declaration to or filing with, any governmental authority is
required in connection with the execution, delivery and performance by the Company of this Agreement or the consummation by the
Company of any other transactions contemplated hereby.
E. Regulation
D Qualification. Neither the Company nor, to its actual knowledge, any of its affiliates, members, officers, directors or
beneficial shareholders of 20% or more of its outstanding securities, has experienced a disqualifying event as enumerated pursuant
to Rule 506(d) of Regulation D under the Securities Act.
Section
3. Representations
and Warranties of the Purchaser. As a material inducement to the Company to enter into this Agreement and issue and sell the
Private Placement Units to the Purchaser, the Purchaser hereby represents and warrants to the Company (which representations and
warranties shall survive each Closing Date) that:
A. Organization
and Requisite Authority. The Purchaser possesses all requisite power and authority necessary to carry out the transactions
contemplated by this Agreement.
B. Authorization;
No Breach.
(i) This
Agreement constitutes a valid and binding obligation of the Purchaser, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other laws of general applicability relating to or affecting
creditors’ rights and to general equitable principles (whether considered in a proceeding in equity or law).
(ii) The
execution and delivery by the Purchaser of this Agreement and the fulfillment of and compliance with the terms hereof by the Purchaser
does not and shall not as of each Closing Date (a) conflict with or result in a breach by the Purchaser of the terms, conditions
or provisions of, (b) constitute a default under, (c) result in the creation of any lien, security interest, charge or encumbrance
upon the Purchaser’s equity or assets under, (d) result in a violation of, or (e) require authorization, consent, approval,
exemption or other action by or notice or declaration to, or filing with, any court or administrative or governmental body or agency
pursuant to the Purchaser’s organizational documents in effect on the date hereof or as may be amended prior to completion
of the contemplated Public Offering, or any material law, statute, rule or regulation to which the Purchaser is subject, or any
agreement, instrument, order, judgment or decree to which the Purchaser is subject, except for any filings required after the date
hereof under federal or state securities laws.
C. Investment
Representations.
(i) The
Purchaser is acquiring the Private Placement Units, the Shares and Private Placement Warrants included in the Private Placement
Units and, upon exercise of such Private Placement Warrants, the Shares issuable upon such exercise (collectively, the “Securities”)
for its own account, for investment purposes only and not with a view towards, or for resale in connection with, any public sale
or distribution thereof.
(ii) The
Purchaser is an “accredited investor” as such term is defined in Rule 501(a)(3) of Regulation D under
the Securities Act, and the Purchaser has not experienced a disqualifying event as enumerated pursuant to Rule 506(d) of Regulation
D under the Securities Act.
(iii) The
Purchaser understands that the Securities are being offered and will be sold to it in reliance on specific exemptions from
the registration requirements of the United States federal and state securities laws and that the Company is relying upon the truth
and accuracy of, and the Purchaser’s compliance with, the representations and warranties of the Purchaser set forth herein
in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire such Securities.
(iv) The
Purchaser did not decide to enter into this Agreement as a result of any general solicitation or general advertising within the
meaning of Rule 502(c) of Regulation D under the Securities Act.
(v) The
Purchaser has been furnished with all materials relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities which have been requested by the Purchaser. The Purchaser has been afforded
the opportunity to ask questions of the executive officers and directors of the Company. The Purchaser understands that its investment
in the Securities involves a high degree of risk and it has sought such accounting, legal and tax advice as it has considered necessary
to make an informed investment decision with respect to the acquisition of the Securities.
(vi) The
Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on
or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities
by the Purchaser nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
(vii) The
Purchaser understands that: (a) the Securities have not been and are not being registered under the Securities Act or any
state securities laws, and may not be offered for sale, sold, assigned or transferred unless (1) subsequently registered thereunder
or (2) sold in reliance on an exemption therefrom; and (b) except as specifically set forth in the Registration and Shareholder
Rights Agreement, neither the Company nor any other person is under any obligation to register the Securities under the Securities
Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. In this regard, the Purchaser
understands that the SEC has taken the position that promoters or affiliates of a blank check company and their transferees, both
before and after an initial Business Combination, are deemed to be “underwriters” under the Securities
Act when reselling the securities of a blank check company. Based on that position, Rule 144 adopted pursuant to the Securities
Act would not be available for resale transactions of the Securities despite technical compliance with the requirements of such
Rule, and the Securities can be resold only through a registered offering or in reliance upon another exemption from the registration
requirements of the Securities Act.
(viii) The
Purchaser has such knowledge and experience in financial and business matters, knowledge of the high degree of risk associated
with investments in the securities of companies in the development stage such as the Company, is capable of evaluating the merits
and risks of an investment in the Securities and is able to bear the economic risk of an investment in the Securities in
the amount contemplated hereunder for an indefinite period of time. The Purchaser has adequate means of providing for its current
financial needs and contingencies and will have no current or anticipated future needs for liquidity which would be jeopardized
by the investment in the Securities. The Purchaser can afford a complete loss of its investments in the Securities.
(ix) The
Purchaser understands that the Private Placement Units and the Shares included in the Private Placement Units shall bear
the following legend and appropriate “stop transfer restrictions”:
“THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, 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 SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS
WHICH, IN THE OPINION OF COUNSEL, IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO LOCKUP PROVISIONS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF DURING THE TERM OF
THE LOCKUP.”
(x) The
Purchaser understands that the Private Placement Warrants shall bear the legend substantially in the form set forth in the Warrant
Agreement.
Section
4. Conditions of the Purchaser’s Obligations.
The obligations of the Purchaser to purchase and pay for the Private Placement Units are subject to the fulfillment, on or before
each Closing Date, of each of the following conditions:
A. Representations
and Warranties. The representations and warranties of the Company contained in Section 2 shall be true and correct at and as
of such Closing Date as though then made.
B. Performance.
The Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before such Closing Date.
C. No
Injunction. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby, which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Warrant Agreement.
D. Warrant
Agreement and Registration and Shareholder Rights Agreement. The Company shall have entered into the Warrant Agreement, in
the form of Exhibit A hereto, and the Registration and Shareholder Rights Agreement, in the form of Exhibit B hereto,
in each case on terms satisfactory to the Purchaser.
Section
5. Conditions of the Company’s Obligations.
The obligations of the Company to the Purchaser under this Agreement are subject to the fulfillment, on or before each Closing
Date, of each of the following conditions:
A. Representations
and Warranties. The representations and warranties of the Purchaser contained in Section 3 shall be true and correct at and
as of such Closing Date as though then made.
B. Performance.
The Purchaser shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by the Purchaser on or before such Closing Date.
C. Corporate
Consents. The Company shall have obtained the consent of its board of directors authorizing the execution, delivery and performance
of this Agreement and the Warrant Agreement and the issuance and sale of the Private Placement Units hereunder.
D. No
Injunction. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby, which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Warrant Agreement.
E.
Warrant Agreement. The Company shall have entered into the Warrant
Agreement.
Section
6. Miscellaneous.
A. Successors and Assigns.
Except as otherwise expressly provided herein, all covenants and agreements contained in this Agreement by or on behalf of any
of the parties hereto shall bind and inure to the benefit of the respective successors of the parties hereto whether so expressed
or not. Notwithstanding the foregoing or anything to the contrary herein, the parties may not assign this Agreement, other than
assignments by the Purchaser to affiliates thereof (including, without limitation one or more of its members).
B. Severability.
Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.
C. Counterparts.
This Agreement may be executed simultaneously in two or more counterparts, none of which need contain the signatures of more than
one party, but all such counterparts taken together shall constitute one and the same agreement. Signatures to this Agreement transmitted
via facsimile or e-mail shall be valid and effective to bind the party so signing.
D. Descriptive
Headings; Interpretation. The descriptive headings of this Agreement are inserted for convenience only and do not constitute
a substantive part of this Agreement. The use of the word “including” in this Agreement shall be by way of example
rather than by limitation.
E. Governing
Law. This Agreement shall be deemed to be a contract made under the laws of the State of New York and for all purposes shall
be construed in accordance with the internal laws of the State of New York, without giving effect to conflicts of law principles
that would result in the application of the laws of another jurisdiction.
F. Amendments.
This Agreement may not be amended, modified or waived as to any particular provision, except by a written instrument executed by
the parties hereto.
[Signature page follows]
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement.
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COMPANY: |
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CONSONANCE-HFW ACQUISITION CORP. |
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Name: |
Gad Soffer |
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Title: |
Chief Executive Officer |
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PURCHASER: |
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CONSONANCE LIFE SCIENCES |
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By: |
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Name: |
Gad Soffer |
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Title: |
Member |
EXHIBIT A
Warrant
Agreement
EXHIBIT
B
Registration and Shareholder Rights Agreement
Exhibit 10.4
INDEMNIFICATION
AGREEMENT
THIS INDEMNIFICATION
AGREEMENT (the “Agreement”) is made and entered into as of [_____], 2020 between Consonance-HFW Acquisition
Corp., a Cayman Islands exempted company (the “Company”), and [_____] (“Indemnitee”).
WITNESSETH THAT:
WHEREAS, highly
competent persons have become more reluctant to serve companies and corporations as directors or in other capacities unless they
are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions
against them arising out of their service to and activities on behalf of the company;
WHEREAS, the
Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified
individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons
serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary
and widespread practice among United States-based corporations, companies and other business enterprises, the Company believes
that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and
with more exclusions. At the same time, directors, officers, and other persons in service to corporations, companies or business
enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters
that traditionally would have been brought only against the Company or business enterprise itself. The Amended and Restated Memorandum
and Articles of Association of the Company (the "Articles") requires indemnification of the officers and directors
of the Company. The Articles expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby
contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect
to indemnification;
WHEREAS, the
uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such
persons;
WHEREAS, the
Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests
of the Company’s shareholders and that the Company should act to assure such persons that there will be increased certainty
of such protection in the future;
WHEREAS, it
is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on
behalf of, such persons to the fullest extent permitted by and the Articles so that they will serve or continue to serve the Company
free from undue concern that they will not be so indemnified;
WHEREAS, this
Agreement is a supplement to and in furtherance of the Articles and any resolutions adopted pursuant thereto, and shall not be
deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; and
WHEREAS, Indemnitee
does not regard the protection available under the Articles and insurance as adequate in the present circumstances, and may not
be willing to serve as an officer or director without adequate protection, and the Company desires Indemnitee to serve in such
capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on
the condition that he be so indemnified.
NOW, THEREFORE,
in consideration of Indemnitee’s agreement to serve as a director from and after the date hereof, the parties hereto agree
as follows:
1.
Indemnity of Indemnitee. The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest
extent permitted by applicable law and the Articles, as such may be amended from time to time. In furtherance of the foregoing
indemnification, and without limiting the generality thereof:
(a)
Proceedings Other Than Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the
rights of indemnification provided in this Section 1(a) if, by reason of his Corporate Status (as hereinafter defined),
the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than
a Proceeding by or in the right of the Company. Pursuant to this Section 1(a), Indemnitee shall be indemnified against
all Expenses (as hereinafter defined), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred
by him, or on his behalf, in connection with such Proceeding or any claim, issue or matter therein, if the Indemnitee acted in
good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and
with respect to any criminal Proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful.
(b)
Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification
provided in this Section 1(b) if, by reason of his Corporate Status, the Indemnitee is, or is threatened to be made,
a party to or participant in any Proceeding brought by or in the right of the Company. Pursuant to this Section 1(b),
Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee, or on the Indemnitee’s
behalf, in connection with such Proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company; provided, however, if and the Articles so provides, no indemnification
against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have
been adjudged to be liable to the Company unless and to the extent that a state or federal court in the Borough of Manhattan in
the State of New York (the “NY Court”) shall determine that such indemnification may be made.
(c)
Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision
of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits
or otherwise, in any Proceeding, he shall be indemnified to the maximum extent permitted by applicable law and the Articles, as
such may be amended from time to time, against all Expenses actually and reasonably incurred by him or on his behalf in connection
therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or
more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses
actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter.
For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal,
with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
2. Additional
Indemnity. In addition to, and without regard to any limitations on, the indemnification provided for in Section 1
of this Agreement, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his
Corporate Status, he is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by
or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or
passive wrongdoing of Indemnitee. The only limitation that shall exist upon the Company’s obligations pursuant to this
Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined
(under the procedures, and subject to the presumptions, set forth in Sections 6 and 7
hereof) to be unlawful.
3.
Contribution.
(a)
Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect
of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would
be if joined in such action, suit or proceeding), the Company shall pay, in the first instance, the entire amount of any judgment
or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby
waives and relinquishes any right of contribution it may have against Indemnitee. The Company shall not enter into any settlement
of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action,
suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.
(b)
Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for
any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending
or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action,
suit or proceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually
and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all
officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if
joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction or events
from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative
benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and
all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if
joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the transaction
or events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations
which and the Articles may require to be considered. The relative fault of the Company and all officers, directors or employees
of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding),
on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which
their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or
secondary and the degree to which their conduct is active or passive.
(c)
The Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may
be brought by officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.
(d) To
the fullest extent permitted by applicable law and the Articles, if the indemnification provided for in this Agreement is
unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the
amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in
settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such
proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect
(i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s)
giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees
and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
4.
Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent
that Indemnitee is, by reason of his Corporate Status, a witness, or is made (or asked) to respond to discovery requests, in any
Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by
him or on his behalf in connection therewith.
5.
Advancement of Expenses. Notwithstanding any other provision of this Agreement, the Company shall advance
all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate
Status within thirty (30) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance
or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall
reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written undertaking
by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled
to be indemnified against such Expenses. Any advances and undertakings to repay pursuant to this Section 5 shall be
unsecured and interest free.
6.
Procedures and Presumptions for Determination of Entitlement to Indemnification. It is the intent of this
Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the Articles. Accordingly,
the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee
is entitled to indemnification under this Agreement:
(a)
To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including
therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to
determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification. Notwithstanding
the foregoing, any failure of Indemnitee to provide such a request to the Company, or to provide such a request in a timely fashion,
shall not relieve the Company of any liability that it may have to Indemnitee unless, and to the extent that, such failure actually
and materially prejudices the interests of the Company.
(b)
Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a)
hereof, a determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the
following four methods, which shall be at the election of the Board: (i) by a majority vote of the disinterested directors,
even though less than a quorum, (ii) by a committee of disinterested directors designated by a majority vote of the disinterested
directors, even though less than a quorum, (iii) if there are no disinterested directors or if the disinterested directors
so direct, by independent legal counsel in a written opinion to the Board, a copy of which shall be delivered to the Indemnitee,
or (iv) if so directed by the Board, by the shareholders of the Company. For purposes hereof, disinterested directors are
those members of the Board who are not parties to the action, suit or proceeding in respect of which indemnification is sought
by Indemnitee.
(c) If
the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) hereof,
the Independent Counsel shall be selected as provided in this Section 6(c). The Independent Counsel shall be
selected by the Board. Indemnitee may, within ten (10) days after such written notice of selection shall have been given,
deliver to the Company a written objection to such selection; provided, however, that such objection may be asserted
only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent
Counsel” as defined in Section 13 of
this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and
timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated,
the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court
has determined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written
request for indemnification pursuant to Section 6(a) hereof, no Independent Counsel shall have been selected and
not objected to, either the Company or Indemnitee may petition an NY Court or other court of competent jurisdiction for
resolution of any objection which shall have been made by the Indemnitee to the Company’s selection of Independent
Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the
court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall
act as Independent Counsel under Section 6(b) hereof. The Company shall pay any and all reasonable fees and
expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) hereof,
and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c),
regardless of the manner in which such Independent Counsel was selected or appointed.
(d)
In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity
making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to
overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. Neither
the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the
commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has
met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or independent legal
counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct.
(e)
Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books
of account of the Enterprise (as hereinafter defined), including financial statements, or on information supplied to Indemnitee
by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information
or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any director,
officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification
under this Agreement. Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event
be presumed that Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden
of persuasion by clear and convincing evidence.
(f) If
the person, persons or entity empowered or selected under Section 6 to determine whether Indemnitee is entitled
to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request
therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee
shall be entitled to such indemnification absent (i) a misstatement by Indemnitee of a material fact, or an omission of
a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under and the Articles; provided, however, that
such sixty (60) day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the
person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires
such additional time to obtain or evaluate documentation and/or information relating thereto and; provided, further,
that the foregoing provisions of this Section 6(f) shall
not apply if the determination of entitlement to indemnification is to be made by the shareholders pursuant to Section 6(b)
of this Agreement and if (i) within fifteen (15) days after receipt by the Company of the request for such
determination, the Board or the Disinterested Directors, if appropriate, resolve to submit such determination to the
shareholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt
and such determination is made thereat, or (ii) a special meeting of shareholders is called within fifteen (15) days
after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days
after having been so called and such determination is made thereat.
(g)
Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s
entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation
or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and
reasonably necessary to such determination. Any Independent Counsel, member of the Board or shareholders of the Company shall act
reasonably and in good faith in making a determination regarding the Indemnitee’s entitlement to indemnification under this
Agreement. Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with
the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to
Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
(h)
The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits
a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any action, claim or proceeding to
which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation,
settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that
Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding. Anyone seeking to overcome this presumption
shall have the burden of proof and the burden of persuasion by clear and convincing evidence.
(i)
The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction,
or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement)
of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect
to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.
7.
Remedies of Indemnitee.
(a) In
the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not
entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of
this Agreement, (iii) no determination of entitlement to indemnification is made pursuant to Section 6(b) of
this Agreement within ninety (90) days after receipt by the Company of the request for indemnification, (iv) payment of
indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request
therefor, or (v) payment of indemnification is not made within ten (10) days after a determination has been made that
Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6
of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate NY Court, or in any other court of
competent jurisdiction, of Indemnitee’s entitlement to such indemnification. Indemnitee shall commence such proceeding
seeking an adjudication within one hundred eighty (180) days following the date on which Indemnitee first has the right to
commence such proceeding pursuant to this Section 7(a).
The Company shall not oppose Indemnitee’s right to seek any such adjudication.
(b)
In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that
Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be
conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the
adverse determination under Section 6(b).
(c)
If a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is
entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to
this Section 7, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact
necessary to make Indemnitee’s misstatement not materially misleading in connection with the application for indemnification,
or (ii) a prohibition of such indemnification under and the Articles.
(d)
In the event that Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of his rights
under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability
insurance policies maintained by the Company, the Company shall pay on his behalf, in advance, any and all expenses (of the types
described in the definition of Expenses in Section 13 of this Agreement) actually and reasonably incurred by him in
such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement
of expenses or insurance recovery.
(e)
The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7
that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court
that the Company is bound by all the provisions of this Agreement. The Company shall indemnify Indemnitee against any and all Expenses
and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefore) advance,
to the extent not prohibited by and the Articles, such expenses to Indemnitee, which are incurred by Indemnitee in connection with
any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any
directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately
is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.
(f)
Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification
under this Agreement shall be required to be made prior to the final disposition of the Proceeding.
8.
Non-Exclusivity; Survival of Rights; Insurance; Primacy of Indemnification; Subrogation.
(a) The
rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee
may at any time be entitled under and the Articles, any agreement, a vote of shareholders, a resolution of directors of the
Company, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or
restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his
Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in the laws of the Cayman
Islands, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the
Articles and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or
remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder
or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder,
or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
(b)
To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors,
officers, employees, or agents or fiduciaries of the Company or of any other company or corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise that such person serves at the request of the Company, Indemnitee 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 director,
officer, employee, agent or fiduciary under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant
to the terms hereof, the Company has directors’ and officers’ liability insurance in effect, the Company shall give
prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective
policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee,
all amounts payable as a result of such proceeding in accordance with the terms of such policies.
(c)
In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to
all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such
rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
(d)
The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder
if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement
or otherwise.
(e)
The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at
the request of the Company as a director, officer, employee or agent of any other company or corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification
or advancement of expenses from such other company or corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise.
9.
Exception to Right of Indemnification. Notwithstanding any provision in this Agreement, the Company shall
not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:
(a)
for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity
provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; provided,
that the foregoing shall not affect the rights of Indemnitee set forth in Section 8(c) above; or
(b)
for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of
the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions
of state statutory law or common law; or
(c)
in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding
(or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees,
unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company
provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under and the Articles.
10.
Duration of Agreement. All agreements and obligations of the Company contained herein shall continue during
the period Indemnitee is an officer or director of the Company (or is or was serving at the request of the Company as a director,
officer, employee or agent of another company or corporation, partnership, joint venture, trust or other enterprise) and shall
continue thereafter so long as Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section 7
hereof) by reason of his Corporate Status, whether or not he is acting or serving in any such capacity at the time any liability
or expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company),
assigns, spouses, heirs, executors and personal and legal representatives.
11.
Security. To the extent requested by Indemnitee and approved by the Board, the Company may at any time and
from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line
of credit, funded trust or other collateral. Any such security, once provided to Indemnitee, may not be revoked or released without
the prior written consent of the Indemnitee.
12.
Enforcement.
(a)
The Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed
on it hereby in order to induce Indemnitee to serve as an officer or director of the Company, and the Company acknowledges that
Indemnitee is relying upon this Agreement in serving as an officer or director of the Company.
(b)
This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the
subject matter hereof.
(c)
The Company shall not seek from a court, or agree to, a “bar order” which would have the effect of prohibiting
or limiting the Indemnitee’s rights to receive advancement of expenses under this Agreement.
13.
Definitions. For purposes of this Agreement:
(a)
“Corporate Status” describes the status of a person who is or was a director, officer, employee,
agent or fiduciary of the Company or of any other company or corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise that such person is or was serving at the express written request of the Company.
(b)
“Disinterested Director” means a director of the Company who is not and was not a party to the
Proceeding in respect of which indemnification is sought by Indemnitee.
(c)
“Enterprise” shall mean the Company and any other company or corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express written request of the
Company as a director, officer, employee, agent or fiduciary.
(d)
“Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript
costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding,
or responding to, or objecting to, a request to provide discovery in any Proceeding. Expenses also shall include Expenses incurred
in connection with any appeal resulting from any Proceeding and any federal, state, local or foreign taxes imposed on the Indemnitee
as a result of the actual or deemed receipt of any payments under this Agreement, including without limitation the premium, security
for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent. Expenses, however, shall
not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
(e)
“Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters
of company or corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the
Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under
this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding
giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel”
shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict
of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel
against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant
hereto.
(f)
“Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate
dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding,
whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in
which Indemnitee was, is or will be involved as a party or otherwise, by reason of his or her Corporate Status, by reason of any
action taken by him or of any inaction on his part while acting in his or her Corporate Status; in each case whether or not he
is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided
under this Agreement; including one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee
pursuant to Section 7 of this Agreement to enforce his rights under this Agreement.
14.
Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity
or enforceability of any other provision. Without limiting the generality of the foregoing, this Agreement is intended to confer
upon Indemnitee indemnification rights to the fullest extent permitted by and the Articles. In the event any provision hereof conflicts
with any and the Articles, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary
to resolve such conflict.
15. Modification
and Waiver. No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.
16.
Notice By Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with or
otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification covered hereunder. The failure to so notify the Company shall not relieve the
Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that
such failure or delay materially prejudices the Company.
17.
Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing
and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed
electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business
day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid,
or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent:
(a) To
Indemnitee at the address set forth below Indemnitee signature hereto.
(b) To
the Company at:
Consonance-HFW Acquisition Corp.
1 Palmer Square, Suite 305,
Princeton, NJ 08540
With a copy (which shall not constitute notice) to:
Daniel Espinoza
Goodwin Procter LLP
100 Northern Avenue
Boston, MA 02210
or to such other address as may have been
furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.
18.
Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same Agreement. Counterparts may be delivered via facsimile,
electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com)
or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid
and effective for all purposes.
19.
Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not
be deemed to constitute part of this Agreement or to affect the construction thereof.
20. Governing
Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York, without regard to its conflict of laws rules.
The Company and Indemnitee hereby irrevocably and unconditionally (a) agree that any action or proceeding arising out of
or in connection with this Agreement shall be brought only in the appropriate NY Court, and not in any other state or federal
court in the United States of America or any court in any other country, (b) consent to submit to the exclusive
jurisdiction of the NY Court for purposes of any action or proceeding arising out of or in connection with this Agreement,
(c) waive any objection to the laying of venue of any such action or proceeding in the NY Court, and (d) waive, and
agree not to plead or to make, any claim that any such action or proceeding brought in the NY Court has been brought in an
improper or inconvenient forum.
Signature Page To Follow
IN WITNESS WHEREOF,
the parties hereto have executed this Indemnification Agreement on and as of the day and year first above written.
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Consonance-HFW Acquisition Corp. |
[Signature Page to Indemnification Agreement]
Exhibit 10.5
Consonance-HFW Acquisition Corp.
[●], 2020
Consonance Life Sciences
1 Palmer Square,
Suite 305, Princeton, NJ 08540
Ladies and Gentlemen:
This letter will confirm our agreement that,
commencing on the effective date (the “Effective Date”) of the registration statement (the “Registration
Statement”) for the initial public offering (the “IPO”) of the securities of Consonance
HFW-Acquisition Corp. (the “Company”) and continuing until the earlier of (i) the consummation by the
Company of an initial business combination and (ii) the Company’s liquidation (in each case as described in the Registration
Statement) (such earlier date hereinafter referred to as the “Termination Date”), Consonance Life Sciences
(the “Sponsor”) shall take steps directly or indirectly to make available to the Company certain office
space, secretarial and administrative services as may be required by the Company from time to time, situated at 1 Palmer Square,
Suite 305, Princeton, NJ 08540 (or any successor location). In exchange therefore, the Company shall pay the Sponsor a sum of up
to $50,000 per month commencing on the Effective Date and continuing monthly thereafter until the Termination Date. Sponsor hereby
agrees that it does not have any right, title, interest or claim of any kind (a “Claim”) in or to any
monies that may be set aside in a trust account (the “Trust Account”) that may be established in connection
with and upon the consummation of the IPO and hereby irrevocably waives any Claim it presently has or 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, reimbursement,
payment or satisfaction of any Claim against the Trust Account or any monies or other assets in the Trust Account for any reason
whatsoever.
This letter agreement constitutes the entire
agreement and understanding of the parties hereto in respect of its subject matter 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 amended,
modified or waived as to any particular provision, except by a written instrument executed by the parties hereto.
The parties may not assign this letter agreement
and any of their rights, interests, or obligations hereunder without the consent of the other party. 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 governed
by, construed in accordance with, and interpreted pursuant to the laws of the State of New York, without giving effect to its choice
of laws principles that will apply the laws of another jurisdiction.
This letter agreement may be executed in
one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute
one and the same agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced
to evidence the existence of this letter agreement.
[Signature Page Follows]
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Consonance-HFW Acquisition Corp. |
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Gad Soffer |
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Chief Executive Officer |
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Gad Soffer |
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Member |
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[Signature Page to Administrative Services
Agreement]
Exhibit 10.6
THIS PROMISSORY NOTE (“NOTE”) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”). THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF REGISTRATION OF THE RESALE THEREOF UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
IN FORM, SCOPE AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
PROMISSORY NOTE
| Principal Amount: up to $300,000 |
Dated as of September 4, 2020 |
(as set forth on the Schedule of Borrowings
attached hereto)
Consonance-HFW Acquisition
Corp., a Cayman Islands exempted company and blank check company (the “Maker”), promises to pay to the order
of Consonance Life Sciences, a Cayman Islands limited liability company, or its registered assigns or successors in interest (the
“Payee”), or order, the principal sum of up to three hundred thousand U.S. dollars ($300,000) (as set forth
on the Schedule of Borrowings attached hereto) in lawful money of the United States of America, on the terms and conditions described
below. All payments on this Note shall be made by check or wire transfer of immediately available funds or as otherwise determined
by the Maker to such account as the Payee may from time to time designate by written notice in accordance with the provisions of
this Note.
1. Principal. The
principal balance of this Note shall be payable on the earlier of: (i) December 31, 2021 or (ii) the date on which Maker consummates
an initial public offering of its securities (the “IPO”). The principal balance may be prepaid at any time.
2. Interest. No
interest shall accrue on the unpaid principal balance of this Note.
3. Application of
Payments. All payments shall be applied first to payment in full of any costs incurred in the collection of any sum due under
this Note, including (without limitation) reasonable attorney’s fees, then to the payment in full of any late charges and
finally to the reduction of the unpaid principal balance of this Note.
4. Events of Default.
The following shall constitute an event of default (“Event of Default”):
(a) Failure to Make
Required Payments. Failure by Maker to pay the principal amount due pursuant to this Note within five (5) business days of
the date specified above.
(b) Voluntary Bankruptcy,
Etc. The commencement by Maker of a voluntary case under any applicable bankruptcy, insolvency, reorganization, rehabilitation
or other similar law, or the consent by it to the appointment of or taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) of Maker or for any substantial part of its property, or the making by it of
any assignment for the benefit of creditors, or the failure of Maker generally to pay its debts as such debts become due, or the
taking of corporate action by Maker in furtherance of any of the foregoing.
(c) Involuntary Bankruptcy,
Etc. The entry of a decree or order for relief by a court having jurisdiction in the premises in respect of Maker in an involuntary
case under any applicable bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of Maker or for any substantial part of its property, or ordering the winding-up or
liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive
days.
5. Remedies.
(a) Upon the occurrence
of an Event of Default specified in Section 4(a) hereof, Payee may, by written notice to Maker, declare this Note to be due immediately
and payable, whereupon the unpaid principal amount of this Note, and all other amounts payable thereunder, shall become immediately
due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything
contained herein or in the documents evidencing the same to the contrary notwithstanding.
(b) Upon the occurrence
of an Event of Default specified in Sections 4(b) and 4(c), the unpaid principal balance of this Note, and all other sums payable
with regard to this Note, shall automatically and immediately become due and payable, in all cases without any action on the part
of Payee.
6. Waivers. Maker
and all endorsers and guarantors of, and sureties for, this Note waive presentment for payment, demand, notice of dishonor, protest,
and notice of protest with regard to the Note, all errors, defects and imperfections in any proceedings instituted by Payee under
the terms of this Note, and all benefits that might accrue to Maker by virtue of any present or future laws exempting any property,
real or personal, or any part of the proceeds arising from any sale of any such property, from attachment, levy or sale under execution,
or providing for any stay of execution, exemption from civil process, or extension of time for payment; and Maker agrees that any
real estate that may be levied upon pursuant to a judgment obtained by virtue hereof, on any writ of execution issued hereon, may
be sold upon any such writ in whole or in part in any order desired by Payee.
7. Unconditional
Liability. Maker hereby waives all notices in connection with the delivery, acceptance, performance, default, or enforcement
of the payment of this Note, and agrees that its liability shall be unconditional, without regard to the liability of any other
party, and shall not be affected in any manner by any indulgence, extension of time, renewal, waiver or modification granted or
consented to by Payee, and consents to any and all extensions of time, renewals, waivers, or modifications that may be granted
by Payee with respect to the payment or other provisions of this Note, and agrees that additional makers, endorsers, guarantors,
or sureties may become parties hereto without notice to Maker or affecting Maker’s liability hereunder.
8. Notices. All
notices, statements or other documents which are required or contemplated by this Agreement shall be: (i) in writing and delivered
personally or sent by first class registered or certified mail, overnight courier service or facsimile or electronic transmission
to the address designated in writing, (ii) by facsimile to the number most recently provided to such party or such other address
or fax number as may be designated in writing by such party and (iii) by electronic mail, to the electronic mail address most recently
provided to such party or such other electronic mail address as may be designated in writing by such party. Any notice or other
communication so transmitted shall be deemed to have been given on the day of delivery, if delivered personally, on the business
day following receipt of written confirmation, if sent by facsimile or electronic transmission, one (1) business day after delivery
to an overnight courier service or five (5) days after mailing if sent by mail.
9. Construction.
THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS
THEREOF.
10. Severability. Any
provision contained in this Note which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
11. Trust Waiver.
Notwithstanding anything herein to the contrary, the Payee hereby waives any and all right, title, interest or claim of any
kind (“Claim”) in or to any distribution of or from the trust account to be established in which the proceeds
of the IPO conducted by the Maker (including the deferred underwriters discounts and commissions) and the proceeds of the sale
of the warrants issued in a private placement to occur prior to the consummation of the IPO are to be deposited, as described in
greater detail in the registration statement and prospectus to be filed with the Securities and Exchange Commission in connection
with the IPO, and hereby agrees not to seek recourse, reimbursement, payment or satisfaction for any Claim against the trust account
for any reason whatsoever.
12. Amendment; Waiver.
Any amendment hereto or waiver of any provision hereof may be made with, and only with, the written consent of the Maker and
the Payee.
13. Assignment.
No assignment or transfer of this Note or any rights or obligations hereunder may be made by any party hereto (by operation
of law or otherwise) without the prior written consent of the other party hereto and any attempted assignment without the required
consent shall be void.
[Signature page follows]
IN WITNESS WHEREOF,
Maker, intending to be legally bound hereby, has caused this Note to be duly executed by the undersigned as of the day and year
first above written.
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Consonance-HFW Acquisition Corp. |
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a Cayman Islands exempted company |
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By: |
/s/ Kevin
Livingston |
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Name: Kevin Livingston |
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Title: Chief Executive Officer |
SCHEDULE OF BORROWINGS
The following increases or decreases in
this Promissory Note have been made:
Date of Increase or
Decrease | |
Amount of decrease in
Principal Amount of this
Promissory Note | |
Amount of increase in
Principal Amount of this
Promissory Note | |
Principal Amount of this
Promissory Note
following such decrease
or increase |
Exhibit 10.7
Consonance-HFW Acquisition Corp.
September 4, 2020
Consonance Life Sciences, LLC
| RE: |
Securities Subscription Agreement |
Gentlemen:
This agreement (this
“Agreement”) is entered into on September 4, 2020 by and between Consonance Life Sciences, LLC, a Cayman Islands
exempted company (the “Subscriber” or “you”), and Consonance-HFW Acquisition Corp., a Cayman
Islands limited liability company (the “Company”). Pursuant to the terms hereof, the Company hereby accepts
the offer the Subscriber has made to subscribe for and purchase 3,593,750 Class B ordinary shares, $0.0001 par value per share
(the “Shares”), up to 468,750 of which are subject to forfeiture by you if the underwriters of the initial public
offering (“IPO”) of units (“Units”) of the Company do not fully exercise their over-allotment
option (the “Over-allotment Option”). The Company and the Subscriber’s agreements regarding such Shares
are as follows:
1. Subscription and Purchase of Securities. For the sum
of $25,000 (the “Purchase Price”), which the Company acknowledges receiving in cash, the Company hereby issues
the Shares to the Subscriber, and the Subscriber hereby subscribes for and purchases the Shares from the Company, 468,750 of which
are subject to forfeiture, on the terms and subject to the conditions set forth in this Agreement. All references in this Agreement
to shares of the Company being forfeited shall take effect as surrenders for no consideration of such shares as a matter of Cayman
Islands law. Upon the issuance of the Shares, the Subscriber hereby surrenders for no consideration the one Class B ordinary share
of the Company held by it following the incorporation of the Company.
2. Representations, Warranties and Agreements.
2.1 Subscriber’s
Representations, Warranties and Agreements. To induce the Company to issue the Shares to the Subscriber, the Subscriber hereby
represents and warrants to the Company and agrees with the Company as follows:
2.1.1 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 offering of the Shares.
2.1.2 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 limited liability company agreement of the Subscriber,
(ii) any agreement, indenture 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.
2.1.3 Registration
and Authority. The Subscriber is a Cayman Islands limited liability company, formed and registered, validly existing and possessing
all requisite power and authority necessary to carry out the transactions contemplated by this Agreement. Upon execution and delivery
by you, this Agreement will be a legal, valid and binding agreement of Subscriber, enforceable against Subscriber in accordance
with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance or similar
laws affecting the enforcement of creditors’ rights generally and subject to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity).
2.1.4 Experience,
Financial Capability and Suitability. Subscriber is: (i) sophisticated in financial matters and is able to evaluate the
risks and benefits of the investment in the Shares and (ii) able to bear the economic risk of its investment in the Shares
for an indefinite period of time because the Shares have not been registered under the Securities Act (as defined below) and
therefore cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is
available. Subscriber is capable of evaluating the merits and risks of its investment in the Company and has the capacity to
protect its own interests. Subscriber must bear the economic risk of this investment until the Shares are sold pursuant to:
(i) an effective registration statement under the Securities Act or (ii) an exemption from registration available with
respect to such sale. Subscriber is able to bear the economic risks of an investment in the Shares and to afford a complete
loss of Subscriber’s investment in the Shares.
2.1.5 Access to Information;
Independent Investigation. Prior to the execution of this Agreement, the Subscriber has had the opportunity to ask questions
of and receive answers from representatives of the Company concerning an investment in the Company, as well as the finances, operations,
business and prospects of the Company, and the opportunity to obtain additional information to verify the accuracy of all information
so obtained. In determining whether to make this investment, Subscriber has relied solely on Subscriber’s own knowledge and
understanding of the Company and its business based upon Subscriber’s own due diligence investigation and the information
furnished pursuant to this paragraph. Subscriber understands that no person has been authorized to give any information or to make
any representations which were not furnished pursuant to this Section 2 and Subscriber has not relied on any other representations
or information in making its investment decision, whether written or oral, relating to the Company, its operations and/or its prospects.
2.1.6 Regulation D
Offering. 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 the sale contemplated
hereby is being made in reliance on a private placement exemption to “accredited investors” within the meaning of Section
501(a) of Regulation D under the Securities Act or similar exemptions under federal and state law.
2.1.7 Investment Purposes.
The Subscriber is purchasing the Shares solely for investment purposes, for the Subscriber’s own account and not for the
account or benefit of any other person, and not with a view towards the distribution or dissemination thereof. The Subscriber did
not decide to enter into this Agreement as a result of any general solicitation or general advertising within the meaning of Rule
502 under the Securities Act.
2.1.8 Restrictions
on Transfer; Shell Company. Subscriber understands the Shares are being offered in a transaction not involving a public offering
within the meaning of the Securities Act. Subscriber understands the Shares will be “restricted securities” within
the meaning of Rule 144(a)(3) under the Securities Act, and Subscriber understands that the certificates representing the Shares
will contain a legend in respect of such restrictions. If in the future the Subscriber decides to offer, resell, pledge or otherwise
transfer the Shares, such Shares may be offered, resold, pledged or otherwise transferred only pursuant to: (i) registration under
the Securities Act, or (ii) an available exemption from registration. Subscriber agrees that if any transfer of its Shares or any
interest therein is proposed to be made, as a condition precedent to any such transfer, Subscriber may be required to deliver to
the Company an opinion of counsel satisfactory to the Company. Absent registration or an exemption, the Subscriber agrees not to
resell the Shares. 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 Shares until one year 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.
2.1.9 No Governmental
Consents. No governmental, administrative or other third party consents or approvals are required or necessary on the part
of Subscriber in connection with the transactions contemplated by this Agreement.
2.2 Company’s
Representations, Warranties and Agreements. To induce the Subscriber to subscribe for and purchase the Shares, the Company
hereby represents and warrants to the Subscriber and agrees with the Subscriber as follows:
2.2.1 Incorporation
and Corporate Power. The Company is a Cayman Islands exempted company incorporated, validly existing and is qualified to
do business in every jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse
effect on the financial condition, operating results or assets of the Company. The Company possesses all requisite corporate
power and authority necessary to carry out the transactions contemplated by this Agreement. Upon execution and delivery by
the Company, this Agreement will be a legal, valid and binding agreement 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 or similar laws affecting the enforcement of creditors’ rights generally and subject to general principles
of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
2.2.2 No Conflicts.
The execution, delivery and performance of this Agreement and the consummation by the Company of the transactions contemplated
hereby do not violate, conflict with or constitute a default under (i) the memorandum and articles of association of the Company,
(ii) any agreement, indenture 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.
2.2.3 Title to Securities.
Upon issuance in accordance with, and payment pursuant to, the terms hereof, and registration in the Company’s register of
members, the Shares will be duly and validly issued, fully paid and nonassessable. Upon issuance in accordance with, and payment
pursuant to, the terms hereof, and registration in the Company’s register of members, the Subscriber will have or receive
good title to the Shares, free and clear of all liens, claims and encumbrances of any kind, other than (a) transfer restrictions
hereunder and other agreements to which the Shares may be subject, (b) transfer restrictions under federal and state securities
laws, and (c) liens, claims or encumbrances imposed due to the actions of the Subscriber.
2.2.4 No Adverse Actions.
There are no actions, suits, investigations or proceedings pending, threatened against or affecting the Company which: (i) seek
to restrain, enjoin, prevent the consummation of or otherwise affect the transactions contemplated by this Agreement or (ii) question
the validity or legality of any transactions or seeks to recover damages or to obtain other relief in connection with any transactions.
3. Forfeiture of Shares.
3.1 Partial or No
Exercise of the Over-allotment Option. In the event the Over-allotment Option granted to the representative(s) of the underwriters
of the Company’s IPO is not exercised in full, the Subscriber acknowledges and agrees that it shall forfeit any and all rights
to such number of Shares (up to an aggregate of 750,000 Shares and pro rata based upon the percentage of the Over-allotment Option
exercised) such that immediately following such forfeiture, the Subscriber (and all other initial shareholders prior to the IPO,
if any) will own an aggregate number of Shares (not including ordinary shares issuable upon exercise of any warrants or any ordinary
shares purchased by Subscriber in the Company’s IPO or in the aftermarket) equal to 20% of the issued and outstanding ordinary
shares of the Company immediately following the IPO.
3.2 Termination
of Rights as Shareholder. If any of the Shares are forfeited in accordance with this Section 3, then after such time the Subscriber
(or successor in interest), shall no longer have any rights as a holder of such Shares, and the Company shall take such action
as is appropriate to cancel such Shares.
4. Waiver of Liquidation Distributions;
Redemption Rights. In connection with the Shares 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 by the Company from the trust account which will be
established for the benefit of the Company’s public shareholders and into which substantially all of the proceeds of the
IPO will be deposited (the “Trust Account”), in the event of a liquidation of the Company upon the Company’s
failure to timely complete an initial business combination. For purposes of clarity, in the event the Subscriber purchases ordinary
shares in the IPO or in the aftermarket, any additional Shares so purchased shall be eligible to receive any liquidating distributions
by the Company. However, in no event will the Subscriber have the right to redeem any ordinary shares into funds held in the Trust
Account upon the successful completion of an initial business combination.
5. Restrictions on Transfer.
5.1 Securities
Law Restrictions. In addition to any restrictions to be contained in that certain letter agreement (commonly known as an
“Insider Letter”) to be dated as of the closing of the IPO by and between Subscriber and the Company,
Subscriber agrees not to sell, transfer, pledge, hypothecate or otherwise dispose of all or any part of the Shares unless,
prior thereto (a) a registration statement on the appropriate form under the Securities Act and applicable state securities
laws with respect to the Shares proposed to be transferred shall then be effective or (b) the Company has received an opinion
from counsel reasonably satisfactory to the Company, that such registration is not required because such transaction is
exempt from registration under the Securities Act and the rules promulgated by the Securities and Exchange Commission
thereunder and with all applicable state securities laws.
5.2 Restrictive
Legends. Any certificates representing the Shares shall have endorsed thereon legends substantially as follows:
“THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, 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 SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE
OPINION OF COUNSEL, IS AVAILABLE.”
“THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO A LOCKUP AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED DURING THE TERM OF
THE LOCKUP.”
5.3 Additional Shares
or Substituted Securities. In the event of the declaration of a share capitalization, the declaration of an extraordinary dividend
payable in a form other than Shares, a spin-off, a share sub-division, an adjustment in conversion ratio, a recapitalization or
a similar transaction affecting the Company’s outstanding Shares without receipt of consideration, any new, substituted or
additional securities or other property which are by reason of such transaction distributed with respect to any Shares subject
to this Section 5 or into which such Shares thereby become convertible shall immediately be subject to this Section 5 and Section
3. Appropriate adjustments to reflect the distribution of such securities or property shall be made to the number and/or class
of Shares subject to this Section 5 and Section 3.
5.4 Registration
Rights. Subscriber acknowledges that the Shares are being purchased pursuant to an exemption from the registration requirements
of the Securities Act and will become freely tradable only after certain conditions are met or they are registered pursuant to
a Registration Rights Agreement to be entered into with the Company prior to the closing of the IPO.
6. Other Agreements.
6.1 Further Assurances.
Subscriber agrees to execute such further instruments and to take such further action as may reasonably be necessary to carry out
the intent of this Agreement.
6.2 Notices.
All notices, statements or other documents which are required or contemplated by this Agreement shall be: (i) in writing and delivered
personally or sent by first class registered or certified mail, overnight courier service or facsimile or electronic transmission
to the address designated in writing, (ii) by facsimile to the number most recently provided to such party or such other address
or fax number as may be designated in writing by such party and (iii) by electronic mail, to the electronic mail address most recently
provided to such party or such other electronic mail address as may be designated in writing by such party. Any notice or other
communication so transmitted shall be deemed to have been given on the day of delivery, if delivered personally, on the business
day following receipt of written confirmation, if sent by facsimile or electronic transmission, one (1) business day after delivery
to an overnight courier service or five (5) days after mailing if sent by mail.
6.3 Entire Agreement.
This Agreement, together with that certain Insider Letter to be entered into between Subscriber and the Company, substantially
in the form to be filed as an exhibit to the Registration Statement on Form S-1 associated with the Company’s IPO, embodies
the entire agreement and understanding between the Subscriber and the Company with respect to the subject matter hereof and supersedes
all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement of any kind not expressly set forth in this Agreement shall affect, or be used to interpret, change or restrict,
the express terms and provisions of this Agreement.
6.4 Modifications
and Amendments. The terms and provisions of this Agreement may be modified or amended only by written agreement executed by
all parties hereto.
6.5 Waivers and
Consents. The terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by
a written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall
be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether
or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
6.6 Assignment.
The rights and obligations under this Agreement may not be assigned by either party hereto without the prior written consent of
the other party.
6.7 Benefit.
All statements, representations, warranties, covenants and agreements in this Agreement shall be binding on the parties hereto
and shall inure to the benefit of the respective successors and permitted assigns of each party hereto. Nothing in this Agreement
shall be construed to create any rights or obligations except among the parties hereto, and no person or entity shall be regarded
as a third-party beneficiary of this Agreement.
6.8 Governing Law.
This Agreement and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the
laws of New York applicable to contracts wholly performed within the borders of such state, without giving effect to the conflict
of law principles thereof.
6.9 Severability.
In the event that any court of competent jurisdiction shall determine that any provision, or any portion thereof, contained in
this Agreement shall be unreasonable or unenforceable in any respect, then such provision shall be deemed limited to the extent
that such court deems it reasonable and enforceable, and as so limited shall remain in full force and effect. In the event that
such court shall deem any such provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement
shall nevertheless remain in full force and effect.
6.10 No Waiver of
Rights, Powers and Remedies. No failure or delay by a party hereto in exercising any right, power or remedy under this Agreement,
and no course of dealing between the parties hereto, shall operate as a waiver of any such right, power or remedy of such party.
No single or partial exercise of any right, power or remedy under this Agreement by a party hereto, nor any abandonment or discontinuance
of steps to enforce any such right, power or remedy, shall preclude such party from any other or further exercise thereof or the
exercise of any other right, power or remedy hereunder. The election of any remedy by a party hereto shall not constitute a waiver
of the right of such party to pursue other available remedies. No notice to or demand on a party not expressly required under this
Agreement shall entitle the party receiving such notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such notice or demand to any other or further action in
any circumstances without such notice or demand.
6.11 Survival of
Representations and Warranties. All representations and warranties made by the parties hereto in this Agreement or in any other
agreement, certificate or instrument provided for or contemplated hereby, shall survive the execution and delivery hereof and any
investigations made by or on behalf of the parties.
6.12 No Broker or
Finder. Each of the parties hereto represents and warrants to the other that no broker, finder or other financial consultant
has acted on its behalf in connection with this Agreement or the transactions contemplated hereby in such a way as to create any
liability on the other. Each of the parties hereto agrees to indemnify and save the other harmless from any claim or demand for
commission or other compensation by any broker, finder, financial consultant or similar agent claiming to have been employed by
or on behalf of such party and to bear the cost of legal expenses incurred in defending against any such claim.
6.13 Headings and
Captions. The headings and captions of the various subdivisions of this Agreement are for convenience of reference only and
shall in no way modify or affect the meaning or construction of any of the terms or provisions hereof.
6.14 Counterparts. This
Agreement may be executed in one or more counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it
being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or any other form of electronic delivery, such signature shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature
page were an original thereof.
6.15 Construction.
The parties hereto have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties hereto and no presumption
or burden of proof will arise favoring or disfavoring any party hereto because of the authorship of any provision of this Agreement.
The words “include,” “includes,” and “including” will be deemed to be
followed by “without limitation.” Pronouns in masculine, feminine, and neuter genders will be construed to include
any other gender, and words in the singular form will be construed to include the plural and vice versa, unless the context otherwise
requires. The words “this Agreement,” “herein,” “hereof,” “hereby,”
“hereunder,” and words of similar import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited. The parties hereto intend that each representation, warranty, and covenant contained herein will have
independent significance. If any party hereto has breached any representation, warranty, or covenant contained herein in any respect,
the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which such party hereto has not breached will not detract from or mitigate the fact that such party
hereto is in breach of the first representation, warranty, or covenant.
6.16 Mutual Drafting.
This Agreement is the joint product of the Subscriber 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.
7. Voting and Tender of Shares.
Subscriber agrees to vote the Shares in favor of an initial business combination that the Company negotiates and submits for approval
to the Company’s shareholders and shall not seek redemption or repurchase with respect to such Shares. Additionally, the
Subscriber agrees not to tender any Shares in connection with a tender offer presented to the Company’s shareholders in connection
with an initial business combination negotiated by the Company.
[Signature Page Follows]
If the foregoing accurately
sets forth our understanding and agreement, please sign the enclosed copy of this Agreement and return it to us.
| |
Very truly yours, |
| |
|
| |
Consonance-HFW Acquisition Corp. |
| |
|
| |
By: |
/s/ Kevin Livingston |
| |
|
Name: Kevin Livingston |
| |
|
Title: Chief Executive Officer |
Accepted and agreed as of the date first
written above.
Consonance Life Sciences, LLC
| By: |
/s/ Kevin Livingston |
|
| |
Name: Kevin Livingston |
|
| |
Title: Manager |
|
Exhibit 14
CONSONANCE-HFW
ACQUISITION CORP.
CODE OF CONDUCT AND ETHICS
The Board of Directors
(“Board”) of Consonance-HFW Acquisition Corp. (the “Company”) has adopted this Code of Conduct and Ethics
(this “Code”) to provide value for our stockholders; and
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· |
To encourage honest and ethical conduct, including fair dealing and the ethical handling of actual or apparent conflicts of interest; |
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· |
To prompt full, fair, accurate, timely and understandable disclosure; |
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· |
To comply with applicable laws and governmental rules and regulations; |
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· |
To prompt internal reporting of violations of this Code; |
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· |
To protect the Company’s legitimate business interests, including corporate opportunities, assets and confidential information; and |
All directors, officers,
employees and independent contractors of the Company are expected to be familiar with this Code and to adhere to the principles
and procedures set forth in this Code. For purposes of this Code, all directors, officers, employees and independent contractors
are referred to collectively as “employees” or “you” throughout this Code.
I. Honest and Ethical Conduct
All directors, officers,
employees and independent contractors owe duties to the Company to act with integrity. Integrity requires, among other things,
being honest and ethical. This includes the ethical handling of actual or apparent conflicts of interest between personal and professional
relationships. Deceit and subordination of principle are inconsistent with integrity.
All directors, officers,
employees and independent contractors have the following duties:
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· |
To conduct business with professional courtesy and integrity, and act honestly and fairly without prejudice in all commercial dealings; |
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· |
To work in a safe, healthy and efficient manner, using skills, time and experience to the maximum of abilities; |
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· |
To comply with applicable awards, Company policies and job requirements, and adhere to a high standard of business ethics; |
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· |
To observe both the form and spirit of laws, governmental rules, regulations and accounting standards; |
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· |
Not to knowingly make any misleading statements to any person or to be a party to any improper practice in relation to dealings with or by the Company; |
| |
· |
To ensure that Company resources and properties are used properly; |
| |
· |
To maintain the confidentiality of information where required or consistent with Company policies; and |
| |
· |
Not to disclose information or documents relating to the Company or its business, other than as required by law, not to make any unauthorized public comment on Company affairs and not to misuse any information about the Company or its associates, and not to accept improper or undisclosed material personal benefits from third parties as a result of any transaction or transactions of the Company. |
II. Conflicts of Interest
A “conflict of
interest” arises when an individual’s personal interest interferes or appears to interfere with the interests of the
Company. A conflict of interest can arise when a director, officer or employee takes actions or has personal interests that may
make it difficult to perform his or her Company work objectively and effectively.
There are a variety
of situations in which a conflict of interest may arise. While it would be impractical to attempt to list all possible situations,
some common types of conflicts may be:
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· |
To serve as a director, employee or contractor for a company that has a business relationship with, or is a competitor of the Company; |
| |
· |
To have a financial interest in a competitor, supplier or customer of the Company; |
| |
· |
To receive improper personal benefits from a competitor, supplier or customer, as a result of any transaction or transactions of the Company; |
| |
· |
To accept financial interest beyond entertainment or nominal gifts in the ordinary course of business, such as a meal or a coffee mug; |
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· |
To present at a conference where the conference sponsor has a real or potential business relationship with the Company (e.g. vendor, customer, or investor), and, the conference sponsor offers travel or accommodation arrangements or other benefits materially in excess of the Company’s standard; or |
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· |
To use for personal gain, rather than for the benefit of the Company, an opportunity that you discovered through your role with the Company. |
Fidelity or service
to the Company should never be subordinated to or dependent on personal gain or advantage. Conflicts of interest should be avoided.
In most cases, anything
that would constitute a conflict for a director, officer or employee also would present a conflict if it is related to a member
of his or her family.
Interests in other
companies, including potential competitors and suppliers, that are purely for management of the other entity, or where an otherwise
questionable relationship is disclosed to the Board and any necessary action is taken to ensure there will be no effect on the
Company, are not considered conflicts unless otherwise determined by the Board.
Evaluating whether
a conflict of interest exists can be difficult and may involve a number of considerations. Please refer to other policies, such
as the employee handbook, for further information. We also encourage you to seek guidance from the Chief Executive Officer or Chief
Financial Officer, or their equivalents (the “Senior Financial Officers”), or your manager when you have any questions
or doubts.
III. Disclosure
Each director, officer
or employee, to the extent involved in the Company’s disclosure process, including the Senior Financial Officers, is required
to be familiar with the Company’s disclosure controls and procedures applicable to him or her so that the Company’s
public reports and documents comply in all material respects with the applicable securities laws and rules. In addition, each such
person having direct or supervisory authority regarding these securities filings or the Company’s other public communications
concerning its general business, results, financial condition and prospects should, to the extent appropriate within his or her
area of responsibility, consult with other Company officers and employees and take other appropriate steps regarding these disclosures
with the goal of making full, fair, accurate, timely and understandable disclosure.
Each director, officer
or employee, to the extent involved in the Company’s disclosure process, including the Senior Financial Officers, must:
| |
· |
Familiarize himself or herself with the disclosure requirements applicable to the Company as well as the business and financial operations of the Company. |
| |
· |
Not knowingly misrepresent, or cause others to misrepresent, facts about the Company to others, whether within or outside the Company, including to the Company’s independent auditors, governmental regulators and self-regulatory organizations. |
IV. Compliance
It is the Company’s
policy to comply with all applicable laws, rules and regulations. It is the personal responsibility of each employee, officer and
director to adhere to the standards and restrictions imposed by those laws, rules and regulations in the performance of their duties
for the Company, including those relating to accounting and auditing matters and insider trading.
The Board endeavors
to ensure that the directors, officers and employees of the Company act with integrity and observe the highest standards of behavior
and business ethics in relation to their corporate activities.
Specifically, directors,
officers and employees must:
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· |
Act in the best interests of the Company; |
| |
· |
Be responsible and accountable for their actions; and |
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· |
Observe the ethical principles of fairness, honesty and truthfulness, including disclosure of potential conflicts. |
Generally, it is against
Company policies for any individual to profit from undisclosed information relating to the Company or any other company in violation
of insider trading or other laws. Anyone who is aware of material non-public information relating to the Company, our customers,
or other companies may not use the information to purchase or sell securities in violation of securities laws, or communicate such
information to others who might trade on the basis of such information.
If you are uncertain
about the legal rules involving your purchase or sale of any Company securities or any securities in companies that you are familiar
with by virtue of your work for the Company, you should consult with the Senior Financial Officers before making any such purchase
or sale. Other policies issued by the Company also provide guidance as to certain of the laws, rules and regulations that apply
to the Company’s activities.
V. Reporting and Accountability
The Board has the authority
to interpret this Code in any particular situation. Any director, officer or employee who becomes aware of any violation of this
Code is required to notify the Senior Financial Officers promptly.
Any questions relating
to how these policies should be interpreted or applied should be addressed to your manager or Senior Financial Officers. Any material
transaction or relationship that could reasonably be expected to give rise to a conflict of interest, as discussed in Section II
of this Code, should be discussed with your manager or Senior Financial Officers. A director, officer or employee who is unsure
of whether a situation violates this Code should discuss the situation with the Senior Financial Officers to prevent possible misunderstandings
and embarrassment at a later date.
Each director, officer
or employee must:
| |
· |
Notify the Senior Financial Officers promptly of any existing or potential violation of this Code. |
| |
· |
Not retaliate against any other director, officer or employee for reports of potential violations. |
The Company will follow
the following procedures in investigating and enforcing this Code and in reporting on the Code:
| |
· |
The Senior Financial Officers take all appropriate action to investigate any violations reported. In addition, the Senior Financial Officers, as appropriate, shall report each violation and alleged violation involving a director or an executive officer to the Chairman of the Board. To the extent he or she deems appropriate, the Chairman of the Board shall participate in any investigation of a director or executive officer. After the conclusion of an investigation of a director or executive officer, the conclusions shall be reported to the Board of Directors. |
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· |
The Board will conduct such additional investigation as it deems necessary. The Board will determine that a director or executive officer has violated this Code. Upon being notified that a violation has occurred, the Senior Financial Officers will take such disciplinary or preventive action as deemed appropriate, up to and including dismissal or, in the event of criminal or other serious violations of law, notification of appropriate law enforcement authorities. |
VI. Corporate Opportunities
Employees, officers
and directors are prohibited from taking (or directing to a third party) a business opportunity that is discovered through the
use of corporate property, information or position, unless the Company has already been offered the opportunity and turned it down.
More generally, employees, officers and directors are prohibited from using corporate property, information or position for personal
gain and from competing with the Company.
Sometimes, the line
between personal and Company benefits is difficult to draw, and sometimes there are both personal and Company benefits in certain
activities. Employees, officers and directors who intend to make use of Company property or services in a manner not solely for
the benefit of the Company should consult beforehand with your manager or the Senior Financial Officers.
VII. Confidentiality
In carrying out the
Company’s business, employees, officers and directors often learn confidential or proprietary information about the Company,
its customers, suppliers, or joint venture parties. Employees, officers and directors must maintain the confidentiality of all
information so entrusted to them, except when disclosure is authorized or legally mandated. Unauthorized disclosure of any confidential
information is prohibited. Additionally, employees should take appropriate precautions to ensure that confidential or sensitive
business information, whether it is proprietary to the Company or another company, is not communicated within the Company except
to employees who have a need to know such information to perform their responsibilities for the Company. Confidential or proprietary
information of our Company, and of other companies, includes any non-public information that would be harmful to the relevant company
or useful or helpful to competitors if disclosed.
Third parties may ask
you for information concerning the Company. Subject to the exceptions noted in the preceding paragraph, employees, officers and
directors (other than the Company’s authorized spokespersons) must not discuss internal Company matters with, or disseminate
internal Company information to, anyone outside the Company, except as required in the performance of their Company duties and,
if appropriate, after a confidentiality agreement is in place. This prohibition applies particularly to inquiries concerning the
Company from the media, market professionals (such as securities analysts, institutional investors, investment advisers, brokers
and dealers) and security holders. All responses to inquiries on behalf of the Company must be made only by the Company’s
authorized spokespersons. If you receive any inquiries of this nature, you must decline to comment and refer the inquirer to your
supervisor or one of the Company’s authorized spokespersons.
VIII. Fair Dealing
Our core value of operating
is based on responsiveness, openness, honesty and trust with our members, business partners, employees and stockholders. We do
not seek competitive advantages through illegal or unethical business practices. Each employee, officer and director should endeavor
to deal fairly with the Company’s customers, service providers, suppliers, competitors and employees. No employee, officer
or director should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation
of material facts, or any unfair dealing practice.
IX. Protection and Proper Use of Company
Assets
All employees, officers
and directors should protect the Company’s assets and ensure their efficient use. All Company assets should be used only
for legitimate business purposes. Theft, carelessness and waste have a direct impact on our profit.
XI. Waivers and Amendments
From time to time,
the Company may waive provisions of this Code. Any employee or director who believes that a waiver may be called for should discuss
the matter with your manager or the Senior Financial Officers.
Any waiver of the Code
for executive officers (including the Senior Financial Officers) or directors of the Company may be made only by the Board and
must be promptly disclosed to stockholders along with the reasons for such waiver in a manner as required by applicable law or
the rules of the applicable stock exchange. Any amendment or waiver of any provision of this Code must be approved in writing by
the Board or, if appropriate, its delegate(s) and promptly disclosed pursuant to applicable laws and regulations.
Any waiver or modification
of the Code for a Senior Financial Officer will be promptly disclosed to stockholders if and as required by applicable law or the
rules of the applicable stock exchange.
The Company is committed
to continuously reviewing and updating its policies, and therefore reserves the right to amend this Code at any time, for any reason,
subject to applicable law.
Adopted: __________, 2020
Exhibit 21.1
SUBSIDIARIES
None.
Exhibit 23.1
Independent
Registered Public Accounting Firm’s Consent
We consent to the inclusion in this Registration Statement
of Consonance-HFW Acquisition Corp. on Form S-1 of our report dated September 18, 2020, except for Note 3, Note 4, Note
5, Note 6, the second paragraph of Note 7 and Note 8 as to which the date is October 8, 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 Consonance-HFW Acquisition Corp. as of September 4, 2020 and for the period from August 21, 2020
(inception) through September 4, 2020, which report appears in the Prospectus, which is part of this Registration
Statement. We also consent to the reference to our Firm under the heading “Experts” in such Prospectus.
/s/ Marcum llp
Marcum llp
New York, NY
October 8, 2020
Exhibit 99.1
CONSENT
Consonance-HFW Acquisition Corp. intends to file a Registration
Statement on Form S-1 (together with any amendments or supplements thereto the “Registration Statement”), registering
securities for issuance in its initial public offering. As required by Rule 438 under the Securities Act of 1933, as amended,
the undersigned hereby consents to being named in the Registration Statement as a Director Nominee.
| /s/ Christopher Haqq |
|
| Christopher Haqq |
|
| |
|
| Date: October 8, 2020 |
|
Exhibit 99.2
CONSENT
Consonance-HFW Acquisition Corp. intends to file a Registration
Statement on Form S-1 (together with any amendments or supplements thereto the “Registration Statement”), registering
securities for issuance in its initial public offering. As required by Rule 438 under the Securities Act of 1933, as amended,
the undersigned hereby consents to being named in the Registration Statement as a Director Nominee.
| /s/ Jennifer Jarrett |
|
| Jennifer Jarrett |
|
| |
|
| Date: October 8, 2020 |
|
Exhibit 99.3
CONSENT
Consonance-HFW Acquisition Corp. intends to file a Registration
Statement on Form S-1 (together with any amendments or supplements thereto the “Registration Statement”), registering
securities for issuance in its initial public offering. As required by Rule 438 under the Securities Act of 1933, as amended,
the undersigned hereby consents to being named in the Registration Statement as a Director Nominee.
| /s/ Donald J. Santel |
|
| Donald J. Santel |
|
| |
|
| Date: October 8, 2020 |
|
Exhibit 99.4
CONSENT
Consonance-HFW Acquisition Corp. intends to file a Registration
Statement on Form S-1 (together with any amendments or supplements thereto the “Registration Statement”), registering
securities for issuance in its initial public offering. As required by Rule 438 under the Securities Act of 1933, as amended,
the undersigned hereby consents to being named in the Registration Statement as a Director Nominee.
| /s/ Benny Soffer |
|
| Benny Soffer |
|
| |
|
| Date: October 8, 2020 |
|
Exhibit 99.5
CONSENT
Consonance-HFW Acquisition Corp. intends to file a Registration
Statement on Form S-1 (together with any amendments or supplements thereto the “Registration Statement”), registering
securities for issuance in its initial public offering. As required by Rule 438 under the Securities Act of 1933, as amended,
the undersigned hereby consents to being named in the Registration Statement as a Director Nominee.
| /s/ Mitchell J. Blutt |
|
| Mitchell J. Blutt |
|
| |
|
| Date: October 8, 2020 |
|
Exhibit 99.6
CONSONANCE-HFW
ACQUISITION CORP.
CHARTER
OF THE AUDIT COMMITTEE
OF
THE BOARD OF DIRECTORS
Purpose of the Committee
The primary purpose
of the Audit Committee (the “Committee”) shall be to act on behalf of the Board of Directors (the “Board”)
of Consonance-HFW Acquisition Corp. (the “Company”), in (i) fulfilling the Board’s oversight responsibilities
with respect to the Company’s corporate accounting and financial reporting processes, compliance with legal and regulatory
requirements, the systems of internal control over financial reporting, and audits of financial statements, as well as the quality
and integrity of the Company’s financial statements and reports and the qualifications, independence and performance of the
registered public accounting firm or firms engaged as the Company’s independent outside auditors for the purpose of preparing
or issuing an audit report or performing other audit, review or attest services (the “Auditors”) and (ii) preparing
disclosure required by Item 407(d)(3)(i) of Regulation S-K under the Securities Act of 1933, as amended (the “Securities
Act”). The Committee shall also provide oversight assistance in connection with the Company’s legal, regulatory and
ethical compliance programs as established by management and the Board. The operation of the Committee shall be subject to the
Bylaws of the Company as in effect from time to time.
The policy of the Committee,
in discharging these obligations, shall be to maintain and foster an open avenue of communication among the Committee, the Auditors
and the Company’s financial management.
Composition of the Committee
The Committee shall
consist of at least three members of the Board, each of whom (i) are financially literate, as determined by the Board, or must
become financially literate within a reasonable period of time following their appointment and (ii) meets the independence requirements
of the Securities and Exchange Commission (“SEC”) and applicable laws, regulations and listing requirements of the
New York Stock Exchange (the “NYSE”) as in effect from time to time. At least one member (i) must have accounting or
related financial management expertise, as determined by the Board, and (ii) shall qualify as an “Audit Committee Financial
Expert” as defined in Item 407(d)(5)(ii) of Regulation S-K and shall otherwise satisfy the applicable sophistication requirements
of the NYSE as in effect from time to time.
Members of the Committee
may only receive director and committee member fees as compensation from the Company. The members of the Committee shall be appointed
by the Board on the recommendation of the Nominating and Corporate Governance Committee. The Board shall designate one member of
the Committee as its Chairperson. Vacancies on the Committee shall be filled by majority vote of the Board at the next meeting
of the Board following the occurrence of the vacancy or by written consent of the Board. No member of the Committee shall be removed
except by majority vote of the Board. The Board may remove any member from the Committee at any time with or without cause. Resignation
or removal of a director from the Board, for whatever reason, shall automatically constitute resignation or removal, as applicable,
from the Compensation Committee.
No member of the Committee
may simultaneously serve on the audit committee of more than three issuers having securities registered under Section 12 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), unless the Board determines that such simultaneous
service would not impair the ability of such member to effectively serve on the Committee.
Meetings and Procedures of the Committee
The Committee shall
meet as often as it deems necessary or appropriate, but at least quarterly. A majority of the members of the Committee shall constitute
a quorum for purposes of a meeting.
The Committee shall
report to the Board on Committee findings, recommendations and other matters the Committee deems appropriate or the Board requests.
The Committee shall keep written minutes of its meetings, which minutes shall be maintained with the books and records of the Company.
Any action required or permitted to be taken at any meeting of the Committee may be taken without a meeting, if all members of
the Committee consent thereto in writing, and the writing or writings are filled with the minutes of proceedings of the Committee.
Delegation of Authority
The Committee shall
have authority to appoint, determine compensation for, and at the Company’s expense, retain and oversee the Auditors as set
forth in Section 10A(m)(2) of the Exchange Act and the rules thereunder and otherwise to fulfill its responsibilities under this
Charter. The Committee shall have authority to retain and determine compensation for, at the expense of the Company, special legal,
accounting or other advisors or consultants as it deems necessary or appropriate in the performance of its duties. The Committee
shall also have authority to pay, at the expense of the Company, ordinary administrative expenses that, as determined by the Committee,
are necessary or appropriate in carrying out its duties. Each member of the Committee shall have full access to all books, records,
facilities and personnel of the Company as deemed necessary or appropriate by any member of the Committee to discharge his or her
responsibilities hereunder. The Committee shall have authority to require that any of the Company’s personnel, counsel, accountants
(including the Auditors) or investment bankers, or any other consultant or advisor to the Company attend any meeting of the Committee
or meet with any member of the Committee or any of its special outside legal, accounting or other advisors or consultants. The
approval of this Charter by the Board shall be construed as a delegation of authority to the Committee with respect to the responsibilities
set forth herein.
Committee Responsibilities
The Committee shall
oversee the Company’s financial reporting process on behalf of the Board, and shall have direct responsibility for the appointment,
compensation, retention and oversight of the work of the Auditors and any other registered public accounting firm engaged for the
purpose of performing other review or attest services for the Company. The Auditors and each such other registered public accounting
firm shall report directly and be accountable to the Committee. The Committee’s functions and procedures should remain flexible
to address most effectively changing circumstances.
It shall be the responsibility
of management to prepare the Company’s financial statements and periodic reports and the responsibility of the Auditors to
audit those financial statements. These functions shall not be the responsibility of the Committee, nor shall it be the Committee’s
responsibility to ensure that the financial statements or periodic reports are complete and accurate, conform to generally accepted
accounting principles (“GAAP”) or otherwise comply with applicable laws.
To implement the Committee’s
purpose and policy, the Committee shall be charged with the following functions and processes with the understanding, however,
that the Committee may supplement or (except as otherwise required by applicable laws or rules) deviate from these activities as
appropriate under the circumstances:
1. Evaluation
and Retention of Auditors. To evaluate the performance of the Auditors, including the lead partner, to assess their
qualifications (including their internal quality-control procedures and any material issues raised by that firm’s most recent
internal quality-control review or any investigations by regulatory authorities) and to determine whether to retain or to terminate
the engagement of the existing Auditors or to appoint and engage a different independent registered public accounting firm, which
retention shall be subject only to ratification by the Company’s stockholders (if the Committee or the Board elects to submit
such retention for ratification by the stockholders). At least annually, the Committee should obtain and review a report by the
Auditors that describes (1) the firm’s internal quality control procedures, (2) any material issues raised by the most recent
internal quality control review, peer review or Public Company Accounting Oversight Board (United States) (the “PCAOB”)
review or inspection of the firm or by any other inquiry or investigation by governmental or professional authorities in the past
five years regarding one or more audits carried out by the firm and any steps taken to resolve any such issues, and (3) all relationships
between the firm and the Company or any of its subsidiaries; and to discuss with the independent auditors this report and any relationships
or services that may impact the objectivity and independence of the Auditors. At least annually, the Committee should evaluate
the qualifications, performance and independence of the Auditors, including an evaluation of the lead audit partner; and to assure
the regular rotation of the lead audit partner.
2. Communication
Prior to Engagement. Prior to engagement of any prospective Auditors, to review a written disclosure by the prospective
Auditors of all relationships between the prospective Auditors, or their affiliates, and the Company, or persons in financial oversight
roles at the Company, that may reasonably be thought to bear on independence, and to discuss with the prospective Auditors the
potential effects of such relationships on the independence of the prospective Auditors, consistent with Ethics and Independence
Rule 3526, Communication with Audit Committees Concerning Independence (“Rule 3526”), of the PCAOB.
3. Approval
of Audit Engagements. To determine and approve engagements of the Auditors, prior to commencement of such engagements,
to perform all proposed audit, review and attest services, including the scope of and plans for the audit, the adequacy of staffing,
the compensation to be paid, at the Company’s expense, to the Auditors and the negotiation and execution, on behalf of the
Company, of the Auditors’ engagement letters, which approval may be pursuant to preapproval policies and procedures established
by the Committee consistent with applicable laws and rules, including the delegation of preapproval authority to one or more Committee
members so long as any such preapproval decisions are presented to the full Committee at the next scheduled meeting. The Committee
should review and discuss with the Auditors (1) the Auditors’ responsibilities under generally accepted auditing standards
and the responsibilities of management in the audit process, (2) the overall audit strategy, (3) the scope and timing of the annual
audit, (4) any significant risks identified during the Auditors’ risk assessment procedures and (5) when completed, the results,
including significant findings, of the annual audit.
4. Approval
of Non-Audit Services. To determine and approve engagements of the Auditors, prior to commencement of such engagements
(unless in compliance with exceptions available under applicable laws and rules related to immaterial aggregate amounts of services),
to perform any proposed permissible non-audit services, including the scope of the service and the compensation to be paid therefor,
at the Company’s expense, which approval may be pursuant to preapproval policies and procedures established by the Committee
consistent with applicable laws and rules, including the delegation of preapproval authority to one or more Committee members so
long as any such preapproval decisions are presented to the full Committee at the next scheduled meeting.
5. Auditor
Independence. At least annually, consistent with Rule 3526, to receive and review written disclosures from the Auditors
delineating all relationships between the Auditors, or their affiliates, and the Company, or persons in financial oversight roles
at the Company, that may reasonably be thought to bear on independence and a letter from the Auditors affirming their independence,
to consider and discuss with the Auditors any potential effects of any such relationships on the independence of the Auditors as
well as any compensation or services that could affect the Auditors’ objectivity and independence, and to assess and otherwise
take appropriate action to oversee the independence of the Auditors.
6. Former
Employees of Auditor. To consider and, if deemed appropriate, adopt clear policies regarding hiring of employees
or former employees of the Auditors that participated in any capacity in any Company audit.
7. Audited
Financial Statement Review. To review, upon completion of the audit, the financial statements proposed to be included
in the Company’s Registration Statements and Annual Report on Form 10-K to be filed with the SEC and to recommend whether
or not such financial statements should be so included.
8. Annual
Audit Results. To review with management and the Auditors, the results of the annual audit, including the Auditors’
assessment of the quality, not just acceptability, of the Company’s accounting principles and practices, the Auditors’
views about qualitative aspects of the Company’s significant accounting practices, the reasonableness of significant judgments
and estimates (including material changes in estimates), all known and likely misstatements identified during the audit (other
than those the Auditors believe to be trivial), the adequacy of the disclosures in the financial statements and any other matters
required to be communicated to the Committee by the Auditors under the standards of the PCAOB.
9. Auditor
Communications. At least annually, to discuss with the Auditors the matters required to be discussed by Statement
on Auditing Standards No. 61, as amended (AICPA, Professional Standards, vol. 12. AU section 380), as adopted by the PCAOB
in Rule 3200T (including any successor rule adopted by the PCAOB).
10. Quarterly
Results. To review and discuss with management and the Auditors, as appropriate, the results of the Auditors’
review of the Company’s quarterly financial statements, prior to public disclosure of quarterly financial information, if
practicable, or filing with the SEC of the Company’s Quarterly Report on Form 10-Q, and any other matters required to
be communicated to the Committee by the Auditors under generally accepted auditing standards, including standards of the PCAOB,
as appropriate.
11. Earnings
Releases. To review and discuss with management and the Auditors the Company’s earnings press releases,
including the type of information to be included and its presentation and the use of any pro forma, adjusted or other non-GAAP
financial information and any financial information and earnings guidance provided to analysts and ratings agencies, including
the type of information to be disclosed and type of presentation to be made.
12. Management’s
Discussion and Analysis. To review and discuss with management and the Auditors, as appropriate, the Company’s
disclosures contained under the caption “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in its periodic reports to be filed with the SEC.
13. Accounting
Principles and Policies. To review with management and the Auditors, as appropriate, significant issues that arise
regarding accounting principles and financial statement presentation, including critical accounting policies and practices, alternative
accounting policies available under GAAP related to material items discussed with management, the potential impact on the Company’s
financial statements of off-balance sheet structures and any other significant reporting issues and judgments, significant regulatory,
legal and accounting initiatives or developments that may have a material impact on the Company’s financial statements, compliance
programs and policies if, in the judgment of the Committee, such review is necessary or appropriate.
14. Risk
Assessment and Management. To review and discuss with management and, as appropriate, the Auditors the Company’s
guidelines and policies with respect to risk assessment and risk management, including the Company’s major financial risk
exposures and the steps taken by management to monitor and control these exposures; and to review and discuss with management insurance
programs, including director and officer insurance, product liability insurance and general liability insurance (but excluding
compensation and benefits-related insurance).
15. Management
Cooperation with Audit. To evaluate the cooperation received by the Auditors during their audit examination, including
a review with the Auditors of any significant difficulties encountered during the audit or any restrictions on the scope of their
activities or access to required records, data and information and, whether or not resolved, significant disagreements with management
and management’s response, if any.
16. Management
Letters. To review and discuss with the Auditors and, if appropriate, management, any management or internal control
letter issued or, to the extent practicable, proposed to be issued by the Auditors and management’s response, if any, to
such letter, as well as any additional material written communications between the Auditors and management.
17. National
Office Communications. To review and discuss with the Auditors, as appropriate, communications between the audit
team and the Auditors’ national office with respect to accounting or auditing issues presented by the engagement.
18. Disagreements
Between Auditors and Management. To review with management and the Auditors, or any other registered public accounting
firm engaged to perform review or attest services, any conflicts or disagreements between management and the Auditors, or such
other accounting firm, whether or not resolved, regarding financial reporting, accounting practices or policies or other matters,
that individually or in the aggregate could be significant to the Company’s financial statements or the Auditors’ report,
and to resolve any conflicts or disagreements regarding financial reporting.
19. Internal
Control Over Financial Reporting and Disclosure Controls. To confer with management and the Auditors, as appropriate,
regarding the scope, adequacy and effectiveness of internal control over financial reporting and disclosure controls and procedures,
including significant deficiencies or material weaknesses identified by the Auditors. To review with the management and the Auditors
any fraud, whether or not material, that includes management or other employees who have any significant role in the Company’s
internal control over financial reporting or disclosure controls, and any significant changes in internal controls or disclosure
controls or other factors that could significantly affect them, including any corrective actions in regard to significant deficiencies
or material weaknesses.
20. Separate
Sessions. Periodically, to meet in separate sessions with the Auditors, as appropriate, and management to discuss
any matters that the Committee, the Auditors or management believe should be discussed privately with the Committee.
21. Correspondence
with Regulators. To consider and review with management, the Auditors, outside counsel, as appropriate, and any
special counsel, separate accounting firm or other consultants and advisors as the Committee deems appropriate, any correspondence
with regulators or governmental agencies and any published reports that raise material issues regarding the Company’s financial
statements or accounting policies.
22. Complaint
Procedures. To establish procedures, when and as required by applicable laws and rules, for the receipt, retention
and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and
the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters, and to
establish such procedures as the Committee may deem appropriate for the receipt, retention and treatment of complaints received
by the Company with respect to any other matters that may be directed to the Committee for review and assessment.
23. Ethical
Compliance; Compliance with Legal and Regulatory Requirements. To review the results of management’s efforts
to monitor compliance with the Company’s programs and policies designed to ensure adherence to applicable laws and rules,
as well as to its Code of Business Conduct and Ethics, as amended from time to time, and regarding legal matters and compliance
with legal and regulatory requirements that may have a material effect on the Company’s business, financial statements or
compliance policies, including any material reports or inquiries from regulatory or governmental agencies.
24. Related-Person
Transactions. To review and provide oversight of related-person transactions, as required by stock exchange rules
and regulations.
25. Engagement
of Registered Public Accounting Firms. To determine and approve engagements of any registered public accounting
firm (in addition to the Auditors), prior to commencement of such engagements, to perform any other review or attest service, including
the compensation to be paid, at the Company’s expense, to such firm and the negotiation and execution, on behalf of the Company,
of such firm’s engagement letter, which approval may be pursuant to preapproval policies and procedures, including the delegation
of preapproval authority to one or more Committee members, so long as any such preapproval decisions are presented to the full
Committee at the next scheduled meeting.
26. Investment
Policy. To review, on a periodic basis, as appropriate, the Company’s investment policy and recommend to the
Board any changes to the investment policy.
27. Investigations.
To investigate any matter brought to the attention of the Committee within the scope of its duties if, in the judgment of the Committee,
such investigation is necessary or appropriate.
28. Proxy
Report. To prepare the report of the Committee required by the rules of the SEC to be included in the Company’s
annual proxy statement.
29. Annual
Charter Review. To review and assess the adequacy of this Charter annually and recommend any proposed changes to
the Board for approval.
30. Report
to Board. To report to the Board with respect to material issues that arise regarding the quality or integrity of
the Company’s financial statements, the Company’s compliance with legal or regulatory requirements, the performance
or independence of the Auditors or such other matters as the Committee deems appropriate from time to time or whenever it shall
be called upon to do so.
31. Annual
Committee Evaluation. To conduct an annual evaluation of the performance of the Committee.
32. Internal
Audit Function. Until the internal audit function of the Company is established, to assist with the Board’s
oversight of the design and implementation of an internal audit function; meet periodically with Company personnel primarily responsible
for designing and implementing the internal audit function; review with the Auditors the Company’s plans for implementing
the internal audit function, including management’s plans for internal audit’s budget, staff and responsibilities;
and report regularly to the Board regarding the design and implementation of internal audit. Once the internal audit function is
established, the Committee will monitor that the Company maintains an effective internal audit function and oversee the internal
auditors (or other personnel responsible for the internal audit function), who will report directly to the Committee.
33. General
Authority. To perform such other functions and to have such powers as may be necessary or appropriate in the efficient
and lawful discharge of the foregoing.
Adopted: ___________, 2020
Exhibit 99.7
CONSONANCE-HFW ACQUISITION CORP.
CHARTER OF
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
OF THE BOARD OF DIRECTORS
Purpose
The Nominating and Corporate Governance
Committee (the “Committee”) is a committee of the Board of Directors (the “Board”) of Consonance-HFW Acquisition
Corp. (the “Company”), established to help ensure that the Board is properly constituted to meet its fiduciary obligations
to stockholders and the Company and that the Company has and follows appropriate corporate governance practices and standards.
Committee Membership
| |
· |
The Committee shall be comprised of directors, each of whom meets the independence requirements established by the Board and applicable laws, regulations and listing requirements of the New York Stock Exchange (the “NYSE”) as in effect from time to time. |
| |
· |
The Committee members shall be appointed by and serve at the discretion of the Board, acting by majority vote. The Board may remove any member from the Committee at any time with or without cause, acting by majority vote. Resignation or removal of a director from the Board, for whatever reason, shall automatically constitute resignation or removal, as applicable, from the Committee. |
| |
· |
The Board may designate one member of the Committee as its Chairperson and in the absence of any such designation by the Board, the Committee shall designate by majority vote of the full Committee one member of the Committee as its Chairperson. |
Meetings and Procedures
| |
· |
The Committee will set its own schedule of meetings and will meet as often as it deems necessary or appropriate. A majority of the members of the Committee shall constitute a quorum for purposes of a meeting. |
| |
· |
The Committee will maintain written minutes of its meetings, which minutes will be filed with the minutes of the meetings of the Board, and shall report on its meetings to the Board and any action taken or approved by the Committee. Any action required or permitted to be taken at any meeting of the Committee may be taken without a meeting, if all members of the Committee consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Committee. |
| |
· |
The Committee may form subcommittees for any purpose that the Committee deems appropriate and may delegate to such subcommittees such power and authority as the Committee deems appropriate. The Committee shall not delegate to a subcommittee any power or authority required by law, regulation or listing standard to be exercised by the Committee as a whole. |
| |
· |
Members of the Committee may not receive any compensation from the Company except the fees that they receive for service as a member of the Board or any committee thereof. |
Authority and Responsibilities
To the extent it deems necessary or appropriate,
the Committee shall perform the following:
Board Composition, Evaluation and Nominating
Activities
| |
· |
Evaluate the current composition, organization and governance of the Board and its committees, determine future requirements and make recommendations to the Board for approval. |
| |
· |
Review periodically the policy and procedures for considering stockholder nominees for election to the Board. |
| |
· |
Recommend for approval by the Board on an annual basis desired qualifications and characteristics for Board membership and with corresponding attributes. |
| |
· |
Search for, identify, evaluate and recommend for the selection by the Board, candidates to fill new positions or vacancies on the Board and any candidates recommended by stockholders, which shall include a description of any specific qualifications and characteristics that the Committee believes must be met by a nominee and a description of any specific qualifies or characteristics the Committee believes one or more of the directors should possess. |
| |
· |
Exercise sole authority on whatever terms it approves to retain and terminate a search firm or firms to assist it in identifying director candidates. |
| |
· |
Evaluate the performance of individual members of the Board eligible for re-election, and recommend for the selection by the Board, the director nominees for election to the Board at the annual meeting of stockholders. |
| |
· |
Evaluate the independence of directors and director nominees against the independence requirements of the stock exchange rules and regulations and the U.S. Securities and Exchange Commission (the “SEC”) rules and other applicable requirements. |
| |
· |
Evaluate director compensation, consulting with outside consultants and/or management, when appropriate, and make recommendations to the Board regarding director compensation. |
Board Committees
| |
· |
Review periodically the composition of each committee of the Board, the need for additional committees, or changes in mandate or dissolution of existing committees, and make recommendations to the Board accordingly. |
| |
· |
Recommend to the Board persons to be members and chairpersons of the various committees. |
Corporate Governance Generally
| |
· |
Develop and recommend to the Board a set of corporate governance principles and practices satisfying the standards established under the applicable laws, regulations and listing requirements of the NYSE as in effect from time to time. |
| |
· |
Review annually the Company’s corporate governance principles and practices, the Company’s compliance with these principles and practices, and recommend changes, as appropriate. |
| |
· |
Oversee the Company’s communications and relations with stockholders. |
| |
· |
Oversee the evaluation of the Company’s management. |
| |
· |
Oversee, review and report to Board regarding the Company’s succession planning for the Board, senior management and other key employees. |
| |
· |
Periodically review and reassess the adequacy and scope this Charter and the Committee’s established processes and procedures and recommend any proposed changes to the Board for approval. |
| |
· |
Oversee the Board’s performance and self-evaluation process, including conducting surveys of director observations, suggestions and preferences regarding how effectively the Board operates. |
| |
· |
Oversee compliance by the Board and its committees with applicable laws and regulations, including the stock exchange rules and regulations and SEC rules and regulations. |
| |
· |
Review annually the performance of the Committee. |
Conflicts of Interest
| |
· |
Review and monitor the Company’s Code of Ethics. |
| |
· |
Consider questions of possible conflicts of interest of members of the Board and of corporate officers and review actual or potential conflicts of interest or related party transactions involving members of the Board or officers of the Company, and make determinations accordingly. |
In performing its responsibilities, the
Committee shall have the authority to hire and obtain advice, reports or opinions from internal or external counsel and expert
advisors, including sole authority to retain and terminate search firms to identify director candidates, and to set the terms and
fees for any such search firms, legal counsel and advisors.
Adopted: ____________, 2020
Exhibit 99.8
CONSONANCE-HFW ACQUISITION CORP.
CHARTER OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Purpose of the Committee
The purposes of the
Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Consonance-HFW Acquisition
Corp. (the “Company”) shall be to oversee the Company’s compensation and employee benefit plans and practices,
including its executive, director and other incentive and equity-based compensation plans and to review and prepare any disclosures
required to be made by the Company in its periodic filings with the Securities and Exchange Commission (“SEC”) pursuant
to the rules and regulations of the SEC.
This Charter is intended
as a tool within which the Board, assisted by its committees, directs the affairs of the Company. While it should be interpreted
in the context of all applicable laws, regulations and listing requirements, as well as in the context of the Company’s charter
and bylaws (“Governing Documents”), it is not intended to establish by its own force any legally binding obligations.
Composition of the Committee
The members of the
Committee shall be appointed by the Board on the recommendation of the Nominating and Corporate Governance Committee. The Board
may designate one member of the Committee as its Chairperson and in the absence of any such designation by the Board, the Committee
shall designate by majority vote of the full Committee one member of the Committee as its Chairperson. Vacancies on the Committee
shall be filled by majority vote of the Board at the next meeting of the Board following the occurrence of the vacancy or by written
consent of the Board. No member of the Committee shall be removed except by majority vote of the Board. The Board may remove any
member from the Committee at any time with or without cause. Resignation or removal of a director from the Board, for whatever
reason, shall automatically constitute resignation or removal, as applicable, from the Compensation Committee.
The Committee shall
be comprised of directors, each of whom meets the independence requirements established by the Board and applicable laws, regulations
and listing requirements of the New York Stock Exchange (the “NYSE”) as in effect from time to time. At least two members
of the Committee also shall qualify as (i) a “non-employee director” within the meaning of Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended (“Exchange Act”), and (ii) an “outside director” within
the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). Each member shall also
be free of any relationship that, in the judgment of the Board, would interfere with the exercise of his or her independent judgment.
Meetings and Procedures of the Committee
The Committee may fix
its own rules of procedure, which shall be consistent with the Governing Documents. The Committee shall meet as often as it deems
necessary or appropriate, but at least annually. The Chairperson of the Committee or a majority of the members of the Committee
may also call a special meeting of the Committee. A majority of the members of the Committee shall constitute a quorum for purposes
of a meeting.
The Committee may request
that any directors, officers or employees of the Company, or other persons whose advice and counsel are sought by the Committee,
attend any meeting of the Committee to provide such pertinent information as the Committee requests. The Company’s Chief
Executive Officer (“CEO”) shall not attend the portion of any meeting where the CEO’s performance or compensation
are discussed.
The Committee shall
report to the Board on Committee findings, recommendations and other matters the Committee deems appropriate or the Board requests.
The Committee shall keep written minutes of its meetings, which minutes shall be maintained with the books and records of the Company.
Any action required or permitted to be taken at any meeting of the Committee may be taken without a meeting, if all members of
the Committee consent thereto in writing, and the writing or writings are filled with the minutes of proceedings of the Committee.
Delegation of Authority
The Committee may form
subcommittees for any purpose that the Committee deems appropriate and may delegate to such subcommittees such power and authority
as the Committee deems appropriate; provided, however, that the Committee shall not delegate to a subcommittee any power or authority
required by any law, regulation or stock listing standard to be exercised by the Committee as a whole.
The Committee may also
delegate to one or more executive officers of the Company the authority to make grants of equity-based compensation to eligible
individuals who are not executive officers. Any executive officer to whom the Committee grants such authority shall regularly report
to the Committee grants so made and the Committee may revoke any delegation of authority at any time.
Committee Responsibilities
The primary responsibilities
of the Committee shall be to:
| |
· |
Ensure that the Company’s executive compensation programs are designed to enable it to recruit, retain and motivate a large group of talented and diverse executives. |
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· |
Ensure that the Company’s executive compensation programs are appropriately competitive, support organization objectives and stockholder interests, and ensure executive compensation is adequately designed to align the interests of executive officers with the long-term performance of the Company. |
| |
· |
Review and report to the Board for its consideration any cash incentive compensation plans, option plans or other equity based plans that provide for payment in the Company’s stock or are based on the value of the Company’s stock, subject to any approvals required by the stockholders of the Company. |
| |
· |
Oversee all employee benefit plans and programs of the Company, its subsidiaries and divisions, including the authority to adopt, amend and terminate such plans and programs (unless approval by the Board or stockholders is required by law). |
| |
· |
Review and approve annual corporate goals and objectives relevant to the CEO’s compensation; evaluate the CEO’s performance in light of those goals and objectives; and recommend for approval by the independent members of the Board, the CEO’s compensation level based on this evaluation. |
| |
· |
Evaluate and recommend for Board approval, on an annual basis, the individual elements of total compensation for the executive officers (within the meaning of Section 16 of the Exchange Act), other than the CEO, and other key executives. |
| |
· |
Evaluate and recommend for Board approval any mandatory stock ownership guidelines. |
| |
· |
Review and make such recommendations to the Board as it deems advisable regarding the compensation paid to non-employee directors. |
| |
· |
Make all approvals necessary under Section 16 of the Exchange Act, Section 162(m) of the Code and other regulatory provisions. |
| |
· |
If applicable, review and discuss the Compensation Discussion and Analysis (the “CD&A”) required to be included in the Company’s proxy statement and annual report on Form 10-K by the rules and regulations of the SEC with management, and, based on such review and discussion, determine whether or not to recommend to the Board that the CD&A be so included. |
| |
· |
Produce the annual Compensation Committee Report for inclusion in the Company’s proxy statement in compliance with the rules and regulations promulgated by the SEC. |
| |
· |
Annually assess and report to the Board on the performance and effectiveness of the Committee. |
| |
· |
Review this Charter on an annual basis, update it as appropriate, and submit it for the approval of the Board when updated. |
| |
· |
Undertake such other responsibilities or tasks as the Board may delegate or assign to the Committee from time to time. |
Investigations and Studies; Outside
Advisers
The Committee may conduct
or authorize investigations into or studies of matters within the Committee’s scope of responsibilities, and may retain,
at the Company’s expense, such independent legal counsel or other consultants or advisers as it deems necessary and appropriate,
including compensation consultants to advise the Committee with respect to amounts or forms of executive or director compensation,
and may rely on the integrity and advice of any such counsel or other advisers. It is the Committee’s intention that any
compensation consultant engaged to advise the Committee with respect to executive and director compensation will not engage in
work for the Company that is unrelated to executive and director compensation advisory services without prior approval of the Committee
Chairperson.
The Committee shall
be directly responsible for the appointment, compensation and oversight of the work of any such compensation consultant, legal
counsel and other adviser retained by the Committee. The Company shall provide for appropriate funding, as determined by the compensation
committee, for payment of reasonable compensation to a compensation consultant, legal counsel or any other adviser retained by
the compensation committee. The Committee shall have sole authority to approve related fees and retention terms.
The Committee may select,
or receive advice from, a compensation consultant, legal counsel or other adviser to the Committee, other than in-house legal counsel,
only after taking into consideration all factors relevant to the adviser’s independence from management, including those
specified in Section 303A.02(a)(ii) of the NYSE Listed Company Manual and the following factors:
| |
· |
the provision of other services to the Company by the person that employs the compensation consultant, legal counsel or other adviser; |
| |
· |
the amount of fees received from the Company by the person that employs the compensation consultant, legal counsel or other adviser, as a percentage of the total revenue of the person that employs the compensation consultant, legal counsel or other adviser; |
| |
· |
the policies and procedures of the person that employs the compensation consultant, legal counsel or other adviser that are designed to prevent conflicts of interest; |
| |
· |
any business or personal relationship of the compensation consultant, legal counsel or other adviser with a member of the Committee; |
| |
· |
any stock of the Company owned by the compensation consultant, legal counsel or other adviser; and |
| |
· |
any business or personal relationship of the compensation consultant, legal counsel, other adviser or the person employing the adviser with a member of senior management. |
Notwithstanding the
foregoing, the Committee is not required to conduct an independence assessment for a compensation adviser that acts in a role limited
to the following activities for which no disclosure is required under Item 407(e)(3)(iii) of Regulation S-K promulgated by the
SEC: (a) consulting on any broad-based plan that does not discriminate in scope, terms, or operation, in favor of Executive Officers
or directors of the Company, and that is available generally to all salaried employees; and/or (b) providing information that either
is not customized for the Company or that is customized based on parameters that are not developed by the adviser, and about which
the adviser does not provide advice.
Adopted: __________, 2020
