Introduction
We are a blank check company
incorporated in the State of Delaware on January 24, 2020 for the purpose of entering into a merger, share exchange, asset acquisition,
stock purchase, recapitalization, reorganization or other similar business combination, with one or more target businesses.
On August 4, 2020, we consummated
our initial public offering (the “IPO”) of 15,000,000 units (the “Units”), each Unit consisting of one
share of Class A common stock of the Company, par value $0.0001 per share (the “Class A Common Stock”) and one-half
of one redeemable warrant of the Company (each, a “Warrant”), each whole Warrant entitling the holder thereof to purchase
one share of Class A Common Stock for $11.50 per share (subject to adjustment). The Units were sold at a price of $10.00 per Unit,
and the IPO generated gross proceeds of $150,000,000. Pursuant to an Underwriting Agreement, dated July 30, 2020 (the “Underwriting
Agreement”), by and between the Company and Stifel, Nicolaus & Company, Incorporated, as representative of the several
underwriters (the “Underwriters”), we granted the Underwriters a 45-day option to purchase up to 2,250,000 additional
Units solely to cover over-allotments, if any
On August 4, 2020,
simultaneously with the closing of the IPO, we consummated the private placement (“Private Placement”) with the Sponsor
and certain funds and accounts managed by Magnetar Financial LLC, UBS O’Connor LLC, and Mint Tower Capital Management B.V.
(collectively the “Anchor Investors”) of 5,250,000 warrants (the “Private Warrants”) at a price of $1.00
per Private Warrant, generating gross proceeds to the Company of $5,250,000. The Private Warrants are identical to the Warrants
(as defined below) sold in the IPO except that the Private Warrants will be non-redeemable and may be exercised on a cashless basis,
in each case so long as they continue to be held by the Sponsor, the anchor investors or their permitted transferees. Additionally,
our Sponsor and anchor investors have agreed not to transfer, assign, or sell any of the Private Warrants or underlying securities
(except in limited circumstances, as described in the Registration Statement) until the date that is 30 days after the date we
complete our initial business combination. The Sponsor and anchor investors were granted certain demand and piggyback registration
rights in connection with the purchase of the Private Warrants.
Subsequently, on August 12, 2020, the Underwriters
exercised the over-allotment option in full, and the closing of the issuance and sale of the additional 2,250,000 Units (the “Over-Allotment
Units”) occurred on August 14, 2020. The issuance by the Company of the Over-Allotment Units at a price of $10.00 per unit
resulted in total gross proceeds of $22,500,000. On August 14, 2020, simultaneously with the issuance and sale of the Over-Allotment
Units, the Company consummated the sale of an additional 450,000 Private Warrants (the “Over-Allotment Private Placement”
and, together with the IPO Private Placement, the “Private Placements”), generating gross proceeds of $450,000. The
Private Warrants issued in the Over-Allotment Private Placement were issued pursuant to Section 4(a)(2) of the Securities Act of
1933, as amended, as the transaction did not involve a public offering.
As of August 14, 2020, a total of $172,500,000 of the
net proceeds from the sale of the Units in the IPO (including the Over-Allotment Units) and the Private Placements were deposited
in a trust account established for the benefit of the Company’s public stockholders at UBS Financial Services, Inc. with
Continental Stock Transfer & Trust Company acting as trustee. None of the funds held in trust will be released from the
trust account, other than interest income to pay any tax obligations, until the earlier of (i) the consummation of the Company’s
initial business combination and (ii) the Company’s failure to consummate a business combination by August 4, 2022.
In
February 2020, we issued an aggregate of 4,312,500 founder shares to our sponsor for an aggregate purchase price of $25,000 in
cash, or approximately $0.006 per share. In July 2020, our sponsor forfeited 920,000 founder shares and the anchor investors purchased
920,000 founder shares for an aggregate purchase price of approximately $5,333, or approximately $0.006 per share. The number of
founder shares issued was determined based on the expectation that such founder shares would represent 20% of the outstanding shares
upon completion of our IPO. These Class B shares will automatically convert into shares of Class A common stock at the time
of our initial business combination as described herein. In the case that additional shares of Class A common stock, or equity-linked
securities, are issued or deemed issued in excess of the amounts offered in our IPO and related to the closing of the initial business
combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted
(unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect
to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares
of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares
of common stock outstanding upon the completion of our IPO plus all shares of Class A common stock and equity-linked securities
issued or deemed issued in connection with the initial business combination (excluding any shares or equity-linked securities issued,
or to be issued, to any seller in the initial business combination, any private placement-equivalent warrants issued to our sponsor
or its affiliates upon conversion of loans made to us).
On September 22, 2020, we announced that holders
of the Company’s units may elect to separately trade the shares of Class A common stock and warrants included in its units,
commencing on or about September 22, 2020. The shares of Class A common stock and warrants will trade on the Nasdaq Capital Market
(“Nasdaq”) under the symbols NHIC and NHICW, respectively. Units not separated will continue to trade on Nasdaq under
the symbol NHICU. After separation, the shares of Class A common stock and warrants may be recombined to create units.
Business Combination Agreement
On March 5, 2021, NewHold entered into an Agreement
and Plan of Merger (the “Merger Agreement”) by and among the Company, NHIC Sub Inc., a Delaware corporation and a wholly
owned subsidiary of NewHold (“Merger Sub”), and Evolv Technologies, Inc. dba Evolv Technology, Inc., a Delaware corporation
(“Evolv”).
Pursuant
to the terms of the Merger Agreement, a business combination between NewHold and Evolv (the “Evolv
Business Combination”) will be effected through the merger of Merger Sub with and into Evolv, with Evolv surviving
the merger as a wholly owned subsidiary of NewHold (the “Merger”). The Board of Directors of NewHold (the “Board”)
has unanimously (i) approved and declared advisable the Merger Agreement, the Merger and the other transactions contemplated thereby
and (ii) resolved to recommend approval of the Merger Agreement and related matters by the stockholders of NewHold.
Treatment of Evolv Securities:
Preferred
Stock. Immediately prior to the effective time of the Merger (the “Effective Time”) and subject to the consent
of the holders of Evolv’s preferred stock, par value $0.001 per share (the “Evolv Preferred Stock”), each issued
and outstanding share of Evolv Preferred Stock shall be converted into shares of the common stock, par value $0.001 per share,
of Evolv (the “Evolv Common Stock”) at the then-applicable conversion rates.
Convertible
Notes. Immediately prior to the Effective Time, each issued and outstanding convertible promissory note of Evolv (the
“Evolv Convertible Notes”) will be automatically converted into shares of Evolv Common Stock in accordance with the
then-applicable conversion rates.
Warrants.
With the exception of a warrant to purchase 6,756,653 shares of Evolv Common Stock (the “Finback Warrant”), immediately
prior to the Effective Time, Evolv shall cause each outstanding warrant to purchase shares of Evolv capital stock to be exercised
in full on a cash or cashless basis or terminated without exercise. With respect to the Finback Warrant, the portion that is vested
immediately prior to the Effective Time shall be either exercised in full on a cash or cashless basis or terminated as of the Effective
Time, while the portion that is unvested as of immediately prior to the Effective Time shall be automatically converted into a
warrant to purchase shares of the Class A common stock, par value $0.0001 per share, of NewHold (the “NewHold Common Stock”),
proportionately adjusted for the Exchange Ratio (as defined below). All Evolv warrants that are converted into shares of Evolv
Common Stock are hereafter referred to as the “Evolv Warrants.”
Common
Stock. At the Effective Time, each share of Evolv Common Stock (including shares outstanding as a result of the conversion
of the Evolv Preferred Stock, the Evolv Convertible Notes and the Evolv Warrants but excluding shares the holders of which perfect
rights of appraisal under Delaware law) will be converted into the right to receive such number of shares of NewHold Common Stock
equal to the Exchange Ratio and a number of Earn-Out Shares (as defined below). The Exchange Ratio is defined in the Merger Agreement
to be 125,000,000 divided by the number of outstanding shares of Evolv Common Stock and options to purchase shares of Evolv Common
Stock as of immediately prior to the Effective Time, after giving effect to the conversion of the Evolv Preferred Stock, Evolv
Convertible Notes and Evolv Warrants and as further adjusted pursuant to the Merger Agreement.
Stock
Options. At the Effective Time, each outstanding option to purchase shares of Evolv Common Stock shall be converted
into an option to purchase shares of NewHold Common Stock equal to the number of shares subject to such option prior to the Effective
Time multiplied by the Exchange Ratio, with the per share exercise price equal to the exercise price prior to the Effective Time
divided by the Exchange Ratio.
Earn-Out
Shares. Following the closing of the merger, former holders of shares of Evolv Common Stock (including shares received
as a result of the Evolv Preferred Stock conversion, Evolv Convertible Notes conversion and Evolv Warrants conversion), former
holders of Evolv stock options shall be entitled to receive their pro rata share of up to 15,000,000 additional shares of NewHold
Common Stock (the “Earn-Out Shares”) if, within a five- year period following the signing date of the Merger Agreement,
the closing share price of the NewHold Common Stock equals or exceeds any of three thresholds over any 20 trading days within a
30-day trading period (each, a “Triggering Event”) and, in respect of a former holder of Evolv stock options, the holder
continues to provide services to NewHold or one of its subsidiaries at the time of such Triggering Event.
The Merger Agreement contains
customary representations, warranties and covenants of the parties thereto. The consummation of the proposed Evolv Business Combination
is subject to certain conditions as further described in the Merger Agreement.
For more information about
the Merger Agreement and the proposed Evolv Business Combination, see our Current Report on Form 8-K filed with the SEC on March
8, 2021, and the Evolv Disclosure Statement that we will file with the SEC. Unless specifically stated, this Annual Report does
not give effect to the proposed Evolve Business Combination and does not contain the risks associated with the proposed Evolv Business
Combination. Such risks and effects relating to the proposed Evolv Business Combination will be included in the Evolv Disclosure
Statement. INVESTORS AND SECURITY HOLDERS OF NHIC ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO)
AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE MERGER THAT NHIC WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT NHIC, EVOLV AND THE MERGER. The preliminary proxy statement, the definitive proxy
statement and other relevant materials in connection with the merger (when they become available), and any other documents filed
by us with the SEC, may be obtained free of charge at the SEC’s website (www.sec.gov) or by writing to us at 12141 Wickchester
Lane, Houston, TX 77079.
General
Overview
We are a newly organized blank check company
incorporated on January 24, 2020 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to
throughout this annual report as our initial business combination. 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 will concentrate on sourcing business combination
opportunities with industrial technology businesses, with particular emphasis on those that align with several key themes commonly
referred to as “Industry 4.0.” Our management team will target business-to-business sectors whose industry structure
is being fundamentally reshaped by technology. They believe that companies in these sectors that are using advanced data analytics,
software, artificial intelligence, and cutting edge instrumentation and process automation to make their processes “intelligent”
have a significant competitive advantage over those that have not yet embraced such solutions.
We are not, however, required to complete our
initial business combination with an industrial technology business and, as a result, we may pursue a business combination outside
of that industry. We will seek to acquire businesses that we believe are fundamentally sound but would benefit from a public listing
to execute their financial, operational, and strategic plans.
We believe that the opportunity within industrial
technology businesses is driven by several key trends, including:
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Flexible Mass Production. Commercial customers demand increasing variety and customization
resulting in businesses requiring more flexible manufacturing and logistics solutions.
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Speed and Agility to Market. Increasing digitization of the selling experience necessitates
reducing a product’s time to market and increasing its speed of delivery.
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Supply Chain Optimization. Effective use of technology is allowing companies to more
efficiently and effectively manage complex supply chains without increases in inventory.
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Efficiency and Productivity Gains. Organizations continually face pressures from their
stakeholders to further reduce costs and environmental impact while increasing output and financial returns.
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Design and Manufacturing Optimization. Designers and engineers desire the ability to
economically manufacture a product that very closely matches its optimal design.
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Energy Efficiency. All energy users are demanding the latest in efficiency technology, both
to reduce cost and to demonstrate attention to their carbon footprint.
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According to KPMG, enterprise spend on intelligent automation, defined as “technologies that enable the transformation and automation of business processes by leveraging any combination of software robotics, cloud, artificial intelligence and smart machines,” is expected to reach $231.9 billion by 2025 (KPMG, Ready, set, fail? Avoiding setbacks in the intelligent automation race, 2018 and KPMG, Easing the pressure points: The state of intelligent automation, 2019). Organizations have invested significant capital to modernize their production processes in recent years. According to Capgemini Research Institute, manufacturers globally made 30% of their factories “smart” from 2018 to 2019, and plan to transform 40% more from 2020 to 2025 (Capgemini, Smart Factories at Scale, 2019).
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Consistent with this strategy, we have identified
the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will
focus on these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into our initial business
combination with a target business that does not meet these criteria and guidelines.
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Companies that operate in industries and sectors that are ripe for technological disruption or are currently undergoing technological transformations. We plan to identify sectors that are in the process of or have significant potential to adopt an industrial technology solution. We will seek to acquire a business that operates within an industry that is witnessing at least one or more trends, mentioned above, which we believe are driving the opportunity within industrial technology.
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Companies with an attractive and defensible competitive position. We will target companies with market positions and technologies that we believe offer long-term competitive advantages. These could include proprietary technology, a market leading product suite, unique processes, strong market share, or a culture of innovation that we believe is enduring and unique.
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Companies with high revenue growth, or with the potential for high revenue growth. We will seek to acquire businesses that have or are believed to achieve significant revenue growth primarily driven by either adopting or providing an industrial technology solution to disrupt the existing paradigm or increase its market position in the end markets in which it serves. To validate future demand, we look for businesses that can clearly demonstrate a compelling return on investment by either adopting or providing an industrial technology solution and the size of the addressable opportunity.
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Companies that exhibit the ability to deliver significant operating leverage and future free cash flow whether they may or may not be profitable currently. We will seek to acquire businesses that already have, or have the potential to generate consistent and increasing free cash flow. We do not require the target businesses to be profitable at the time of acquisition, but expect gross margins and contribution margins to be above, or at least in line with, relevant competitors. We view businesses with high gross margins and contribution margins favorably as these businesses possess the potential to deliver significant operating leverage and free cash flow when fully scaled.
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Knowledgeable management teams with relevant industry experience and proven track record of developing or deploying a technology solution. We aim to target businesses with expert management teams that have specialized knowledge of their respective industry sector and are active leaders in developing or deploying technology to provide a solution for a problem or challenge within their respective industry sector.
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Benefit from being a public company. We intend to acquire a company that will benefit from being publicly traded and can effectively utilize the broader access to capital and public profile that are associated with being a publicly traded company.
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These criteria are not intended to be exhaustive.
Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these
general guidelines as well as other considerations, factors and criteria that our management may deem relevant.
Competitive Strengths
Accomplished Leadership Team with Relevant Investment, Public
Company and Prior Successful SPAC Experience
Our team has over 60 years of combined private
equity experience, complemented by extensive public market expertise that includes successful execution of three prior SPAC business
combinations. Kevin Charlton, our Chief Executive Officer, served as an executive officer of, and played an integral role throughout
all phases of the SPAC process for Hennessy Capital Acquisition Corp., Hennessy Capital Acquisition Corp. II and Hennessy Capital
Acquisition Corp. III, including the initial public offering, deal sourcing, due diligence, deal structuring, financing, and back-end execution
of the initial business combinations.
History of Successfully Sourcing and Executing Transactions
as a Team
NewHold Enterprises, a private investment firm
founded in 2017 which controls our sponsor, has completed two platform acquisitions and two add-ons since its inception. Messrs.
Charlton, Baynes-Reid and Deutsch also previously executed five transactions at River Hollow Partners, the predecessor to
NewHold Enterprises, all proprietarily sourced.
Established Track Record of Sourcing Proprietary Opportunities
Suitable for both Private and Public Investing
NewHold Enterprises principals have sourced 325
potential opportunities since its inception in 2017, the vast majority outside of traditional sale processes, funded through a
proprietary network of family offices and high net worth individuals. Additionally, Mr. Charlton, in his role as President
and Chief Operating Officer of the first three Hennessy Capital SPAC vehicles, was a part of a team that developed a unique SPAC-centered deal
sourcing model, which resulted in over 400 targets evaluated over the life of Hennessy Capital Acquisition
Corp., Hennessy Capital Acquisition Corp. II and Hennessy Capital Acquisition Corp. III.
Access to NewHold Enterprises’ Proprietary Network of
Family Offices and High Net Worth Individuals
NewHold Enterprises sources capital from a series
of family offices, each with generally over $1 billion of assets under management, and serves as a direct investing platform
for such investors, allowing them to leverage their infrastructure and complement their traditional private equity book. NewHold
Enterprises’ network currently consists of more than 100 family offices and more than 95 high net worth investors.
Extensive Experience of Investing in Middle-Market Growth
Assets
Our team has extensive experience sourcing and
investing in middle market growth companies through private and public investment vehicles. Our focus on flexible hold periods
and ownership structures enhances the optionality companies have to focus on operations and integration, and better aligns financial
incentives with progressive growth initiatives. Our vehicle and strategy is complementary to NewHold Enterprises’ diversified
industrials business. With our IPO, we seek to offer growth equity to industrial technology companies looking for an alternative
to traditional private equity.
Initial Business Combination
Nasdaq rules require that we must complete one
or more business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust
account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at the
time of our signing a definitive agreement in connection with our initial business combination. Our board of directors will make
the determination as to the fair market value of our initial business combination. If our board of directors is not able to independently
determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment banking
firm that is a member of FINRA or an independent accounting firm with respect to the satisfaction of such criteria. While we consider
it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our initial
business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target
or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. We anticipate structuring
our initial business combination either (i) in such a way so that the post-transaction company in which our public stockholders
own shares will own or acquire 100% of the equity interests or assets of the target business or businesses, or (ii) in such a way
so that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in
order to meet certain objectives of the target management team or stockholders, or for other reasons. However, we will only complete
an initial business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities
of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an
investment company under the Investment Company Act of 1940, as amended, or the “Investment Company Act”. Even if the
post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the
initial business combination may collectively own a minority interest in the post-transaction company, depending on valuations
ascribed to the target and us in the initial business combination. For example, we could pursue a transaction in which we issue
a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire
a 100% controlling interest in the target. However, as a result of the issuance of
a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than
a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests
or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business
or businesses that is owned or acquired is what will be taken into account for purposes of Nasdaq’s 80% of net assets test.
If the initial business combination involves more than one target business, the 80% of net assets test will be based on the aggregate
value of all of the transactions and we will treat the target businesses together as the initial business combination for purposes
of a tender offer or for seeking stockholder approval, as applicable.
Sourcing of Potential Business Combination Targets
The NewHold team believes that it is critical
to find a transaction where the SPAC offers a unique solution to the seller in comparison to its alternatives. We have found in
prior SPACs that it is critical to obtain exclusivity earlier in the process than with other types of transactions, and if the
seller is considering a range of transactions, they will only engage with us if the SPAC offers advantages that are critical to
their strategy. This requires that our team source a significant number of transactions in order to populate our deal pipeline.
We will then apply a series of screens to determine if the potential target is appropriate for a SPAC. These screens would include:
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Does the company have financial reporting that is ready for the public markets?
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Would the strategy of the company benefit from the public markets?
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Is the management team prepared for and interested in the demands of a public listing?
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Given the peer group relevant for the target, is the valuation that a SPAC transaction would offer the seller of interest to them?
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Our Business Combination Process
In evaluating prospective business combinations,
we expect to conduct a thorough due diligence review process that will encompass, among other things, a review of historical and
projected financial and operating data, meetings with management and their advisors (if applicable), on-site inspection of
facilities and assets, discussion with customers and suppliers, legal reviews and other reviews as we deem appropriate. We will
also utilize our expertise in evaluating operating projections, financial projections and determining the appropriate return expectations
given the risk profile of the target business.
We are not prohibited from pursuing our initial
business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete
our initial business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee
of independent directors, will obtain an opinion from an independent investment banking firm that is a member of FINRA or an independent
accounting firm that our initial business combination is fair to our company from a financial point of view.
Our officers and directors will indirectly own
founder shares and/or private placement warrants following our IPO. Because of this ownership, our officers and directors may have
a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate
our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating
a particular business combination if the retention or resignation of any such officers and directors were to be included by a target
business as a condition to any agreement with respect to our initial business combination. For additional information regarding
our executive officers’ and directors’ business affiliations and potential conflicts of interest, see “Management
— Directors and Executive Officers” and “Management — Conflicts of Interest.”
Each
of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations
to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity.
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 to present the opportunity to such entity, he or
she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity. We believe, however,
that the fiduciary duties or contractual obligations
of our officers or directors will not materially affect our ability to complete our initial business combination. Our amended and
restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director
or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of
our 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.
Our sponsor and our officers and directors, other
than Marc Saiontz and Neil Glat, have agreed not to participate in the formation of, or become an officer or director of, any other
special purpose acquisition company with a class of securities registered under the Securities Exchange Act of 1934, as amended,
or the Exchange Act, until we have entered into a definitive agreement regarding our initial business combination or we have failed
to complete our initial business combination within 24 months after the closing of our IPO, as such may be extended by stockholder
approval. Marc Saiontz and Neil Glat have agreed not to participate in the formation of, or become an officer or director of, any
other industrial-focused special purpose acquisition company with a class of securities registered under the Securities Exchange
Act of 1934, as amended, or the Exchange Act, until we have entered into a definitive agreement regarding our initial business
combination or we have failed to complete our initial business combination within 24 months after the closing of our IPO,
as such may be extended by stockholder approval.
Our Management Team
Members of our management team are not obligated
to devote any specific number of hours to our matters but they intend to devote as much of their time as they deem necessary to
our affairs until we have completed our initial business combination. The amount of time that any member of our management team
will devote in any time period will vary based on whether a target business has been selected for our initial business combination
and the current stage of the business combination process.
We believe our management team’s operating
and transaction experience and relationships with companies will provide us with a substantial number of potential business combination
targets. Over the course of their careers, the members of our management team have developed a broad network of contacts and corporate
relationships in various industries. This network has grown through the activities of our management team sourcing, acquiring and
financing businesses, our management team’s relationships with sellers, financing sources and target management teams and
the experience of our management team in executing transactions under varying economic and financial market conditions. See the
section of this annual report entitled “Management” for a more complete description of our management team’s
experience.
In addition, the members of our board of directors
have significant executive management and public company experience. Over the course of their careers, the members of our management
team and board of directors have developed a broad network of contacts and corporate relationships that we believe will be useful
for sourcing acquisition opportunities. This network has been developed through our management team’s experience in:
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sourcing, acquiring, operating, developing, growing, financing and selling businesses; and
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executing transactions under varying economic and financial market conditions.
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This network has provided our management team
with a flow of referrals that have resulted in numerous transactions. 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 also be brought to our attention from various unaffiliated sources, including investment bankers, private
investment funds and other intermediaries. 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 to target businesses in which they
think we may be interested on an unsolicited basis, since many of these sources will have read this annual report and know the
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.
Status as a Public Company
We believe our structure will make us an attractive
business combination partner to target businesses. As a public company, we offer a target business an alternative to the traditional
initial public offering through a merger or other business combination with us. Following an initial business combination, we believe
the target business would have greater access to capital and additional means of creating management incentives that are better
aligned with stockholders’ interests than it would as a private company. A target business can further benefit by augmenting
its profile among potential new customers and vendors and aid in attracting talented employees. In a business combination transaction
with us, the owners of the target business may, for example, exchange their shares of stock in the target business for our shares
of Class A common stock (or shares of a new holding company) or for a combination of our shares of Class A common stock and cash,
allowing us to tailor the consideration to the specific needs of the sellers.
Although there are various costs and obligations
associated with being a public company, we believe target businesses will find this method a more 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, marketing and road show efforts that
may not be present to the same extent in connection with an initial business combination with us.
Furthermore, once a proposed initial business
combination is completed, the target business will have effectively become public, whereas an initial public offering is always
subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could delay or
prevent the offering from occurring or could have negative valuation consequences. Following an initial business combination, we
believe the target business would then have greater access to capital and an additional means of providing management incentives
consistent with stockholders’ 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 management
team’s backgrounds will make us an attractive business partner, some potential target businesses may view our status as a
blank check company, such as our lack of an operating history and our ability to seek stockholder approval of any proposed initial
business combination, negatively.
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 independent registered public accounting
firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory
vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some
investors find our securities less attractive as a result, there may be a less active trading market for our securities and the
prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also
provides that an “emerging growth company” can take advantage of the extended transition period provided in Section
7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth
company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary
of the completion of our IPO, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we
are deemed to be a large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates exceeds
$700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion
in non-convertible debt securities during the prior three-year period.
Financial Position
With approximately $172,579,000 in the Trust
Account as of December 31, 2020, of which $166,541,500 is available for a Business Combination, assuming no redemptions and after
payment of $6,037,500 of deferred underwriting fees, before fees and expenses associated with our Business Combination, we offer
a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth
and expansion of its operations or strengthening its balance sheet by reducing its debt or leverage ratio. Because we are able
to complete our Business Combination using our cash, debt or equity securities, or a combination of the foregoing, we have the
flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business
to fit its needs and desires. However, we have not taken any steps to secure third party financing and there can be no assurance
it will be available to us.
Effecting Our Initial Business Combination
We are not presently engaged in, and we will
not engage in, any operations for an indefinite period of time following our IPO. We intend to effectuate our initial business
combination using cash from the proceeds of our IPO and the private placement of the private placement warrants, the proceeds of
the sale of our shares in connection with our initial business combination (pursuant to backstop agreements that we entered into
following the consummation of our IPO or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders
or the owners of the target, or a combination of the foregoing. We may seek to complete our initial business combination with a
company or business that may be financially unstable or in its early stages of development or growth, which would subject us to
the numerous risks inherent in such companies and businesses.
If our initial business combination is paid for
using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration
in connection with our initial business combination or used for redemptions of our Class A common stock, we may apply the balance
of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations
of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial
business combination, to fund the purchase of other companies or for working capital.
We may seek to raise additional funds through
a private offering of debt or equity securities in connection with the completion of our initial business combination, and we may
effectuate our initial business combination using the proceeds of such offering rather than using the amounts held in the trust
account. In addition, we intend to target businesses larger than we could acquire with the net proceeds of our IPO and the sale
of the private placement warrants, and may as a result be required to seek additional financing to complete such proposed initial
business combination. Subject to compliance with applicable securities laws, we would expect to complete such financing only simultaneously
with the completion of our initial business combination. In the case of an initial business combination funded with assets other
than the trust account assets, our proxy materials or tender offer documents disclosing the initial business combination would
disclose the terms of the financing and, only if required by law, we would seek stockholder approval of such financing. There are
no prohibitions on our ability to raise funds privately or through loans in connection with our initial business combination. At
this time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds
through the sale of securities or otherwise.
There is no current basis for investors in our
Class A shares to evaluate the possible merits or risks of the target business with which we may ultimately complete our initial
business combination. Although our management will assess the risks inherent in a particular target business with which we may
combine, we cannot assure you that this assessment will result in our identifying all risks that a target business may encounter.
Furthermore, some of those risks may be outside of our control, meaning that we can do nothing to control or reduce the chances
that those risks will adversely impact a target business.
Sources of Target Businesses
We anticipate that target business candidates
will be brought to our attention from various unaffiliated sources, including investment bankers and investment professionals.
Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us by calls or
mailings. These sources may also introduce us to target businesses in which they think we may be interested on an unsolicited basis,
since many of these sources will have read this annual report and know what types of businesses we are targeting. Our officers
and directors, as well as our sponsor and 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 deal flow opportunities that
would not otherwise necessarily be available to us as a result of the business relationships of our officers and directors and
our sponsor and their respective industry and business contacts as well as their affiliates. 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, advisory
fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction. We will
engage a finder only to the extent our management determines that the use of a finder may bring opportunities to us that may not
otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction that our management
determines is in our best interest to pursue. Payment of finder’s fees 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 our sponsor or officers are affiliated, be paid any finder’s
fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation by the company prior to, or
in connection with any services rendered 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 target in connection with a contemplated initial business combination. We have agreed to pay an affiliate
of our sponsor a total of $15,000 per month for office space, utilities and 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-transaction company following
our initial business combination. The presence or absence of any such fees or arrangements will not be used as a criterion in our
selection process of an initial business combination candidate.
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 the section of this
annual report entitled “Management — Conflicts of Interest,” if any of our officers or directors becomes aware
of an initial 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. Our officers and directors currently have certain relevant fiduciary duties
or contractual obligations that may take priority over their duties to us.
Selection of a Target Business and Structuring of our Initial
Business Combination
Nasdaq rules require that we must complete one
or more business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust
account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at the
time of our signing a definitive agreement in connection with our initial business combination. The fair market value of our initial
business combination will be determined by our board of directors based upon one or more standards generally accepted by the financial
community, such as discounted cash flow valuation, a valuation based on trading multiples of comparable public businesses or a
valuation based on the financial metrics of M&A transactions of comparable businesses. If our board of directors is not able
to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent
investment banking firm that is a member of FINRA or an independent accounting firm with respect to the satisfaction of such criteria.
While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market
value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of
a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects.
We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination.
Subject to this requirement, our management will have virtually unrestricted flexibility in identifying and selecting one or more
prospective target businesses, although we will not be permitted to effectuate our initial business combination with another blank
check company or a similar company with nominal operations.
In any case, we will only complete an initial
business combination in which we own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquire
a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment
Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business or businesses, the portion
of such business or businesses that are owned or acquired by the post-transaction company is what will be taken into account
for purposes of Nasdaq’s 80% of net assets test. There is no basis for investors in our IPO to evaluate the possible merits
or risks of any target business with which we may ultimately complete our initial business combination.
To the extent we effect our initial business
combination with a company or business that may be financially unstable or in its early stages of development or growth we may
be affected by numerous risks inherent in such company or business. Although our management will endeavor to evaluate the risks
inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
In evaluating a prospective business target,
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
and other information that will be made available to us.
The time required to select and evaluate a target
business and to structure and complete our initial business combination, and the costs associated with this process, are not currently
ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective
target business with which our initial business combination is not ultimately completed will result in our incurring losses and
will reduce the funds we can use to complete another business combination.
Lack of Business Diversification
For an indefinite period of time after the completion
of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business.
Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries,
it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line
of business. In addition, we intend to focus our search for an initial business combination in a single industry. 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.
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Limited Ability to Evaluate the Target’s Management Team
Although we intend to closely scrutinize the
management of a prospective target business when evaluating the desirability of effecting our initial business combination with
that business, our assessment of the target business’ management may not prove to be correct. In addition, the future management
may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members
of our management team, if any, in the target business cannot presently be stated with any certainty. The determination as to whether
any of the members of our management team will remain with the combined company will be made at the time of our initial business
combination. While it is possible that one or more of our directors will remain associated in some capacity with us following our
initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial
business combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge
relating to the operations of the particular target business.
We cannot assure you that any of our key personnel
will remain in senior management or advisory positions with the combined company. The determination as to whether any of our key
personnel will remain with the combined company will be made at the time of our initial business combination.
Following an initial business combination, we
may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that
we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge
or experience necessary to enhance the incumbent management.
Stockholders May Not Have the Ability to Approve Our Initial
Business Combination
We may conduct redemptions without a stockholder
vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required by law or applicable
stock exchange rule, or we may decide to seek stockholder approval for business or other legal reasons. Presented in the table
below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder approval is
currently required under Delaware law for each such transaction.
Type of Transaction
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Whether
Stockholder
Approval is
Required
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Purchase of assets
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No
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Purchase of stock of target not involving a merger with the company
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No
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Merger of target into a subsidiary of the company
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No
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Merger of the company with a target
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Yes
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Under Nasdaq’s listing rules, stockholder
approval would be required for our initial business combination if, for example:
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we issue shares of Class A common stock that will be equal to or in excess of 20% of the number of
shares of our Class A common stock then outstanding;
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any of our directors, officers or substantial stockholders (as defined by Nasdaq rules) has a 5% or
greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the target
business or assets to be acquired or otherwise and the present or potential issuance of common stock could result in an
increase in outstanding common shares or voting power of 5% or more; or
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the issuance or potential issuance of common stock will result in our undergoing a change of
control.
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Permitted Purchases of our Securities
If we seek stockholder approval of our initial
business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender
offer rules, our initial stockholders, directors, officers, advisors or their affiliates may purchase public shares or public warrants
in privately negotiated transactions or in the open market either prior to or following the completion of our initial business
combination. There is no limit on the number of shares our initial stockholders, directors, officers, advisors or their affiliates
may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. However, they have no current commitments,
plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. If
they engage in such transactions, they will not make 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. We do not currently anticipate
that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction
subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases
that the purchases are subject to such rules, the purchasers will comply with such rules. Any such purchases will be reported pursuant
to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements. None
of the funds held in the trust account will be used to purchase public shares or public warrants in such transactions prior to
completion of our initial business combination.
The purpose of any such purchases of shares could
be to vote such shares in favor of the initial business combination and thereby increase the likelihood of obtaining stockholder
approval of the initial business combination or to satisfy a closing condition in an agreement with a target that requires us to
have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that
such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number
of public warrants outstanding or to vote such warrants on any matters submitted to the warrantholders for approval in connection
with our initial business combination. Any such purchases of our securities may result in the completion of our initial business
combination that may not otherwise have been possible. In addition, if such purchases are made, the public “float”
of our shares of Class A common stock or warrants may be reduced and the number of beneficial holders of our securities may be
reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities
exchange.
Our sponsor, officers, directors and/or their
affiliates anticipate that they may identify the stockholders with whom our sponsor, officers, directors or their affiliates may
pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests
submitted by stockholders following our mailing of proxy materials in connection with our initial business combination. To the
extent that our sponsor, officers, directors, advisors or their affiliates enter into a private purchase, they would identify and
contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share of the
trust account or vote against our initial business combination, whether or not such stockholder has already submitted a proxy with
respect to our initial business combination. Our sponsor, officers, directors, advisors or their affiliates will only purchase
shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any purchases by our sponsor, officers, directors
and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only be made to the
extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation
under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that
must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or their
affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the
Exchange Act. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such
purchases are subject to such reporting requirements.
Redemption Rights for Public Stockholders upon Completion of
our Initial Business Combination
We will provide our public stockholders with
the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial business
combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account 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 taxes or to fund our working capital requirements, 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 approximately $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. Our sponsor,
officers, directors, special advisor and an employee of an affiliate of our sponsor have entered into a letter agreement with us,
pursuant to which they have agreed to waive their redemption rights with respect to any founder shares and any public shares held
by them in connection with the completion of our initial business combination.
Manner of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock
upon the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the
initial business combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of
a proposed initial business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based
on a variety of factors such as the timing of the transaction
and whether the terms of the transaction would require us to seek stockholder approval under the law or stock exchange listing
requirement. Under Nasdaq rules, asset acquisitions and stock purchases would not typically require stockholder approval while
direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding common
stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. If we structure
an initial business combination with a target company in a manner that requires stockholder approval, we will not have discretion
as to whether to seek a stockholder vote to approve the proposed initial business combination. We may conduct redemptions without
a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange
listing requirements or we choose to seek stockholder approval for business or other legal reasons. So long as we obtain and maintain
a listing for our securities on Nasdaq, we will be required to comply with such rules.
If a stockholder vote is not required and we
do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate
of incorporation:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender
offers, and
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file tender offer documents with the SEC prior to completing our initial business combination which contain substantially
the same financial and other information about the initial business combination and the redemption rights as is required
under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
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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 shares of our
Class A common stock in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under
the Exchange Act.
In the event we conduct redemptions pursuant
to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a)
under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender
offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number
of public shares which are not purchased by our sponsor, which number will be based on the requirement that we may not redeem public
shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC’s
“penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement
relating to our initial business combination upon consummation of our initial business combination and after payment of underwriters’
fees and commissions. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer
and not complete the initial business combination.
If, however, stockholder approval of the transaction
is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or other legal
reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which
regulates the solicitation of proxies, and not pursuant to the tender offer rules, and
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file proxy materials with the SEC.
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In the event that we seek stockholder approval
of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders
with the redemption rights described above upon completion of the initial business combination.
If
we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of
common stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the holders
present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power
of all outstanding shares of capital stock of the company entitled to vote at such meeting. Our initial stockholders will count
toward this quorum and pursuant to the letter agreement, our sponsor, officers, directors, special advisor and an employee of an
affiliate of our sponsor have agreed to vote their founder shares and any public shares purchased during or after our IPO (including
in open market and privately negotiated transactions) in favor of our initial business combination. For purposes of seeking approval
of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of our initial
business combination once a quorum is obtained. As a result, in addition to the founder shares
held by our sponsor, officers, directors and special advisor and that employee, we would need only approximately 11.6%,
of the 17,250,000 public shares outstanding to be voted in favor of an initial business combination (assuming only a quorum is
present at the meeting) in order to have our initial business combination approved (assuming the over-allotment option is
not exercised). In addition, as a result of the founder shares and private placement warrants that the anchor investors may hold
(directly or indirectly), they may have different interests with respect to a vote on an initial business combination than other
public stockholders. We intend to give approximately 30 days (but not less than 10 days nor more than 60 days) prior written notice
of any such meeting, if required, at which a vote shall be taken to approve our initial business combination. These quorum and
voting thresholds, and the voting agreements of our sponsor, officers, directors, special advisor and such employee may make it
more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares
irrespective of whether they vote for or against the proposed transaction.
Our amended and restated certificate of incorporation
will provide that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less
than $5,000,001 (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset
or cash requirement which may be contained in the agreement relating to our initial business combination upon consummation of our
initial business combination and after payment of underwriters’ fees and commissions. For example, the proposed initial business
combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target
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 initial business combination. In the event the aggregate cash consideration we would be required
to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash
conditions pursuant to the terms of the proposed initial business combination exceed the aggregate amount of cash available to
us, we will not complete the initial business combination or redeem any shares, and all shares of Class A common stock submitted
for redemption will be returned to the holders thereof.
Limitation on Redemption upon Completion of our Initial Business
Combination if we Seek Stockholder Approval
Notwithstanding the foregoing, if we seek stockholder
approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination
pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder,
together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than
an aggregate of 15% of the shares sold in our IPO, which we refer to as the “Excess Shares.” Such restriction shall
also be applicable to our affiliates. We believe this restriction will discourage stockholders from accumulating large blocks of
shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed initial
business combination as a means to force us or our management to purchase their shares at a significant premium to the then-current market
price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares
sold in our IPO could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our management
at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to
redeem no more than 15% of the shares sold in our IPO without our prior consent, we believe we will limit the ability of a small
group of stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in
connection with an initial business combination with a target that requires as a closing condition that we have a minimum net worth
or a certain amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares (including
Excess Shares) for or against our initial business combination.
Tendering Stock Certificates in Connection with a Tender Offer
or Redemption Rights
We
may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their
shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the
tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal
to approve the initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer
agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s
option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares in connection
with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements.
Accordingly, a public stockholder would have from the
time we send out our tender offer materials until the close of the tender offer period, or up to two days prior to the vote on
the initial 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 exercise period, it is advisable for stockholders to use electronic
delivery of their public shares.
There is a nominal cost associated with the above-referenced tendering
process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge
the tendering broker $80.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However,
this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender their
shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery
must be effectuated.
The foregoing is different from the procedures
used by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many
blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and
a holder could simply vote against a proposed initial business combination and check a box on the proxy card indicating such holder
was seeking to exercise his or her redemption rights. After the initial business combination was approved, the company would contact
such stockholder to arrange for him or her to deliver his or her certificate to verify ownership. As a result, the stockholder
then had an “option window” after the completion of the initial business combination during which he or she could monitor
the price of the company’s stock in the market. If the price rose above the redemption price, he or she could sell his or
her shares in the open market before actually delivering his or her shares to the company for cancellation. As a result, the redemption
rights, to which stockholders were aware they needed to commit before the stockholder meeting, would become “option”
rights surviving past the completion of the initial business combination until the redeeming holder delivered its certificate.
The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s election to redeem
is irrevocable once the initial business combination is approved.
Any request to redeem such shares, once made,
may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the stockholder meeting set
forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection
with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights,
such holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated
that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after
the completion of our initial business combination.
If our initial business combination is not approved
or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be entitled
to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates
delivered by public holders who elected to redeem their shares.
If our initial proposed initial business combination
is not completed, we may continue to try to complete an initial business combination with a different target until 24 months
from the closing of our IPO.
Redemption of Public Shares and Liquidation if no Initial
Business Combination
Our amended and restated certificate of incorporation
provides that we will have only 24 months from the closing of our IPO to complete our initial business combination. If we
are unable to complete our initial business combination within such 24-month period, we will: (i) cease all operations except
for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter subject to
lawfully available funds therefor, redeem 100% of the public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously
released to us to pay our taxes or to fund our working capital requirements (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 stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and
(iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with
respect to our warrants, which will expire worthless if we fail to complete our initial business combination within the 24-month time
period.
Our initial stockholders have agreed to waive
their rights to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to
complete our initial business combination within 24 months from the closing of our IPO. However, if our sponsor, our officers
or directors or the anchor investors acquire public shares in or after our IPO, they will be entitled to liquidating distributions
from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted
24-month time period.
Our sponsor, officers, directors, special advisor
and an employee of an affiliate of our sponsor have agreed, pursuant to a written agreement with us, that they will not propose
any amendment to our amended and restated certificate of incorporation (i) to modify the substance or timing of the ability of
holders of our public shares to seek redemption in connection with our initial business combination or our obligation to redeem
100% of our public shares if we do not complete our initial business combination within 24 months from the closing of our
IPO or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business combination
activity, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval
of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account
including interest earned on the funds held in the trust account and not previously released to us to pay our taxes and/or to fund
our working capital requirements, divided by the number of then outstanding public shares. However, we may not redeem our public
shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business
combination and after payment of underwriters’ fees and commissions (so that we are not 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 (described above), we would not proceed with the amendment or the related
redemption of our public shares at such time.
We expect that all costs and expenses associated
with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the
approximately $1,500,000 of proceeds held outside the trust account, although we cannot assure you that there will be sufficient
funds for such purpose. We will depend on sufficient interest being earned on the proceeds held in the trust account to pay any
tax obligations we may owe or for working capital purposes (provided that the funds released for working capital purposes may not
exceed $250,000 annually). However, if those funds are not sufficient to cover the costs and expenses associated with implementing
our plan of dissolution, to the extent that there is any interest accrued in the trust account not required to pay taxes on interest
income earned on the trust account balance, we may request the trustee to release to us an additional amount of up to $100,000
of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds
of our IPO and the sale of the private placement warrants, 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 stockholders
upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account could, however, become subject
to the claims of our creditors which would have higher priority than the claims of our public stockholders. We cannot assure you
that the actual per-share redemption amount received by stockholders will not be substantially less than $10.00. Under Section
281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments
to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any
distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that
we will have funds sufficient to pay or provide for all creditors’ claims.
Although
we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account
for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute
such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent
inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the
waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the
trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account,
our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third
party that has not executed a waiver if management believes that such third party’s engagement would be significantly more
beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute
a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management
to be significantly superior to those of other consultants that would agree to execute
a waiver or in cases where management is unable to find a service provider willing to execute a waiver. We are not aware
of any product or service providers who have not or will not provide such waiver other than the underwriters of our IPO and our
independent registered public accounting firm.
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. Our sponsor has agreed that it will
be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective
target business with which we have entered into a written letter of intent, confidentiality or similar agreement or business combination
agreement, reduce the amount of funds 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
share due to reductions in the value of the trust assets, less taxes payable and up to $250,000 per year for working capital purposes,
if any, provided that such liability will not apply to any claims by a third party or prospective target business who executed
a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it
apply to any claims under our indemnity of the underwriters of our IPO against certain liabilities, including liabilities under
the Securities Act. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently
verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only
assets are securities of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations.
None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors
and prospective target businesses.
In the event that the proceeds in the trust account
are reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date
of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest
which may be withdrawn to pay taxes and up to $250,000 per year for working capital purposes, if any, 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 if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the
amount recoverable or if the independent directors determine that a favorable outcome is not likely. We have not asked our sponsor
to reserve for such indemnification obligations and we cannot assure you that our sponsor would be able to satisfy those obligations.
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,
prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title,
interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any claims under
our indemnity of the underwriters of our IPO against certain liabilities, including liabilities under the Securities Act. We will
have access to up to approximately $1,500,000 from the proceeds of our IPO with which to pay any such potential claims (including
costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately $100,000).
In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, stockholders
who received funds from our trust account could be liable for claims made by creditors. In the event that our offering expenses
exceed our estimate of $750,000, 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 $750,000, the amount of funds we intend to be held outside
the trust account would increase by a corresponding amount.
Under the DGCL, stockholders may be held liable
for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata
portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do
not complete our initial business combination within 24 months from the closing of our IPO may be considered a liquidating
distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended
to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any
third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any
claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any
liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata
share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the
third anniversary of the dissolution.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in
the event we do not complete our initial business combination within 24 months from the closing of our IPO, is not considered
a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the
imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant
to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption
distribution, instead of three years, as in the case of a liquidating distribution. If we are unable to complete our initial business
combination within 24 months from the closing of our IPO, 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 subject to lawfully available funds
therefor, redeem 100% of the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay
our taxes or to fund our working capital requirements (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 stockholders’ rights as
stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as
promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board
of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably
possible following our 24th month and, therefore, we do not intend to comply with those procedures. As such,
our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any
liability of our stockholders may extend well beyond the third anniversary of such date.
Because we will not be complying with Section
280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our
payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent 10 years.
However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching
for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment
bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in our underwriting agreement,
we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account.
As a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any
claim that would result in any liability extending to the trust account is remote. Further, our sponsor may be liable only to the
extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.00 per public share or (ii) such
lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions
in value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes and up to $250,000 per year for
working capital purposes, if any, and will not be liable as to any claims under our indemnity of the underwriters of our IPO against
certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable
against a third party, our sponsor will not be responsible to the extent of any liability for such third-party claims.
If we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable
bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the
claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able
to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable
debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore, our board
of directors may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, thereby exposing
itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing
the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our public stockholders will be entitled to receive
funds from the trust account only upon the earlier to occur of: (i) the completion of our initial business combination, (ii) the
redemption of any public shares properly tendered in connection with a stockholder vote to amend any provisions of our amended
and restated certificate of incorporation (A) to modify the substance or timing of the ability of holders of our public shares
to seek redemption in connection with our initial business combination or our obligation to redeem 100% of our public shares if
we do not complete our initial business combination within 24 months from the closing of our IPO or (B) with respect to any
other provision relating to stockholders’ rights or pre-initial business combination activity, and (iii) the redemption
of all of our public shares if we are unable to complete our business combination within 24 months from the closing of our
IPO, subject to applicable law. In no other circumstances will a stockholder have any right or interest of any kind to or in the
trust account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s
voting in connection with the initial business combination alone will not result in a stockholder’s redeeming its shares
to us for an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights as
described above. These provisions of our amended and restated certificate of incorporation, like all provisions of our amended
and restated certificate of incorporation, may be amended with a stockholder vote.
Comparison of Redemption or Purchase Prices in Connection
with Our Initial Business Combination and if We Fail to Complete Our Initial Business Combination
The following table compares the redemptions
and other permitted purchases of public shares that may take place in connection with the completion of our initial business combination
and if we are unable to complete our initial business combination within 24 months from the closing of our IPO.
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Redemptions in
Connection with our Initial
Business Combination
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Other Permitted
Purchases of Public Shares
by us or our Affiliates
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Redemptions if we fail to
Complete an Initial
Business Combination
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Calculation of redemption price
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Redemptions at the
time of our initial business combination may be made pursuant to a tender offer or in connection with a stockholder vote. The
redemption price will be the same whether we conduct redemptions pursuant to a tender offer or in connection with a
stockholder vote. In either case, our public stockholders may redeem their public shares for cash equal to the aggregate
amount then on deposit in the trust account as of two business days prior to the consummation of the initial business
combination (which is initially anticipated to be $10.00 per public share), including interest earned on the funds held
in the trust account and not previously released to us to pay our taxes or to fund our working capital requirements, divided
by the number of then outstanding public shares, subject to the limitation that no redemptions will take place, if all of the
redemptions would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination and any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms of a proposed initial business combination.
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If we seek stockholder 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 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.
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If we are unable to complete our initial business combination within 24 months from the closing of our IPO, 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 public share), including interest earned on the funds held in the trust account and not previously released to us to pay our taxes or to fund our working capital requirements (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares.
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Impact to remaining stockholders
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The redemptions in connection with our initial business combination will reduce the book value per share for our remaining stockholders, who will bear the burden of the deferred underwriting commissions and the taxes payable.
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If the permitted purchases described above are made there would be no impact to our remaining stockholders because the purchase price would not be paid by us.
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The redemption of our public shares if we fail to complete our initial business combination will reduce the book value per share for the shares held by our initial stockholders, who will be our only remaining stockholders after such redemptions.
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Competition
In identifying, evaluating and selecting a target
business for our initial business combination, we may encounter intense competition from other entities having a business objective
similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses
seeking strategic business combinations. 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 we do. Our ability to acquire larger target businesses will be limited by our available
financial resources. This inherent limitation gives others an advantage in pursuing the initial business combination of a target
business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their redemption rights
may reduce the resources available to us for our initial business combination and our outstanding warrants, and the future dilution
they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a
competitive disadvantage in successfully negotiating an initial business combination.
Periodic Reporting and Financial Information
We will provide stockholders with audited financial
statements of the prospective target business as part of the tender offer materials or proxy solicitation materials sent to stockholders
to assist them in assessing the target business. In all likelihood, these financial statements will need to be prepared in accordance
with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical financial statements may be required
to be audited in accordance with the standards of the PCAOB. These financial statement requirements may limit the pool of potential
targets we may conduct an initial business combination with because some targets may be unable to provide such statements in time
for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination within
the prescribed time frame. We cannot assure you that any particular target business identified by us as a potential business combination
candidate will have financial statements prepared in accordance with GAAP or that the potential target business will be able to
prepare its financial statements in accordance with the requirements outlined above. To the extent that these requirements cannot
be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential business combination
candidates, we do not believe that this limitation will be material.
We
are required to evaluate our internal control procedures for the fiscal year ending December 31, 2020 as required by the Sarbanes-Oxley Act.
Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth
company, will we be required to have our internal control procedures audited. A target company may not be in compliance with the
provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls
of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete
any such business combination. 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
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 our IPO, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we
are deemed to be a large accelerated filer, which means the market value of our shares of Class A common stock that are held by
non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have
issued more than $1.0 billion in non-convertible debt during the prior three-year period.
Employees
We currently have 3 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 target business has been selected for our initial business combination and the stage
of the initial 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.