In this Annual Report
on Form 10-K/A (the “Form 10-K/A”), references to “Capitol” or the “Company” and to “we,”
“us” and “our” refer to Capitol Investment Corp. V.
Introduction
Mark
Ein and Dyson Dryden established Capitol Investment Corp. V, their fifth blank check company, to invest in and help build an industry-leading
public company that will aim to deliver long term value to stockholders. We believe that our extensive investing and company building
experience, long track record with public acquisition companies, broad network of relationships, strategic expertise and deep
engagement as proactive directors and advisors, combined with our capital, can be a meaningful catalyst for growth and value creation
for the business that we partner with over the long term.
Mr.
Ein is an investor, entrepreneur and philanthropist, who has created, acquired, invested in and built a series of growth companies
across a diverse set of industries over the course of his 30-year career. During this time, in addition to leading four successful
public acquisition companies, Mr. Ein has been involved in the founding or early stages of six companies that have been worth
over one billion dollars and has led over $3 billion of private equity, venture capital and public company investments. Mr. Dryden
has worked with Mr. Ein for over a decade, initially as his advisor, and since 2013 as his partner principally focused on their
public acquisition company platform and its related investments. He brings over 20 years of investing, capital markets, capital
raising and strategic advisory experience to Capitol V.
Mr.
Ein and Mr. Dryden have a long track record of successfully sourcing, evaluating, structuring, negotiating and executing four
previous public acquisition company transactions. They are supported by a strong, dedicated investment team with a history of
working together that we believe will provide us with valuable analytical, financial, transactional, communications and other
expertise that we will leverage to identify and execute a business combination and drive future value for the combined business.
Our
team’s combined experience, expansive networks and long-standing relationships will provide valuable access to the highest-quality
growth companies. Our management team is also well positioned to identify and execute a business combination as a preferred partner
to a wide range of business owners. Our previous investments include companies owned by founders, families, private equity funds,
hedge funds and venture funds.
We
were originally formed as a Cayman Islands exempted company on May 1, 2017. In May 2019, we redomesticated from the Cayman Islands
to Delaware and are now a Delaware corporation. We were formed for the purpose of effecting a merger, stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination with one or more businesses or entities. We have not selected any
potential business combination target and are not limited to any particular industry or geographic location in selecting a target
business with which to engage in a business combination.
We maintain a website
located at http://www.capinvestment.com. Our corporate filings, including our Annual Report on Form 10-K/A, our Quarterly Reports on
Form 10-Q, our Current Reports on Form 8-K, our proxy statements and reports filed by our officers and directors under Section 16(a)
of the Securities Exchange Act of 1934, as amended, and any amendments to those filings, are available, free of charge, on our website
as soon as reasonably practicable after we electronically file such material with the Securities and Exchange Commission. We do not intend
for information contained in our website to be a part of this Annual Report on Form 10-K/A.
Company
History
Capitol
Acquisition Management V LLC and Capitol Acquisition Founder V LLC (collectively, the “Sponsors”) were issued an aggregate
of 8,625,000 founder shares, or Class B common stock, (after taking into account (i) a stock dividend of approximately 0.17 shares
of Class B common stock for each share of Class B common stock effectuated in October 2017, (ii) a stock dividend of one share
of Class B common stock for each outstanding share of Class B common stock effectuated in May 2019 and (iii) an approximately
0.8571-for-1 reverse stock split with respect to our Class B common stock effectuated in November 2020) for which we received
a capital contribution of an aggregate of $25,000. Our Sponsors subsequently transferred a portion of these founders’ shares
to certain individuals, including our independent directors, for the same per share purchase price originally paid for such shares.
Our Sponsors and independent directors are collectively referred to herein as our initial stockholders.
On December 4, 2020, we
consummated our initial public offering (the “Offering”) of 34,500,000 units (the “Units”). Each Unit consists
of one share of our Class A common stock, par value $0.0001 per share (“Class A common stock”), and one-third of one redeemable
warrant (“Warrants”), with each whole Warrant entitling the holder thereof to purchase one whole share of Class A common
stock for $11.50 per share. The Class A common stock and the Warrants included in the Units traded as a Unit until January 22, 2021,
when separate trading of Class A common stock and Warrants began. No fractional warrants were or will be issued and only whole warrants
trade. Holders now have the option to continue to hold Units or separate their Units into the component pieces. The Units were sold in
the Offering at a price of $10.00 per Unit, generating gross proceeds to us of $345,000,000.
Simultaneously
with the consummation of the Offering on December 4, 2020, we completed the private sale (the “Private Placement”)
of 5,833,333 warrants (the “Private Placement Warrants”) at a purchase price of $1.50 per Private Placement Warrant,
to our Sponsors and our independent directors, generating gross proceeds to us of $8,750,000.
Approximately
$338.1 million of the net proceeds from the Offering and $6.9 million of the proceeds from the sale of the Private Placement Warrants
have been deposited in a trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee, established
for the benefit of our public stockholders. After paying expenses associated with the Offering and the Private Placement, we had
approximately $1.0 million of cash held outside of the trust account for working capital.
Except
for the withdrawal from the trust account of interest earned on the funds held therein necessary to pay our income taxes, if any,
the funds in the trust account will not be released to us until the earlier of the completion of a business combination or our
liquidation upon our failure to consummate a business combination within the required time period (which may not occur until December
4, 2022).
Track
Record with Similarly Structured Acquisition Vehicles
Mr. Ein
and Mr. Dryden have a long track record of successfully raising capital and executing transactions through public acquisition
companies structured similarly to Capitol V, having completed four such transactions over a 13-year period, across different
industries and at different stages of the economic cycle. The past performance of our founders and other members of our management
team is not a guarantee that we will be able to identify a suitable candidate for our initial business combination or of success
with respect to any business combination we may consummate. You should not rely on the historical record of our management’s
performance as indicative of our future performance.
Capitol
I/Two Harbors
Creation
of a Real Estate Investment Trust to capitalize on the severe dislocation in the residential mortgage-backed securities market
following the global financial crisis in 2009.
Capitol
Acquisition Corp., or Capitol I, was a $261 million special purpose acquisition company that completed its initial public
offering in June 2007. Mr. Ein was the founder, Chairman and Chief Executive Officer of Capitol I. Capitol I completed
its business combination with Two Harbors Investment Corp., or Two Harbors, in October 2009. Two Harbors was a newly formed
Maryland real estate investment trust, or REIT, established to focus on residential mortgage backed securities in partnership
with Pine River Capital Management L.P. Two Harbors’ common stock is traded on the New York Stock Exchange, or NYSE, under
the symbol “TWO.” Mr. Ein served as Vice-Chairman of the board of directors of Two Harbors from October 2009
to May 2015. During Mr. Ein’s tenure as Vice-Chairman, Two Harbors became one of the world’s largest REITs
and also founded, and then completed the spin-off of, Silver Bay Realty Trust, which was the first ever publicly traded single
family housing REIT. Mr. Dryden served as Capitol I’s investment banker throughout the search process and assisted
with the execution of the Two Harbors transaction.
Capitol
II/Lindblad Expeditions
Growth
equity investment in founder-owned and led business to extend leadership position in global expedition cruising in partnership
with National Geographic in 2015.
Capitol
Acquisition Corp. II, or Capitol II, was a $200 million special purpose acquisition company that completed its initial public
offering in May 2013. Mr. Ein was the Chairman of the Board and Chief Executive Officer and Mr. Dryden was Chief
Financial Officer and Director of Capitol II. Capitol II completed its $439 million business combination with Lindblad Expeditions,
Inc., or Lindblad, in July 2015. Lindblad is a global leader in expedition cruising and extraordinary travel experiences
offering captivating trips featuring highly curated content to 40+ remarkable destinations on all seven continents in partnership
with National Geographic. Lindblad’s merger with Capitol II enabled it to pursue attractive future growth opportunities
including new ship builds, expanded charters and acquisitions. Lindblad’s common stock is traded on the NASDAQ under the
symbol “LIND.” Since the closing of the business combination with Lindblad, Mr. Ein has continued to serve as
the Chairman of the Board and Mr. Dryden has continued to serve as a Director of Lindblad.
Capitol
III/Cision
Deleveraging
growth capital investment in leading private-equity owned global provider of public relations software, media distribution, media
intelligence and related professional services to enhance the company’s balance sheet, enable organic growth investments
and facilitate acquisitions.
Capitol
Acquisition Corp. III, or Capitol III, was a $325 million special purpose acquisition company that completed its initial
public offering in October 2015. Mr. Ein was the Chairman of the Board and Chief Executive Officer and Mr. Dryden
was President, Chief Financial Officer and Director of Capitol III. Capitol III completed its $2.4 billion business combination
with Canyon Holdings S.a.r.l.,or Cision, a portfolio company of private equity firm GTCR, in June 2017. At that time, the
merger of Capitol III and Cision was the largest transaction by a U.S. public acquisition company completed since 2010. Cision
is a leading global provider of public relations software, media distribution, media intelligence and related professional services.
Public relations and communications professionals use Cision’s products and services to help manage, execute and measure
their strategic public relations and communications programs. Cision solutions also include market-leading media technologies
such as PR Newswire. Cision serves over 75,000 customers in more than 170 countries and 40 languages worldwide, and maintains
offices in North America, Europe, Australia, Asia and Latin America. In January 2020, Platinum Equity took Cision private
in a transaction valued at $2.7 billion. Mr. Ein served as Vice Chairman of the Board and Mr. Dryden served as
a Director of the combined company from June 2017 until January 2020, when the sale to Platinum Equity closed.
Capitol
IV/Nesco
Investment
in one of the largest specialty equipment rental providers to the growing critical infrastructure industries of electric utility
transmission and distribution, telecom and rail in North America to deleverage the business, enable growth investments and facilitate
acquisitions.
Capitol
Investment Corp. IV, or Capitol IV, was a $402.5 million special purpose acquisition company that completed its initial public
offering in August 2017. Mr. Ein was the Chairman of the Board and Chief Executive Officer of Capitol IV and Mr. Dryden
was the President, Chief Financial Officer and a Director of Capitol IV. Capitol IV completed its $1.1 billion business combination
with Nesco, a portfolio company of private equity firm Energy Capital Partners, in July 2019. Nesco is one of the largest
specialty equipment rental providers to the growing electric utility transmission and distribution, telecom and rail industries
in North America. Nesco offers its specialized equipment to a diverse customer base for the maintenance, repair, upgrade and installation
of critical infrastructure assets, including electric lines, telecommunications networks and rail systems. The combined company’s
common stock and warrants are traded on the NYSE under the symbols “NSCO” and “NSCO WS.” Mr. Ein
and Mr. Dryden have both continued to serve on the Board of Directors of the combined company, with Mr. Dryden currently
serving as Co-Chairman and Mr. Ein as Vice Chairman.
Acquisition
Strategy
We
employ a pro-active acquisition strategy focused on companies that have demonstrated a potential for future growth and/or companies
for which we believe we can be the catalyst to accelerating growth. We believe seeing a large set of potential opportunities creates
the highest probability of finding an exceptional business combination. Our acquisition selection process will leverage our team’s
extensive network of industry, family office, private equity and venture capital sponsor relationships, as well as relationships
with management teams of public and private companies, investment bankers, attorneys and accountants who we believe should provide
us with significant business combination opportunities.
We
have identified the following criteria and guidelines that we believe are important in evaluating prospective target businesses.
We intend to seek to acquire companies that we believe:
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Will
experience substantial growth post-acquisition. We believe that we are well-positioned to evaluate a company’s current growth
prospects and opportunities to enhance growth post-acquisition, both organically and through acquisitions.
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Have
developed leading positions within industries that exhibit strong fundamentals. We intend to evaluate each industry and the target
businesses within those industries based on several factors, including growth characteristics, competitive positioning, profitability
margins and sustainability.
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Exhibit
unseen value or other characteristics that have been disregarded by the marketplace. We intend to leverage the operational experience
and financial acumen of our team to focus on unlocking value others may have overlooked.
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Will
offer an attractive risk-adjusted return on investment for our stockholders. We will seek to acquire the target on attractive
terms. Financial returns will be evaluated based on both organic cash flow growth potential and an ability to create value through
new initiatives. Potential upside from growth in the business will be weighed against any downside risks.
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Are
led by exceptionally talented, experienced and highly competent management teams. If needed, we will leverage our experience in
identifying and recruiting new management.
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In
addition, we will consider a prospective target business in the context of its broader stakeholder impact, including environmental,
social and governance factors.
While
these criteria will be used in evaluating business combination opportunities, we may decide to enter into a business combination
with a target business or businesses that do not meet these proposed criteria and guidelines.
Initial
Business Combination
The
NYSE 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 (net of amounts previously disbursed to management for working capital purposes,
if permitted, and excluding the amount of deferred underwriting discounts and commissions held in trust) at the time of our signing
a definitive agreement in connection with 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 or another independent firm that regularly renders fairness opinions with respect to the satisfaction of such criteria.
We
anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders
own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure
our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets
of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons,
but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required
to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50%
or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority
interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination. For
example, we could pursue a transaction in which we issue a substantial number of new shares of common stock or preferred stock
in exchange for all of the outstanding capital stock of a target in order to consummate such transaction. In this case, we would
acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares,
our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares
subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses
are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is
what will be taken into account for purposes of the NYSE’s 80% fair market value test. If the business combination involves
more than one target business, the 80% fair market value test will be based on the aggregate value of all of the transactions.
Notwithstanding
the foregoing, if we are not then listed on the NYSE for whatever reason, we would no longer be required to meet the foregoing
80% fair market value test.
Status
as a Public Company
We
believe our structure will make us an attractive business combination partner to target businesses. As an existing public company,
we offer a target business an alternative to the traditional initial public offering through a merger or other business combination
with us. In a business combination transaction with us, the owners of the target business may, for example, exchange their shares
of stock in the target business for our Class A common stock (or shares of a new holding company) or for a combination of our
Class A common stock and cash, allowing us to tailor the consideration to the specific needs of the sellers. 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, that may not be present to the same extent in connection with a business combination with us.
Furthermore,
once a proposed business combination is completed, the target business will have effectively become public, whereas an initial
public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions,
which could prevent the offering from occurring. Once public, we believe the target business would then have greater access to
capital, 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 and experience 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.
Financial
Position
With
the funds available in our trust account, we offer a target business a variety of options such as creating a liquidity event for
its owners, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing
its debt ratio. Because we are able to complete our initial business combination using our cash, debt or equity securities, or
a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the
consideration to be paid to the target business to fit its needs and desires. However, we have not taken any steps to secure third-party
financing and there can be no assurance it will be available to us.
Effecting
a Business Combination
Sources
of Target Businesses
We
anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment
bankers and private investment funds. 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 our filings with the Securities and Exchange Commission and know what types of businesses we are
targeting. Our officers and directors, as well as their affiliates, may also bring to our attention target business candidates
of which they become aware through their business contacts as a result of formal or informal inquiries or discussions they may
have, as well as attending trade shows or conventions. 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 track record and business relationships of our officers
and directors. While we do not presently anticipate engaging the services of professional firms or other individuals that specialize
in business acquisitions on any formal basis, we may engage these firms or other individuals in the future, in which event we
may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation based
on the terms of the transaction. We will engage a finder only to the extent our management determines that the use of a finder
may bring opportunities to us that may not otherwise be available to us or if finders approach us on an unsolicited basis with
a potential transaction that our management determines is in our best interest to pursue. Payment of a finder’s fee is customarily
tied to completion of a transaction, in which case any such fee will be paid out of the funds held in the trust account. In no
event, however, will our sponsors or any of our existing officers or directors, or any entity with which they are affiliated,
be paid any finder’s fee for introducing a target business to us.
We
are not prohibited from pursuing an initial business combination with a business combination target that is affiliated with our
sponsors, officers or directors, or from making the acquisition through a joint venture or other form of shared ownership with
our sponsors, officers or directors. In the event we seek to complete our initial business combination with a business combination
target that is affiliated with our sponsors, executive officers or directors, we, or a committee of independent directors, would
obtain an opinion from an independent investment banking firm or another independent firm that regularly renders fairness opinions
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.
Evaluation
of a Target Business and Structuring of Our Initial Business Combination
In
evaluating a prospective target business, we expect to conduct a thorough due diligence review which may encompass, among other
things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection
of facilities, as applicable, as well as a review of financial, operational, legal and other information which will be made available
to us. If we determine to move forward with a particular target, we will proceed to structure and negotiate the terms of the business
combination transaction.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the
costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect
to the identification and evaluation of, and negotiation with, a prospective target business with which our initial business combination
is not ultimately completed will result in our incurring losses and will reduce the funds we can use to complete another business
combination.
Lack
of Business Diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend
entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations
with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations
and mitigate the risks of being in a single line of business. By completing our initial business combination with only a single
entity, our lack of diversification may:
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subject
us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on
the particular industry in which we operate after our initial business combination; and
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cause
us to depend on the marketing and sale of a single product or limited number of products or services.
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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’s management may not prove to
be correct. In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public
company. Furthermore, the future role of members of our management team, if any, in the target business cannot presently be stated
with any certainty. The determination as to whether any of the members of our management team will remain with the combined company
will be made at the time of our initial business combination. While it is possible that one or more of our directors will remain
associated in some capacity with us following our initial business combination, it is unlikely that any of them will devote their
full efforts to our affairs subsequent to our initial business combination. Moreover, we cannot assure you that members of our
management team will have significant experience or knowledge relating to the operations of the particular target business.
We
cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company.
The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our
initial business combination.
Following
a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite
skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve Our Initial Business Combination
We
may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC subject to the provisions of
our amended and restated certificate of incorporation. However, we will seek stockholder approval if it is required by law or
applicable stock exchange rule, or we may decide to seek stockholder approval for business or other legal reasons.
Under
the NYSE’s listing rules, stockholder approval would be required for our initial business combination if, for example:
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we
issue common stock that will be equal to or in excess of 20% of the number of our common stock then outstanding (other than in
a public offering);
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any
of our directors, officers or substantial stockholders (as defined by the NYSE rules) has a 5% or greater interest earned on the
trust account (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 stock 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, executive officers, advisors or
their affiliates may purchase shares or public warrants in privately negotiated transactions or in the open market either prior
to or following the completion of our initial business combination. There is no limit on the number of shares such persons may
purchase, or any restriction on the price that they may pay. Any such price per share may be different than the amount per share
a public stockholder would receive if it elected to redeem its shares in connection with our initial business combination. However,
such persons have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms
or conditions for any such transactions. In the event our initial stockholders, directors, officers, advisors or any of their
affiliates determine to make any such purchases at the time of a stockholder vote relating to our initial business combination,
such purchases could have the effect of influencing the vote necessary to approve such transaction. None of the funds in the trust
account will be used to purchase shares or public warrants in such transactions. If our initial stockholders, sponsors, directors,
executive officers, advisors or their affiliates 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 have adopted an insider trading policy which requires insiders to: (1) refrain from purchasing company
securities during certain blackout periods and when they are in possession of any material non-public information; and (2) clear
all trades in company securities with our legal counsel prior to execution. We cannot currently determine whether our insiders
will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon several factors, including but not limited
to, the timing and size of such purchases. Depending on such circumstances, our insiders may either make such purchases pursuant
to a Rule 10b5-1 plan or determine that such a plan is not necessary.
In
the event that our initial stockholders, sponsors, directors, officers, advisors or their affiliates purchase shares in privately
negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders
would be required to revoke their prior elections to redeem their shares. We do not currently anticipate that such purchases,
if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction
subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases
that the purchases are subject to such rules, the purchasers will be required to comply with such rules.
The
purpose of any such purchases of shares could be to (i) vote such shares in favor of the business combination and thereby increase
the likelihood of obtaining stockholder approval of the business combination or (ii) to satisfy a closing condition in an agreement
with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business
combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants
could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant
holders for approval in connection with our initial business combination. Any such purchases of our securities may result in the
completion of our initial business combination that may not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our Class A common stock or public warrants may be reduced
and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation,
listing or trading of our securities on a national securities exchange.
Our
initial stockholders, sponsors, officers, directors and/or their affiliates anticipate that they may identify the public stockholders
with whom they may pursue privately negotiated purchases by either the public stockholders contacting us directly or by our receipt
of redemption requests submitted by public stockholders (in the case of Class A common stock) following our mailing of proxy materials
in connection with our initial business combination.
To
the extent that our initial stockholders, sponsors, officers, directors 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. Our initial stockholders, sponsors, executive
officers, directors or any of their affiliates will select which public stockholders to purchase shares from based on the negotiated
price and number of shares and any other factors that they may deem relevant, and will only purchase shares if such purchases
comply with Regulation M under the Exchange Act and the other federal securities laws. 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.
Redemption
Rights for Public Shareholders upon Completion of Our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their Class A common stock upon the completion
of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account calculated as of two business days prior to the consummation of our initial business combination, including interest
earned on the trust account not previously released to us to pay taxes (net of taxes payable), divided by the number of then-outstanding
public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.00
per public share. The per share amount we will distribute to investors who properly redeem their shares will not be reduced by
the deferred underwriting commissions we will pay to the underwriters. The redemption rights will include the requirement that
a beneficial holder must identify itself in order to validly redeem its shares. Our initial stockholders, which include our independent
directors, have entered into agreements with us, pursuant to which they have agreed to waive their redemption rights with respect
to their founder shares and any public shares they may hold in connection with the completion of our initial business combination.
The other members of our management team have entered into agreements similar to the one entered into by our initial stockholders
with respect to any public shares acquired by them in the Offering or thereafter.
Limitations
on Redemptions
Our
amended and restated certificate of incorporation provides 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 immediately prior to or upon consummation of an initial business
combination (so that we are not subject to the SEC’s “penny stock” rules). However, the proposed 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 business combination. In the event the aggregate cash consideration we would be required to pay for all
shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant
to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the
business combination or redeem any shares, and all shares of Class A common stock submitted for redemption will be returned to
the holders thereof, and we instead may search for an alternate business combination.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their Class A common stock upon the completion
of our initial business combination either (i) in connection with a stockholder meeting called to approve the business combination
or (ii) by means of a tender offer. In the case of a stockholder meeting, such election must be made, unless extended by us in
our sole discretion, no later than two business days prior to the initially scheduled vote on the initial business combination.
The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will
be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether
the terms of the transaction would require us to seek stockholder approval under applicable law or stock exchange listing requirement.
Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company
where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend our
amended and restated certificate of incorporation would require stockholder approval. We currently intend to conduct redemptions
in connection with a stockholder vote unless stockholder approval is not required by applicable law or stock exchange listing
requirement and we choose to conduct redemptions pursuant to the tender offer rules of the SEC for business or other legal reasons.
If
we hold a stockholder vote to approve our initial business combination, 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 our initial business
combination.
If
we seek stockholder approval, we will complete our initial business combination only if a majority of the shares of common stock
voted are voted in favor of the business combination. In such case, our initial stockholders have agreed to vote their founder
shares and any public shares purchased by them in favor of our initial business combination. As a result, in addition to our initial
stockholders’ founder shares, we would need 12,937,501, or 37.5%, of the 34,500,000 shares sold in the Offering to be voted
in favor of an initial business combination in order to have our initial business combination approved (assuming all outstanding
shares are voted). Each public stockholder may elect to redeem its public shares irrespective of whether it votes, or how it votes
on, the proposed transaction. In addition, our initial stockholders have entered into the letter agreement with us, pursuant to
which they have agreed to waive their redemption rights with respect to their founder shares and public shares in connection with
the completion of a business combination. Our other directors and officers have entered into the letter agreement, which imposes
the same obligations on them with respect to any public shares acquired by them.
If
we conduct redemptions pursuant to the tender offer rules of the SEC, 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 our 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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In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business
days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination
until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not
tendering more than the number of public shares we are permitted to redeem. If public stockholders tender more shares than we
have offered to purchase, we will withdraw the tender offer and not complete our initial business combination, and we instead
may search for an alternate business combination.
Limitation
on Redemption upon Completion of Our Initial Business Combination If We Seek Shareholder Approval
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation 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 Excess Shares. We believe this restriction will discourage stockholders from accumulating large blocks
of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed
business combination as a means to force us or our 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 20%
of the shares could threaten to exercise its redemption rights if such holder’s shares are not purchased by us, our sponsors
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 20% of the shares without our prior consent, we believe we will limit the ability of a small group
of stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection
with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount
of cash.
However,
we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against
our initial business combination.
Tendering
share Certificates in Connection with Exercising Redemption Rights
In
connection with any vote held to approve a proposed business combination, public stockholders seeking to exercise their redemption
rights, whether they are record holders or hold their shares in “street name,” will be required to either tender their
certificates to our transfer agent or to deliver their shares to the transfer agent electronically using The Depository Trust
Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option, in each case no later than two business
days prior to the initially scheduled vote on the proposal to approve the business combination. The proxy solicitation materials
that we will furnish to holders of our public shares in connection with our initial business combination will indicate the applicable
delivery requirements, which will include the requirement that a beneficial holder must identify itself in order to validly redeem
its shares. Accordingly, a public stockholder would have up to two days prior to the vote on the business combination to tender
its shares if it wishes to seek to exercise its redemption rights. Given the relatively short period in which to exercise redemption
rights, it is advisable for 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 a fee of approximately $80.00 and
it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred
regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The need to deliver
shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
Any
request to redeem such shares, once made, may be withdrawn at any time up to two business days prior to the vote on the proposal
to approve the business combination, unless otherwise agreed to by us. Furthermore, if a holder of a public share delivered its
certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect
to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically).
It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed
promptly after the completion of our initial business combination.
If
our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise
their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In
such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If
our initial proposed business combination is not completed, we may continue to try to complete a business combination with a different
target until December 4, 2022 or during any Extension Period.
Redemption
of Public Shares and Liquidation If No Initial Business Combination
Our
amended and restated certificate of incorporation provides that we will have until December 4, 2022 to complete our initial business
combination. If we are have not completed our initial business combination within such 24-month period or during any Extension
Period, we will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not
more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest earned on the trust account not previously released to us to pay
taxes (net of taxes payable and 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 liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in the case
of clauses (ii) and (iii) to our obligations under Delaware law to provide for claims of creditors. 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 such time period.
Our
initial stockholders, which include our independent directors, have entered into a letter agreement with us, pursuant to which
they have waived their rights to liquidating distributions from the trust account with respect to their founder shares if we fail
to complete our initial business combination by December 4, 2022 or during any Extension Period. Our other directors and officers
have entered into the letter agreement, which imposes the same obligations on them with respect to any public shares acquired
by them directly. However, if our initial stockholders or other directors or officers acquire public shares, 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 time period.
The
underwriters have agreed to waive their rights to their deferred underwriting commission held in the trust account in the event
we do not complete our initial business combination within the allotted time frame (including any Extension Period) and, in such
event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of
our public shares.
Our
sponsors, executive officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any
amendment to our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to
allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete
our initial business combination by December 4, 2022 or (B) 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 public shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then
on deposit in the trust account, including interest earned on the trust account not previously released to us to pay taxes (net
of taxes payable), divided by the number of then-outstanding public shares. However, we may not redeem our public shares in an
amount that would cause our net tangible assets to be less than $5,000,001 immediately prior to or upon consummation of an initial
business combination (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,
we would not proceed with the amendment or the related redemption of our public shares at such time. This redemption right shall
apply in the event of the approval of any such amendment, whether proposed by our sponsors, any executive officer, director or
director nominee, or any other person.
We
expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors,
will be funded from amounts remaining out of the $1,000,000 of proceeds held outside the trust account plus the interest earned
on the funds in the trust account available to us, 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 provide us with additional
working capital we will need to identify and complete one or more initial business combinations, as well as to pay any tax obligations
that we may owe. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan
of dissolution, 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 the Offering, 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 $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 less than $10.00. While we intend to pay such amounts, if any, we cannot
assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although
we will seek to have all vendors, service providers, prospective target businesses and other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account
for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute
such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent
inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the
waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the
trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account,
our management will 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. In addition, there is no guarantee that such entities will agree to waive
any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and
will not seek recourse against the trust account for any reason. In order to protect the amounts held in the trust account, our
sponsors have agreed that they will be liable to us if and to the extent any claims by a third party (other than our independent
public accountants) for services rendered or products sold to us, or a prospective target business with which we have entered
into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount
of funds in the trust account to below the lesser of (i) $10.00 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; 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 the Offering against
certain liabilities, including liabilities under the Securities Act. However, we have not asked our sponsors to reserve for such
indemnification obligations and we believe our sponsors’ only assets are our securities. Therefore, we think it is unlikely
that our sponsors would be able to satisfy those obligations. None of our other officers or directors will indemnify us for claims
by third parties including, without limitation, claims by vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 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, in each case less taxes payable, and our sponsors assert that they are
unable to satisfy their indemnification obligations or that they have no indemnification obligations related to a particular claim,
our independent directors would determine whether to take legal action against our sponsors to enforce their indemnification obligations.
While we currently expect that our independent directors would take legal action on our behalf against our sponsors to enforce
their indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may
choose not to do so in any particular instance. Accordingly, we cannot assure you that due to claims of creditors the actual value
of the per-share redemption price will not be less than $10.00 per share.
We
will seek to reduce the possibility that our sponsors 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 sponsors will also
not be liable as to any claims under our indemnity of the underwriters of the Offering against certain liabilities, including
liabilities under the Securities Act. We will have access to up to $1,000,000 from the proceeds of the Offering with which to
pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated to
be no more than approximately $100,000). In the event that we liquidate and it is subsequently determined that the reserve for
claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims made
by creditors.
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, and thereby exposing itself and our company to claims of punitive damages, by paying public
stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be
brought against us for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account only (i) in the event of the redemption of our public
shares if we do not complete our initial business combination by December 4, 2022 or during any Extension Period, (ii) in connection
with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing of
our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares
if we do not complete our initial business combination prior to until December 4, 2022 or (B) with respect to any other provision
relating to stockholders’ rights or pre-initial business combination activity or (iii) if they redeem their respective shares
for cash upon the completion of our initial business combination. In no other circumstances will a stockholder have any right
or interest of any kind to or in the trust account. In the event we seek stockholder approval in connection with our initial business
combination, a stockholder’s voting in connection with the business combination alone will not result in a stockholder’s
redeeming its shares to us for an applicable pro rata share of the trust account. Such stockholder must have also exercised its
redemption rights described above. These provisions of our amended and restated certificate of incorporation, like all provisions
of our amended and restated certificate of incorporation, may be amended with a stockholder vote.
Competition
In
identifying, evaluating and selecting a target business for our initial business combination, we may encounter intense competition
from other entities having a business objective similar to ours, including other blank check companies, private equity groups
and leveraged buyout funds, public companies and operating businesses seeking strategic acquisitions. Many of these entities are
well established and have extensive experience identifying and effecting business combinations directly or through affiliates.
Moreover, many of these competitors possess greater financial, technical, human and other resources than us. Our ability to acquire
larger target businesses will be limited by our available financial resources. This inherent limitation gives others an advantage
in pursuing the acquisition of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders
who exercise their redemption rights may reduce the resources available to us for our initial business combination 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.
Employees
We
currently have four executive officers. These individuals are not obligated to devote any specific number of hours to our matters
but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business
combination. The amount of time they will devote in any time period will vary based on whether a target business has been selected
for our initial business combination and the stage of the business combination process we are in. We do not intend to have any
full time employees prior to the completion of our initial business combination.
An
investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together
with the other information contained in this annual report, before making a decision to invest in our securities. If any of the
following events occur, our business, financial condition and operating results may be materially adversely affected. In that
event, the trading price of our securities could decline, and you could lose all or part of your investment.
The
risks include the following summary risk factors:
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our
ability to select an appropriate target business or businesses;
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our
ability to complete our initial business combination;
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our
expectations around the performance of a prospective target business or businesses;
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our
success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business
combination;
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our
officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business
or in approving our initial business combination;
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our
potential ability to obtain additional financing to complete our initial business combination;
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our
pool of prospective target businesses;
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our
ability to consummate an initial business combination due to the uncertainty resulting from the recent COVID-19 pandemic;
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the
ability of our officers and directors to generate a number of potential investment opportunities;
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our
public securities’ potential liquidity and trading;
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the
lack of a market for our securities;
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the
use of proceeds not held in the trust account or available to us from interest income on the trust account balance;
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the
trust account not being subject to claims of third parties; or
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our
financial performance.
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Risks
Related to Searching for and Consummating a Business Combination
Our stockholders
may not be afforded an opportunity to vote on our proposed initial business combination, which means we may complete our initial
business combination even though a majority of our stockholders do not support such a combination.
We
may choose not to hold a stockholder vote before we complete our initial business combination if the business combination would
not require stockholder approval under applicable law or stock exchange listing requirement. For instance, if we were seeking
to acquire a target business where the consideration we were paying in the transaction was all cash, we would not be required
to seek stockholder approval to complete such a transaction. Except for as required by applicable law or stock exchange requirement,
the decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to
sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors,
such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder
approval. Accordingly, we may complete our initial business combination even if holders of a majority of our common stock do not
approve of the business combination we complete.
Your only opportunity to affect the investment
decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares from us for cash.
At the time of your investment
in us, you will not be provided with an opportunity to evaluate the specific merits or risks of our initial business combination. Since
our board of directors may complete a business combination without seeking stockholder approval, public stockholders may not have the
right or opportunity to vote on the business combination, unless we seek such stockholder vote. Accordingly, your only opportunity to
affect the investment decision regarding our initial business combination may be limited to exercising your redemption rights within the
period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders in
which we describe our initial business combination.
If we seek stockholder approval of our initial
business combination, our initial stockholders and management team have agreed to vote in favor of such initial business combination,
regardless of how our public stockholders vote.
Our initial stockholders own
20% of our outstanding common stock. Our initial stockholders and management team also may from time to time purchase shares of Class A
common stock prior to our initial business combination. Our amended and restated certificate of incorporation provides that, if we seek
stockholder approval of an initial business combination, such initial business combination will be approved if we receive the affirmative
vote of a majority of the shares voted at such meeting, including the founder shares. If we seek stockholder approval of our initial business
combination, our initial stockholders and management team have agreed to vote in favor of such initial business combination, regardless
of how our public stockholders vote. As a result, in addition to our initial stockholders’ founder shares, we would need 12,937,501,
or 37.5%, of the 34,500,000 public shares sold in the offering to be voted in favor of an initial business combination in order to have
our initial business combination approved (assuming all outstanding shares are voted). Accordingly, if we seek stockholder approval of
our initial business combination, the agreement by our initial stockholders and management team to vote in favor of our initial business
combination will increase the likelihood that we will receive the requisite stockholder approval for such initial business combination.
The ability of our public stockholders
to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make
it difficult for us to enter into a business combination with a target.
We may seek to enter into
a business combination transaction agreement with a prospective target business that requires as a closing condition that we have a minimum
net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights, we would not be able to meet
such closing condition and, as a result, would not be able to proceed with the business combination. Furthermore, in no event will we
redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 immediately prior to or upon
consummation of an initial business combination (so that we are not subject to the SEC’s “penny stock” rules). Consequently,
if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or such greater
amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related business
combination and may instead search for an alternate business combination. Prospective targets will be aware of these risks and, thus,
may be reluctant to enter into a business combination transaction with us.
The ability of our public stockholders to
exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination
or optimize our capital structure.
At the time we enter into
an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights, and therefore
will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If
our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or
requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such
requirements, or arrange for third-party financing. In addition, if a larger number of shares are submitted for redemption than we
initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange
for third-party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence
of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the most desirable business
combination available to us or optimize our capital structure. The amount of the deferred underwriting commissions payable to the underwriters
will not be adjusted for any shares that are redeemed in connection with an initial business combination. The per-share amount we
will distribute to stockholders who properly exercise their redemption rights will not be reduced by the deferred underwriting commission
and after such redemptions, the amount held in trust will continue to reflect our obligation to pay the entire deferred underwriting commissions.
The ability of our public stockholders to
exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination
would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our initial business combination
agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount
of cash at closing, the probability that our initial business combination would be unsuccessful is increased. If our initial business
combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the
trust account. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time
our shares may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may
suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or
you are able to sell your shares in the open market.
The requirement that we complete our initial
business combination prior to December 4, 2022 may give potential target businesses leverage over us in negotiating a business combination
and may limit the time we have in which to conduct due diligence on potential business combination targets as we approach our dissolution
deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for our stockholders.
Any potential target business
with which we enter into negotiations concerning a business combination will be aware that we must complete our initial business combination
prior to December 4, 2022. Consequently, such target business may obtain leverage over us in negotiating a business combination, knowing
that if we do not complete our initial business combination with that particular target business, we may be unable to complete our initial
business combination with any target business. This risk will increase as we get closer to the timeframe described above. In addition,
we may have limited time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected
upon a more comprehensive investigation.
We may not be able to complete our initial
business combination prior to December 4, 2022, in which case we would cease all operations except for the purpose of winding up and we
would redeem our public shares and liquidate.
We may not be able to find
a suitable target business and complete our initial business combination prior to December 4, 2022. Our ability to complete our initial
business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the other
risks described herein. If we have not completed our initial business combination within such time period or during any Extension Period,
we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more
than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the trust account, including interest earned on the trust account not previously released to us to pay taxes (net of
taxes payable and 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 liquidation distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to the
approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and
(iii), to our obligations under Delaware law to provide for claims of creditors.
Our search for a business combination, and
any target business with which we ultimately consummate a business combination, may be materially adversely affected by the COVID-19 outbreak
or any future pandemic and the status of debt and equity markets.
In December 2019, a novel
strain of coronavirus, or COVID-19, was reported to have surfaced, which has and is continuing to spread throughout the world, including
the United States. On January 30, 2020, the World Health Organization declared the outbreak of COVID-19 a “Public
Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared
a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11,
2020 the World Health Organization characterized the outbreak as a “pandemic.” The outbreak of COVID-19 has adversely
affected, and other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) could
adversely affect, economies and financial markets worldwide, business operations and the conduct of commerce generally, and the business
of any potential target business with which we consummate a business combination could be, or may already have been, materially and adversely
affected. Furthermore, we may be unable to complete a business combination if continued concerns relating to COVID-19 restrict travel,
limit the ability to have meetings with potential investors or the target company’s personnel or vendors and service providers are
unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for and
ability to consummate a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including
new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact,
among others. If the disruptions posed by COVID-19, any future pandemic or other events (such as terrorist attacks or natural disasters)
continue for an extensive period of time, including as a result of increased market volatility, decreased market liquidity or protectionist
sentiments or legislation in our target markets, our ability to consummate a business combination, or the operations of a target business
with which we ultimately consummate a business combination, may be materially adversely affected. In addition, our ability to consummate
a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and other events.
If we seek stockholder approval of our initial
business combination, our initial stockholders, sponsors, directors, executive officers, advisors and their affiliates may elect to purchase
shares or public warrants from public stockholders, which may influence a vote on a proposed business combination and reduce the public ”float” of
our shares of Class A common stock.
If we seek stockholder approval
of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to
the tender offer rules, our initial stockholders, directors, executive officers, advisors or their affiliates may purchase shares or public
warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial business
combination, although they are under no obligation to do so. However, other than as expressly stated herein, they have no current commitments,
plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of
the funds in the trust account will be used to purchase shares or public warrants in such transactions.
In the event that our initial
stockholders, sponsors, directors, executive officers, advisors or their affiliates purchase shares in privately negotiated transactions
from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to
revoke their prior elections to redeem their shares. The purpose of any such purchases of shares could be to vote such shares in favor
of the business combination and thereby increase the likelihood of obtaining stockholder approval of the business combination or to satisfy
a closing condition in an agreement with a target business that requires us to have a minimum net worth or a certain amount of cash at
the closing of our initial business combination, where it appears that such requirement would otherwise not be met. 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 warrant holders for approval in connection with our initial business combination. Any such purchases of our securities
may result in the completion of our initial business combination that may not otherwise have been possible. 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.
In addition, if such purchases
are made, the public “float” of our shares of Class A common stock or public warrants and the number of beneficial holders
of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities
on a national securities exchange.
If a stockholder fails to receive notice
of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for
tendering its shares, such shares may not be redeemed.
We will comply with the proxy
rules or tender offer rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our
compliance with these rules, if a stockholder fails to receive our proxy solicitation or tender offer materials, as applicable, such stockholder
may not become aware of the opportunity to redeem its shares. In addition, the proxy solicitation or tender offer materials, as applicable,
that we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures
that must be complied with in order to validly redeem or tender public shares. In the event that a stockholder fails to comply with these
procedures, its shares may not be redeemed. See “Proposed Business — Business Strategy — Tendering share
Certificates in Connection with Exercising Redemption Rights.”
Although we have identified general criteria
and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination
with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial
business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified
general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter
into our initial business combination will not have all of these positive attributes. If we complete our initial business combination
with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business
that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination with a target
that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption rights, which may
make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain
amount of cash. In addition, if stockholder approval of the transaction is required by law, or we decide to obtain stockholder approval
for business or other legal reasons, it may be more difficult for us to attain stockholder approval of our initial business combination
if the target business does not meet our general criteria and guidelines. If we are unable to complete our initial business combination
within the required time period, our public stockholders may only receive their pro rata portion of the funds in the trust account that
are available for distribution to public stockholders, and our warrants will expire worthless.
We may seek acquisition opportunities in
any industry our management chooses (which industries may or may not be outside of our management’s areas of expertise).
We may consider a business
combination with a target business operating in any industry our management chooses. Although our management will endeavor to evaluate
the risks inherent in any particular business combination candidate, we cannot assure you that we will adequately ascertain or assess
all of the significant risk factors. We also cannot assure you that an investment in our units will not ultimately prove to be less favorable
to investors in the Offering than a direct investment, if an opportunity were available, in a business combination candidate.
We are not required to obtain an opinion
from an investment banking firm or another independent firm that regularly renders fairness opinions, and consequently, you may have no
assurance from an independent source that the price we are paying for the business is fair to our company from a financial point of view.
Unless we complete our initial
business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm or
another independent firm that regularly renders fairness opinions that the price we are paying is fair to our company from a financial
point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, who will determine
fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed in our proxy
solicitation or tender offer materials, as applicable, related to our initial business combination.
We may issue additional Class A common stock
or preferred stock to complete our initial business combination or under an employee incentive plan after completion of our initial business
combination. We may also issue Class A common stock upon the conversion of the founder shares at a ratio greater than one-for-one at the
time of our initial business combination as a result of the anti-dilution provisions contained therein. Any such issuances would dilute
the interest of our stockholders and likely present other risks.
Our amended and restated certificate
of incorporation authorizes the issuance of up to 400,000,000 shares of Class A common stock, par value $0.0001 per share, 50,000,000
Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, $0.0001 per share. There are 365,500,000
and 41,375,000 authorized but unissued shares of Class A common stock and Class B common stock, respectively, available for issuance which
amount does not take into account shares reserved for issuance upon exercise of outstanding warrants or shares issuable upon conversion
of the Class B common stock. The Class B common stock is automatically convertible into Class A common stock at the time of our initial
business combination initially at a one-for-one ratio but subject to adjustment as set forth herein. There are no shares of preferred
stock issued and outstanding.
We may issue a substantial
number of additional shares of Class A common stock or preferred stock to complete our initial business combination or under an employee
incentive plan after completion of our initial business combination. We may also issue Class A common stock upon conversion of the Class
B common stock at a ratio greater than one-for-one at the time of our initial business combination as a result of the anti-dilution provisions
as set forth herein. However, our amended and restated certificate of incorporation will provide, among other things, that prior to our
initial business combination, we may not issue additional shares that would entitle the holders thereof to (i) receive funds from the
trust account or (ii) vote on any initial business combination. These provisions of our amended and restated certificate of incorporation,
like all provisions of our amended and restated certificate of incorporation, may be amended with a stockholder vote. The issuance of
additional common or preferred stock:
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may significantly dilute the equity interest of investors in the Offering;
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may subordinate the rights of holders of Class A common stock if preferred stock is issued with rights senior to those afforded our Class A common stock;
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could cause a change in control if a substantial number of Class A common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and
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may adversely affect prevailing market prices for our units, Class A common stock and/or warrants.
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We may issue notes or other debt securities,
or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition
and thus negatively impact the value of our stockholders’ investment in us.
We may choose to incur substantial
debt to complete our initial business combination. We and our officers have agreed that we will not incur any indebtedness unless we have
obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust account. As
such, no issuance of debt will affect the per share amount available for redemption from the trust account. Nevertheless, the incurrence
of debt could have a variety of negative effects, including:
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default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
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our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
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our inability to pay dividends on our Class A common stock;
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
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We may only be able to complete one business
combination with the proceeds of the Offering and the sale of the private placement warrants, which will cause us to be solely dependent
on a single business which may have a limited number of products or services. This lack of diversification may negatively impact our operations
and profitability.
We may effectuate our initial
business combination with a single target business or multiple target businesses simultaneously or within a short period of time. However,
we may not be able to effectuate our initial business combination with more than one target business because of various factors, including
the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that
present operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By
completing our initial business combination with only a single entity, our lack of diversification may subject us to numerous economic,
competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible spreading
of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different
industries or different areas of a single industry. Accordingly, the prospects for our success may be:
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solely dependent upon the performance of a single business, property or asset; or
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dependent upon the development or market acceptance of a single or limited number of products, processes or services.
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This lack of diversification
may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon
the particular industry in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete
business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination and
give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously
acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its
business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay
our ability, to complete our initial business combination. With multiple business combinations, we could also face additional risks, including
additional burdens and costs with respect to possible multiple negotiations and due diligence (if there are multiple sellers) and the
additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a
single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results
of operations.
We may attempt to complete our initial business
combination with a private company about which little information is available, which may result in a business combination with a company
that is not as profitable as we suspected, if at all.
In pursuing our business combination
strategy, we may seek to effectuate our initial business combination with a privately held company. By definition, very little public
information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential initial
business combination on the basis of limited information, which may result in a business combination with a company that is not as profitable
as we suspected, if at all.
Our management may not be able to maintain
control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target
business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure our initial
business combination so that the post-transaction company in which our public stockholders own shares will own less than 100% of
the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction company
owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target
sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction
that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities of the target, our
stockholders prior to our initial business combination may collectively own a minority interest in the post-business combination
company, depending on valuations ascribed to the target and us in the business combination. For example, we could pursue a transaction
in which we issue a substantial number of new Class A common stock in exchange for all of the outstanding capital stock of a target. In
this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new Class A
common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding Class A common
stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a
single person or group obtaining a larger share of the company’s shares than we initially acquired. Accordingly, this may make it
more likely that our management will not be able to maintain control of the target business.
We do not have a specified maximum redemption
threshold. The absence of such a redemption threshold may make it possible for us to complete our initial business combination with which
a substantial majority of our stockholders do not agree.
Our amended and restated certificate
of incorporation does not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares in
an amount that would cause our net tangible assets to be less than $5,000,001 immediately prior to or upon consummation of an initial
business combination (such that we are not subject to the SEC’s “penny stock” rules). As a result, we may be able to
complete our initial business combination even though a substantial majority of our public stockholders do not agree with the transaction
and have redeemed their shares or, if we seek stockholder approval of our initial business combination and do not conduct redemptions
in connection with our initial business combination pursuant to the tender offer rules, have entered into privately negotiated agreements
to sell their shares to our sponsors, officers, directors, advisors or any of their affiliates. In the event the aggregate cash consideration
we would be required to pay for all Class A common stock that are validly submitted for redemption plus any amount required to satisfy
cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will
not complete the business combination or redeem any shares, all Class A common stock submitted for redemption will be returned to the
holders thereof, and we instead may search for an alternate business combination.
Because we must furnish our stockholders
with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination
with some prospective target businesses.
The federal proxy rules require
that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical
and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure in connection
with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements may be required
to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America, or GAAP,
or international financing reporting standards as issued by the International Accounting Standards Board, or IFRS, depending on the circumstances
and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting
Oversight Board (United States), or the PCAOB. These financial statement requirements may limit the pool of potential target businesses
we may acquire because some targets may be unable to provide such 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.
Because we are neither limited to evaluating
a target business in a particular industry sector nor have we selected any specific target businesses with which to pursue our initial
business combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
We are not limited to evaluating
a target business in any particular industry sector (except that we will not, under our amended and restated certificate of incorporation,
be permitted to effectuate our initial business combination with another blank check company or similar company with nominal operations)
and we have not selected any specific target business with which to pursue our initial business combination. Because we have not yet selected
or approached any specific target business with respect to a business combination, there is no basis to evaluate the possible merits or
risks of any particular target business’s operations, results of operations, cash flows, liquidity, financial condition or prospects.
To the extent we complete our initial business combination, we may be affected by numerous risks inherent in the business operations with
which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales
or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development stage
entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure
you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence.
Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those
risks will adversely impact a target business. We also cannot assure you that an investment in our units will ultimately prove to be more
favorable to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any
stockholders who choose to remain stockholders following our initial business combination could suffer a reduction in the value of their
securities. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that
the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are
able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable,
relating to the business combination contained an actionable material misstatement or material omission.
If we pursue a target company with operations
or opportunities outside of the United States for our initial business combination, we may face additional burdens in connection with
investigating, agreeing to and completing such initial business combination, and if we effect such initial business combination, we would
be subject to a variety of additional risks that may negatively impact our operations.
If we pursue a target a company
with operations or opportunities outside of the United States for our initial business combination, we would be subject to risks associated
with cross-border business combinations, including in connection with investigating, agreeing to and completing our initial business
combination, conducting due diligence in a foreign jurisdiction, having such transaction approved by any local governments, regulators
or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If we effect our initial business
combination with such a company, we would be subject to any special considerations or risks associated with companies operating in an
international setting, including any of the following:
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costs and difficulties inherent in managing cross-border business operations;
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rules and regulations regarding currency redemption;
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complex corporate withholding taxes on individuals;
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laws governing the manner in which future business combinations may be effected;
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exchange listing and/or delisting requirements;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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local or regional economic policies and market conditions;
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unexpected changes in regulatory requirements;
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tax issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency fluctuations and exchange controls;
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challenges in collecting accounts receivable;
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cultural and language differences;
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employment regulations;
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underdeveloped or unpredictable legal or regulatory systems;
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protection of intellectual property;
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social unrest, crime, strikes, riots and civil disturbances;
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regime changes and political upheaval;
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terrorist attacks and wars; and
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deterioration of political relations with the United States.
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We may not be able to adequately
address these additional risks. If we were unable to do so, we may be unable to complete such initial business combination, or, if we
complete such combination, our operations might suffer, either of which may adversely impact our business, financial condition and results
of operations.
Risks Related to Our Securities
We are a blank check company with no operating
history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a blank check company
with no operating. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business
objective of completing our initial business combination. We have no plans, arrangements or understandings with any prospective target
business concerning a business combination and may be unable to complete our initial business combination. If we fail to complete our
initial business combination, we will never generate any operating revenues.
You will not have any rights or interests
in funds from the trust account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be forced
to sell your public shares or warrants, potentially at a loss.
Our public stockholders will
be entitled to receive funds from the trust account only upon the earliest to occur of (i) our completion of an initial business
combination, and then only in connection with those Class A common stock that such stockholder properly elected to redeem, subject
to the limitations described herein, (ii) the redemption of any public shares properly tendered in connection with a stockholder
vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption
in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business
combination prior to December 4, 2022 or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business
combination activity and (iii) the redemption of our public shares if we have not completed an initial business combination prior
to December 4, 2022 or during any Extension Period, subject to applicable law and as further described herein. In no other circumstances
will a public stockholder have any right or interest of any kind in the trust account. Holders of warrants will not have any right to
the proceeds held in the trust account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell
your public shares or warrants, potentially at a loss.
The NYSE may delist our securities from
trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional
trading restrictions.
Our securities are listed
on the NYSE. We cannot assure you that our securities will continue to be, listed on the NYSE in the future or prior to our initial business
combination. In order to continue listing our securities on the NYSE prior to our initial business combination, we must maintain certain
financial, distribution and share price levels. Generally, we must maintain a minimum market capitalization (generally $50,000,000) and
a minimum number of holders of our securities (generally 300 public holders).
Additionally, in connection
with our initial business combination, we will likely be required to demonstrate compliance with the NYSE’s initial listing requirements,
which are more rigorous than the NYSE’s continued listing requirements, in order to continue to maintain the listing of our securities
on the NYSE. For instance, our share price would generally be required to be at least $4.00 per share and our stockholders’ equity
would generally be required to be at least $4.0 million. We cannot assure you that we will be able to meet those initial listing
requirements at that time.
If the NYSE delists our securities
from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities
could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our Class A common stock are a “penny stock” which will require brokers trading in our Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
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a limited amount of news and analyst coverage; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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The National Securities Markets
Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which
are referred to as “covered securities.” Because we expect that our units and eventually our Class A common stock and
warrants will be listed on the NYSE, our units, Class A common stock and warrants will qualify as covered securities under the statute.
Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate
companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the
sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the
sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank check
companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies
in their states. Further, if we were no longer listed on the NYSE, our securities would not qualify as covered securities under the statute
and we would be subject to regulation in each state in which we offer our securities.
You will not be entitled to protections
normally afforded to investors of many other blank check companies.
Because the net proceeds of
the Offering and the sale of the private placement warrants are intended to be used to complete an initial business combination with a
target business that has not been selected, we may be deemed to be a “blank check” company under the United States securities
laws. However, because we had net tangible assets of at least $5,000,001 upon the completion of the Offering and the sale of the private
placement warrants and filed a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt
from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not
be afforded the benefits or protections of those rules. Among other things, this means our units will be immediately tradable and we will
have a longer period of time to complete our initial business combination than do companies subject to Rule 419. Moreover, if we
were subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust account to us unless
and until the funds in the trust account were released to us in connection with our completion of an initial business combination.
If we seek stockholder approval of our initial
business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a ”group” of
stockholders are deemed to hold in excess of 20% of our Class A common stock, you will lose the ability to redeem all such shares
in excess of 20% of our Class A common stock.
If we seek stockholder approval
of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to
the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder, together with any
affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined
under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of
20% of the shares sold in without our prior consent, which we refer to as the “Excess Shares.” However, we would not
be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business
combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business combination
and you could suffer a material loss on your investment in us if you sell Excess Shares in open-market transactions. Additionally,
you will not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. As a
result, you will continue to hold that number of shares exceeding 20% and, in order to dispose of such shares, would be required to sell
your shares in open-market transactions, potentially at a loss.
Because of our limited resources and the
significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination.
If we are unable to complete our initial business combination, our public stockholders may receive only their pro rata portion of the
funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
We expect to encounter intense
competition from other entities having a business objective similar to ours, including private investors (which may be individuals or
investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses
we intend to acquire. Many of these individuals and entities are well-established and have extensive experience in identifying and
effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors
possess greater technical, human and other resources or more local industry knowledge than we do and our financial resources will be relatively
limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses we could potentially
acquire with the net proceeds of the Offering and the sale of the private placement warrants, our ability to compete with respect to the
acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive
limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, we are obligated to offer
holders of our public shares the right to redeem their shares for cash at the time of our initial business combination in conjunction
with a stockholder vote or via a tender offer. Target companies will be aware that this may reduce the resources available to us for our
initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business
combination. If we are unable to complete our initial business combination, our public stockholders may receive only their pro
rata portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will
expire worthless.
If the net proceeds of the Offering not
being held in the trust account, together with the interest that may be released to us, are insufficient to allow us to operate until
December 4, 2022, it could limit the amount available to fund our search for a target business or businesses and complete our initial
business combination, and we will depend on loans from our sponsors or management team to fund our search and to complete our initial
business combination.
We believe that the funds
available to us outside of the trust account will be sufficient to allow us to operate at least until December 4, 2022, which is the date
by which we have to complete a business combination, assuming that a business combination is not consummated during that time. However,
we cannot assure you that our estimates will be accurate. If we are required to seek additional capital, we would need to borrow funds
from our sponsors, management team or other third parties to operate or may be forced to liquidate. Neither our sponsors, members of our
management team nor any of their affiliates is under any obligation to advance funds to us in such circumstances. Any such advances would
be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial business combination.
Up to $2,000,000 of such loans may be convertible into warrants of the post-business combination entity at a price of $1.50 per warrant
at the option of the lender. The warrants would be identical to the private placement warrants. Prior to the completion of our initial
business combination, we do not expect to seek loans from parties other than our sponsors, members of our management team or an affiliate
of our sponsors or members of our management team as we do not believe third parties will be willing to loan such funds and provide a
waiver against any and all rights to seek access to funds in our trust account. If we are unable to complete our initial business combination
because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. Consequently,
our public stockholders may only receive an estimated $10.00 per share, or possibly less, on our redemption of our public shares, and
our warrants will expire worthless.
Subsequent to our completion of our initial
business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have
a significant negative effect on our financial condition, results of operations and our share price, which could cause you to lose some
or all of your investment.
Even if we conduct due diligence
on a target business with which we combine, we cannot assure you that this diligence will surface all material issues with a particular
target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors
outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later
write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting
losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize
in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate
impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our
securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result
of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing. Accordingly,
any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of their securities.
Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction
was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully
bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the business
combination contained an actionable material misstatement or material omission.
If third parties bring claims against us,
the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than
$10.00 per share.
Our placing of funds in the
trust account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service
providers, prospective target businesses and other entities with which we do business execute agreements with us waiving any right, title,
interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, such parties may
not execute such agreements, or even if they execute such agreements, they may not be prevented from bringing claims against the trust
account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as
claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets,
including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held
in the trust account, our management will 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. In addition, there is no guarantee
that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts
or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we
have not completed our initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection
with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may
be brought against us within the ten years following redemption. Accordingly, the per-share redemption amount received by public
stockholders could be less than the $10.00 per public share initially held in the trust account, due to claims of such creditors. Pursuant
to a letter agreement, our sponsors have agreed that they will be liable jointly and severally to us if and to the extent any claims by
a third party (other than our independent public accountants) for services rendered or products sold to us, or a prospective target business
with which we have entered into a written letter of intent, confidentiality or other similar agreement or business combination agreement,
reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per
share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions
in the value of the trust assets, less taxes payable; provided that such liability will not apply to any claims by a third party or prospective
target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable),
nor will it apply to any claims under our indemnity of the underwriters of the Offering against certain liabilities, including liabilities
under the Securities Act. However, we have not asked our sponsors to reserve for such indemnification obligations and we believe our sponsors’
only assets are our securities. Therefore, we think it is unlikely that our sponsors would be able to satisfy those obligations. None
of our other officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and
prospective target businesses.
The securities in which we invest the proceeds
held in the trust account could bear a negative rate of interest, which could reduce the interest income available for payment of taxes
or reduce the value of the assets held in trust such that the per-share redemption amount received by stockholders may be less than $10.00
per share.
The net proceeds of the Offering
and certain proceeds from the sale of the private placement warrants are held in the trust account. The proceeds held in the trust account
may only be invested in direct U.S. government treasury obligations with a maturity of 180 days or less or in money market funds
meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury
obligations. While short-term U.S. treasury obligations currently yield a positive rate of interest, they have briefly yielded negative
interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market
Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States.
In the event of very low or negative yields, the amount of interest income (which we are permitted to use for payment of our tax obligations
and up to $100,000 of dissolution expenses) would be reduced. In the event that we have not completed our initial business combination
or make certain amendments to our amended and restated certificate of incorporation, our public stockholders are entitled to receive their pro
rata share of the proceeds held in the trust account, plus any interest income. If the balance of the trust account is reduced
below $345.0 million as a result of negative interest rates, the amount of funds in the trust account available for distribution
to our public stockholders may be reduced below $10.00 per share.
If, after we distribute the proceeds in
the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us
that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as
having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive
damages.
If, after we distribute the
proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy
laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek
to recover some or all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its
fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying
public stockholders from the trust account prior to addressing the claims of creditors.
If, before distributing the proceeds in
the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us
that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share
amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the
proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included
in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any
bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders in connection
with our liquidation may be reduced.
If we are deemed to be an investment company
under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted,
which may make it difficult for us to complete our initial business combination.
If we are deemed to be an
investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities,
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each of which may make it difficult for us to
complete our initial business combination. In addition, we may have imposed upon us burdensome requirements, including:
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registration as an investment company;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
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In order not to be regulated
as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged
primarily in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting,
owning, holding or trading “investment securities” constituting more than 40% of our assets (exclusive of U.S. government
securities and cash items) on an unconsolidated basis. Our business will be to identify and complete a business combination and thereafter
to operate the post-transaction business or assets for the long term. We do not plan to buy businesses or assets with a view to resell
or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that our
anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the trust account may
only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment
Company Act having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the
trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments,
and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses
in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the
meaning of the Investment Company Act. The trust account is intended as a holding place for funds pending the earliest to occur of either:
(i) the completion of our initial business combination; (ii) the redemption of any public shares properly tendered in connection
with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation
to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our
initial business combination by December 4, 2022 or (B) with respect to any other provision relating to stockholders’ rights or
pre-initial business combination activity; or (iii) absent an initial business combination by December 4, 2022 or during any
Extension Period, our return of the funds held in the trust account to our public stockholders as part of our redemption of the public
shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were
deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses
for which we have not allotted funds and may hinder our ability to complete a business combination. If we are unable to complete our initial
business combination, our public stockholders may only receive their pro rata portion of the funds in the trust account
that are available for distribution to public stockholders, and our warrants will expire worthless.
Changes in laws or regulations, or a failure
to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial
business combination, and results of operations.
We are subject to laws and
regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other
legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those
laws and regulations and their interpretation and application may also change from time to time and those changes could have a material
adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations,
as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our
initial business combination, and results of operations.
If we are unable to consummate our initial
business combination prior to December 4, 2022, our public stockholders may be forced to wait beyond December 4, 2022 before redemption
from our trust account.
If we are unable to consummate
our initial business combination prior to December 4, 2022 or during any Extension Period, the proceeds then on deposit in the trust account,
including interest earned on the trust account not previously released to us to pay taxes (net of taxes payable and less up to $100,000
of interest to pay dissolution expenses), will be used to fund the redemption of our public shares, as further described herein. Any redemption
of public stockholders from the trust account will be effected automatically by function of our amended and restated certificate of incorporation
prior to any voluntary winding up. If we are required to wind-up, liquidate the trust account and distribute such amount therein, pro
rata, to our public stockholders, as part of any liquidation process, such winding up, liquidation and distribution must comply with
the applicable provisions of the DGCL. In that case, investors may be forced to wait beyond December 4, 2022 before the redemption proceeds
of our trust account become available to them, and they receive the return of their pro rata portion of the proceeds
from our trust account. We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless we
consummate our initial business combination prior thereto and only then in cases where investors have sought to redeem their Class A
common stock. Only upon our redemption or any liquidation will public stockholders be entitled to distributions if we are unable to complete
our initial business combination.
We may not hold an annual meeting of stockholders
until after the consummation of our initial business combination and you will not be entitled to any of the corporate protections provided
by such a meeting.
In accordance with NYSE corporate
governance requirements, we are not required to hold an annual meeting until one year after our first year end following our listing on
the NYSE. We may not hold an annual meeting of stockholders until after we consummate our initial business combination and thus may not
be in compliance with Section 211(b) of the DGCL, which requires an annual meeting of stockholders be held for the purposes of electing
directors in accordance with a company’s bylaws unless such election is made by written consent in lieu of such a meeting. Therefore,
if our stockholders want us to hold an annual meeting prior to our consummation of our initial business combination, they may attempt
to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
Additionally, only holders of Class B common stock will have the right to vote on the election of directors and to remove directors prior
to our initial business combination, and such rights may only be amended by a resolution passed by the holders of a majority of our Class
B common stock. Accordingly, you may not have any say in the management of our company prior to the consummation of an initial business
combination.
We are not registering the Class A
common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration
may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants
and causing such warrants to expire worthless.
We are not registering the
Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However,
we have agreed that as soon as practicable, but in no event later than 20 business days after the closing of our initial business combination,
we will use our commercially reasonable efforts to file with the SEC and have, within 60 business days following our initial business
combination to have declared effective, a registration statement covering the Class A common stock issuable upon exercise of the
warrants and to maintain a current prospectus relating to those Class A common stock until the warrants expire or are redeemed, as
specified in the warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which
represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained
or incorporated by reference therein are not current or correct or the SEC issues a stop order. If the shares issuable upon exercise of
the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless
basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders
seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities
laws of the state of the exercising holder, unless an exemption is available. In no event will we be required to net cash settle any warrant,
or issue securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares
underlying the warrants under the Securities Act or applicable state securities laws. If the issuance of the shares upon exercise of the
warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant will not be entitled
to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as
part of a purchase of units will have paid the full unit purchase price solely for the Class A common stock included in the units.
If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the
underlying securities for sale under all applicable state securities laws.
The private placement warrants may be exercised
at a time when the public warrants may not be exercised.
Once the private placement
warrants become exercisable, such warrants may immediately be exercised on a cashless basis, at the holder’s option, so long as
they are held by the purchasers or their permitted transferees. The public warrants, however, will only be exercisable on a cashless basis
at the option of the holders if we fail to register the shares issuable upon exercise of the warrants under the Securities Act within
60 days following the closing of our initial business combination. Accordingly, it is possible that the holders of the private placement
warrants could exercise such warrants at a time when the holders of public warrants could not exercise their warrants.
The grant of registration rights to our
initial stockholders and holders of our private placement warrants may make it more difficult to complete our initial business combination,
and the future exercise of such rights may adversely affect the market price of our Class A common stock.
Pursuant to an agreement to
be entered into concurrently with the issuance and sale of the securities in the Offering, our initial stockholders and their permitted
transferees can demand that we register the Class A common stock into which founder shares are convertible, holders of our private
placement warrants and their permitted transferees can demand that we register the private placement warrants and the Class A common
stock issuable upon exercise of the private placement warrants and holders of warrants that may be issued upon conversion of working capital
loans may demand that we register such warrants or the Class A common stock issuable upon conversion of such warrants. The registration
rights will be exercisable with respect to the founder shares and the private placement warrants and the Class A common stock issuable
upon exercise of such private placement warrants. We will bear the cost of registering these securities. The registration and availability
of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our Class A
common stock. In addition, the existence of the registration rights may make our initial business combination more costly or difficult
to conclude. This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or
ask for more cash consideration to offset the negative impact on the market price of our Class A common stock that is expected when
the securities owned by our initial stockholders, holders of our private placement warrants or their respective permitted transferees
are registered.
A provision of our warrant agreement may
make it more difficult for us to consummate an initial business combination.
If (x) we issue additional
shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our
initial business combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with
such issue price or effective issue price to be determined in good faith by our board of directors and, in the case of any such issuance
to our initial stockholders or their affiliates, without taking into account any founder shares held by our initial stockholders or such
affiliates, as applicable, prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 60%
of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date of the consummation
of our initial business combination (net of redemptions) and (z) the volume-weighted average trading price of our Class A
common stock during the ten-trading day period starting on the trading day after the day on which we consummate our initial business
combination, or the market value, is below $9.20 per share, then the exercise price of the warrants will be adjusted (to the nearest cent)
to be equal to 115% of the higher of the market value and the newly issued price and the $18.00 per share redemption trigger price will
be adjusted (to the nearest cent) to be equal to 180% of the higher of the market value and the newly issued price, and the $10.00 per
share redemption trigger price will be adjusted (to the nearest cent) to be equal to the higher of the market value and the newly issued
price. This may make it more difficult for us to consummate an initial business combination with a target business.
Unlike most other similarly structured blank
check companies, our initial stockholders will receive additional shares of Class A common stock if we issue shares to consummate
an initial business combination.
The founder shares will automatically
convert into Class A common stock on the first business day following the consummation of our initial business combination on a one-for-one basis,
subject to adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities
convertible or exercisable for Class A common stock, are issued or deemed issued and related to the closing of our initial business
combination, the ratio at which founder shares will convert into 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 founder shares will equal, in the aggregate,
20% of the sum of our common stock outstanding plus the number of shares of Class A common stock and equity-linked securities
issued or deemed issued in connection with our initial business combination (net of redemptions), excluding any shares of Class A
common stock or equity-linked securities issued, or to be issued, to any seller in our initial business combination and any private
placement warrants issued to our sponsors and independent directors. This is different than most other similarly structured blank check
companies in which the initial stockholders will only be issued an aggregate of 20% of the total number of shares to be outstanding prior
to our initial business combination.
Resources could be wasted in researching
acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another
business. If we are unable to complete our initial business combination within the required time period, our public stockholders may only
receive their pro rata portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants
will expire worthless.
The investigation of each
specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments
requires substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide not to complete
a specific initial business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable.
Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial business combination
for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred
which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to
complete our initial business combination within the required time period, our public stockholders may only receive their pro
rata portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will
expire worthless.
We may amend the terms of the warrants in
a manner that may be adverse to holders of public warrants with the approval by the holders of at least 50% of the then-outstanding public
warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and the number of
shares of our Class A common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants were issued in
registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant
agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any
defective provision, but requires the approval by the holders of at least 50% of the then-outstanding public warrants to make any
change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public
warrants in a manner adverse to a holder if holders of at least 50% of the then-outstanding public warrants approve of such amendment.
To do so, we would need approval from 5,000,001 public warrants to amend the terms of the warrants. Although our ability to amend the
terms of the public warrants with the consent of at least 50% of the then-outstanding public warrants is unlimited, examples of such
amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash, shorten
the exercise period or decrease the number of Class A common stock purchasable upon exercise of a warrant.
We may redeem your unexpired warrants prior
to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem
outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided
that the closing price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading
day prior to proper notice of such redemption, provided that on the date we give notice of redemption. If and when the warrants become
redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale
under all applicable state securities laws. Redemption of the outstanding warrants could force you to (i) exercise your warrants and pay
the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at the then-current market
price when you might otherwise wish to hold your warrants or (iii) accept the nominal redemption price which, at the time the outstanding
warrants are called for redemption, is likely to be substantially less than the market value of your warrants. None of the private placement
warrants will be redeemable by us so long as they are held by the sponsors and independent directors or their permitted transferees.
In addition, we may redeem
your warrants at any time after they become exercisable and prior to their expiration at a price of $0.10 per warrant upon a minimum of
30 days’ prior written notice of redemption, provided that holders will be able to exercise their warrants prior to redemption for
a number of Class A common stock determined based on the redemption date and the fair market value of our Class A common stock. Any such
redemption may have similar consequences to a cash redemption described above. In addition, such redemption may occur at a time when the
warrants are “out of the money,” in which case you would lose any potential embedded value from a subsequent increase in the
value of the Class A common stock had your warrants remained outstanding, and may not compensate the holders for the value of the warrants,
including because the number of common stock received is capped at 0.361 shares of our Class A common stock per warrant (subject
to adjustment) irrespective of the remaining life of the warrants.
Our warrants may have an adverse effect
on the market price of our Class A common stock and make it more difficult to effectuate our initial business combination.
We issued warrants to purchase
11,500,000 of our Class A common stock as part of the units offered in the Offering and, simultaneously with the closing of the Offering,
we issued an aggregate of 5,833,333 private placement warrants, each exercisable to purchase one share of Class A common stock at $11.50
per share. In addition, if our sponsors make any working capital loans, they may convert those loans into up to an additional 1,333,333
private placement warrants, at the price of $1.50 per warrant. To the extent we issue common stock to effectuate a business transaction,
the potential for the issuance of a substantial number of additional Class A common stock upon exercise of these warrants could make us
a less attractive acquisition vehicle to a target business. Such warrants, when exercised, will increase the number of issued and outstanding
Class A common stock and reduce the value of the Class A common stock issued to complete the business transaction. Therefore, our warrants
may make it more difficult to effectuate a business transaction or increase the cost of acquiring the target business.
Because each unit contains one-third of
one warrant and only a whole warrant may be exercised, the units may be worth less than units of other blank check companies.
Each unit contains one-third of
one warrant. Pursuant to the warrant agreement, no fractional warrants will be issued upon separation of the units, and only whole units
will trade. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise,
round down to the nearest whole number the number of Class A common stock to be issued to the warrant holder. This is different from other
offerings similar to ours whose units include one share of common stock and one warrant to purchase one whole share. We have established
the components of the units in this way in order to reduce the dilutive effect of the warrants upon completion of a business combination
since the warrants will be exercisable in the aggregate for one-third of the number of shares compared to units that each contain
a whole warrant to purchase one share, thus making us, we believe, a more attractive merger partner for target businesses. Nevertheless,
this unit structure may cause our units to be worth less than if it included a warrant to purchase one whole share.
We are an emerging growth company and a
smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements
available to emerging growth companies or smaller reporting companies, this could make our securities less attractive to investors and
may make it more difficult to compare our performance with other public companies.
We are an “emerging
growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions
from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but
not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act,
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the
requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments
not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We could be
an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market
value of our Class A common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case
we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will find our securities
less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance
on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading
market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS
Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth
companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period which
means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which
has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards
used.
Additionally, we are a “smaller
reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced
disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller
reporting company until the last day of the fiscal year in which (1) the market value of our Class A common stock held by non-affiliates exceeds
$250 million as of the end of that fiscal year’s second fiscal quarter, or (2) our annual revenues exceeded $100 million
during such completed fiscal year and the market value of our Class A common stock held by non-affiliates exceeds $700 million
as of the end of that fiscal year’s second fiscal quarter. To the extent we take advantage of such reduced disclosure obligations,
it may also make comparison of our financial statements with other public companies difficult or impossible.
Compliance obligations under the Sarbanes-Oxley
Act may make it more difficult for us to effectuate a business combination, require substantial financial and management resources, and
increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act
requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K/A for the
year ending December 31, 2021. Only in the event we are deemed to be a large accelerated filer or an accelerated filer will we be
required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial
reporting. Further, for as long as we remain an emerging growth company, we will not be required to comply with the independent registered
public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank check company
makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies
because a target business with which we seek to complete our initial business combination may not be in compliance with the provisions
of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such entity
to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
Provisions in our amended and restated certificate
of incorporation may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class
A common stock and could entrench management.
Our amended and restated certificate
of incorporation contain provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best
interests. These provisions include a staggered board of directors and the ability of the board of directors to designate the terms of
and issue new series of preferred stock, which may make more difficult the removal of management and may discourage transactions that
otherwise could involve payment of a premium over prevailing market prices for our securities.
Our amended and restated certificate of
incorporation will provide, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive
forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum
for disputes with us or our directors, officers, employees or stockholders.
Our amended and restated certificate
of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against directors,
officers and employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State
of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process
on such stockholder’s counsel. This exclusive forum provision will apply to state and federal law claims brought by stockholders
(including claims pursuant to the Securities Act), although stockholders will not be deemed to have waived our compliance with the federal
securities laws and the rules and regulations thereunder, and the Court of Chancery and the federal district court for the District of
Delaware shall concurrently be the sole and exclusive forums for claims arising under the federal securities laws, including the Securities
Act. Notwithstanding the foregoing, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce
any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision
will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal
courts have exclusive jurisdiction. The enforceability of similar choice of forum provisions in other companies’ organizational
documents has been challenged in legal proceedings, and it is possible that, in connection with claims arising under federal securities
laws, a court could find the choice of forum provisions contained in our amended and restated certificate of incorporation to be inapplicable
or unenforceable.
If that were the case, because
stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder,
it would allow stockholders to bring claims for breach of these provisions in any appropriate forum. Any person or entity purchasing or
otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions
in our amended and restated certificate of incorporation.
This choice of forum provision
may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our
directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. Alternatively, if a court
were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable
in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business,
operating results and financial condition.
Our warrants are accounted for as liabilities
and the changes in value of our warrants could have a material effect on our financial results.
On April 12, 2021, the
Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the
accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement
on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)”
(the “SEC Statement”). Specifically, the SEC Statement focused on certain settlement terms and provisions related
to certain tender offers following a business combination, which terms are similar to those contained in the warrant agreement governing
our warrants. As a result of the SEC Statement, we reevaluated the accounting treatment of our 11,500,000 public warrants and 5,833,000
private placement warrants, and determined to classify the warrants as derivative liabilities measured at fair value, with changes in
fair value each period reported in earnings.
As a result, included
on our balance sheet as of December 31, 2020 contained elsewhere in this Annual Report are derivative liabilities related to embedded
features contained within our warrants. Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”),
provides for the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss
related to the change in the fair value being recognized in earnings in the statement of operations. As a result of the recurring fair
value measurement, our financial statements and results of operations may fluctuate quarterly, based on factors, which are outside of
our control. Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our warrants each
reporting period and that the amount of such gains or losses could be material.
We have identified a material weakness
in our internal control over financial reporting as of December 31, 2020. If we are unable to develop and maintain an effective system
of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which
may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
Following the issuance of
the SEC Statement, on May 10, 2021, our management and our audit committee concluded that, in light of the SEC Statement, it was appropriate
to restate our previously issued audited financial statements as of and for the period ended December 31, 2020 (the “Restatement”).
See “—Our warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect
on our financial results.” As part of such process, we identified a material weakness in our internal controls over financial reporting.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is
a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected
and corrected on a timely basis.
Effective internal controls
are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material
weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately
have the intended effects.
If we identify any new
material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement
of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case,
we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable
stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result.
We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid
potential future material weaknesses.
We may face litigation and other risks
as a result of the material weakness in our internal control over financial reporting.
Following the issuance
of the SEC Statement, our management and our audit committee concluded that it was appropriate to restate our previously issued audited
financial statements as of and for the year ended December 31, 2020. See “—Our warrants are accounted for as liabilities
and the changes in value of our warrants could have a material effect on our financial results.” As part of the Restatement, we
identified a material weakness in our internal controls over financial reporting.
As a result of such material
weakness, the Restatement, the change in accounting for the warrants and other matters raised or that may in the future be raised by
the SEC, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities
laws, contractual claims or other claims arising from the Restatement and material weaknesses in our internal control over financial
reporting and the preparation of our financial statements. As of the date of this Annual Report, we have no knowledge of any such litigation
or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or
dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition
or our ability to complete a Business Combination.
Risks Related to Our Management, Directors
and Employees
Past performance by our management team
may not be indicative of future performance of an investment in us.
Information regarding performance
by, or businesses associated with, our management team is presented for informational purposes only. Any past experience and performance
of our management team and their respective affiliates is not a guarantee either: (1) that we will be able to successfully identify a
suitable candidate for our initial business combination; or (2) of any results with respect to any initial business combination we may
consummate. You should not rely on the historical record of our management team’s or their respective affiliate’s performance
as indicative of the future performance of an investment in us or the returns we will, or are likely to, generate going forward.
Our directors may decide not to enforce
the indemnification obligations of our sponsors, resulting in a reduction in the amount of funds in the trust account available for distribution
to our public stockholders.
In the event that the proceeds
in the trust account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount per share held in the trust
account as of the date of the liquidation of the trust account if less than $10.00 per share due to reductions in the value of the trust
assets, in each case less taxes payable, and our sponsors assert that they are unable to satisfy their obligations or that they have no
indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against
our sponsors to enforce their indemnification obligations. While we currently expect that our independent directors would take legal action
on our behalf against our sponsors to enforce their indemnification obligations to us, it is possible that our independent directors in
exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance. If our independent
directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution
to our public stockholders may be reduced below $10.00 per share.
We may not have sufficient funds to satisfy
indemnification claims of our directors and executive officers.
We have agreed to indemnify
our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to waive any right,
title, interest or claim of any kind in or to any monies in the trust account and to not seek recourse against the trust account for any
reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds outside
of the trust account or (ii) we consummate an initial business combination. Our obligation to indemnify our officers and directors may
discourage stockholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions
also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action,
if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected
to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
Our ability to successfully effect our initial
business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may
join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability
of our post-combination business.
Prior to the completion of
an initial business combination, our operations will be dependent upon a relatively small group of individuals and, in particular, our
executive officers and directors. We believe that our success depends on the continued service of our officers and directors, at least
until we have completed our initial business combination. In addition, our executive officers and directors are not required to commit
any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating their time among various business
activities, including identifying potential business combinations and monitoring the related due diligence. We do not have an employment
agreement with, or key-man insurance on the life of, any of our directors or executive officers. The unexpected loss of the services
of one or more of our directors or executive officers could have a detrimental effect on us.
The role of our key personnel
in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business
in senior management or advisory positions following our initial business combination, it is likely that some or all of the management
of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial business
combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar
with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them
become familiar with such requirements.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination, and a particular business combination
may be conditioned on the retention or resignation of such key personnel. These agreements may provide for them to receive compensation
following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular
business combination is the most advantageous.
Our key personnel may be able
to remain with our company after the completion of our initial business combination only if they are able to negotiate employment or consulting
agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the
business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities
for services they would render to us after the completion of the business combination. Such negotiations also could make such key personnel’s
retention or resignation a condition to any such agreement. The personal and financial interests of such individuals may influence their
motivation in identifying and selecting a target business.
Our executive officers and directors will
allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to
our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our executive officers and
directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating
their time between our operations and our search for a business combination and their other businesses. We do not intend to have any full-time employees
prior to the completion of our initial business combination. Each of our executive officers is engaged in several other business endeavors
for which he may be entitled to substantial compensation and our executive officers are not obligated to contribute any specific number
of hours per week to our affairs. Our independent directors also serve as officers and board members for other entities. If our executive
officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess
of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our
ability to complete our initial business combination.
Our officers and directors presently have
fiduciary or contractual obligations to other entities and, accordingly, may have conflicts of interest in determining to which entity
a particular business opportunity should be presented.
Until we consummate our initial
business combination, we intend to engage in the business of identifying and combining with one or more businesses. Each of our officers
and directors presently has, and any of them in the future may have, additional fiduciary or contractual obligations to other entities
pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly,
our officers and directors may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation
to us.
Our officers and directors may in the future
become affiliated with entities engaged in business activities similar to those intended to be conducted by us, including another blank
check company, and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should
be presented.
Until we consummate our initial
business combination, we intend to engage in the business of identifying and combining with one or more businesses. Our sponsors and officers
and directors may in the future become affiliated with entities that are engaged in a similar business, including another blank check
company that may have acquisition objectives that are similar to ours. Accordingly, they may have conflicts of interest in determining
to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential
target business may be presented to other entities prior to its presentation to us.
In addition to the foregoing,
Leland Investments, through its personnel including Mr. Ein, provides management services to Kastle Acquisition LLC and its subsidiaries,
which provides building security products and services. These services include strategic, marketing and financial advisory, consulting
and other oversight services in relation to Kastle Acquisition’s operations. The agreement with Kastle Acquisition contains a non-competition clause
that generally provides that neither Leland Investments, Mr. Ein nor any entity that he controls shall directly and materially compete
with the business of Kastle Acquisition and its subsidiaries. Accordingly, we generally will not be able to acquire a target business
that is in the same line of business that Kastle Acquisition and its subsidiaries are in.
Our executive officers, directors, security
holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy
that expressly prohibits our directors, executive officers, security holders or affiliates from having a direct or indirect pecuniary
or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest.
In fact, we may enter into a business combination with a target business that is affiliated with our sponsors, our directors or executive
officers, although we do not currently intend to do so. Nor do we have a policy that expressly prohibits any such persons from engaging
for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between
their interests and ours.
The personal and financial
interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and completing
a business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable target
business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination
are appropriate and in our stockholders’ best interest. However, we might not ultimately be successful in any claim we may make
against them for such reason.
We may engage in a business combination
with one or more target businesses that have relationships with entities that may be affiliated with our sponsors, executive officers,
directors or existing holders which may raise potential conflicts of interest.
Although we will not be specifically
focusing on, or targeting, any transaction with any entities affiliated with our sponsors, executive officers, directors or existing holders,
we could pursue such a transaction if we determined that such affiliated entity met our criteria for a business combination and such transaction
was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain an opinion regarding the fairness
to our company from a financial point of view of a business combination with one or more businesses affiliated with our sponsors, executive
officers, directors or existing holders, potential conflicts of interest still may exist and, as a result, the terms of the business combination
may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Because our sponsors, executive officers
and directors will lose their entire investment in us if our initial business combination is not completed (other than with respect to
public shares they may acquire during or after the Offering), a conflict of interest may arise in determining whether a particular business
combination target is appropriate for our initial business combination.
Our initial stockholders hold
an aggregate of 8,625,000 founder shares. If we do not complete an initial business combination the founder shares will expire worthless.
If we do not complete our initial business combination by December 4, 2022 or during any Extension Period, the private placement warrants
held by our sponsors, executive officers and directors will expire worthless. The personal and financial interests of our executive officers
and directors may influence their motivation in identifying and selecting a target business combination, completing an initial business
combination and influencing the operation of the business following our initial business combination. This risk may become more acute
as December 4, 2022 nears, which is the deadline for our completion of an initial business combination.
Our initial stockholders will control the
election of our board of directors until the consummation of our initial business combination and will control a substantial interest
in us. As a result, they will elect all of our directors prior to the consummation of our initial business combination and may exert a
substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
Our initial stockholders own
20% of our issued and outstanding common stock. In addition, the founder shares, all of which are held by our initial stockholders, entitle
the holders to elect all of our directors prior to the consummation of our initial business combination. Holders of our public shares
will have no right to vote on the election of directors during such time. These provisions of our amended and restated certificate of
incorporation may only be amended by a majority of our Class B common stock. Accordingly, they may exert a substantial influence on actions
requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate
of incorporation. In addition, our board of directors, whose members were elected by our sponsors, is divided into three classes, each
of which will generally serve for a term for three years with only one class of directors being elected in each year. We may not hold
an annual meeting of stockholders to elect new directors prior to the completion of our initial business combination, in which case all
of the current directors will continue in office until at least the completion of the business combination. If there is an annual meeting,
as a consequence of our “staggered” board of directors, only a minority of the board of directors will be considered for election
and our initial stockholders, because of their ownership position, will control the outcome, as only holders of founder shares have the
right to vote on the election of directors and to remove directors prior to our initial business combination. Accordingly, our initial
stockholders will continue to exert control at least until the completion of our initial business combination.