NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 18, 2020
TO THE STOCKHOLDERS OF INSURANCE ACQUISITION CORP.:
You are cordially invited
to attend the special meeting, which we refer to as the “Special Meeting”, of stockholders of Insurance Acquisition
Corp., which we refer to as “we”, “us”, “our” or the “Company”, to be held at [--]:00
[---] Eastern Time on September 18, 2020.
The Special Meeting
will be a completely virtual meeting of stockholders, which will be conducted via live webcast. You will be able to attend the
Special Meeting online, vote and submit your questions during the Special Meeting by visiting [----------]. We are pleased to utilize
the virtual stockholder meeting technology to (i) provide ready access and cost savings for our stockholders and the company, and
(ii) to promote social distancing pursuant to guidance provided by the Center for Disease Control and the U.S. Securities and Exchange
Commission due to the novel coronavirus. The virtual meeting format allows attendance from any location in the world.
Even if you are planning
on attending the Special Meeting online, please promptly submit your proxy vote by telephone, or, if you received a printed form
of proxy in the mail, by completing, dating, signing and returning the enclosed proxy, so your shares will be represented at the
Special Meeting. Instructions on voting your shares are on the proxy materials you received for the Special Meeting. Even if you
plan to attend the Special Meeting online, it is strongly recommended you complete and return your proxy card before the Special
Meeting date, to ensure that your shares will be represented at the Special Meeting if you are unable to attend.
The accompanying proxy
statement, which we refer to as the “Proxy Statement”, is dated July __, 2020, and is first being mailed to stockholders
of the Company on or about _______, 2020. The sole purpose of the Special Meeting is to consider and vote upon the following proposals:
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a proposal to amend the Company’s
amended and restated certificate of incorporation, which we refer to as the “charter”, in the form set forth in Annex
A to the accompanying Proxy Statement, which we refer to as the “Extension Amendment” and such proposal the “Extension
Amendment Proposal”, to extend the date by which the Company must (i) consummate a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or other similar business combination involving the Company and one or more operating
businesses or assets, which we refer to as a “business combination”, (ii) cease its operations if it fails to complete
such business combination, and (iii) redeem 100% of the Company’s Class A common stock included as part of the units sold
in the Company’s initial public offering that was consummated on March 22, 2019, which we refer to as the “IPO”,
from September 22, 2020 to January 11, 2021 or such earlier date as determined by the Board, which we refer to as the “Extension”,
and such later date, the “Extended Date”; and
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a proposal to approve the adjournment of
the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that
there are insufficient votes for, or otherwise in connection with, the approval of the Extension Amendment Proposal, which we refer
to as the “Adjournment Proposal”. The Adjournment Proposal will only be presented at the Special Meeting if there are
not sufficient votes to approve the Extension Amendment Proposal.
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Each of the Extension
Amendment Proposal and the Adjournment Proposal is more fully described in the accompanying Proxy Statement.
As previously disclosed, on June 29, 2020,
the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) among the Company, IAC Merger Sub,
Inc., a Delaware corporation and direct wholly owned subsidiary of the Company (“Merger Sub”), and Shift Technologies,
Inc., a Delaware corporation (“Shift”), providing for, among other things, and subject to the conditions therein, the
combination of Shift and the Company pursuant to the proposed merger of Merger Sub with and into Shift with Shift continuing as
the surviving entity (the “Merger”).
The purpose of the
Extension Amendment is to allow the Company more time to complete its initial business combination with Shift or another proposed
business combination. Our board of directors (the “Board”) currently believes that there will not be sufficient time
before September 22, 2020 to complete a business combination. Accordingly, the Board believes that in order to be able to consummate
an initial business combination, we will need to obtain the Extension. Therefore, the Board has determined that it is in the best
interests of our stockholders to extend the date that the Company has to consummate a business combination to the Extended Date
in order that our stockholders have the opportunity to participate in our future investment. In the event that the Company consummates
the Merger prior to the Special Meeting, the Company will issue a press release and file a Form 8-K with the Securities and Exchange
Commission announcing the consummation of the Merger and the cancellation of the Special Meeting.
In connection with
the Extension Amendment Proposal, public stockholders may elect to redeem their public shares for a per-share price, payable in
cash, equal to the aggregate amount then on deposit in the trust account (the “Trust
Account”), including interest (which interest shall be net of taxes payable), divided by the number of then outstanding
shares of Class A common stock issued in our IPO, which shares we refer to as the “public shares”, and which election
we refer to as the “Election”, regardless of whether such public stockholders vote on the Extension Amendment Proposal.
If the Extension Amendment Proposal is approved by the requisite vote of stockholders, the remaining holders of public shares will
retain their right to redeem their public shares when the proposed business combination is submitted to the stockholders, subject
to any limitations set forth in our charter as amended by the Extension Amendment. In addition, public stockholders who do not
make the Election would be entitled to have their public shares redeemed for cash if the Company has not completed a business combination
by the Extended Date. Insurance Acquisition Sponsor, LLC and Dioptra Advisors, LLC,
which we refer to collectively as our “Sponsor”, owns 5,103,333 shares of our Class B common stock, which we refer
to as the “Founder Shares”, that were issued to the Sponsor prior to our IPO, and 375,000 private placement units,
which we refer to as the “Placement Units”, that were purchased by the Sponsor in a private placement which occurred
simultaneously with the completion of the IPO. In addition, four of our current and former independent directors each owns 15,000
Founder Shares and Cantor Fitzgerald & Co., the representative of the underwriters for the IPO (“Cantor”), holds
50,000 Placement Units.
To exercise your
redemption rights, you must demand that the Company redeem your public shares for a pro rata portion of the funds held in the Trust
Account, and tender your shares to the Company’s transfer agent at least two business days prior to the Special Meeting (or
September 16, 2020). You may tender your shares by either delivering your share certificate to the transfer agent or by delivering
your shares electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) system. If you hold
your shares in street name, you will need to instruct your bank, broker or other nominee to withdraw the shares from your account
in order to exercise your redemption rights.
Based upon the current
amount in the Trust Account, the Company anticipates that the per-share price at which public shares will be redeemed from cash
held in the Trust Account will be approximately $10.[---] at the time of the Special
Meeting. The closing price of the Company’s Class A common stock on July __, 2020 was $___. The Company cannot assure stockholders
that they will be able to sell their shares of the Company’s Class A common stock in the open market, even if the market
price per share is higher than the redemption price stated above, as there may not be sufficient liquidity in its securities when
such stockholders wish to sell their shares.
The Adjournment Proposal,
if adopted, will allow our Board to adjourn the Special Meeting to a later date or dates to permit further solicitation of proxies.
The Adjournment Proposal will only be presented to our stockholders in the event that there are insufficient votes for, or otherwise
in connection with, the approval of the Extension Amendment Proposal.
If the Extension Amendment
Proposal is not approved and we do not consummate a business combination by September 22, 2020, as contemplated by our IPO prospectus
and in accordance with our charter, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as
reasonably possible but not more than ten business days thereafter subject to lawfully available funds therefor, redeem 100% of
the public shares in consideration of a per-share price, payable in cash, equal to the quotient obtained by dividing (A) the aggregate
amount then on deposit in the Trust Account, including interest (net of taxes payable, less up to $100,000 of such net interest
to pay dissolution expenses), by (B) the total number of then outstanding public shares, which redemption will completely extinguish
rights of public stockholders (including the right to receive further liquidating distributions, if any), subject to applicable
law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders
and the Board in accordance with applicable law, dissolve and liquidate, subject in each case to the Company’s obligations
under the Delaware General Corporation Law, which we refer to as the “DGCL”, to provide for claims of creditors and
other requirements of applicable law. There will be no distribution from the Trust Account with respect to our warrants, which
will expire worthless in the event of our winding up. In the event of a liquidation, Cantor, our Sponsor, officers and directors
will not receive any monies held in the Trust Account as a result of their ownership of the Founder Shares or the Placement Units.
Subject to the foregoing,
the affirmative vote of at least 65% of the Company’s outstanding shares of common stock, including the Founder Shares and
the shares of Class A common stock underlying the Placement Units, will be required to approve the Extension Amendment Proposal.
The approval of the Extension Amendment is essential to the implementation of our Board’s plan to extend the date by which
we must consummate our initial business combination. Notwithstanding stockholder approval of the Extension Amendment Proposal,
our Board will retain the right to abandon and not implement the Extension Amendment at any time without any further action by
our stockholders.
Approval of the Adjournment
Proposal requires the affirmative vote of the majority of the votes cast by stockholders represented in person or by proxy at the
Special Meeting.
Our Board has fixed
the close of business on July 29, 2020 as the date for determining the Company stockholders entitled to receive notice of and vote
at the Special Meeting and any adjournment thereof. Only holders of record of the Company’s common stock on that date are
entitled to have their votes counted at the Special Meeting or any adjournment thereof.
You are not being
asked to vote on the proposed business combination with Shift or any other proposed transaction at this time. If the Extension
is implemented and you do not elect to redeem your public shares, provided that you are a stockholder on the record date for a
meeting to consider a business combination, you will retain the right to vote on a proposed business combination when it is submitted
to stockholders and the right to redeem your public shares for cash in the event a business combination is approved and completed
or we have not consummated a business combination by the Extended Date.
After careful consideration
of all relevant factors, the Board has determined that the Extension Amendment Proposal and, if presented, the Adjournment Proposal
are advisable and recommends that you vote or give instruction to vote “FOR” such proposals.
Under Delaware law
and the Company’s bylaws, no other business may be transacted at the Special Meeting.
Enclosed is the Proxy
Statement containing detailed information concerning the Extension Amendment Proposal, the Adjournment Proposal and the Special
Meeting. Whether or not you plan to attend the Special Meeting, we urge you to read this material carefully and vote your shares.
July ___, 2020
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By Order of the Board of Directors
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/s/ John M. Butler
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John M. Butler
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President and Chief Executive Officer
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Your vote is important. If you are a
stockholder of record, please sign, date and return your proxy card as soon as possible to make sure that your shares are represented
at the Special Meeting. If you are a stockholder of record, you may also cast your vote online at the Special Meeting. If your
shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank how to vote your shares, or you
may cast your vote online at the Special Meeting by obtaining a proxy from your brokerage firm or bank. Your failure to vote or
instruct your broker or bank how to vote will have the same effect as voting “AGAINST” the Extension Amendment Proposal,
and an abstention will have the same effect as voting “AGAINST” the Extension Amendment Proposal.
Important Notice Regarding the Availability
of Proxy Materials for the Special Meeting of Stockholders to be held on September 18, 2020: This notice of meeting and the
accompanying Proxy Statement are available at [------------].
INSURANCE ACQUISITION
CORP.
2929 Arch Street,
Suite 1703
Philadelphia,
Pennsylvania 19104
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 18, 2020
PROXY STATEMENT
The special meeting,
which we refer to as the “Special Meeting”, of stockholders of Insurance Acquisition Corp., which we refer to as the
“we”, “us”, “our” or the “Company”, will be held at [--]:00 [---] Eastern Time
on September 18, 2020 as a virtual meeting. You will be able to attend, vote your shares, and submit questions during the Special
Meeting via a live webcast available at [----------]. The Special Meeting will be held for the sole purpose of considering and
voting upon the following proposals:
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a proposal to amend the Company’s
amended and restated certificate of incorporation, which we refer to as the “charter”, in the form set forth in Annex
A, which we refer to as the “Extension Amendment” and such proposal the “Extension Amendment Proposal”,
to extend the date by which the Company must (i) consummate a merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or other similar business combination involving the Company and one or more businesses or assets, which we refer
to as a “business combination”, (ii) cease its operations if it fails to complete such business combination, and (iii)
redeem 100% of the Company’s Class A common stock included as part of the units sold in the Company’s initial public
offering that was consummated on March 22, 2019, which we refer to as the “IPO”, from September 22, 2020 to January
11, 2021 or such earlier date as determined by the Board, which we refer to as the “Extension”, and such later date,
the “Extended Date”; and
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a proposal to approve the adjournment of
the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that
there are insufficient votes for, or otherwise in connection with, the approval of the Extension Amendment Proposal, which we refer
to as the “Adjournment Proposal”. The Adjournment Proposal will only be presented at the Special Meeting if there are
not sufficient votes to approve the Extension Amendment Proposal.
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As previously disclosed, on June 29, 2020,
the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) among the Company, IAC Merger Sub,
Inc., a Delaware corporation and direct wholly owned subsidiary of the Company (“Merger Sub”), and Shift Technologies,
Inc., a Delaware corporation (“Shift”), providing for, among other things, and subject to the conditions therein, the
combination of Shift and the Company pursuant to the proposed merger of Merger Sub with and into Shift with Shift continuing as
the surviving entity (the “Merger”).
The Extension Amendment
Proposal is essential to the overall implementation of the plan of the board of directors, which we refer to as the “Board”,
to extend the date by which the Company has to complete an initial business combination. The purpose of the Extension Amendment
is to allow the Company more time to complete its initial business combination with Shift or another proposed business combination.
In the event that the Company consummates the Merger prior to the Special Meeting, the Company will issue a press release and file
a Form 8-K with the Securities and Exchange Commission announcing the consummation of the Merger and the cancellation of the Special
Meeting.
Approval of the Extension
Amendment Proposal is a condition to the implementation of the Extension. In addition, we will not proceed with the Extension if
the number of redemptions of our shares of Class A common stock issued in our IPO, which shares we refer to as the “public
shares”, causes us to have less than $5,000,001 of net tangible assets following approval of the Extension Amendment Proposal.
In connection
with the Extension Amendment Proposal, public stockholders may elect to redeem their public shares for a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account
(the “Trust Account”), including interest (which interest shall be net of taxes payable), divided by the number
of then outstanding public shares, which election we refer to as the “Election”, regardless of whether such
public stockholders vote on the Extension Amendment Proposal. If the Extension Amendment Proposal is approved by the
requisite vote of stockholders, the remaining holders of public shares will retain their right to redeem their public shares
when the proposed business combination is submitted to the stockholders, subject to any limitations set forth in our
charter as amended by the Extension Amendment. In addition, public stockholders who do not make the Election would be
entitled to have their public shares redeemed for cash if the Company has not completed a business combination by the
Extended Date. Insurance Acquisition Sponsor, LLC and Dioptra Advisors, LLC,
which we refer to collectively as our “Sponsor”, owns 5,103,333 shares of our Class B common stock, which we
refer to as the “Founder Shares”, that were issued to the Sponsor prior to our IPO, and 375,000 private placement
units, which we refer to as the “Placement Units”, that were purchased by the Sponsor in a private placement
which occurred simultaneously with the completion of the IPO. In addition, four of our current and former independent
directors each owns 15,000 Founder Shares and Cantor Fitzgerald & Co., the representative of the underwriters for the IPO
(“Cantor”), holds 50,000 Placement Units.
To exercise your
redemption rights, you must demand that the Company redeem your public shares for a pro rata portion of the funds held in the Trust
Account, and tender your shares to the Company’s transfer agent at least two business days prior to the Special Meeting (or
September 16, 2020). You may tender your shares by either delivering your share certificate to the transfer agent or by delivering
your shares electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) system. If you hold
your shares in street name, you will need to instruct your bank, broker or other nominee to withdraw the shares from your account
in order to exercise your redemption rights.
The withdrawal of funds
from the Trust Account in connection with the Election will reduce the amount held in the
Trust Account following the Election, and the amount remaining in the Trust Account may be only a small fraction of the approximately
$153.7 million that was in the Trust Account as of March 31, 2020. In such event, the Company may need to obtain additional
funds to complete an initial business combination, and there can be no assurance that such funds will be available on terms acceptable
to the parties or at all.
If the Extension Amendment
Proposal is not approved and we do not consummate a business combination by September 22, 2020, as contemplated by our IPO prospectus
and in accordance with our charter, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as
reasonably possible but not more than ten business days thereafter subject to lawfully available funds therefor, redeem 100% of
the public shares in consideration of a per-share price, payable in cash, equal to the quotient obtained by dividing (A) the aggregate
amount then on deposit in the Trust Account, including interest (net of taxes payable, less up to $100,000 of such net interest
to pay dissolution expenses), by (B) the total number of then outstanding public shares, which redemption will completely extinguish
rights of public stockholders (including the right to receive further liquidating distributions, if any), subject to applicable
law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders
and the Board in accordance with applicable law, dissolve and liquidate, subject in each case to the Company’s obligations
under the Delaware General Corporation Law, which we refer to as the “DGCL”, to provide for claims of creditors and
other requirements of applicable law.
There will be no distribution
from the Trust Account with respect to the Company’s warrants, which will expire worthless in the event of our winding up.
In the event of a liquidation, Insurance Acquisition Sponsor, LLC and Dioptra Advisors, LLC,
which we refer to collectively as our “Sponsor”, will not receive any monies held in the Trust Account as a result
of its ownership of 5,103,333 shares of our Class B common stock, which we refer to as the “Founder Shares”, that were
issued to the Sponsor prior to our IPO and 375,000 private placement units, which we refer to as the “Placement Units”,
that were purchased by the Sponsor in a private placement which occurred simultaneously with the completion of the IPO. As a consequence,
a liquidating distribution will be made only with respect to the public shares. In addition, our current and former independent
directors that each own 15,000 Founder Shares and Cantor Fitzgerald & Co., the representative of the underwriters for the IPO
(“Cantor”), which holds 50,000 Placement Units, will not receive any monies held in the Trust Account as a result of
their ownership of such Founder Shares or Placement Units.
If the Company
liquidates, Cohen & Company, LLC, the manager of our Sponsor, has agreed to indemnify us to the extent any claims by a
third party for services rendered or products sold to us, or any claims by a prospective target business with which we have
discussed entering into an acquisition agreement, reduce the amount of funds in the Trust Account to below $10.00 per public
share, except as to any claims by a third party who executed a waiver of any and all rights to seek access to our Trust
Account, regardless of whether such waiver is enforceable, and except as to any claims under our indemnity of the
underwriters of the IPO against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the
“Securities Act”).. We cannot assure you, however, that Cohen & Company, LLC would be able to satisfy those
obligations. Based upon the current amount in the Trust Account, we anticipate that the per-share price at which public
shares will be redeemed from cash held in the Trust Account will be approximately $10.[--]. Nevertheless, the Company
cannot assure you that the per share distribution from the Trust Account, if the Company liquidates, will not be less than
$10.00, due to unforeseen claims of creditors.
Under the DGCL, stockholders
may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution.
If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable
provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against
the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting
period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating
distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the
stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Because the Company
will not be complying with Section 280 of the DGCL as described in our prospectus filed with the Securities and Exchange Commission,
which we refer to as the “SEC”, on March 21, 2019, Section 281(b) of the DGCL requires us to adopt a plan, based on
facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially
brought against us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company,
and our operations have been limited to searching for prospective target businesses to acquire, the only likely claims to arise
would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses.
If the Extension Amendment
Proposal is approved, the Company, pursuant to the terms of the investment management trust agreement, dated March 19, 2019, by
and between the Company and Continental Stock Transfer & Trust Company (the “Trust Agreement”), will (i) remove
from the Trust Account an amount, which we refer to as the “Withdrawal Amount”, equal to the number of public shares
properly redeemed multiplied by the per-share price, equal to the aggregate amount then on deposit in the Trust Account, including
interest (which interest shall be net of taxes payable), divided by the number of then outstanding public shares and (ii) deliver
to the holders of such redeemed public shares their portion of the Withdrawal Amount. The remainder of such funds shall remain
in the Trust Account and be available for use by the Company to complete a business combination on or before the Extended Date.
Holders of public shares who do not redeem their public shares now will retain their redemption rights and their ability to vote
on a business combination through the Extended Date if the Extension Amendment Proposal is approved.
Our Board has fixed
the close of business on July 29, 2020 as the date for determining the Company stockholders entitled to receive notice of and vote
at the Special Meeting and any adjournment thereof. Only holders of record of the Company’s common stock on that date are
entitled to have their votes counted at the Special Meeting or any adjournment thereof. On the record date of the Special Meeting,
there were 15,490,000 shares of Class A common stock and 5,163,333 shares of Class B common stock outstanding. The Company’s
warrants do not have voting rights in connection with the Extension Amendment Proposal or the Adjournment Proposal.
This Proxy Statement
contains important information about the Special Meeting and the proposals. Please read it carefully and vote your shares.
We will pay for
the entire cost of soliciting proxies from our working capital. We have engaged Morrow Sodali LLC to assist in the
solicitation of proxies for the Special Meeting. We have agreed to pay Morrow Sodali LLC its customary fee. We will also
reimburse Morrow Sodali LLC for reasonable out-of-pocket expenses and will indemnify Morrow Sodali LLC and its affiliates
against certain claims, liabilities, losses, damages and expenses. In addition to these mailed proxy materials, our directors
and officers may also solicit proxies in person, by telephone or by other means of communication. These parties will not be
paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for
the cost of forwarding proxy materials to beneficial owners. While the payment of these expenses will reduce the cash
available to us to consummate an initial business combination if the Extension is approved, we do not expect such payments to
have a material effect on our ability to consummate an initial business combination.
This Proxy Statement
is dated July ____, 2020 and is first being mailed to stockholders on or about _____, 2020.
QUESTIONS AND ANSWERS ABOUT THE SPECIAL
MEETING
These Questions and
Answers are only summaries of the matters they discuss. They do not contain all of the information that may be important to you.
You should read carefully the entire document, including the annexes to this Proxy Statement.
Why am I receiving this Proxy Statement?
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We are a blank check company incorporated
in Delaware on March 13, 2018, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or other similar business combination with one or more operating businesses or assets. In March 2019, we consummated
our IPO from which we derived gross proceeds of approximately $150,650,000 in the aggregate. Like most blank check companies, our
charter provides for the return of our IPO proceeds held in trust to the holders of public shares if there is no qualifying business
combination(s) consummated on or before a certain date (in our case, September 22, 2020).
On June 29, 2020, the Company entered into
the Merger Agreement among the Company, Merger Sub, and Shift, providing for, among other things, and subject to the conditions
therein, the combination of Shift and the Company pursuant to the proposed merger of Merger Sub with and into Shift with Shift
continuing as the surviving entity. However, the Company may be unable to complete an initial business combination by September
22, 2020. Our Board believes therefore that it is in the best interests of the stockholders to continue our existence until the
Extended Date in order to allow us more time to complete our initial business combination.
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What is being voted on?
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You are being asked to vote on:
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a proposal to amend our charter to extend the date by which
we have to consummate a business combination from September 22, 2020 to January 11, 2021 or such earlier date as determined by
the Board; and
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a proposal to approve the adjournment of the Special Meeting
to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient
votes for, or otherwise in connection with, the approval of the Extension Amendment Proposal.
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The Extension Amendment Proposal is essential to the overall implementation of our Board’s plan to extend the date that we have to complete a business combination. Approval of the Extension Amendment Proposal is a condition to the implementation of the Extension.
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If the Extension Amendment Proposal is approved, we will, pursuant to the Trust Agreement, remove the Withdrawal Amount from the Trust Account, deliver to the holders of redeemed public shares their portion of the Withdrawal Amount and retain the remainder of the funds in the Trust Account for our use in connection with consummating a business combination on or before the Extended Date.
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We will not proceed with the Extension if redemptions of our public shares cause us to have less than $5,000,001 of net tangible assets following approval of the Extension Amendment Proposal.
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If the Extension
Amendment Proposal is approved and the Extension is implemented, the removal of the Withdrawal Amount from the Trust Account in
connection with the Election will reduce the amount held in the Trust Account following the Election. We cannot predict the amount
that will remain in the Trust Account if the Extension Amendment Proposal is approved and the amount remaining in the Trust Account
may be only a small fraction of the approximately $153.7 million that was in the Trust Account as of March 31, 2020. In such event,
we may need to obtain additional funds to complete an initial business combination, and there can be no assurance that such funds
will be available on terms acceptable to the parties or at all.
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If the Extension Amendment Proposal is not approved and we have not consummated a business combination by September 22, 2020, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter subject to lawfully available funds therefor, redeem 100% of the public shares in consideration of a per-share price, payable in cash, equal to the quotient obtained by dividing (A) the aggregate amount then on deposit in the Trust Account, including interest (net of taxes payable, less up to $100,000 of such net interest to pay dissolution expenses), by (B) the total number of then outstanding public shares, which redemption will completely extinguish rights of public stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the Board in accordance with applicable law, dissolve and liquidate, subject in each case to the Company’s obligations under the DGCL to provide for claims of creditors and other requirements of applicable law.
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There will be no distribution from the Trust Account with respect to our warrants, which will expire worthless in the event of our winding up. In the event of a liquidation, our Sponsor, officers and directors will not receive any monies held in the Trust Account as a result of their ownership of the Founder Shares and Placement Units.
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Why is the Company proposing the Extension Amendment Proposal?
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Our charter currently provides for the
return of our IPO proceeds held in trust to the holders of shares of Class A common stock sold in our IPO if there is no qualifying
business combination(s) consummated on or before September 22, 2020.
On June 29, 2020, the Company entered into
the Merger Agreement among the Company, Merger Sub, and Shift, providing for, among other things, and subject to the conditions
therein, the combination of Shift and the Company pursuant to the proposed merger of Merger Sub with and into Shift with Shift
continuing as the surviving entity. However, the Company may be unable to complete an initial business combination by September
22, 2020. Our Board believes therefore that it is in the best interests of the stockholders to continue our existence until the
Extended Date in order to allow us more time to complete our initial business combination.
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The Company believes that given its expenditure of time, effort and money on finding a business combination, circumstances warrant providing public stockholders an opportunity to consider a business combination. Accordingly, the Board is proposing the Extension Amendment Proposal to extend the Company’s corporate existence until the Extended Date.
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You are not being asked to vote on the proposed business combination with Shift or any other proposed transaction at this time. If the Extension is implemented and you do not elect to redeem your public shares, provided that you are a stockholder on the record date for a meeting to consider a business combination, you will retain the right to vote on a proposed business combination when it is submitted to stockholders and the right to redeem your public shares for cash in the event a business combination is approved and completed or we have not consummated a business combination by the Extended Date.
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Why should I vote “FOR” the Extension Amendment
Proposal?
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Our Board believes stockholders should have an opportunity to evaluate an initial business combination. Accordingly, the Board is proposing the Extension Amendment Proposal to amend our charter in the form set forth in Annex A hereto to extend the date by which we must (i) consummate a business combination, (ii) cease our operations if we fail to complete such business combination, and (iii) redeem 100% of our Class A common stock included as part of the units sold in our IPO from September 22, 2020 to January 11, 2021 or such earlier date as determined by the Board. The Extension would give the Company the opportunity to complete a business combination.
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Our charter provides
that if our stockholders approve an amendment to our charter that would affect the substance or timing of our obligation to redeem
100% of our public shares if we do not complete our business combination before September 22, 2020, we will provide our public
stockholders with the opportunity to redeem all or a portion of their public shares upon such approval at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of
taxes payable), divided by the number of then outstanding public shares. We believe that this charter provision was included to
protect our stockholders from having to sustain their investments for an unreasonably long period if we failed to find a suitable
business combination in the timeframe contemplated by the charter. We also believe, however, that given our expenditure of time,
effort and money on potential business combinations, circumstances warrant providing those stockholders who believe they might
find any potential business combination to be an attractive investment with an opportunity to consider such a transaction.
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Our Board recommends that you vote in favor of the Extension
Amendment Proposal.
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Why should I vote “FOR” the Adjournment Proposal?
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If the Adjournment Proposal is not approved by our stockholders, our Board may not be able to adjourn the Special Meeting to a later date in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Extension Amendment Proposal.
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When would the Board abandon the Extension Amendment Proposal?
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Our Board will abandon the Extension Amendment if our stockholders do not approve the Extension Amendment Proposal. In addition, notwithstanding stockholder approval of the Extension Amendment Proposal, our Board will retain the right to abandon and not implement the Extension Amendment at any time without any further action by our stockholders. In addition, we will not proceed with the Extension if the number of redemptions of our public shares causes us to have less than $5,000,001 of net tangible assets following approval of the Extension Amendment Proposal.
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How do the Company insiders intend to vote their shares?
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All of our directors, executive officers and their respective affiliates are expected to vote any common stock over which they have voting control (including any public shares owned by them) in favor of the Extension Amendment Proposal. Currently, our Sponsor and our officers and directors own approximately 26.7% of our issued and outstanding shares of common stock, including 5,148,333 Founder Shares and 375,000 Placement Units. Our Sponsor and our directors, executive officers and their affiliates do not intend to purchase shares of common stock in the open market or in privately negotiated transactions in connection with the stockholder vote on the Extension Amendment.
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What vote is required to adopt the proposals?
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The approval of
the Extension Amendment Proposal will require the affirmative vote of holders of at least 65% of our outstanding shares of common
stock on the record date.
The approval of the Adjournment Proposal
will require the affirmative vote of the majority of the votes cast by stockholders represented in person or by proxy.
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What if I don’t want to
vote “FOR” the Extension Amendment Proposal?
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If you do not
want the Extension Amendment Proposal to be approved, you must abstain, not vote, or vote “AGAINST” such proposal.
You will be entitled to redeem your public shares for cash in connection with this vote whether or not you vote on the Extension
Amendment Proposal so long as you elect to redeem your public shares for a pro rata portion of the funds available in the Trust
Account in connection with the Extension Amendment. If the Extension Amendment Proposal is approved, and the Extension is implemented,
then the Withdrawal Amount will be withdrawn from the Trust Account and paid to the redeeming holders.
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What happens if the Extension
Amendment Proposal is not approved?
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Our Board will abandon the Extension
Amendment if our stockholders do not approve the Extension Amendment Proposal.
If the Extension
Amendment Proposal is not approved and we have not consummated a business combination by September 22, 2020, we will (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter subject to lawfully available funds therefor, redeem 100% of the public shares in consideration of a per-share price,
payable in cash, equal to the quotient obtained by dividing (A) the aggregate amount then on deposit in the Trust Account, including
interest (net of taxes payable, less up to $100,000 of such net interest to pay dissolution expenses), by (B) the total number
of then outstanding public shares, which redemption will completely extinguish rights of public stockholders (including the right
to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of the remaining stockholders and the Board in accordance with applicable law,
dissolve and liquidate, subject in each case to the Company’s obligations under the DGCL to provide for claims of creditors
and other requirements of applicable law.
There will be no distribution from the
Trust Account with respect to our warrants which will expire worthless in the event we wind up.
In the event of a liquidation, Cantor,
our Sponsor, officers and directors (current and former) will not receive any monies held in the Trust Account as a result of
their ownership of the Founder Shares or Placement Units.
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If the Extension Amendment Proposal is approved, what happens next?
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If the Extension Amendment Proposal is
approved, the Company will continue to attempt to consummate an initial business combination until the Extended Date.
Upon approval of the Extension Amendment
Proposal by holders of at least 65% of the common stock outstanding as of the record date, we will file an amendment to the charter
with the Secretary of State of the State of Delaware in the form set forth in Annex A hereto. We will remain a reporting company
under the Exchange Act and our units, Class A common stock and public warrants will remain publicly traded.
If the Extension Amendment Proposal is
approved, the removal of the Withdrawal Amount from the Trust Account will reduce the amount remaining in the Trust Account and
increase the percentage interest of our common stock held by our Sponsor, our directors and our officers as a result of their ownership
of the Founder Shares and Placement Units.
Notwithstanding stockholder approval of
the Extension Amendment Proposal, our Board will retain the right to abandon and not implement the Extension Amendment at any time
without any further action by our stockholders.
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What happens to the Company warrants if the Extension Amendment Proposal is not approved?
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If the Extension Amendment Proposal is not approved and we have not consummated a business combination by September 22, 2020, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter subject to lawfully available funds therefor, redeem 100% of the public shares in consideration of a per-share price, payable in cash, equal to the quotient obtained by dividing (A) the aggregate amount then on deposit in the Trust Account, including interest (net of taxes payable, less up to $100,000 of such net interest to pay dissolution expenses), by (B) the total number of then outstanding public shares, which redemption will completely extinguish rights of public stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the Board in accordance with applicable law, dissolve and liquidate, subject in each case to the Company’s obligations under the DGCL to provide for claims of creditors and other requirements of applicable law. There will be no distribution from the Trust Account with respect to our warrants, which will expire worthless in the event of our winding up.
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What happens to the Company’s warrants if the Extension Amendment Proposal is approved?
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If the Extension Amendment Proposal is approved, we will retain the blank check company restrictions previously applicable to us and continue to attempt to consummate a business combination until the Extended Date. The public warrants will remain outstanding in accordance with their terms during any extension period.
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Would I still be able to exercise my redemption rights if I vote “AGAINST” any subsequently proposed business combination?
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Unless you elect to redeem your public shares in connection with the Special Meeting, you will be able to vote on any proposed business combination when it is submitted to stockholders if you are a stockholder on the record date for a meeting to seek stockholder approval of the business combination. If you disagree with the proposed business combination, you will retain your right to redeem your public shares upon consummation of the business combination in connection with the stockholder vote to approve the business combination, subject to any limitations set forth in our charter.
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How do I attend the meeting?
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You will need your control number for access.
If you do not have your control number, contact Continental Stock Transfer & Trust Company at the phone number or e-mail
address below. Beneficial investors who hold shares through a bank, broker or other intermediary, will need to contact them
and obtain a legal proxy. Once you have your legal proxy, contact Continental Stock Transfer & Trust Company to have a
control number generated. Continental Stock Transfer & Trust Company contact information is as follows: 917-262-2373,
or email proxy@continentalstock.com.
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How do I change or revoke my vote?
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You may change your vote by sending a later-dated, signed proxy card to our Secretary at Insurance Acquisition Corp., 2929 Arch Street, Suite 1703, Philadelphia, PA 19104, so that it is received by our Secretary prior to the Special Meeting or by attending the Special Meeting online and voting. You also may revoke your proxy by sending a notice of revocation to our Secretary, which must be received by our Secretary prior to the Special Meeting.
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Please note, however, that if on the record date your shares were held, not in your name, but rather in an account at a brokerage firm, custodian bank, or other nominee, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. If your shares are held in street name, and you wish to attend the Special Meeting and vote at the Special Meeting online, you must follow the instructions included with the enclosed proxy card.
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How are votes counted?
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Votes will be counted by the inspector of election appointed for the Special Meeting, who will separately count “FOR” and “AGAINST” votes and abstentions. The Extension Amendment Proposal must be approved by the affirmative vote of at least 65% of the outstanding shares as of the record date of our common stock, including the Founder Shares and shares of Class A common stock underlying the Placement Units, voting together as a single class. Accordingly, a Company stockholder’s failure to vote by proxy or to vote online at the Special Meeting or an abstention with respect to the Extension Amendment Proposal will have the same effect as a vote “AGAINST” such proposal.
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The approval of the Adjournment Proposal
requires the affirmative vote of the majority of the votes cast by stockholders represented in person or by proxy. Accordingly,
a Company stockholder’s failure to vote by proxy or to vote online at the Special Meeting will not be counted towards the
number of shares of common stock required to validly establish a quorum, and if a valid quorum is otherwise established, it will
have no effect on the outcome of any vote on the Adjournment Proposal.
Abstentions will be counted in connection
with the determination of whether a valid quorum is established but will have no effect on the outcome of the Adjournment Proposal.
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If my shares are held in “street name,” will
my broker automatically vote them for me?
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No. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. We believe all the proposals presented to the stockholders will be considered non-discretionary and therefore your broker, bank, or nominee cannot vote your shares without your instruction. You should instruct your broker to vote your shares. If your shares are held by your broker as your nominee, which we refer to as being held in “street name”, you may need to obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker to vote your shares.
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What is a quorum requirement?
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A quorum of stockholders is necessary to hold a valid meeting. Holders of a majority in voting power of our common stock on the record date issued and outstanding and entitled to vote at the Special Meeting, present in person or represented by proxy, constitute a quorum.
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Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote online at the Special Meeting. Abstentions will be counted towards the quorum requirement. In the absence of a quorum, the chairman of the meeting has power to adjourn the Special Meeting. As of the record date for the Special Meeting, 10,326,667 shares of our common stock would be required to achieve a quorum.
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Who can vote at the Special Meeting?
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Only holders of record of our common stock at the close of business on July 29, 2020 are entitled to have their vote counted at the Special Meeting and any adjournments or postponements thereof. On the record date, 15,490,000 shares of our Class A common stock and 5,163,333 shares of our Class B common stock were outstanding and entitled to vote.
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Stockholder of Record: Shares Registered in Your Name. If on the record date your shares were registered directly in your name with our transfer agent, Continental Stock Transfer & Trust Company, then you are a stockholder of record. As a stockholder of record, you may vote online at the Special Meeting or vote by proxy. Whether or not you plan to attend the Special Meeting online, we urge you to fill out and return the enclosed proxy card to ensure your vote is counted.
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Beneficial Owner: Shares Registered in the Name of a Broker or Bank. If on the record date your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited to attend the Special Meeting. However, since you are not the stockholder of record, you may not vote your shares online at the Special Meeting unless you request and obtain a valid proxy from your broker or other agent.
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Does the Board recommend voting for the approval of the
Extension Amendment Proposal and the Adjournment Proposal?
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Yes. After careful consideration of the terms and conditions of these proposals, our Board has determined that the Extension Amendment and, if presented, the Adjournment Proposal are in the best interests of the Company and its stockholders. The Board recommends that our stockholders vote “FOR” the Extension Amendment Proposal and the Adjournment Proposal.
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What interests do the Company’s Sponsor, directors
and officers have in the approval of the proposals?
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Our Sponsor, directors and officers and other initial stockholders have interests in the proposals that may be different from, or in addition to, your interests as a stockholder. These interests include ownership of (i) 5,163,333 Founder Shares (purchased for $25,000) and 375,000 Placement Units (purchased for $3.75 million), which would expire worthless if a business combination is not consummated, and (ii) a promissory note in the principal amount of up to $750,000 issued in connection with working capital loans made to us by Cohen & Company, LLC, an affiliate of the Sponsor. See the section entitled “The Extension Amendment Proposal — Interests of our Sponsor, Directors and Officers”.
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Do I have appraisal rights if I object to the Extension
Amendment Proposal?
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Our stockholders do not have appraisal rights in connection with the Extension Amendment Proposal under the DGCL.
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What do I need to do now?
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We urge you to read carefully and consider the information contained in this Proxy Statement, including the annexes, and to consider how the proposals will affect you as our stockholder. You should then vote as soon as possible in accordance with the instructions provided in this Proxy Statement and on the enclosed proxy card.
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How do I vote?
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If you are a holder of record of our common stock, you may vote online at the Special Meeting or by submitting a proxy for the Special Meeting. Whether or not you plan to attend the Special Meeting online, we urge you to vote by proxy to ensure your vote is counted. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. You may still attend the Special Meeting and vote online if you have already voted by proxy.
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If your shares of our common stock are held in “street name” by a broker or other agent, you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited to attend the Special Meeting. However, since you are not the stockholder of record, you may not vote your shares online at the Special Meeting unless you request and obtain a valid proxy from your broker or other agent.
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How do I redeem my shares of Class A common stock?
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If the Extension is implemented, each of our public stockholders may seek to redeem all or a portion of its public shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of taxes payable), divided by the number of then outstanding public shares. If the Extension Amendment Proposal is approved by the requisite vote of stockholders, the remaining holders of public shares will retain their right to redeem their public shares when the proposed business combination is submitted to the stockholders, subject to any limitations set forth in our charter as amended by the Extension Amendment. In addition, public stockholders who do not make the Election would be entitled to have their public shares redeemed for cash if the Company has not completed a business combination by the Extended Date
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In order to exercise your redemption rights, you must, prior to 5:00 p.m. Eastern time on September 16, 2020 (two business days before the Special Meeting) tender your shares physically or electronically and submit a request in writing that we redeem your public shares for cash to Continental Stock Transfer & Trust Company, our transfer agent, at the following address:
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Continental Stock Transfer & Trust Company
1 State Street Plaza, 30th Floor
New York, New York 10004
Attn: Mark Zimkind
E-mail: mzimkind@continentalstock.com
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What should I do if I receive more than one set of voting
materials?
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You may receive more than one set of voting materials, including multiple copies of this Proxy Statement and multiple proxy cards or voting instruction cards, if your shares are registered in more than one name or are registered in different accounts. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your Company shares.
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Who is paying for this proxy solicitation?
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We will pay for the entire cost of soliciting proxies from our working capital. We have engaged Morrow Sodali LLC to assist in the solicitation of proxies for the Special Meeting. We have agreed to pay Morrow Sodali LLC its customary fee. We will also reimburse Morrow Sodali LLC for reasonable out-of-pocket expenses and will indemnify Morrow Sodali LLC and its affiliates against certain claims, liabilities, losses, damages and expenses. In addition to these mailed proxy materials, our directors and officers may also solicit proxies in person, by telephone or by other means of communication. These parties will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners. While the payment of these expenses will reduce the cash available to us to consummate an initial business combination if the Extension is approved, we do not expect such payments to have a material effect on our ability to consummate an initial business combination.
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Who can help answer my questions?
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If you have questions about the proposals
or if you need additional copies of the Proxy Statement or the enclosed proxy card you should contact:
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Insurance Acquisition Corp.
2929 Arch Street, Suite 1703
Philadelphia, PA 19104
Attn:
Telephone:
You may also contact our proxy solicitor
at:
Morrow Sodali LLC
470 West Avenue
Stamford, CT 06902
Telephone: (800) 662-5200
Banks and brokers: (203) 658-9400
Email: INSU.info@investor.morrowsodali.com
You may also obtain additional information
about the Company from documents filed with the SEC by following the instructions in the section entitled “Where You Can
Find More Information.”
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FORWARD-LOOKING STATEMENTS
We believe that some
of the information in this Proxy Statement constitutes forward-looking statements. You can identify these statements by forward-looking
words such as “may”, “expect”, “anticipate”, “contemplate”, “believe”,
“estimate”, “intends”, and “continue” or similar words. You should read statements that contain
these words carefully because they:
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discuss future expectations;
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contain projections of future results of
operations or financial condition; or
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state other “forward-looking”
information.
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We believe it is important
to communicate our expectations to our stockholders. However, there may be events in the future that we are not able to predict
accurately or over which we have no control. The cautionary language discussed in this Proxy Statement provides examples of risks,
uncertainties and events that may cause actual results to differ materially from the expectations described by us in such forward-looking
statements, including, among other things, claims by third parties against the Trust Account, unanticipated delays in the distribution
of the funds from the Trust Account and our ability to finance and consummate a business combination. You are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of the date of this Proxy Statement.
All
forward-looking statements included herein attributable to us or any person acting on our behalf are expressly qualified in
their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by
applicable laws and regulations, we undertake no obligation to update or revise these forward-looking statements, whether as
a result of new information, future events or otherwise.
BACKGROUND
We are a blank check
company incorporated in Delaware in March 2018 and formed for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business combination with one or more businesses or assets.
There are currently
15,490,000 shares of Class A common stock and 5,163,333 shares of Class B common stock
issued and outstanding. In addition, we issued warrants to purchase 7,532,500 shares of Class A common stock as part of our IPO,
along with an aggregate of 212,500 warrants underlying the Placement Units issued to our Sponsor and Cantor in a private placement
simultaneously with the consummation of our IPO. Each whole warrant entitles its holder to purchase one share of Class A common
stock at an exercise price of $11.50 per share, subject to adjustment. The warrants will become exercisable 30 days after the completion
of our initial business combination and expire five years after the completion of our initial business combination or earlier upon
redemption or liquidation. Once the warrants become exercisable, the Company may redeem the outstanding warrants at a price of
$0.01 per warrant, if the last sale price of the Company’s Class A common stock equals or exceeds $18.00 per share (as adjusted
for stock splits, stock dividends, reorganizations and the like) for any 20 trading days within a 30 trading day period ending
on the third business day before the Company sends the notice of redemption to the warrant holders. The warrants underlying the
Placement Units, however, are non-redeemable so long as they are held by our Sponsor, Cantor or their permitted transferees.
Upon the closing of
the IPO, net proceeds of $150,650,000 from our IPO and the simultaneous sale of the Placement Units in a private placement transaction
was placed in our Trust Account in the United States maintained by Continental Stock Transfer & Trust Company, acting as trustee,
and invested in U.S. “government securities”, within the meaning of Section 2(a)(16) of the Investment Company Act
of 1940, as amended, which we refer to as the “1940 Act”, with a maturity of 180 days or less or in any open ended
investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the 1940 Act, until the
earlier of: (i) the consummation of a business combination or (ii) the distribution of the proceeds in the Trust Account as described
below.
The
amount of proceeds not deposited in the Trust Account was approximately $104,000 as of March 31, 2020. In addition, interest income
on the funds held in the Trust Account may be released to us to pay our franchise and income tax obligations. As of March 31, 2020,
approximately $153.7 million was held in the Trust Account. The mailing address of the Company’s principal executive office
is 2929 Arch Street, Suite 1703, Philadelphia, PA 19104.
In order to finance
transaction costs in connection with an intended initial business combination, our Sponsor or one of its affiliates has committed,
in the form of a loan, up to $750,000 to be provided to us to finance costs in connection with a business combination or fund working
capital requirements prior to our initial business combination. On May 21, 2020, Cohen & Company, LLC, as affiliate of our
Sponsor, loaned us $350,000 under a convertible promissory note.
On June 29, 2020, the
Company entered into the Merger Agreement among the Company, Merger Sub, and Shift, providing for the Company’s initial business
combination.
You are not being
asked to vote on the proposed business combination with Shift or any other proposed transaction at this time. If the Extension
is implemented and you do not elect to redeem your public shares, provided that you are a stockholder on the record date for a
meeting to consider a business combination, you will retain the right to vote on a proposed business combination when it is submitted
to stockholders and the right to redeem your public shares for cash in the event a business combination is approved and completed
or we have not consummated a business combination by the Extended Date.
THE EXTENSION AMENDMENT PROPOSAL
The Company is proposing
to amend its charter to extend the date by which the Company has to consummate a business combination to the Extended Date.
The Extension Amendment
Proposal is essential to the overall implementation of the Board’s plan to allow the Company more time to complete a business
combination. Approval of the Extension Amendment Proposal is a condition to the implementation of the Extension.
If the Extension Amendment
Proposal is not approved and we have not consummated a business combination by September 22, 2020, we will (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter subject
to lawfully available funds therefor, redeem 100% of the public shares in consideration of a per-share price, payable in cash,
equal to the quotient obtained by dividing (A) the aggregate amount then on deposit in the Trust Account, including interest (net
of taxes payable, less up to $100,000 of such net interest to pay dissolution expenses), by (B) the total number of then outstanding
public shares, which redemption will completely extinguish rights of public stockholders (including the right to receive further
liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the remaining stockholders and the Board in accordance with applicable law, dissolve and liquidate,
subject in each case to the Company’s obligations under the DGCL to provide for claims of creditors and other requirements
of applicable law.
The Board believes
that, given the Company’s expenditure of time, effort and money on finding a business combination, circumstances warrant
providing public stockholders an opportunity to consider a business combination.
A copy of the proposed
amendment to the charter of the Company is attached to this Proxy Statement in Annex A.
Reasons for the Extension Amendment
Proposal
The Company’s
IPO prospectus and charter provide that the Company has until September 22, 2020 to complete the purposes of the Company including,
but not limited to, effecting a business combination under its terms. The purpose of the Extension Amendment is to allow the Company
more time to complete its initial business combination. On June 29, 2020, the Company entered into the Merger Agreement among the
Company, Merger Sub, and Shift, providing for the Company’s initial business combination. Our Board currently believes however
that there may not be sufficient time before September 22, 2020 to complete a business combination. The Company’s IPO prospectus
and charter provide that the affirmative vote of the holders of at least 65% of all outstanding shares of common stock, including
the Founder Shares and the shares of Class A common stock underlying the Placement Units, is required to extend our corporate existence,
except in connection with, and effective upon, consummation of a business combination. Additionally, our IPO prospectus and charter
provide for all public stockholders to have an opportunity to redeem their public shares in the case our corporate existence is
extended as described above. Because we may not be able to conclude a business combination within the permitted time period, the
Board has determined to seek stockholder approval to extend the date by which we have to complete a business combination beyond
September 22, 2020 to the Extended Date. We intend to hold another stockholder meeting prior to the Extended Date in order to seek
stockholder approval of the proposed business combination with Shift.
We believe that the
foregoing charter provision was included to protect Company stockholders from having to sustain their investments for an unreasonably
long period if the Company failed to find a suitable business combination in the timeframe contemplated by the charter. We also
believe, however, that given the Company’s expenditure of time, effort and money on finding a business combination, circumstances
warrant providing public stockholders an opportunity to consider a business combination.
If the Extension Amendment Proposal is Not Approved
The approval of the
Extension Amendment is essential to the implementation of our Board’s plan to extend the date by which we must consummate
our initial business combination. Therefore, our Board will abandon and not implement the Extension Amendment unless our stockholders
approve the Extension Amendment Proposal.
If the Extension Amendment
Proposal is not approved and we have not consummated a business combination by September 22, 2020, we will (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter subject
to lawfully available funds therefor, redeem 100% of the public shares in consideration of a per-share price, payable in cash,
equal to the quotient obtained by dividing (A) the aggregate amount then on deposit in the Trust Account, including interest (net
of taxes payable, less up to $100,000 of such net interest to pay dissolution expenses), by (B) the total number of then outstanding
public shares, which redemption will completely extinguish rights of public stockholders (including the right to receive further
liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the remaining stockholders and the Board in accordance with applicable law, dissolve and liquidate,
subject in each case to the Company’s obligations under the DGCL to provide for claims of creditors and other requirements
of applicable law.
There will be no distribution
from the Trust Account with respect to the Company’s warrants which will expire worthless in the event we wind up. In the
event of a liquidation, our Sponsor, officers and directors will not receive any monies held in the Trust Account as a result of
their ownership of the Founder Shares or the Placement Units.
If the Extension Amendment Proposal Is Approved
If the Extension Amendment
Proposal is approved, the Company will file an amendment to the charter with the Secretary of State of the State of Delaware in
the form set forth in Annex A hereto to extend the time it has to complete a business combination until the Extended Date.
The Company will remain a reporting company under the Exchange Act and its units, Class A common stock and public warrants will
remain publicly traded. The Company will then continue to work to consummate a business combination by the Extended Date.
Notwithstanding stockholder
approval of the Extension Amendment Proposal, our Board will retain the right to abandon and not implement the Extension at any
time without any further action by our stockholders.
You are not being
asked to vote on the proposed business combination with Shift or any other proposed transaction at this time. If the Extension
is implemented and you do not elect to redeem your public shares, provided that you are a stockholder on the record date for a
meeting to consider a business combination, you will retain the right to vote on a proposed business combination when it is submitted
to stockholders and the right to redeem your public shares for cash in the event a business combination is approved and completed
or we have not consummated a business combination by the Extended Date.
If
the Extension Amendment Proposal is approved, and the Extension is implemented, the removal of the Withdrawal Amount from the Trust
Account in connection with the Election will reduce the amount held in the Trust Account. The Company cannot predict the amount
that will remain in the Trust Account if the Extension Amendment Proposal is approved, and the amount remaining in the Trust Account
may be only a small fraction of the approximately $153.7 million that was in the Trust Account as of March 31, 2020. We will not
proceed with the Extension if redemptions of our public shares cause us to have less than $5,000,001 of net tangible assets following
approval of the Extension Amendment Proposal.
Redemption Rights
If the Extension
Amendment Proposal is approved, and the Extension is implemented, each public stockholder may seek to redeem its public
shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including
interest (which interest shall be net of taxes payable), divided by the number of then outstanding public shares. Holders of
public shares who do not elect to redeem their public shares in connection with the Extension will retain the right to redeem
their public shares in connection with any stockholder vote to approve a proposed business combination, or if the Company has
not consummated a business combination by the Extended Date.
TO EXERCISE YOUR
REDEMPTION RIGHTS, YOU MUST SUBMIT A REQUEST IN WRITING THAT WE REDEEM YOUR PUBLIC SHARES FOR CASH TO CONTINENTAL STOCK TRANSFER
& TRUST COMPANY AT THE ADDRESS BELOW, AND, AT THE SAME TIME, ENSURE YOUR BANK OR BROKER COMPLIES WITH THE REQUIREMENTS IDENTIFIED
ELSEWHERE HEREIN.
In
connection with tendering your shares for redemption, prior to 5:00 p.m. Eastern time on September 16, 2020 (two business days
before the Special Meeting), you must elect either to physically tender your stock certificates to Continental Stock Transfer &
Trust Company, 1 State Street Plaza, 30th Floor, New York, New York 10004, Attn: Mark Zimkind, mzimkind@continentalstock.com, or
to deliver your shares to the transfer agent electronically using DTC’s DWAC system, which election would likely be determined
based on the manner in which you hold your shares. The requirement for physical or electronic delivery prior to 5:00 p.m. Eastern
time on September 16, 2020 (two business days before the Special Meeting) ensures that a redeeming holder’s election is irrevocable
once the Extension Amendment Proposal is approved. In furtherance of such irrevocable election, stockholders making the election
will not be able to tender their shares after the vote at the Special Meeting.
Through the DWAC system,
this electronic delivery process can be accomplished by the stockholder, whether or not it is a record holder or its shares are
held in “street name,” by contacting the transfer agent or its broker and requesting delivery of its shares through
the DWAC system. Delivering shares physically may take significantly longer. In order to obtain a physical stock certificate, a
stockholder’s broker and/or clearing broker, DTC, and the Company’s transfer agent will need to act together to facilitate
this request. 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 $100 and the broker would
determine whether or not to pass this cost on to the redeeming holder. It is the Company’s understanding that stockholders
should generally allot at least two weeks to obtain physical certificates from the transfer agent. The Company does not have any
control over this process or over the brokers or DTC, and it may take longer than two weeks to obtain a physical stock certificate.
Such stockholders will have less time to make their investment decision than those stockholders that deliver their shares through
the DWAC system. Stockholders who request physical stock certificates and wish to redeem may be unable to meet the deadline for
tendering their shares before exercising their redemption rights and thus will be unable to redeem their shares.
Certificates that have
not been tendered in accordance with these procedures prior to 5:00 p.m. Eastern time on September 16, 2020 (two business days
before the Special Meeting) will not be redeemed for cash held in the Trust Account on the redemption date. In the event that a
public stockholder tenders its shares and decides prior to the vote at the Special Meeting that it does not want to redeem its
shares, the stockholder may withdraw the tender. If you delivered your shares for redemption to our transfer agent and decide prior
to the vote at the Special Meeting not to redeem your public shares, you may request that our transfer agent return the shares
(physically or electronically). You may make such request by contacting our transfer agent at the address listed above. In the
event that a public stockholder tenders shares and the Extension Amendment Proposal is not approved, these shares will not be redeemed
and the physical certificates representing these shares will be returned to the stockholder promptly following the determination
that the Extension Amendment Proposal will not be approved. The Company anticipates that a public stockholder who tenders shares
for redemption in connection with the vote to approve the Extension Amendment Proposal would receive payment of the redemption
price for such shares soon after the completion of the Extension Amendment. The transfer agent will hold the certificates of public
stockholders that make the election until such shares are redeemed for cash or returned to such stockholders.
If properly demanded,
the Company will redeem each public share for a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the Trust Account, including interest (which interest shall be net of taxes payable), divided by the number of then outstanding
public shares. Based upon the current amount in the Trust Account, the Company anticipates that the per-share price at which public
shares will be redeemed from cash held in the Trust Account will be approximately $10.[---] at the time of the Special Meeting.
The closing price of the Company’s Class A common stock on July __, 2020 was $____.
If you exercise your
redemption rights, you will be exchanging your shares of the Company’s Class A common stock for cash and will no longer own
the shares. You will be entitled to receive cash for these shares only if you properly demand redemption and tender your stock
certificate(s) to the Company’s transfer agent prior to 5:00 p.m. Eastern time on September 16, 2020 (two business days before
the Special Meeting). The Company anticipates that a public stockholder who tenders shares for redemption in connection with the
vote to approve the Extension Amendment Proposal would receive payment of the redemption price for such shares soon after the completion
of the Extension Amendment.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion
is a summary of material United States federal income tax considerations for holders of our Class A common stock with respect to
the exercise of redemption rights in connection with the approval of the Extension Amendment Proposal. This summary is based upon
the Internal Revenue Code of 1986, as amended, which we refer to as the “Code”, the regulations promulgated by the
U.S. Treasury Department, current administrative interpretations and practices of the Internal Revenue Service, which we refer
to as the “IRS”, and judicial decisions, all as currently in effect and all of which are subject to differing interpretations
or to change, possibly with retroactive effect. No assurance can be given that the IRS would not assert, or that a court would
not sustain a position contrary to any of the tax considerations described below. This summary does not discuss all aspects of
United States federal income taxation that may be important to particular investors in light of their individual circumstances
and to investors subject to special tax rules including, without limitation:
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a bank, insurance company, or other financial institution;
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a tax-exempt entity, organization, or arrangement;
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a government or any agency, instrumentality, or controlled entity thereof;
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a real estate investment trust;
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an S corporation or other pass-through entity (or an investor in an S corporation or other pass-through
entity);
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a regulated investment company or a mutual fund;
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a “controlled foreign corporation” or a “passive foreign investment company”;
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a dealer or broker in stocks and securities, or currencies;
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a trader in securities that elects mark-to-market treatment;
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a holder of Company Class A common stock that is liable for the alternative minimum tax;
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a holder of Company Class A common stock that received Company Class A common stock through the
exercise of options, warrants, or similar derivative securities or otherwise as compensation;
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a holder of Company Class A common stock that holds Company Class A common stock in a tax-deferred
account (such as an individual retirement account or a plan qualifying under Section 401(k) of the Code);
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a holder of Company Class A common stock that has a functional currency other than the U.S. dollar;
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a holder of Company Class A common stock that holds Company Class A common stock as part of a hedge,
straddle, constructive sale, conversion or other integrated transaction;
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a holder of Company Class A common stock required to accelerate the recognition of any item of
gross income with respect to such Company Class A common stock as a result of such income being recognized on an applicable financial
statement;
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a holder of Company Class A common stock that is a U.S. expatriate or former citizen or long-term
resident of the United States;
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a holder of Company Class A common stock that does not hold Company Class A common stock as a capital
asset within the meaning of Section 1221 of the Code (generally, for investment purposes);
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a holder of Company Class A common stock whose Company Class A common stock may constitute “qualified
small business stock” under Section 1202 of the Code or “Section 1244 stock” for purposes
of Section 1244 of the Code;
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a holder of Company Class A common stock that acquired their shares of Company Class A common stock
in a transaction subject to the gain rollover provisions of Section 1045 of the Code; or
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a holder of Company Class a common stock that owns or has owned, or is deemed to own or to have
owned, more than 5% of Company Class A common stock (except to the extent specifically set forth below).
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In addition, this summary
is limited to investors that hold our Class A common stock as “capital assets” (generally, property held for investment)
under the Code.
If a partnership (including
an entity or arrangement treated as a partnership for United States federal income tax purposes) holds our Class A common stock,
the tax treatment of a partner in such partnership will generally depend upon the status of the partner, the activities of the
partnership and certain determinations made at the partner level. If you are a partner of a partnership holding our Class A common
stock, you are urged to consult your tax advisor regarding the tax consequences of a redemption.
WE URGE HOLDERS
OF OUR CLASS A COMMON STOCK CONTEMPLATING EXERCISE OF THEIR REDEMPTION RIGHTS TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE
UNITED STATES FEDERAL, STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES THEREOF.
U.S. Federal Income Tax Considerations to U.S. Holders
This section is addressed
to U.S. Holders of our Class A common stock that elect to have their Class A common stock of the Company redeemed for cash. For
purposes of this discussion, a “U.S. Holder” is a beneficial owner that so redeems its Class A common stock of the
Company and is:
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an individual who is a United States citizen or resident
of the United States;
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a corporation (including an entity treated as a corporation
for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof
or the District of Columbia;
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an estate the income of which is includible in gross income
for United States federal income tax purposes regardless of its source; or
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a trust (A) the administration of which is subject to the
primary supervision of a United States court and which has one or more United States persons (within the meaning of the Code)
who have the authority to control all substantial decisions of the trust or (B) that has in effect a valid election under applicable
Treasury regulations to be treated as a United States person.
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Redemption of Class A Common Stock
In the event that a
U.S. Holder’s Class A common stock of the Company is redeemed, the treatment of the transaction for U.S. federal income tax
purposes will depend on whether the redemption qualifies as a sale of the Class A common stock under Section 302 of the Code. Whether
the redemption qualifies for sale treatment will depend largely on the total number of shares of our stock treated as held by the
U.S. Holder (including any stock constructively owned by the U.S. Holder as a result of owning warrants) relative to all of our
shares both before and after the redemption. The redemption of Class A common stock generally will be treated as a sale of the
Class A common stock (rather than as a distribution) if the redemption (i) is “substantially disproportionate” with
respect to the U.S. Holder, (ii) results in a “complete termination” of the U.S. Holder’s interest in us or (iii)
is “not essentially equivalent to a dividend” with respect to the U.S. Holder. These tests are explained more fully
below.
In determining whether
any of the foregoing tests are satisfied, a U.S. Holder takes into account not only stock actually owned by the U.S. Holder, but
also shares of our stock that are constructively owned by it. A U.S. Holder may constructively own, in addition to stock owned
directly, stock owned by certain related individuals and entities in which the U.S. Holder has an interest or that have an interest
in such U.S. Holder, as well as any stock the U.S. Holder has a right to acquire by exercise of an option, which would generally
include Class A common stock which could be acquired pursuant to the exercise of the warrants. In order to meet the substantially
disproportionate test, the percentage of our outstanding voting stock actually and constructively owned by the U.S. Holder immediately
following the redemption of Class A common stock must, among other requirements, be less than 80% of our outstanding voting stock
actually and constructively owned by the U.S. Holder immediately before the redemption. There will be a complete termination of
a U.S. Holder’s interest if either (i) all of the shares of our stock actually and constructively owned by the U.S. Holder
are redeemed or (ii) all of the shares of our stock actually owned by the U.S. Holder are redeemed and the U.S. Holder is eligible
to waive, and effectively waives in accordance with specific rules, the attribution of stock owned by certain family members and
the U.S. Holder does not constructively own any other stock. The redemption of the Class A common stock will not be essentially
equivalent to a dividend if a U.S. Holder’s conversion results in a “meaningful reduction” of the U.S. Holder’s
proportionate interest in us. Whether the redemption will result in a meaningful reduction in a U.S. Holder’s proportionate
interest in us will depend on the particular facts and circumstances. However, the IRS has indicated in a published ruling that
even a small reduction in the proportionate interest of a small minority stockholder in a publicly held corporation who exercises
no control over corporate affairs may constitute such a “meaningful reduction.”
If none of the foregoing
tests are satisfied, then the redemption will be treated as a distribution and the tax effects will be as described below under
“U.S. Federal Income Tax Considerations to U.S. Holders — Taxation of Distributions.”
U.S. Holders of our
Class A common stock considering exercising their redemption rights should consult their own tax advisors as to whether the redemption
of their Class A common stock of the Company will be treated as a sale or as a distribution under the Code.
Gain or Loss on a Redemption of Class
A Common Stock Treated as a Sale
If the redemption qualifies
as a sale of Class A common stock, a U.S. Holder must treat any gain or loss recognized as capital gain or loss. Any such capital
gain or loss will be long-term capital gain or loss if the U.S. Holder’s holding period for the Class A common stock so disposed
of exceeds one year. Generally, a U.S. Holder will recognize gain or loss in an amount equal to the difference between (i) the
amount of cash received in such redemption (or, if the Class A common stock is held as part of a unit at the time of the disposition,
the portion of the amount realized on such disposition that is allocated to the Class A common stock based upon the then fair market
values of the Class A common stock and the one half of one warrant included in the unit) and (ii) the U.S. Holder’s adjusted
tax basis in its Class A common stock so redeemed. A U.S. Holder’s adjusted tax basis in its Class A common stock generally
will equal the U.S. Holder’s acquisition cost (that is, the portion of the purchase price of a unit allocated to a share
of Class A common stock or the U.S. Holder’s initial basis for Class A common stock received upon exercise of a whole warrant)
less any prior distributions treated as a return of capital. Long-term capital gain realized by a non-corporate U.S. Holder generally
will be taxable at a reduced rate. The deduction of capital losses is subject to limitations.
Taxation of Distributions
If the redemption does
not qualify as a sale of Class A common stock, the U.S. Holder will be treated as receiving a distribution. In general, any distributions
to U.S. Holders generally will constitute dividends for United States federal income tax purposes to the extent paid from our current
or accumulated earnings and profits, as determined under United States federal income tax principles. Although it is believed that
we presently have no accumulated earnings and profits, it will not be possible to definitely determine whether we will have, as
of the end of our taxable year, any current earnings. If there are no current or accumulated earnings or the amount of the distribution
to the U.S. Holder exceeds his share of earnings and profits, distributions in excess of current and accumulated earnings
and profits will constitute a return of capital that will be applied against and reduce (but not below zero) the U.S. Holder’s
adjusted tax basis in our Class A common stock. Any remaining excess will be treated as gain realized on the sale or other disposition
of the Class A common stock and will be treated as described under “U.S. Federal Income Tax Considerations to U.S. Holders
— Gain or Loss on a Redemption of Class A Common Stock Treated as a Sale.” Dividends we pay to a U.S. Holder that is
a taxable corporation generally will qualify for the dividends received deduction if the requisite holding period is satisfied.
With certain exceptions, and provided certain holding period requirements are met, dividends we pay to a non-corporate U.S. Holder
generally will constitute “qualified dividends” that will be taxable at a reduced rate.
U.S. Federal Income Tax Considerations
to Non-U.S. Holders
This section is addressed
to Non-U.S. Holders of our Class A common stock that elect to have their Class A common stock of the Company redeemed for cash.
For purposes of this discussion, a “Non-U.S. Holder” is a beneficial owner (other than a partnership) that so redeems
its Class A common stock of the Company and is not a U.S. Holder.
Redemption of Class A Common Stock
The characterization
for United States federal income tax purposes of the redemption of a Non-U.S. Holder’s Class A common stock generally will
correspond to the United States federal income tax characterization of such a redemption of a U.S. Holder’s Class A common
stock, as described under “U.S. Federal Income Tax Considerations to U.S. Holders.”
Non-U.S. Holders of
our Class A common stock considering exercising their redemption rights should consult their own tax advisors as to whether the
redemption of their Class A common stock of the Company will be treated as a sale or as a distribution under the Code.
Gain or Loss on a Redemption of Class A Common Stock Treated
as a Sale
If the redemption qualifies
as a sale of Class A common stock, a Non-U.S. Holder generally will not be subject to United States federal income or withholding
tax in respect of gain recognized on a sale of its Class A common stock of the Company, unless:
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the gain is effectively connected with
the conduct of a trade or business by the Non-U.S. Holder within the United States (and, under certain income tax treaties, is
attributable to a United States permanent establishment or fixed base maintained by the Non-U.S. Holder), in which case the Non-U.S.
Holder will generally be subject to the same treatment as a U.S. Holder with respect to the redemption, and a corporate Non-U.S.
Holder may be subject to the branch profits tax at a 30% rate (or lower rate as may be specified by an applicable income tax treaty);
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the Non-U.S. Holder is an individual who
is present in the United States for 183 days or more in the taxable year in which the redemption takes place and certain other
conditions are met, in which case the Non-U.S. Holder will be subject to a 30% tax on the individual’s net capital gain for
the year; or
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we are or have been a “U.S. real
property holding corporation” for United States federal income tax purposes at any time during the shorter of the five-year
period ending on the date of disposition or the period that the Non-U.S. Holder held our Class A common stock, and, in the case
where shares of our Class A common stock are regularly traded on an established securities market, the Non-U.S. Holder has owned,
directly or constructively, more than 5% of our Class A common stock at any time within the shorter of the five-year period preceding
the disposition or such Non-U.S. Holder’s holding period for the shares of our Class A common stock. We do not believe we
are or have been a U.S. real property holding corporation.
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Taxation of Distributions
If the redemption does
not qualify as a sale of Class A common stock, the Non-U.S. Holder will be treated as receiving a distribution. In general, any
distributions we make to a Non-U.S. Holder of shares of our Class A common stock, to the extent paid out of our current or accumulated
earnings and profits (as determined under United States federal income tax principles), will constitute dividends for U.S. federal
income tax purposes and, provided such dividends are not effectively connected with the Non-U.S. Holder’s conduct of a trade
or business within the United States, we will be required to withhold tax from the gross amount of the dividend at a rate of 30%,
unless such Non-U.S. Holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides
proper certification of its eligibility for such reduced rate. Any distribution not constituting a dividend will be treated first
as reducing (but not below zero) the Non-U.S. Holder’s adjusted tax basis in its shares of our Class A common stock and,
to the extent such distribution exceeds the Non-U.S. Holder’s adjusted tax basis, as gain realized from the sale or other
disposition of the Class A common stock, which will be treated as described under “U.S. Federal Income Tax Considerations
to Non-U.S. Holders — Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock.” Dividends
we pay to a Non-U.S. Holder that are effectively connected with such Non-U.S. Holder’s conduct of a trade or business within
the United States generally will not be subject to United States withholding tax, provided such Non-U.S. Holder complies with certain
certification and disclosure requirements. Instead, such dividends generally will be subject to United States federal income tax,
net of certain deductions, at the same graduated individual or corporate rates applicable to U.S. Holders (subject to an exemption
or reduction in such tax as may be provided by an applicable income tax treaty). If the Non-U.S. Holder is a corporation, dividends
that are effectively connected income may also be subject to a “branch profits tax” at a rate of 30% (or such lower
rate as may be specified by an applicable income tax treaty).
As previously noted
above, the foregoing discussion of certain material U.S. federal income tax consequences is included for general information purposes
only and is not intended to be, and should not be construed as, legal or tax advice to any stockholder. We once again urge you
to consult with your own tax adviser to determine the particular tax consequences to you (including the application and effect
of any U.S. federal, state, local or foreign income or other tax laws) of the receipt of cash in exchange for shares in connection
with the Extension Amendment Proposal.
THE SPECIAL MEETING
Overview
Date, Time and Place.
The Special Meeting of the Company’s stockholders will be held at [--]:00 [---] Eastern Time on September 18, 2020 as a virtual
meeting. You will be able to attend, vote your shares and submit questions during the Special Meeting via a live webcast available
at [----------]. The meeting will be held virtually over the internet by means of a live audio webcast. Only stockholders who own
shares of our common stock as of the close of business on the record date will be entitled to attend the virtual meeting.
To register for the
virtual meeting, please follow these instructions as applicable to the nature of your ownership of our common stock.
If your shares are
registered in your name with our transfer agent and you wish to attend the online-only virtual meeting, go to [-----------], enter
the control number you received on your proxy card and click on the “Click here” to preregister for the online meeting
link at the top of the page. Just prior to the start of the meeting you will need to log back into the meeting site using your
control number. Pre-registration is recommended but is not required in order to attend.
Beneficial stockholders
who wish to attend the online-only virtual meeting must obtain a legal proxy by contacting their account representative at the
bank, broker, or other nominee that holds their shares and e-mail a copy (a legible photograph is sufficient) of their legal proxy
to proxy@continentalstock.com. Beneficial stockholders who e-mail a valid legal proxy will be issued a meeting control number that
will allow them to register to attend and participate in the online-only meeting. After contacting our transfer agent a beneficial
holder will receive an e-mail prior to the meeting with a link and instructions for entering the virtual meeting. Beneficial stockholders
should contact our transfer agent at least five business days prior to the meeting date.
Voting Power; Record
Date. You will be entitled to vote or direct votes to be cast at the Special Meeting, if you owned the Company’s Class
A common stock at the close of business on July 29, 2020, the record date for the Special Meeting. You will have one vote per proposal
for each share of the Company’s common stock you owned at that time. The Company’s warrants do not carry voting rights.
Votes Required.
Approval of the Extension Amendment Proposal will require the affirmative vote of holders of at least 65% of the Company’s
common stock outstanding on the record date, including the Founder Shares and the shares of Class A common stock underlying the
Placement Units. If you do not vote or you abstain from voting on a proposal, your action will have the same effect as an “AGAINST”
vote. Broker non-votes will have the same effect as “AGAINST” votes.
At the close of business
on the record date of the Special Meeting, there were 15,490,000 shares of Class A common stock and 5,163,333 shares of Class B
common stock outstanding, each of which entitles its holder to cast one vote per proposal.
If you do not want
the Extension Amendment Proposal approved, you must abstain, not vote, or vote “AGAINST” the Extension Amendment. You
will be entitled to redeem your public shares for cash in connection with this vote whether or not you vote on the Extension Amendment
Proposal so long as you elect to redeem your public shares for a pro rata portion of the funds available in the Trust Account in
connection with the Extension Amendment Proposal. The Company anticipates that a public stockholder who tenders shares for redemption
in connection with the vote to approve the Extension Amendment Proposal would receive payment of the redemption price for such
shares soon after the completion of the Extension Amendment.
Proxies; Board Solicitation;
Proxy Solicitor. Your proxy is being solicited by the Board on the proposals being presented to stockholders at the Special
Meeting. The Company has engaged Morrow Sodali LLC to assist in the solicitation of proxies for the Special Meeting. No recommendation
is being made as to whether you should elect to redeem your public shares. Proxies may be solicited in person or by telephone.
If you grant a proxy, you may still revoke your proxy and vote your shares online at the Special Meeting if you are a holder of
record of the Company’s common stock. You may contact Morrow Sodali LLC at:
Morrow Sodali LLC
470 West Avenue
Stamford, CT 06902
Tel: (800) 662-5200
Banks and brokers can call at (203) 658-9400
Email: INSU.info@investor.morrowsodali.com
Required Vote
The affirmative vote
by holders of at least 65% of the Company’s outstanding shares of common stock, including the Founder Shares and the shares
of Class A common stock underlying the Placement Units, is required to approve the Extension Amendment Proposal. If the Extension
Amendment Proposal is not approved, the Extension Amendment will not be implemented and the Company will be required by its charter
to (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten
business days thereafter subject to lawfully available funds therefor, redeem 100% of the public shares in consideration of a per-share
price, payable in cash, equal to the quotient obtained by dividing (A) the aggregate amount then on deposit in the Trust Account,
including interest (net of taxes payable, less up to $100,000 of such net interest to pay dissolution expenses), by (B) the total
number of then outstanding public shares, which redemption will completely extinguish rights of public stockholders (including
the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of the remaining stockholders and the Board in accordance with applicable
law, dissolve and liquidate, subject in each case to the Company’s obligations under the DGCL to provide for claims of creditors
and other requirements of applicable law. The approval of the Extension Amendment is essential to the implementation of our Board’s
plan to extend the date by which we must consummate our initial business combination. Therefore, our Board will abandon and not
implement such amendment unless our stockholders approve the Extension Amendment Proposal. Notwithstanding stockholder approval
of the Extension Amendment Proposal, our Board will retain the right to abandon and not implement the Extension Amendment at any
time without any further action by our stockholders.
Our Sponsor and all
of our directors, executive officers and their affiliates are expected to vote any common stock owned by them in favor of the Extension
Amendment Proposal. On the record date, our Sponsor, directors and executive officers of the Company and their affiliates beneficially
owned and were entitled to vote an aggregate of 5,148,333 Founder Shares and 375,000 shares of Class A common stock underlying
the Placement Units, representing approximately 26.7% of the Company’s issued and outstanding shares of common stock. Our
Sponsor and our directors, executive officers and their affiliates do not intend to purchase shares of Class A common stock in
the open market or in privately negotiated transactions in connection with the stockholder vote on the Extension Amendment.
Interests of our Sponsor, Directors and Officers
When you consider the
recommendation of our Board, you should keep in mind that our Sponsor, executive officers and members of our Board have interests
that may be different from, or in addition to, your interests as a stockholder. These interests include, among other things:
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the fact that our Sponsor holds 5,103,333 Founder Shares
and 375,000 Placement Units, all such securities beneficially owned by our Chairman, and each of our independent directors holds
15,000 Founder Shares, that would expire worthless if a business combination is not consummated;
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the fact that Cohen & Company, LLC, an affiliate of
our Sponsor, holds a promissory note in the principal amount of up to $750,000 issued in connection with working capital loans
made to the Company that may not be repaid if a business combination is not consummated;
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the fact that, if the Trust Account is liquidated, including
in the event we are unable to complete an initial business combination within the required time period, Cohen & Company, LLC
has agreed to indemnify us to ensure that the proceeds in the Trust Account are not reduced below $10.00 per public share by the
claims of prospective target businesses with which we have entered into an acquisition agreement or claims of any third party
for services rendered or products sold to us, but only if such a third party or target business has not executed a waiver of any
and all rights to seek access to the Trust Account; and
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the fact that none of our officers or directors has received
any cash compensation for services rendered to the Company and all of the current members of our Board are expected to continue
to serve as directors at least through the date of the special meeting to vote on a proposed business combination and may continue
to serve following any potential business combination and receive compensation thereafter.
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The Board’s Reasons for the Extension
Amendment Proposal and Its Recommendation
As discussed below,
after careful consideration of all relevant factors, our Board has determined that the Extension Amendment is in the best interests
of the Company and its stockholders. Our Board has approved and declared advisable adoption of the Extension Amendment Proposal
and recommends that you vote “FOR” such proposal.
Our IPO prospectus
and charter provide that the Company has until September 22, 2020 to complete the purposes of the Company including, but not limited
to, effecting a business combination under its terms. The purpose of the Extension Amendment is to allow the Company more time
to complete its initial business combination. On June 29, 2020, the Company entered into the Merger Agreement among the Company,
Merger Sub, and Shift, providing for the Company’s initial business combination. However our Board currently believes that
there may not be sufficient time before September 22, 2020 to complete a business combination. The Company’s IPO prospectus
and charter state that if the Company’s stockholders approve an amendment to the Company’s charter that would affect
the substance or timing of the Company’s obligation to redeem 100% of the Company’s public shares if it does not complete
a business combination before September 22, 2020, the Company will provide its public stockholders with the opportunity to redeem
all or a portion of their public shares upon such approval at a per share price, payable in cash, equal to the aggregate amount
then on deposit in the Trust Account, including interest (which interest shall be net of taxes payable), divided by the number
of then outstanding public shares. We believe that this charter provision was included to protect the Company stockholders from
having to sustain their investments for an unreasonably long period if the Company failed to find a suitable business combination
in the timeframe contemplated by the charter.
In addition, the
Company’s IPO prospectus and charter provide that the affirmative vote of the holders of at least 65% of all
outstanding shares of common stock, including the Founder Shares and the shares of Class A common stock underlying the
Placement Units, is required to extend our corporate existence, except in connection with, and effective upon the
consummation of, a business combination. We believe that, given the Company’s expenditure of time, effort and money on
the potential business combination, circumstances warrant providing public stockholders an opportunity to consider a business
combination. Because we continue to believe that a business combination would be in the best interests of our stockholders
and because we will not be able to conclude a business combination within the permitted time period, the Board has determined
to seek stockholder approval to extend the date by which we have to complete a business combination beyond September 22, 2020
to the Extended Date.
The Company is not
asking you to vote on the proposed business combination with Shift or any potential business transaction at this time. If the Extension
is implemented and you do not elect to redeem your public shares, you will retain the right to vote on any proposed business combination
in the future and the right to redeem your public shares at a per-share price, payable in cash, equal to the aggregate amount then
on deposit in the Trust Account, including interest (which interest shall be net of taxes payable), divided by the number of then
outstanding public shares, in the event a business combination is approved and completed or the Company has not consummated a business
combination by the Extended Date.
After careful consideration
of all relevant factors, the Board determined that the Extension Amendment is in the best interests of the Company and its stockholders.
Recommendation of the Board
Our Board unanimously
recommends that our stockholders vote “FOR” the approval of the Extension Amendment Proposal.
THE ADJOURNMENT PROPOSAL
Overview
The Adjournment Proposal,
if adopted, will allow our Board to adjourn the Special Meeting to a later date or dates to permit further solicitation of proxies.
The Adjournment Proposal will only be presented to our stockholders in the event that there are insufficient votes for, or otherwise
in connection with, the approval of the Extension Amendment Proposal. In no event will our Board adjourn the Special Meeting beyond
September 22, 2020.
Consequences if the Adjournment Proposal
is Not Approved
If the Adjournment
Proposal is not approved by our stockholders, our Board may not be able to adjourn the Special Meeting to a later date in the event
that there are insufficient votes for, or otherwise in connection with, the approval of the Extension Amendment Proposal.
Vote Required for Approval
The approval of the
Adjournment Proposal requires the affirmative vote of the majority of the votes cast by stockholders represented in person or by
proxy at the Special Meeting. Accordingly, if a valid quorum is otherwise established, a stockholder’s failure to vote by
proxy or online at the Special Meeting will have no effect on the outcome of any vote on the Adjournment Proposal. Abstentions
will be counted in connection with the determination of whether a valid quorum is established but will have no effect on the outcome
of the Adjournment Proposal.
Recommendation of the Board
Our Board unanimously
recommends that our stockholders vote “FOR” the approval of the Adjournment Proposal.
STOCKHOLDER PROPOSALS
No date for the Company’s
next annual meeting of stockholders (the “Annual Meeting”) has been set. If the Extension Amendment Proposal is
approved, we anticipate that the Annual Meeting will likely be held on or before the Extended Date in connection with any proposed
business combination. For any proposal to be considered for inclusion in our proxy statement and form of proxy for submission to
the stockholders at the Annual Meeting, it must be submitted in writing and comply with the requirements of Rule 14a-8 of the Exchange
Act. Such proposals must be received by the Company’s secretary at its principal executive offices located at 2929 Arch Street,
Suite 1703, Philadelphia, Pennsylvania 19104. In addition, our bylaws provide notice procedures for stockholders to nominate a
person as a director and to propose business to be considered by stockholders at a meeting.
For any proposal for
other business (other than a nomination) to be properly brought before a meeting by a stockholder, the stockholder must have given
timely notice thereof in writing to our secretary at our principal executive offices and any such other business must otherwise
be a proper matter for action by the stockholders. To be timely, a stockholder’s notice must be received by us not later
than the close of business on the 90th day or earlier than the opening of business on the 120th day before the anniversary date
for the immediately preceding year’s annual meeting of stockholders; provided, however, that in the event that the annual
meeting is called for a date that is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder
to be timely must be so received not earlier than the close of business on the 120th day before the meeting and not later than
the later of (x) the close of business on the 90th day before the meeting or (y) the close of business on the 10th day following
the day on which public announcement of the date of the annual meeting is first made by us.
For any director nomination
to be properly brought before a meeting by a stockholder, the stockholder must have given timely notice thereof in writing to our
secretary at our principal executive offices. To be timely, a stockholder’s notice must be received not later than the close
of business on the 90th day or earlier than the close of business on the 120th day before the anniversary date for the immediately
preceding year’s annual meeting of stockholders; provided, however, that in the event that the annual meeting is more than
30 days before or more than 60 days after such anniversary date, to be timely a stockholder’s notice must be received not
earlier than the close of business on the 120th day before the annual meeting and not later than the later of (1) the close
of business on the 90th day before the annual meeting or (2) the close of business on the 10th day following the day on which
public announcement of the date of the annual meeting is first made by us.
Nominations and proposals
also must satisfy other requirements set forth in the bylaws. The Chairman of the Board may refuse to acknowledge the introduction
of any stockholder proposal not made in compliance with the foregoing procedures.
If the Extension Amendment
Proposal is not approved and the Company fails to complete a qualifying business combination on or before September 22, 2020, there
will be no Annual Meeting.
HOUSEHOLDING INFORMATION
Unless we have received
contrary instructions, we may send a single copy of this Proxy Statement to any household at which two or more stockholders reside
if we believe the stockholders are members of the same family. This process, known as “householding”, reduces the volume
of duplicate information received at any one household and helps to reduce our expenses. However, if stockholders prefer to receive
multiple sets of our disclosure documents at the same address this year or in future years, the stockholders should follow the
instructions described below. Similarly, if an address is shared with another stockholder and together both of the stockholders
would like to receive only a single set of our disclosure documents, the stockholders should follow these instructions:
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If the shares are registered in the name of the stockholder,
the stockholder should contact us at our offices at 2929 Arch Street, Suite 1703, Philadelphia, Pennsylvania 19104, or (215) 701-9555,
to inform us of his or her request;; or
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If a bank, broker or other nominee holds the shares, the
stockholder should contact the bank, broker or other nominee directly.
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WHERE YOU CAN FIND MORE INFORMATION
The Company files annual,
quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains an Internet web site that
contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically
with the SEC. The public can obtain any documents that we file electronically with the SEC at www.sec.gov.
If you would like additional
copies of this Proxy Statement or if you have questions about the proposals to be presented at the Special Meeting, you should
contact the Company’s proxy solicitation agent at the following address and telephone number:
Morrow Sodali LLC
470 West Avenue
Stamford, CT 06902
Tel: (800) 662-5200
Banks and brokers can call at (203) 658-9400
Email: INSU.info@investor.morrowsodali.com
You may also obtain
these documents by requesting them from the Company at our offices at 2929 Arch Street, Suite 1703, Philadelphia, Pennsylvania
19104, or by telephone at (215) 701-9555.
If you are a stockholder
of the Company and would like to request documents, please do so by ________, 2020, in order to receive them before the Special
Meeting. If you request any documents from us, we will mail them to you by first class mail, or another equally prompt means.
ANNEX A
PROPOSED AMENDMENT
TO THE
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
INSURANCE ACQUISITION CORP.
Pursuant to Section 245 of the
Delaware General Corporation Law
INSURANCE ACQUISITION CORP. (the
“Corporation”), a corporation organized and existing under the laws of the State of Delaware, does hereby certify as
follows:
1. The
name of the Corporation is Insurance Acquisition Corp. The Corporation’s Certificate of Incorporation was filed in the office
of the Secretary of State of the State of Delaware on March 13, 2018, as amended December 26, 2018 (the “Original Certificate
as Amended”). An Amended and Restated Certificate of Incorporation, which both restated and amended the provisions of the
Original Certificate as Amended, was filed in the office of the Secretary of State of the State of Delaware on March 20, 2019 (the
“Amended and Restated Certificate of Incorporation”).
2. This
Amendment to the Amended and Restated Certificate of Incorporation amends the Amended and Restated Certificate of Incorporation
of the Corporation.
3. This
Amendment to the Amended and Restated Certificate of Incorporation was duly adopted by the affirmative vote of the holders of 65%
of the stock entitled to vote at a meeting of stockholders in accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware (the “DGCL”).
4. The
text of Section 9.01(b) of Article IX is hereby amended and restated to read in full as follows:
(b) Immediately after the Offering, a certain
amount of the net offering proceeds received by the Corporation in the Offering (including the proceeds of any exercise of the
underwriters’ over-allotment option) and certain other amounts specified in the Corporation’s registration statement
on Form S-1, as initially filed with the Securities and Exchange Commission (the “SEC”) on February 19, 2019, as amended
(the “Registration Statement”), shall be deposited in a trust account (the “Trust Account”), established
for the benefit of the Public Stockholders (as defined below) pursuant to a trust agreement described in the Registration Statement.
Except for the withdrawal of interest to pay franchise and income taxes, none of the funds held in the Trust Account (including
the interest earned on the funds held in the Trust Account) will be released from the Trust Account until the earliest to occur
of (i) the completion of the initial Business Combination, (ii) the redemption of 100% of the Offering Shares (as defined below)
if the Corporation is unable to complete its initial Business Combination by January 11, 2021 and (iii) the redemption of shares
in connection with a vote seeking to amend any provisions of the Amended and Restated Certificate relating to stockholders’
rights or pre-initial Business Combination activity (as described in Section 9.07). Holders of shares of Common Stock included
as part of the units sold in the Offering (the “Offering Shares”) (whether such Offering Shares were purchased in the
Offering or in the secondary market following the Offering and whether or not such holders are Insurance Acquisition Sponsor, LLC
or Dioptra Advisors, LLC (the “Sponsor”) or officers or directors of the Corporation, or affiliates of any of the foregoing)
are referred to herein as “Public Stockholders.”
5. The
text of Section 9.02(d) of Article IX is hereby amended and restated to read in full as follows:
(d) In the event that the Corporation has
not consummated an initial Business Combination by January 11, 2021, the Corporation shall (i) cease all operations except for
the purpose of winding up, (ii) as promptly as reasonably possible, but in any event no later than ten (10) business days thereafter,
subject to lawfully available funds therefor, redeem 100% of the Offering Shares in consideration of a per-share price, payable
in cash, equal to the quotient obtained by dividing (A) the aggregate amount then on deposit in the Trust Account, including any
amounts representing interest earned on the Trust Account, less interest previously released to, or reserved for use by, the Corporation
in an amount up to $100,000 to pay dissolution expenses and less any other interest released to, or reserved for use by, the Corporation
to pay franchise and income taxes, by (B) the total number of then outstanding Offering Shares, which redemption will completely
extinguish rights of the Public Stockholders (including the right to receive further liquidating distributions, if any), subject
to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining
stockholders and the Board in accordance with applicable law, dissolve and liquidate, subject in each case to the Corporation’s
obligations under the DGCL to provide for claims of creditors and other requirements of applicable law.
6. The
text of Section 9.07 of Article IX is hereby amended and restated to read in full as follows:
Section
9.7 Additional Redemption Rights. If, in accordance with Section 9.01(a), any amendment is made to Section 9.02(d) to
modify the substance or timing of the Corporation’s obligation to redeem 100% of the Offering Shares if the Corporation
has not consummated an initial Business Combination by January 11, 2021, the Public Stockholders shall be provided with the
opportunity to redeem their Offering Shares upon the approval of any such amendment, at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the Trust Account, including any amounts representing interest earned on the
Trust Account, less any interest previously released to, or reserved for use by, the Corporation to pay franchise and income
taxes , divided by the number of then outstanding Offering Shares; provided, however, that any such amendment will be voided,
and this Article IX will remain unchanged, if any stockholders who wish to redeem are unable to redeem due to the Redemption
Limitation.
IN WITNESS WHEREOF,
Insurance Acquisition Corp. has caused this Amendment to the Amended and Restated Certificate to be duly executed in its name and
on its behalf by an authorized officer as of this ___ day of September, 2020.
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INSURANCE ACQUISITION CORP.
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By:
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Name:
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John M. Butler
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Title:
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President and Chief Executive Officer
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INSURANCE ACQUISITION CORP.