General
We
are an early stage blank check company recently formed as a Delaware corporation for the purpose of effecting a merger, share
exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which
we refer to throughout this Report as our initial business combination. As discussed below, True Wind Capital is a technology-focused private
investment firm, and we are a portfolio investment held in True Wind Capital II, True Wind Capital’s most recent investment
fund. Our Chief Executive Officer, Mr. Adam H. Clammer, and our Chairman, Mr. James H. Greene, Jr., are the founding
partners of True Wind Capital. We expect to capitalize on the ability of our management team and the broader True Wind Capital
platform to identify, acquire, and operate a business in the technology and technology-enabled services sectors that may
provide opportunities for attractive long-term risk-adjusted returns, though we reserve the right to pursue an acquisition
opportunity in any business or industry.
True
Wind Capital
True Wind Capital is
a San Francisco-based private equity firm managing $1.4 billion as of September 2020 that is focused on investing in
leading technology companies with a broad mandate including software, financial technology, industrial technology, healthcare IT,
internet, semiconductors, and IT services. True Wind Capital is a value-added partner, providing support and expertise that
is rooted in its teams’ 75+ years of collective investing experience. True Wind Capital currently has a team of 15 full-time investment
professionals with deep technology investing expertise.
We
are a portfolio investment held in True Wind Capital II, True Wind Capital’s most recent investment fund, which has provided
all of the risk capital to fund our launch. As such, we have utilized True Wind Capital’s platform to provide complete access
to its team, deal prospects, and network, along with any necessary resources to aid in the identification, diligence, and operational
support of a target for the initial business combination. True Wind Capital’s principals, including our Chief Executive
Officer, Mr. Adam H. Clammer and our Chairman, Mr. James H. Greene, Jr., are required under the partnership agreements
of True Wind Capital II, subject to certain exceptions, to dedicate substantially all of their business time to the affairs of
True Wind Capital and its affiliates, including True Wind Capital II and its portfolio companies. As a portfolio investment of
True Wind Capital II, we receive substantial time and support from the True Wind Capital platform.
True
Wind Capital was instrumental in launching Nebula Acquisition Corporation (“Nebula”), a special purpose acquisition
company that completed its initial public offering in January 2018 in which it sold 27,500,000 units, each consisting of one share
of Nebula common stock and one-third of one warrant to purchase one share of Nebula common stock for an offering price of
$10.00 per unit, generating aggregate proceeds of $275,000,000. True Wind Capital sourced several acquisition targets for Nebula,
which completed a business combination in June 2020 with Open Lending, a provider of lending enablement and risk analytics solutions
to financial institutions. In addition to the proceeds from the initial public offering, Nebula contributed another $200 million
in proceeds from a private placement completed at the time of the initial business combination. Open Lending’s common shares
trade on Nasdaq under the symbol “LPRO.” The closing price of LPRO on October 1, 2020 was $26.84 per share. Including
the warrants underlying the units, the return to investors who purchased units in Nebula’s initial public offering was 3.2x
multiple of invested capital and an IRR of 53% through October 1, 2020. The performance of LPRO may not be indicative of
our management team’s ability to successfully find a target business and to consummate an initial business combination.
True
Wind Capital is also the platform used by TWC Tech Holdings II Corp. (NASDAQ: TWCT), a blank check company which raised an aggregate
of $600.0 million in its initial public offering (including exercise of the over-allotment option) in September 2020,
which is currently searching for a target business with which to consummate its initial business combination. In connection with
its initial public offering, TWC Tech Holdings II Corp. also entered into forward purchase agreements with several institutional
accredited investors that provide for the aggregate purchase of at least $100,000,000 of Class A common stock at $10.00 per
share. Each member of our management team, except David Kerko, is a member of the management team of TWC Tech Holdings II Corp.
Business Combination
On February 10, 2021, we
entered into a Business Combination Agreement and Plan of Merger (the “Business Combination Agreement”) with Fetch
Merger Sub, Inc., a Delaware corporation and direct wholly-owned subsidiary of the Company (“Merger Sub”), and A Place
for Rover, Inc., a Delaware corporation (“Rover”), providing for, among other things, and subject to the terms and
conditions therein, a business combination between the Company and Rover pursuant to which, among other things, (i) Merger Sub
will merge with and into Rover, the separate corporate existence of Merger Sub will cease and Rover will continue as the surviving
corporation in the merger and a wholly owned subsidiary of the Company and (ii) the Company will change its name to “Rover
Group, Inc.” (together with the other transactions related thereto, the “Proposed Transactions”). Rover is the
world’s largest online marketplace for pet care. Rover connects pet parents with caring pet care providers who offer overnight
services, including boarding and in-home pet sitting, as well as daytime services, including doggy daycare, dog walking, drop-in
visits, and grooming. Following the Proposed Transactions, it is expected that Rover’s common shares will be listed on The
Nasdaq Capital Market.
Consummation of the transactions
contemplated by the Business Combination Agreement is subject to customary conditions of the respective parties, including the
approval of the Proposed Transactions by the Company’s stockholders in accordance with the Company’s amended and restated
certificate of incorporation and the completion of a redemption offer whereby the Company will be providing its public stockholders
with the opportunity to redeem their shares of Class A common stock for cash equal to their pro rata share of the aggregate amount
on deposit in the Company’s trust account.
Concurrently with the
execution of the Business Combination Agreement, we entered into a backstop subscription agreement with True Wind Capital II, L.P.
and True Wind Capital II-A, L.P. (together, the “TWC Funds”) (the “Sponsor Backstop Subscription Agreement”),
pursuant to which the TWC Funds agreed to, among other things, purchase shares of our common stock in an aggregate amount of up
to $50,000,000 (or such greater amount at the election of the TWC Funds) to the extent of the amount of redemptions of shares of
our common stock. The TWC Funds also agreed to purchase additional shares of our common stock in an aggregate amount of up to $50,000,000
if mutually agreed with Rover.
Concurrently with the
execution of the Business Combination Agreement, certain accredited investors (the “PIPE Investors”), entered into
subscription agreements (the “PIPE Subscription Agreements”) pursuant to which the PIPE Investors have committed to
purchase 5,000,000 shares of our common stock (the “PIPE Shares”) at a purchase price per share of $10.00 and an aggregate
purchase price of $50,000,000 (the “PIPE Investment”). The purchase of the PIPE Shares is conditioned upon, and will
be consummated concurrently with, the closing of the initial business combination. Certain offering related expenses are payable
by us, including customary fees payable to the placement agents, Deutsche Bank Securities and Morgan Stanley & Co. LLC. The
purpose of the sale of the PIPE Shares is to raise additional capital for use in connection with the Proposed Transactions and
to meet the minimum cash requirements provided in the Business Combination Agreement.
Concurrently with the
execution of the Business Combination Agreement, we entered into stockholder support agreements with Rover and certain stockholders
of Rover (the “Rover Holders Support Agreements”), pursuant to which such stockholders agreed to approve the Business
Combination Agreement and the Proposed Transactions.
Concurrently with the
execution of the Business Combination Agreement, our Sponsor, Rover and the Persons set forth on Schedule I thereto (such Persons,
together with our Sponsor, the “Sponsor Parties”) entered into a sponsor support agreement (the “Sponsor Support
Agreement”), pursuant to which, among other things, (i) each Sponsor Party and each of our directors agreed to vote to adopt
and approve the Business Combination Agreement and all other documents and transactions contemplated thereby, (ii) each Sponsor
Party agreed to deliver a duly executed copy of the Investors Rights Agreement and the Lock-Up Agreement (as defined below) at
the closing of our initial business combination and (iii) each Sponsor Party agreed to subject certain shares of our common stock
and warrants to purchase our common stock to certain vesting and forfeiture provisions based on the number of stockholders (if
any) that exercise their rights to redeem their shares of our common stock pursuant to our certificate of incorporation and, following
the closing of our initial business combination, based on the achievement of certain trading price targets following the closing
of our initial business combination, in each case subject to the terms and conditions of our Sponsor Support Agreement.
At the closing of our
initial business combination, we will enter into an investors rights agreement (the “Investors Rights Agreement”) with
our Sponsor, certain affiliates of our Sponsor and certain Rover stockholders, pursuant to which, among other things, (i) we will
agree to register for resale, pursuant to Rule 415 under the Securities Act, certain shares of our common stock and other equity
securities of the Company that are held by the parties thereto from time to time, (ii) in the event that we sell Backstop Shares
(as defined in the Investor Rights Agreement) with an aggregate purchase price of at least $15 million, we will include one individual
designated by our Sponsor in the slate of nominees recommended by our Board of Directors (or duly constituted committee thereof)
for election as directors at each annual meeting of stockholders at which such nominee’s term expires, subject to our Sponsor
and its Affiliates (as defined in the Business Combination Agreement) beneficially owning a certain minimum number of shares of
our common stock and (iii) we will waive the corporate opportunities doctrine with respect to our Sponsor, its affiliates (including
portfolio companies), their respective investors and the director nominees of the foregoing.
At the closing of our
initial business combination, we will enter into a lock-up agreement with our Sponsor, certain affiliates of our Sponsor and certain
Rover stockholders (the “Lock-Up Agreement”) containing restrictions on transfer with respect to shares of our common
stock held by each such holder (subject to certain exceptions, the “Lock-Up Shares”) for a period ending on the date
that is 6 months after the date the closing of our initial business combination occurs, provided that, if during such 6 month period
the volume weighted average price of our common stock is greater than or equal to $16.00 over any twenty trading days within any
thirty trading day period (“Triggering Event III”), 50% of each applicable holder’s Lock-Up Shares shall be released
from such lock-up on the later of (i) Triggering Event III and (ii) the date that is 90 days after the closing under the Business
Combination Agreement. In addition, Rover equityholders will be subject to substantially similar lock-up terms pursuant to our
amended and restated bylaws following the closing of our initial business combination.
The Business Combination
Agreement and related agreements are further described in the Form 8-K filed by the Company on February 11, 2021.
Other than as specifically discussed, this report does not assume
the closing of the Proposed Transactions.
Business
Strategy
Our
business strategy is to utilize True Wind Capital’s existing investment identification and evaluation platform to identify
and complete our initial business combination with a company that our management believes, with proper utilization of our network
and experience, has a compelling potential for value creation through our involvement. The True Wind Capital team leverages their
vast investment experience, deep network and technology industry expertise to identify and generate attractive acquisition opportunities
among technology companies with overall transaction values between $750 million and $2.5 billion. To the extent the
purchase price for any acquisition to be paid in cash exceeds the net proceeds available to us, we may issue debt or equity to
consummate the acquisition. Such additional financing may come in the form of bank financings or preferred equity, common equity
or debt offerings or a combination of the foregoing. We believe True Wind’s experience and track record, along with its
disciplined direct sourcing and thematic research approach, are particularly differentiated, and will enable us to successfully
identify and execute an initial business combination. We leverage True Wind Capital’s extensive network of relationships,
ranging from senior executives at public and private companies to financial advisory firms around the globe, to assist in the
identification of a target for the initial business combination. True Wind Capital intends to dedicate its time and resources
to conduct diligence in an effort to complete an initial business combination.
True
Wind Capital and our management team has experience in:
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Operating
companies, setting and changing strategies, and identifying, mentoring and recruiting exceptional talent;
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Developing
and growing companies, both organically and through strategic transactions and acquisitions, and expanding the product range and
geographic footprint of a number of target businesses;
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Investing
in leading private and public technology companies to accelerate their growth and maturation;
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Sourcing,
structuring, acquiring, and selling businesses;
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Accessing
the capital markets, including financing businesses and helping companies transition to public ownership; and
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Fostering
relationships with sellers, capital providers and target management teams.
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Market
Opportunity
We
are pursuing opportunities with private, high-growth, and high-quality technology companies with an overall transaction value
between $750 million and $2.5 billion. Given our management team’s extensive and diverse technology investing
experience, we are seeking opportunities in software, hardware, and tech-enabled services businesses across a range of different
sectors and end-markets. Furthermore, we are open to combining with businesses that are owned by founders and minority investors,
private equity firms, and family-owned businesses. Private technology companies are at the forefront of innovation and have
been driving disruption in legacy industries at an unprecedented pace, creating brand new markets and business models in the process.
We believe that as these companies continue to scale, their addressable markets continue to expand, and they reach financial maturity,
they will make fundamentally attractive long-term investments that will drive shareholder value creation. We believe that
our mandate provides us with a broad pool of potential opportunities to complete an initial business combination with.
There
has been a significant increase in the amount of capital available and deployed in private markets in recent years, not only from
traditional venture capital firms but also other types of investors including hedge funds, mutual funds, and sovereign wealth
funds. This has not only driven private technology company valuations higher but has resulted in them staying private longer as
these companies now have greater access to growth capital and liquidity that the traditional IPO process has typically provided.
We estimate that there are over 400+ private technology companies globally with a valuation, as of the last round of financing,
in excess of $1 billion, which is more than double the number from four years prior. However, we believe that there are significant
benefits to companies from being publicly traded at a certain stage of their development. These include increased brand awareness
and development, the ability to create acquisition currency to pursue inorganic growth, and increased access to capital markets.
We
believe that combining with a blank check company, especially one with a management team with extensive technology investing experience,
will inherently be an attractive mechanism to go public. Given the current volatility experienced in both the stock market and
debt capital markets as a result of the COVID-19 pandemic, it has become increasingly difficult for high-quality businesses
that want to go public to do so on favorable terms. First, a traditional IPO process is inherently an inefficient mechanism for
price discovery as pricing and terms of an offering remain unknown until the day of pricing of the offering, resulting in uncertainty
of proceeds and valuation. Second, the traditional IPO book-build process can result in allocation decisions that leave companies
with sub-optimal or short-term focused investors that further drive volatility and hinder management’s ability
to drive long-term shareholder value creation. Furthermore, the nature of the IPO process, including sizeable regulatory
requirements and document drafting, selection of underwriters, and investor roadshows and engagements, serves as an expensive
distraction to management from the day-to-day operations of their business, especially in the current COVID-19 environment.
We believe blank check companies provide a transparent and efficient mechanism to go public due to their ability to finalize terms
of a transaction with a target prior to public disclosure and provide companies with a stable base of long-term focused investors
that have conducted significant due diligence. Our previous involvement with Nebula and its combination with Open Lending (NASDAQ:
LPRO), and our management team’s collective 50+ years of technology investing experience, provides us with significant
differentiation in looking for combination opportunities compared to other technology-focused blank check companies.
Investment
Criteria
We
seek to identify companies that have compelling growth potential and a combination of the following characteristics. We use these
criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter our initial business combination with
a target business that does not meet these criteria and guidelines. We intend to acquire companies or assets that we believe have
the following attributes:
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Large
and growing market. We focus on investments in industry segments that we believe demonstrate attractive
long-term growth prospects and reasonable overall size or potential;
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Attractive,
inherently profitable business with high operating leverage. We seek to invest in companies that we
believe possess not only established business models and sustainable competitive advantages, but also inherently profitable unit
economics;
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Strong
management teams. We spend significant time assessing a company’s leadership and personnel and evaluating what we
can do to augment and/or upgrade the team over time if needed;
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Opportunity for
operational improvements. We seek to identify businesses that we believe are stable but at an inflection point and would
benefit from our ability to drive improvements in the company’s processes, go-to-market strategy, product or
service offering, sales and marketing efforts, geographical presence and/or leadership team;
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Differentiated
products or services. We evaluate metrics such as recurring revenues, product life cycle, cohort consistency,
pricing per product or customer, cross-sell success and churn rates to focus on businesses whose products or services are
differentiated or where we see an opportunity to create value by implementing best practices;
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Compelling
growth prospects. We view growth as an important driver of value and seek companies whose growth potential
can generate meaningful upside;
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Minimal
technology risk. We seek to invest in companies that have established market-tested product or
service offerings; and
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Appropriate
valuations. We seek to be a disciplined and valuation-centric investor that invests on terms that
we believe provide significant upside potential with limited downside risk.
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These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination
may be based, to the extent relevant, on these general guidelines as well as on other considerations, factors and criteria that
our management may deem relevant. In the event that we decide to enter into our initial business combination with a target business
that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria
in our stockholder communications related to our initial business combination, which, as discussed in this Report, would be in
the form of tender offer documents or proxy solicitation materials that we would file with the SEC.
Our
Management Team
Our
management team is led by our Chief Executive Officer, Mr. Clammer, and our Chairman, Mr. Greene, who are also the founding
partners of True Wind Capital, who have worked together for over twenty years and who, collectively, have more than 50 years of
private equity investing experience. We believe that they constitute one of the longest standing and most successful partnerships
in technology private equity investing. Prior to founding True Wind Capital, Mr. Clammer and Mr. Greene were founding
partners of the Kohlberg Kravis Roberts & Co. (“KKR”) Global Technology Group in 2004. At KKR, Mr. Clammer
and Mr. Greene played a major role in over 30 platform investments with total transaction values in excess of $75 billion
and more than $15 billion of invested equity, and were involved in investments across geographies, through a variety of different
structures and amidst diverse economic cycles. These investments included some of the largest and most complex private equity
deals in the technology industry. Success at this level requires the highest degree of diligence, financial and market analyses,
process management, structuring abilities, operational knowhow and investment acumen.
As
pioneers in the technology private equity industry, Mr. Clammer and Mr. Greene were required to build the KKR platform
organically. This included: (i) building an exceptional investment team; (ii) creating and fostering relationships with industry
leaders and bankers; (iii) formulating and executing new investment theses; (iv) developing and refining due diligence processes
appropriate for highly technical businesses and markets; and (v) building networks of operating executives and knowledgeable
advisors to rely on for investment input and portfolio management support. More recently, and without the benefit of the KKR brand,
Mr. Clammer and Mr. Greene launched True Wind Capital, creating another exceptional team and raising a $558 million
first time fund. Since the final close in January 2017, True Wind Capital has completed investments in six technology platforms
and numerous add-on acquisitions across a range of structures and types including leveraged buyouts, management buyouts,
growth equity, PIPEs, public-take-privates, and carve-outs.
Our
management team is supported by True Wind Capital’s team of investment professionals who each have meaningful technology-related private
equity and growth equity investing experience and possess extensive experience in corporate finance, mergers and acquisitions,
equity and debt capital markets, strategic consulting, and operations. We believe that True Wind Capital’s operating expertise,
transaction experience, and relationships provide us with a substantial number of attractive potential business combination targets.
The
past performance of our management team or of True Wind Capital is not a guarantee either (i) of success with respect to any business
combination we may consummate or (ii) that we will be able to identify a suitable candidate for our initial business combination.
You should not rely on the historical record of our management’s performance as indicative of our future performance.
Our
Acquisition Process
True
Wind Capital believes that conducting comprehensive due diligence on prospective investments is particularly important within
the technology industry. We have utilized and will continue to utilize the diligence, rigor, and expertise of True Wind Capital’s
platform to evaluate potential targets’ strengths, weaknesses, and opportunities to identify the relative risk and return
profile of any potential target for our initial business combination. Given our management team’s extensive tenure investing
in technology companies, we are familiar with the prospective target’s end-market, competitive landscape and business model.
In
evaluating a prospective initial business combination, we have conducted and will continue to conduct a thorough diligence review
that encompasses, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities,
financial analyses and technology reviews, as well as a review of other information that will be made available to us.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with True Wind Capital, our
sponsor, our officers, or our directors, subject to certain approvals and consents. In the event we seek to complete our initial
business combination with a company that is affiliated with True Wind Capital, our sponsor, officers or directors, we, or a committee
of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA or an
independent accounting firm that our initial business combination is fair to us from a financial point of view. Currently, we
are not aware of an affiliate of True Wind Capital that would make a suitable target for our initial business combination.
Members
of our management team may directly or indirectly own our securities, and accordingly, they may have a conflict of interest in
determining whether a particular target business is an appropriate business with which to effectuate our initial business combination.
Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination
if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement
with respect to our initial business combination.
Each
of our officers and directors presently has, and many of them in the future may have additional, fiduciary, contractual or other
obligations or duties to one or more other entities pursuant to which such officer or director is or will be required to present
a business combination opportunity to such entities, including TWC Tech Holdings II Corp. Our amended and restated certificate
of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless
(i) such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company,
(ii) such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us
to pursue and (iii) the director or officer is permitted to refer the opportunity to us without violating another legal obligation.
Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for one
or more entities to which he or she has fiduciary, contractual or other obligations or duties, including TWC Tech Holdings II
Corp., he or she will honor these obligations and duties to present such business combination opportunity to such entities first,
and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us. We
do not believe, however, that the fiduciary, contractual or other obligations or duties of our officers or directors will materially
affect our ability to complete our initial business combination, aside from TWC Tech Holdings II Corp.
We
have entered into forward purchase agreements with the forward purchasers that provide for the aggregate purchase of at least
$100,000,000 of Class A common stock at $10.00 per share, in a private placement that will close concurrently with the closing
of our initial business combination. The forward purchasers’ commitments under the forward purchase agreements are subject
to certain conditions as described herein. The obligations under the forward purchase agreements will not depend on whether any
shares of Class A common stock are redeemed by our public stockholders. The forward purchasers will not receive any warrants
as part of the forward purchase agreements; these shares will be identical to the shares of Class A common stock included
in the units being sold in our initial public offering, except that the forward purchase shares will be subject to certain transfer
restrictions and have certain registration rights, as described herein.
Our
sponsor, officers, directors and True Wind Capital may participate in the formation of, or become an officer or director of, any
other blank check company prior to completion of our initial business combination. As a result, our sponsor, officers, directors
and True Wind Capital could have conflicts of interest in determining whether to present business combination opportunities to
us or to any other blank check company with which they may become involved. Although we have no formal policy in place for vetting
potential conflicts of interest, our board of directors will review any potential conflicts of interest on a case-by-case basis.
Initial
Business Combination
Nasdaq
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of
the value of the assets held in the trust account (net of amounts disbursed to management for working capital purposes and excluding
the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at the time of our signing
a definitive agreement in connection with our initial business combination. If our board of directors is not able to independently
determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment
banking firm that is a member of FINRA or from an independent accounting firm, with respect to the satisfaction of such criteria.
We do not currently intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination,
although there is no assurance that will be the case. Additionally, pursuant to Nasdaq rules, any initial business combination
must be approved by a majority of our independent directors.
We
anticipate structuring our initial business combination either (i) in such a way so that the post-transaction company in
which our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or
businesses, or (ii) in such a way so that the post-transaction company owns or acquires less than 100% of such interests
or assets of the target business in order to meet certain objectives of the target management team or stockholders, or for other
reasons. However, we will only complete an initial business combination if the post-transaction company owns or acquires
50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient
for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company
owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the initial business combination
may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target
and us in the initial business combination. For example, we could pursue a transaction in which we issue a substantial number
of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling
interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately
prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business
combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the
post-transaction company, the portion of such business or businesses that is owned or acquired is what will be taken into
account for purposes of Nasdaq’s 80% fair market value test. If the initial business combination involves more than one
target business, the 80% fair market value test will be based on the aggregate value of all of the transactions and we will treat
the target businesses together as the initial business combination for purposes of a tender offer or for seeking stockholder approval,
as applicable.
Our
amended and restated certificate of incorporation requires the affirmative vote of a majority of our board of directors, which
must include a majority of our independent directors to approve our initial business combination (or such other vote as the applicable
law or stock exchange rules then in effect may require).
We
do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However,
if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial
business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our
business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our
initial business combination or because we become obligated to redeem a significant number of our public shares upon completion
of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business
combination. In addition, we target businesses with enterprise values that are greater than we could acquire with the net proceeds
of our initial public offering and the sale of the private placement warrants, and, as a result, if the cash portion of the purchase
price exceeds the amount available from the trust account, net of amounts needed to satisfy redemptions by public stockholders,
we may be required to seek additional financing to complete such proposed initial business combination. We may also obtain financing
prior to the closing of our initial business combination to fund our working capital needs and transaction costs in connection
with our search for and completion of our initial business combination. There is no limitation on our ability to raise funds through
the issuance of equity or equity-linked securities or through loans, advances or other indebtedness in connection with our
initial business combination, including pursuant to forward purchase agreements or backstop arrangements we may enter into. Subject
to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our
business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available
to us, we will be forced to cease operations and liquidate the trust account. In addition, following our initial business combination,
if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
We
have filed a registration statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the
Exchange Act. As a result, we are subject to the rules and regulations promulgated under the Exchange Act. We have no current
intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to
the consummation of our initial business combination.
Corporate
Information
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As
such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other
public companies that are not “emerging growth companies” including, but not limited to, not being required to comply
with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory
vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors
find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of
our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following December 11,
2025, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large
accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million
as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion
in non-convertible debt during the prior three-year period. References herein to “emerging growth company”
shall have the meaning associated with it in the JOBS Act.
Our
executive offices are located at Four Embarcadero Center, Suite 2100, San Francisco, CA 94111, and our telephone number is (415)
780-9975. We maintain a corporate website at www.truewindcapital.com/nebula-caravelacqcorp. Our website and the information
contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered
part of, this Report. You should not rely on any such information in making your decision whether to invest in our securities.
Sourcing
of Potential Business Combination Targets
We
anticipate that target business candidates will continue to be brought to our attention from various unaffiliated sources, including
investment bankers and investment professionals. Target businesses will continue to be brought to our attention by such unaffiliated
sources as a result of being solicited by us by calls or mailings. These sources will also continue to introduce us to target
businesses in which they think we may be interested on an unsolicited basis, since many of these sources will have read our public
filings and know what types of businesses we are targeting. Our officers and directors, as well as our sponsor and their affiliates,
will continue to bring to our attention target business candidates that they become aware of through their business contacts as
a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions. In addition,
we may receive a number of proprietary deal flow opportunities that would not otherwise necessarily be available to us as a result
of the business relationships of our officers and directors and our sponsor and their respective industry and business contacts
as well as their affiliates. We have engaged the services of professional firms or other individuals that specialize in business
acquisitions, and we may engage other firms or other individuals in the future, in which event we are paying or may pay a finder’s
fee, consulting fee, advisory fee or other compensation to be determined in an arm’s length negotiation based on the terms
of the transaction, only to the extent our management determines that the use of a finder may bring opportunities to us that may
not otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction that our management
determines is in our best interest to pursue. Payment of finder’s fees is customarily tied to completion of a transaction,
in which case any such fee will be paid out of the funds held in the trust account. In no event, however, will our sponsor or
any of our existing officers or directors, or any entity with which our sponsor or officers are affiliated, be paid any finder’s
fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation by the company prior to,
or in connection with any services rendered for any services they render in order to effectuate, the completion of our initial
business combination (regardless of the type of transaction that it is). Although none of our sponsor, executive officers or directors,
or any of their respective affiliates, are allowed to receive any compensation, finder’s fees or consulting fees from a
prospective business combination target in connection with a contemplated initial business combination, we do not have a policy
that prohibits our sponsor, executive officers or directors, or any of their respective affiliates, from negotiating for the reimbursement
of out-of-pocket expenses by a target business. Some of our officers and directors may enter into employment or consulting
agreements with the post-transaction company following our initial business combination. The presence or absence of any such
fees or arrangements are not used as a criterion in our selection process of an initial business combination candidate.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with True Wind Capital, our
sponsor, our officers, or our directors, subject to certain approvals and consents. In the event we seek to complete our initial
business combination with a company that is affiliated with True Wind Capital, our sponsor, officers or directors, we, or a committee
of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA or an
independent accounting firm that our initial business combination is fair to us from a financial point of view. Currently, we
are not aware of an affiliate of True Wind Capital that would make a suitable target for our initial business combination.
If
any of our officers or directors becomes aware of a business combination opportunity that is suitable for one or more entities
to which he or she has fiduciary, contractual or other obligations or duties, including TWC Tech Holdings II Corp., he or she
will honor these obligations and duties to present such business combination opportunity to such entities first, and only present
it to us if such entities reject the opportunity and he or she determines to present the opportunity to us (including as described
above).
Status
as a Public Company
We
believe our structure makes us an attractive business combination partner to target businesses. As an existing public company,
we offer target businesses an alternative to the traditional initial public offering through a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business combination. In this situation, the owners of the target
business would exchange their shares of stock in the target business for shares of our stock or for a combination of shares of
our stock and cash, allowing us to tailor the consideration to the specific needs of the sellers. Although there are various costs
and obligations associated with being a public company, we believe target businesses will find this method a more certain and
cost effective method to becoming a public company than the typical initial public offering. In a typical initial public offering,
there are additional expenses incurred in marketing, road show and public reporting efforts that may not be present to the same
extent in connection with a business combination with us.
Furthermore,
once a proposed business combination is completed, the target business will have effectively become public, whereas an initial
public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions,
which could delay or prevent the offering from occurring. Once public, we believe the target business would then have greater
access to capital and an additional means of providing management incentives consistent with stockholders’ interests. It
can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting
talented employees.
We
will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following December 11,
2025, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large
accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million
as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion
in non-convertible debt during the prior three-year period.
Financial
Position
With
funds available in the trust account for a business combination initially in the amount of $275,000,000 assuming no redemptions
and after payment of $9,625,000 of deferred underwriting fees and at least $100,000,000 in proceeds from the sale of the forward
purchase shares, we offer a target business a variety of options such as creating a liquidity event for its owners, providing
capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt ratio.
Because we are able to complete our initial business combination using our cash, debt or equity securities, or a combination of
the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to
be paid to the target business to fit its needs and desires. However, we have not taken any steps to secure third-party financing
and there can be no assurance it will be available to us.
Significant Activities Since Inception
On December 11, 2020,
the Company consummated its IPO of 27,500,000 units (the “Units”), including 2,500,000 Units issued pursuant to the
partial exercise by the underwriters of their over-allotment option (the “Over-Allotment Units”; collectively with
the Initial Units, the “Units”). Each Unit consists of one share of Class A common stock, $0.0001 par value per share
(“Class A common stock”), and one-fifth of one warrant (“Public Warrant”), each whole warrant entitling
the holder to purchase one share of Class A common stock at $11.50 per share. The Units were sold at an offering price of $10.00
per Unit, generating gross proceeds of $275,000,000. As a result of the underwriters’ partial exercise of the over-allotment
option, the Company’s sponsor, Nebula Holdings, LLC (the “Sponsor”), forfeited 312,500 shares of Class B common
stock. Simultaneously with the consummation of the IPO and the sale of the Units, the Company consummated the private placement
(“Private Placement”) of an aggregate of 5,166,667 warrants (“Placement Warrants”) at a price of $1.50
per Placement Warrant, generating total proceeds of $7,750,000.
A total of $275 million
of the net proceeds from our initial public offering (including the partial over-allotment) and the private placement of warrants
to our sponsor were deposited in a trust account established for the benefit of the Company’s public stockholders.
Our units began trading
on December 9, 2020 on The NASDAQ Capital Market under the symbol NEBCU. Commencing on January 29, 2021, the securities comprising
the units began separate trading. The units, common stock, and warrants are trading on The NASDAQ Capital Market under the symbols
“NEBCU,” “NEBC” and “NEBCW,” respectively.
On
February 10, 2021, the Company entered into the Business Combination Agreement. Please see the section of this report entitled
“Business—Business Combination” for additional information.
Effecting
our Initial Business Combination
We
are not presently engaged in, and we will not engage in, any operations for an indefinite period of time. We intend to effectuate
our initial business combination using cash from the proceeds of our initial public offering and the sale of the private placement
warrants and the sale of the forward placement shares, if any, our capital stock, debt or a combination of these as the consideration
to be paid in our initial business combination. We may seek to complete our initial business combination with a company or business
that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks
inherent in such companies and businesses.
If
our initial business combination is paid for using equity or debt securities or not all of the funds released from the trust account
are used for payment of the consideration in connection with our initial business combination or used for redemption of our public
shares, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for
maintenance or expansion of operations of post-transaction businesses, the payment of principal or interest due on indebtedness
incurred in completing our initial business combination, to fund the purchase of other companies or for working capital.
We
may seek to raise additional funds in connection with the completion of our initial business combination through a private offering
of equity securities or debt securities or loans, and we may effectuate our initial business combination using the proceeds of
such offerings or loans rather than using the amounts held in the trust account.
In
the case of an initial business combination funded with assets other than the trust account assets, our tender offer documents
or proxy materials disclosing the business combination would disclose the terms of the financing and, only if required by applicable
law, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately or
through loans in connection with our initial business combination.
Selection
of a Target Business and Structuring of our Initial Business Combination
Nasdaq
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of
the value of the assets held in the trust account (net of amounts disbursed to management for working capital purposes and excluding
the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at the time of our signing
a definitive agreement in connection with our initial business combination. The fair market value of our initial business combination
will be determined by our board of directors based upon one or more standards generally accepted by the financial community, such
as discounted cash flow valuation, a valuation based on trading multiples of comparable public businesses or a valuation based
on the financial metrics of M&A transactions of comparable businesses. If our board is not able to independently determine
the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm
that is a member of FINRA or from an independent accounting firm, with respect to the satisfaction of such criteria. We do not
currently intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination,
although there is no assurance that will be the case. Subject to this requirement, our management has virtually unrestricted flexibility
in identifying and selecting one or more prospective target businesses, although we are not permitted to effectuate our initial
business combination with another blank check company or a similar company with nominal operations.
In
any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting
securities of the target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register
as an investment company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets
of a target business or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction company
is what will be taken into account for purposes of Nasdaq’s 80% fair market value test.
To
the extent we effect our initial business combination with a company or business that may be financially unstable or in its early
stages of development or growth, we may be affected by numerous risks inherent in such company or business. Although our management
will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain
or assess all significant risk factors.
In
evaluating a prospective target business, we have conducted and will continue to conduct a thorough due diligence review which
encompasses, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities,
as well as a review of financial, operational, legal and other information which will be made available to us.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the
costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect
to the identification and evaluation of a prospective target business with which our initial business combination is not ultimately
completed will result in our incurring losses and will reduce the funds we can use to complete another business combination.
Lack
of Business Diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend
entirely on the future performance of a single business.
Unlike
other entities that have the resources to complete business combinations with multiple entities in one or several industries,
it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line
of business. By completing our initial business combination with only a single entity, our lack of diversification may:
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subject
us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on
the particular industry in which we operate after our initial business combination; and
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cause
us to depend on the marketing and sale of a single product or limited number of products or services.
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Limited
Ability to Evaluate the Target’s Management Team
Although
we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting
our initial business combination with that business, our assessment of the target business’s management may not prove to
be correct. In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public
company. Furthermore, the future role of members of our management team, if any, in the target business cannot presently be stated
with any certainty. While it is possible that one or more of our directors will remain associated in some capacity with us following
our initial business combination, it is highly unlikely that any of them will devote their full efforts to our affairs subsequent
to our initial business combination. Moreover, we cannot assure you that members of our management team will have significant
experience or knowledge relating to the operations of the particular target business.
We
cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company.
The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our
initial business combination.
Following
our initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target
business. We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will
have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve our Initial Business Combination
We
may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder
approval if it is required by applicable law or stock exchange rule, or we may decide to seek stockholder approval for business
or other reasons. Presented in the table below is a graphic explanation of the types of initial business combinations we may consider
and whether stockholder approval is currently required under Delaware law for each such transaction.
Type of Transaction
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Whether
Stockholder
Approval is
Required
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Purchase of assets
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No
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Purchase of stock of target not involving a merger with the company
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No
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Merger of target into a subsidiary of the company
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No
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Merger of the company with a target
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Yes
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Under
Nasdaq’s listing rules, stockholder approval would be required for our initial business combination if, for example:
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we
issue shares of Class A common stock that will be equal to or in excess of 20% of the number of shares of our Class A
common stock then outstanding;
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any
of our directors, officers or substantial stockholders (as defined by Nasdaq rules) has a 5% or greater interest (or such persons
collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise
and the present or potential issuance of common stock could result in an increase in outstanding common shares or voting power
of 5% or more; or
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the
issuance or potential issuance of common stock will result in our undergoing a change of control.
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The decision as to whether we will seek stockholder approval of a proposed business combination in those instances in which stockholder approval is not required by law will be made by us, solely in our discretion, and will be based on business and legal reasons, which include a variety of factors, including, but not limited to:
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the
timing of the transaction, including in the event we determine stockholder approval would require additional time and there is
either not enough time to seek stockholder approval or doing so would place the company at a disadvantage in the transaction or
result in other additional burdens on the company;
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the
expected cost of holding a stockholder vote;
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the
risk that the stockholders would fail to approve the proposed business combination;
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other
time and budget constraints of the company; and
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additional
legal complexities of a proposed business combination that would be time-consuming and burdensome to present to stockholders.
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Permitted
Purchases of Our Securities
In
the event we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with
our initial business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or any of their
respective affiliates may purchase public shares or public warrants or a combination thereof in privately negotiated transactions
or in the open market either prior to or following the completion of our initial business combination. There is no limit on the
number of shares our initial stockholders, directors, officers, advisors or their affiliates may purchase in such transactions,
subject to compliance with applicable law and Nasdaq rules. However, they have no current commitments, plans or intentions to
engage in such transactions and have not formulated any terms or conditions for any such transactions. In the event our initial
stockholders, directors, officers, advisors or any of their respective affiliates determine to make any such purchases at the
time of a stockholder vote relating to our initial business combination, such purchases could have the effect of influencing the
vote necessary to approve such transaction. None of the funds in the trust account will be used to purchase public shares in such
transactions. If they engage in such transactions, they will be restricted from making any such purchases when they are in possession
of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation M under
the Exchange Act. Such a purchase may include a contractual acknowledgement that such stockholder, although still the record holder
of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. We have adopted
an insider trading policy which requires insiders to (1) refrain from purchasing securities when they are in possession of any
material non-public information and (2) to clear all trades with our compliance personnel or legal counsel prior to execution.
We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will be
dependent upon several factors, including but not limited to, the timing and size of such purchases. Depending on such circumstances,
our insiders may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary.
In
the event that our sponsor, directors, officers, advisors or any of their respective affiliates purchase public shares in privately
negotiated transactions from public stockholders who have already elected to exercise their redemption rights or submitted a proxy
to vote against our initial business combination, such selling stockholders would be required to revoke their prior elections
to redeem their shares and any proxy to vote against our initial business combination. We do not currently anticipate that such
purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction
subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases
that the purchases are subject to such rules, the purchasers will comply with such rules.
The
purpose of such purchases could be to vote such shares in favor of the business combination and thereby increase the likelihood
of obtaining stockholder approval of our initial business combination or to satisfy a closing condition in an agreement with a
target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination,
where it appears that such requirement would otherwise not be met. This may result in the completion of our initial business combination
that may not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our common stock may be reduced and the number of beneficial
holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading
of our securities on a national securities exchange.
Our
sponsor, officers, directors, advisors and/or any of their respective affiliates may identify the stockholders with whom our sponsor,
officers, directors, advisors or any of their respective affiliates may pursue privately negotiated purchases by either the stockholders
contacting us directly or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials
in connection with our initial business combination. To the extent that our sponsor, officers, directors, advisors or any of their
respective affiliates enter into a private purchase, they would identify and contact only potential selling stockholders who have
expressed their election to redeem their shares for a pro rata share of the trust account or vote against our initial business
combination. Such persons would select the stockholders from whom to acquire shares based on the number of shares available, the
negotiated price per share and such other factors as any such person may deem relevant at the time of purchase. The price per
share paid in any such transaction may be different than the amount per share a public stockholder would receive if it elected
to redeem its shares in connection with our initial business combination. Our sponsor, officers, directors, advisors or any of
their respective affiliates will purchase shares only if such purchases comply with Regulation M under the Exchange Act and the
other federal securities laws.
Any
purchases by our sponsor, officers, directors and/or any of their respective affiliates who are affiliated purchasers under Rule
10b-18 under the Exchange Act will only be made to the extent such purchases are made in compliance with Rule 10b-18, which
is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has
certain technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor,
officers, directors and/or any of their respective affiliates will be restricted from making purchases of common stock if such
purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.
Redemption
Rights for Public Stockholders Upon Completion of our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion
of our initial business combination at a per share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account as of two business days prior to the consummation of our initial business combination, including interest (net of
permitted withdrawals), divided by the number of then outstanding public shares, subject to the limitations described herein.
The amount in the trust account as of December 31, 2020 was approximately $10.00 per public share. The per share amount we will
distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will
pay to the underwriters. The redemption right will include the requirement that any beneficial owner on whose behalf a redemption
right is being exercised must identify itself in order to validly redeem its shares. Each public stockholder may elect to redeem
its public shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.
There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Our sponsor,
officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption
rights with respect to any founder shares and any public shares held by them in connection with the completion of our initial
business combination.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock
upon the completion of our initial business combination either: (1) in connection with a stockholder meeting called to approve
the business combination; or (2) by means of a tender offer. The decision as to whether we will seek stockholder approval of a
proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety
of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder
approval under applicable law or stock exchange listing requirement. Under Nasdaq rules, asset acquisitions and stock purchases
would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions
where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation
would require stockholder approval. If we structure a business combination transaction with a target company in a manner that
requires stockholder approval, we will not have discretion as to whether to seek a stockholder vote to approve the proposed business
combination. We currently intend to conduct redemptions pursuant to a stockholder vote unless stockholder approval is not required
by applicable law or stock exchange listing requirement and we choose to conduct redemptions pursuant to the tender offer rules
of the SEC for business or other reasons. So long as we obtain and maintain a listing for our securities on Nasdaq, we are required
to comply with such rules.
If
a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant
to our amended and restated certificate of incorporation:
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conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers; and
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file
tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same
financial and other information about the initial business combination and the redemption rights as is required under Regulation
14A of the Exchange Act, which regulates the solicitation of proxies.
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Upon
the public announcement of our initial business combination, we and our sponsor will terminate any plan established in accordance
with Rule 10b5-1 to purchase shares of our Class A common stock in the open market if we elect to redeem our public
shares through a tender offer, to comply with Rule 14e-5 under the Exchange Act.
In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business
days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination
until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not
tendering more than a specified number of public shares, which number will be based on the requirement that we may not redeem
public shares in an amount that would cause our net tangible assets, after payment of the deferred underwriting commissions, to
be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock” rules) or any greater
net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If
public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete such
initial business combination.
If,
however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirement, or we decide
to obtain stockholder approval for business or other reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation
of proxies, and not pursuant to the tender offer rules; and
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file
proxy materials with the SEC.
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We
expect that a final proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. However,
we expect that a draft proxy statement would be made available to such stockholders well in advance of such time, providing additional
notice of redemption if we conduct redemptions in conjunction with a proxy solicitation. Although we are not required to do so,
we currently intend to comply with the substantive and procedural requirements of Regulation 14A in connection with any stockholder
vote even if we are not able to maintain our Nasdaq listing or Exchange Act registration.
In
the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business
combination.
If
we seek stockholder approval, unless otherwise required by applicable law, regulation or stock exchange rules, we will complete
our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the
business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding
capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company
entitled to vote at such meeting. Our initial stockholders, officers and directors will count towards this quorum and have agreed
to vote any founder shares and any public shares held by them in favor of our initial business combination. These quorum and voting
thresholds and agreements, may make it more likely that we will consummate our initial business combination. Each public stockholder
may elect to redeem its public shares without voting, and if they do vote, irrespective of whether they vote for or against the
proposed transaction. In addition, our sponsor, officers and directors have entered into a letter agreement with us, pursuant
to which they have agreed to waive their redemption rights with respect to any founder shares and any public shares held by them
in connection with the completion of a business combination.
Our
amended and restated certificate of incorporation provides that in no event will we redeem our public shares in an amount that
would cause our net tangible assets, after payment of the deferred underwriting commissions, to be less than $5,000,001 (so that
we do not then become subject to the SEC’s “penny stock” rules). Redemptions of our public shares may also be
subject to a higher net tangible asset test or cash requirement pursuant to an agreement relating to our initial business combination.
For example, the proposed business combination may require: (1) cash consideration to be paid to the target or its owners; (2)
cash to be transferred to the target for working capital or other general corporate purposes; or (3) the retention of cash to
satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration
we would be required to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount
required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of
cash available to us, we will not complete the business combination or redeem any shares, and all shares of Class A common
stock submitted for redemption will be returned to the holders thereof.
Limitation
on Redemption Upon Completion of our Initial Business Combination if we Seek Stockholder Approval
Notwithstanding
the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection
with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation
provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder
is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking
redemption rights with respect to an aggregate of 15% or more of the shares sold in our initial public offering, without our prior
consent, which we refer to as the “Excess Shares.” We believe this restriction will discourage stockholders from accumulating
large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against
a proposed business combination as a means to force us or our affiliates to purchase their shares at a significant premium to
the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than
an aggregate of 15% of the shares sold in our initial public offering could threaten to exercise its redemption rights if such
holder’s shares are not purchased by us or our affiliates at a premium to the then-current market price or on other
undesirable terms. By limiting our stockholders’ ability to redeem no more than 15% of the shares sold in our initial public
offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to
complete our initial business combination, particularly in connection with a business combination with a target that requires
as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our
stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Tendering
Stock Certificates in Connection with a Tender Offer or Redemption Rights
We
may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their
shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in
the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal
to approve the business combination in the event we distribute proxy materials or to deliver their shares to the transfer agent
electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, rather than simply voting
against the initial business combination at the holder’s option. The tender offer or proxy materials, as applicable, that
we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are
requiring public stockholders to satisfy such delivery requirements, which will include the requirement that any beneficial owner
on whose behalf a redemption right is being exercised must identify itself in order to validly redeem its shares. Accordingly,
a public stockholder would have from the time we send out our tender offer materials until the close of the tender offer period,
or up to two business days prior to the vote on the business combination if we distribute proxy materials, as applicable, to tender
its shares if it wishes to seek to exercise its redemption rights. Pursuant to the tender offer rules, the tender offer period
will be not less than 20 business days and, in the case of a stockholder vote, a final proxy statement would be mailed to public
stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft proxy statement would be made available
to such stockholders well in advance of such time, providing additional notice of redemption if we conduct redemptions in conjunction
with a proxy solicitation. Given the relatively short exercise period, it is advisable for stockholders to use electronic delivery
of their public shares.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering
them through The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System. The transfer agent will typically
charge the tendering broker $80.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder.
However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender
their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such
delivery must be effectuated.
The
foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection
with their business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote
on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on
the proxy card indicating such holder was seeking to exercise his or her redemption rights. After the business combination was
approved, the company would contact such stockholder to arrange for him or her to deliver his or her certificate to verify ownership.
As a result, the stockholder then had an “option window” after the completion of the business combination during which
he or she could monitor the price of the company’s stock in the market. If the price rose above the redemption price, he
or she could sell his or her shares in the open market before actually delivering his or her shares to the company for cancellation.
As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder meeting, would
become “option” rights surviving past the completion of the business combination until the redeeming holder delivered
its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s
election to redeem is irrevocable once the business combination is approved.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials
or the date of the stockholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share
delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable
date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically
or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their
shares will be distributed promptly after the completion of our initial business combination.
If
our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise
their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In
such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If
our initial proposed business combination is not completed, we may continue to try to complete a business combination with a different
target until the end of the completion window.
Redemption
of Public Shares and Liquidation if no Initial Business Combination
Our
amended and restated certificate of incorporation provides that we will have only the time of the completion window to complete
our initial business combination. If we are unable to complete our initial business combination within such period, we will: (1)
cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than ten business
days thereafter, redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account, including interest (net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses),
divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law;
and (3) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for
claims of creditors and the requirements of other applicable law. There are no redemption rights or liquidating distributions
with respect to our warrants, which will expire worthless if we fail to complete our initial business combination within the completion
window.
Our
initial stockholders, officers and directors have entered into a letter agreement with us, pursuant to which they have waived
their rights to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to
complete our initial business combination within the completion window. However, if our sponsor or any of our officers and directors
acquires public shares, it will be entitled to liquidating distributions from the trust account with respect to such public shares
if we fail to complete our initial business combination within the completion window.
Our
sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to provide for the
redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we
do not complete our initial business combination within the completion window, unless we provide our public stockholders with
the opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of permitted withdrawals),
divided by the number of then outstanding public shares. However, we may not redeem our public shares in an amount that would
cause our net tangible assets, after payment of the deferred underwriting commissions, to be less than $5,000,001 (so that we
do not then become subject to the SEC’s “penny stock” rules).
We
expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors,
will be funded from amounts held outside the trust account, although we cannot assure you that there will be sufficient funds
for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our
plan of dissolution, to the extent that there is any interest accrued in the trust account not required to pay taxes, we may request
the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If
we were to expend all of the net proceeds of our initial public offering and the sale of the private placement warrants, other
than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account
and any tax payments or expenses for the dissolution of the trust, the per share redemption amount received by stockholders upon
our dissolution would be $10.00. The proceeds deposited in the trust account could, however, become subject to the claims of our
creditors which would have higher priority than the claims of our public stockholders. We cannot assure you that the actual per
share redemption amount received by stockholders will not be substantially less than $10.00. Under Section 281(b) of the DGCL,
our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments to be made in
full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution
of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have
funds sufficient to pay or provide for all creditors’ claims.
Although
we have sought and will continue to seek to have all vendors, service providers (other than our independent registered public
accounting firm), prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders,
there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented
from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility
or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage
with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute
an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives
available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes
that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible
instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant
whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that
would agree to execute a waiver or in cases where we are unable to find a service provider willing to execute a waiver. In addition,
there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising
out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason.
In order to protect the amounts held in the trust account, our sponsor has agreed that it will be liable to us if and to the extent
any claims by a third party (other than our independent registered public accounting firm) for services rendered or products sold
to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount
of funds in the trust account to below (1) $10.00 per public share or (2) the actual amount per public share held in the trust
account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of
the trust assets, in each case net of permitted withdrawals, except as to any claims by a third party that executed a waiver of
any and all rights to the monies held in the trust account (whether any such waiver is enforceable) and except as to any claims
under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under
the Securities Act. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations
and believe that our sponsor’s only assets are securities of our company and, therefore, our sponsor may not be able to
satisfy those obligations. We have not asked our sponsor to reserve for such obligations. Therefore, we cannot assure you that
our sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the trust
account, the funds available in the trust account for our initial business combination and redemptions could be reduced to less
than $10.00 per public share. In such event, we may not be able to complete our initial business combination, and you would receive
such lesser amount per share in connection with any redemption of your public shares. None of our officers will indemnify us for
claims by third parties including, without limitation, claims by vendors and prospective target businesses. None of our other
officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target
businesses.
In
the event that the proceeds in the trust account are reduced below: (1) $10.00 per public share; or (2) the actual amount per
public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due
to reductions in the value of the trust assets, in each case net of permitted withdrawals, and our sponsor asserts that it is
unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim,
our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations.
While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce
its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may
choose not to do so in certain instances. For example, the cost of such legal action may be deemed by the independent directors
to be too high relative to the amount recoverable or the independent directors may determine that a favorable outcome is not likely.
Accordingly, we cannot assure you that due to claims of creditors the actual value of the per share redemption price will not
be substantially less than $10.00 per share.
We
seek to reduce the possibility that our sponsor has to indemnify the trust account due to claims of creditors by endeavoring to
have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses
or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind
in or to monies held in the trust account. Our sponsor are not liable as to any claims under our indemnity of the underwriters
of our initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that
we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received
funds from our trust account could be liable for claims made by creditors.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received
by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our initial business combination within the completion window may be considered
a liquidating distribution under Delaware law. Delaware law provides that if the corporation complies with certain procedures
set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including
a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period
during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating
distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to
the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability
of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in
the event we do not complete our initial business combination within the completion window, is not considered a liquidating distribution
under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute
of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years,
as in the case of a liquidating distribution. If we are unable to complete our initial business combination within the completion
window, we will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not
more than ten business days thereafter, redeem the public shares, at a per share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest (net of permitted withdrawals and up to $100,000 of interest to
pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish
public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any),
subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of our
remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem
our public shares as soon as reasonably possible following our 24th month and, therefore, we do not intend to
comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions
received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
Because
we are complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such
time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us
within the subsequent ten years. However, because we are a blank check company, rather than an operating company, and our operations
are 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 and independent registered public accounting firm) or prospective target businesses. As described
above, pursuant to the obligation contained in our underwriting agreement, we have sought and will continue to seek to have all
vendors, service providers (other than our independent registered public accounting firm), prospective target businesses or other
entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to
any monies held in the trust account.
As
a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim
that would result in any liability extending to the trust account is remote.
Further,
our sponsor may be liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below:
(1) $10.00 per public share; or (2) the actual amount per public share held in the trust account as of the date of the liquidation
of the trust account, if less than $10.00 per share due to reductions in value of the trust assets, in each case net of permitted
withdrawals and will not be liable as to any claims under our indemnity of the underwriters of our initial public offering against
certain liabilities, including liabilities under the Securities Act.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held
in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to
the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the
trust account, we cannot assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we
file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions
received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential
transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts
received by our stockholders. Furthermore, our board may be viewed as having breached its fiduciary duty to our creditors and/or
may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders
from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against
us for these reasons. Please see “Risk Factors — If, after we distribute the proceeds in the trust account to our
public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed,
a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached
their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages.”
Our
public stockholders will be entitled to receive funds from the trust account only in the event of the redemption of our public
shares if we do not complete our initial business combination within the completion window or if they redeem their respective
shares for cash upon the completion of the initial business combination. In no other circumstances will a stockholder have any
right or interest of any kind to or in the trust account. In the event we seek stockholder approval in connection with our initial
business combination, a stockholder’s voting in connection with our initial business combination alone will not result in
a stockholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such stockholder must
have also exercised its redemption rights described above.
Amended
and Restated Certificate of Incorporation
Our
amended and restated certificate of incorporation contains certain requirements and restrictions relating to our initial public
offering that applies to us until the consummation of our initial business combination. If we seek to amend any provisions of
our amended and restated certificate of incorporation to modify the substance or timing of our obligation to provide for the redemption
of our public shares in complete our initial business combination within the completion window or with respect to any other material
provisions relating to the rights of holders of our Class A Common Stock or pre-initial business combination business
activity, we will provide public stockholders with the opportunity to redeem their public shares in connection with any such vote.
Our initial stockholders, officers and directors have agreed to waive any redemption rights with respect to any founder shares
and any public shares held by them in connection with the completion of our initial business combination. Specifically, our amended
and restated certificate of incorporation provides, among other things, that:
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prior
to the consummation of our initial business combination, we shall either: (1) seek stockholder approval of our initial business
combination at a meeting called for such purpose at which stockholders may seek to redeem their shares, regardless of whether
they vote for or against, or abstain from voting on, the proposed business combination, into their pro rata share of the aggregate
amount on deposit in the trust account as of two business days prior to the consummation of our initial business combination,
including interest (net of permitted withdrawals); or (2) provide our public stockholders with the opportunity to tender their
shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata
share of the aggregate amount on deposit in the trust account as of two business days prior to the consummation of our initial
business combination, including interest (net of permitted withdrawals), in each case subject to the limitations described herein;
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we
will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation
and, solely if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of
the business combination at a duly held stockholders meeting;
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if
our initial business combination is not consummated within the completion window, then our existence will terminate and we will
distribute all amounts in the trust account; and
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prior
to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof
to (1) receive funds from the trust account or (2) vote on any initial business combination.
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These
provisions cannot be amended without the approval of holders of 65% of our common stock. In the event we seek stockholder approval
in connection with our initial business combination, our amended and restated certificate of incorporation provides that, unless
otherwise required by applicable law or stock exchange rules, we may consummate our initial business combination only if approved
by a majority of the shares of common stock voted by our stockholders at a duly held stockholders meeting.
Competition
In
identifying, evaluating and selecting a target business for our initial business combination, we have encountered and may continue
to encounter intense competition from other entities having a business objective similar to ours, including other blank check
companies, private equity groups and leveraged buyout funds, public companies and operating businesses seeking strategic acquisitions.
Many of these entities are well established and have extensive experience identifying and effecting business combinations directly
or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than
us. Our ability to acquire larger target businesses is limited by our available financial resources. This inherent limitation
gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation to pay cash in connection
with our public stockholders who exercise their redemption rights may reduce the resources available to us for our initial business
combination and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain
target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business
combination.
Sponsor
Indemnity
Our
sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent registered
public accounting firm) for services rendered or products sold to us, or a prospective target business with which we have discussed
entering into a transaction agreement, reduce the amount of funds in the trust account to below: (1) $10.00 per public share;
or (2) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if
less than $10.00 per share due to reductions in the value of the trust assets, in each case, net of permitted withdrawals, except
as to any claims by a third party that executed a waiver of any and all rights to the monies held in the trust account (whether
any such waiver is enforceable) and except as to any claims under our indemnity of the underwriters of our initial public offering
against certain liabilities, including liabilities under the Securities Act. We have not independently verified whether our sponsor
has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our
company and, therefore, our sponsor may not be able to satisfy those obligations. We have not asked our sponsor to reserve for
such obligations. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. We believe the
likelihood of our sponsor having to indemnify the trust account is limited because we will endeavor to have all vendors and prospective
target businesses as well as other entities execute agreements with us waiving any right, title, interest or claim of any kind
in or to monies held in the trust account.
Employees
We
currently have two officers and do not intend to have any full-time employees prior to the completion of our initial business
combination. Members of our management team are not obligated to devote any specific number of hours to our matters but they devote
as much of their time as they deem necessary to our affairs and intend to continue doing so until we have completed our initial
business combination. The amount of time that any such person devotes in any time period to our company may vary based on whether
a target business has been selected for our initial business combination and the current stage of the business combination process.
Periodic
Reporting and Financial Information
Our
units, Class A common stock and warrants are registered under the Exchange Act and we have reporting obligations, including
the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange
Act, this Report contains financial statements audited and reported on by our independent registered public accounting firm.
We
will provide stockholders with audited financial statements of the prospective target business as part of the tender offer materials
or proxy solicitation materials sent to stockholders to assist them in assessing the target business. These financial statements
may be required to be prepared in accordance with, or be reconciled to, GAAP or IFRS, depending on the circumstances and the historical
financial statements may be required to be audited in accordance with the PCAOB. These financial statement requirements may limit
the pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements
in time for us to disclose such financial statements in accordance with federal proxy rules and complete our initial business
combination within the completion window. We cannot assure you that any particular target business identified by us as a potential
business combination candidate will have financial statements prepared in accordance with GAAP or that the potential target business
will be able to prepare its financial statements in accordance with the requirements outlined above. To the extent that these
requirements cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential
business combination candidates, we do not believe that this limitation will be material.
We
are required to evaluate our internal control procedures for the fiscal year ending December 31, 2021 as required by the
Sarbanes-Oxley Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer and no longer
an emerging growth company will we be required to have our internal control procedures audited. A target business may not be in
compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of
the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs
necessary to complete any such acquisition.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As
such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other
public companies that are not “emerging growth companies” including, but not limited to, not being required to comply
with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory
vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors
find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of
our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following December 11, 2025,
(b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated
filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the
end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion
in non-convertible debt during the prior three-year period. References herein to “emerging growth company”
shall have the meaning associated with it in the JOBS Act.
An
investment in our securities involves a high degree of risk. You should carefully consider all of the risks described below, together
with the other information contained in this Report, including the financial statements. If any of the following risks occur,
our business, financial condition or results of operations may be materially and adversely affected. In that event, the trading
price of our securities could decline, and you could lose all or part of your investment. The risk factors described below are
not necessarily exhaustive and you are encouraged to perform your own investigation with respect to us and our business.
Risks
Relating to our Search for, Consummation of, or Inability to Consummate,
a Business Combination and Post-Business Combination Risks
Our
public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, and even if we hold
a vote, holders of our founder shares will participate in such vote, which means we may complete our initial business combination
even if a majority of our public stockholders do not support such a combination.
We
may choose not to hold a stockholder vote to approve our initial business combination unless the initial business combination
would require stockholder approval under applicable law or stock exchange listing requirements or if we decide to hold a stockholder
vote for business or other legal reasons. Except as required by applicable law or stock exchange rules, the decision as to whether
we will seek stockholder approval of a proposed business combination or will allow stockholders to sell their shares to us in
a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing of
the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. Even if we seek
stockholder approval, the holders of our founder shares will participate in the vote on such approval. Accordingly, we may consummate
our initial business combination even if holders of a majority of our outstanding public shares do not approve of the business
combination we consummate.
If
we seek stockholder approval of our initial business combination, after approval of our board, our sponsor, officers and directors
have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote.
Our
initial stockholders, officers and directors have agreed (and their permitted transferees will agree) to vote any founder shares
and any public shares held by them in favor of our initial business combination. As a result, in addition to our initial stockholders’
founder shares, we would need 10,312,501, or 37.5%, of the 27,500,000 public shares sold in our initial public offering to be
voted in favor of a transaction in order to have such initial business combination approved. We expect that our initial stockholders
and their permitted transferees will own at least 20% of our outstanding shares of common stock at the time of any such stockholder
vote. Accordingly, if we seek stockholder approval of our initial business combination, after approval of our board, it is more
likely that the necessary stockholder approval will be received than would be the case if our initial stockholders and their permitted
transferees agreed to vote their founder shares in accordance with the majority of the votes cast by our public stockholders.
Your
only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise
of your right to redeem your shares from us for cash, unless we seek stockholder approval of such business combination.
Since
our board of directors may complete a business combination without seeking stockholder approval, public stockholders may not have
the right or opportunity to vote on the business combination. Accordingly, if we do not seek stockholder approval, your only opportunity
to affect the investment decision regarding a potential business combination may be limited to exercising your redemption rights
within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public
stockholders in which we describe our initial business combination.
The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential
business combination targets, which may make it difficult for us to enter into a business combination with a target.
We
may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition
that we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights,
we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination.
The amount of the deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are redeemed
in connection with a business combination and such amount of deferred underwriting discount is not available for us to use as
consideration in an initial business combination. Furthermore, in no event will we redeem our public shares in an amount that
would cause our net tangible assets, after payment of the deferred underwriting commissions, to be less than $5,000,001 (so that
we do not then become subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement
which may be contained in the agreement relating to our initial business combination. Consequently, if accepting all properly
submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or such greater amount necessary
to satisfy a closing condition as described above, we would not proceed with such redemption and the related business combination
and may instead search for an alternate business combination. Prospective targets will be aware of these risks and, thus, may
be reluctant to enter into a business combination transaction with us. If we are able to consummate an initial business combination,
the per-share value of shares held by non-redeeming stockholders will reflect our obligation to pay the deferred underwriting
commissions.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us
to complete the most desirable business combination or optimize our capital structure.
At
the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise
their redemption rights and, therefore, we will need to structure the transaction based on our expectations as to the number of
shares that will be submitted for redemption. If our initial business combination agreement requires us to use a portion of the
cash in the trust account to pay the purchase price or requires us to have a minimum amount of cash at closing, we will need to
reserve a portion of the cash in the trust account to meet such requirements or arrange for third-party financing. In addition,
if a larger number of shares is submitted for redemption than we initially expected, we may need to restructure the transaction
to reserve a greater portion of the cash in the trust account or arrange for third party financing. Raising additional third-party financing
may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. Furthermore, this dilution
would increase to the extent that the anti-dilution provision of the Class B common stock results in the issuance of
shares of Class A common stock on a greater than one-to-one basis upon conversion of the Class B common stock at
the time of our initial business combination. In addition, the amount of deferred underwriting commissions payable to the underwriters
is not required to be adjusted for any shares that are redeemed in connection with an initial business combination. The above
considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital
structure.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the
probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order
to redeem your stock.
If
our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price,
or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful
increases. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account
until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open
market; however, at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In either
situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption
until we liquidate or you are able to sell your stock in the open market.
The
requirement that we complete our initial business combination within the completion window may give potential target businesses
leverage over us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential
business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete
our initial business combination on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete
our initial business combination within the completion window. Consequently, such target business may obtain leverage over us
in negotiating a business combination, knowing that if we do not complete our initial business combination with that particular
target business, we may be unable to complete our initial business combination with any target business. This risk will increase
as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence and may enter
into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
We
may not be able to complete our initial business combination within the completion window, in which case we would cease all operations
except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public stockholders
may receive only $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
Our
sponsor, officers and directors have agreed that we must complete our initial business combination within the completion window.
We may not be able to find a suitable target business and complete our initial business combination within such time period. Our
ability to complete our initial business combination may be negatively impacted by general market conditions, volatility in the
capital and debt markets and the other risks described herein.
If
we have not completed our initial business combination within such time period, we will: (1) cease all operations except
for the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter,
redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account,
including interest (net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number
of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders
(including the right to receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly
as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors,
dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the
requirements of other applicable law. In such case, our public stockholders may receive only $10.00 per share, or less than $10.00 per
share, on the redemption of their shares, and our warrants will expire worthless.
If
permitted withdrawals and other sources of working capital are insufficient, it could limit the amount available to fund our search
for a target business or businesses and complete our initial business combination and we will depend on loans from our sponsor
or management team to fund our search, to pay our taxes and to complete our initial business combination. If we are unable to
obtain such loans, we may be unable to complete our initial business combination.
Of
the net proceeds of our initial public offering and the sale of the private placement warrants, $1.0 million (as of December 31,
2020) was available to us outside the trust account to fund our working capital requirements. If we are required to seek additional
capital, we would need to borrow funds from our sponsor, management team or other third parties to operate or may be forced to
liquidate. Neither our sponsor, members of our management team nor any of their respective affiliates is under any obligation
or other duty to loan funds to us in such circumstances. Any such loans would be repaid only from funds held outside the trust
account or from funds released to us upon completion of our initial business combination. If we are unable to complete our initial
business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate
the trust account. In such case, our public stockholders may receive only $10.00 per share, or less in certain circumstances,
and our warrants will expire worthless.
If
we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors or any of their respective
affiliates may elect to purchase shares or warrants from the public, which may influence a vote on a proposed business combination
and reduce the public “float” of our common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or any of their respective
affiliates may purchase public shares or public warrants or a combination thereof in privately negotiated transactions or in the
open market either prior to or following the completion of our initial business combination, although they are under no obligation
or other duty to do so. Such a purchase may include a contractual acknowledgement that such public stockholder, although still
the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption
rights. In the event that our sponsor, directors, officers, advisors or any of their respective affiliates purchase public shares
in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such
selling public stockholders would be required to revoke their prior elections to redeem their shares. The price per share paid
in any such transaction may be different than the amount per share a public stockholder would receive if it elected to redeem
its shares in connection with our initial business combination. The purpose of such purchases could be to vote such shares in
favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of our initial business
combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a
certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise
not be met. The purpose of such purchases could be to vote such shares in favor of the business combination and thereby increase
the likelihood of obtaining stockholder approval of our initial business combination or to satisfy a closing condition in an agreement
with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business
combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants
could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant
holders for approval in connection with our initial business combination. Any such purchases of our securities may result in the
completion of our initial business combination that may not otherwise have been possible. Any such purchases will be reported
pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting
requirements.
In
addition, if such purchases are made, the public “float” of our Class A common stock and the number of beneficial
holders of our securities may be reduced, possibly making it difficult to maintain the quotation, listing or trading of our securities
on a national securities exchange.
If
a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination,
or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial
business combination. Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials,
as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents
or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business
combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares.
For example, we may require our public stockholders seeking to exercise their redemption rights, whether they are record holders
or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date
set forth in the tender offer or proxy materials documents mailed to such holders, or up to two business days prior to the vote
on the proposal to approve the initial business combination in the event we distribute proxy materials, or to deliver their shares
to the transfer agent electronically. In the event that a stockholder fails to comply with these procedures, its shares may not
be redeemed.
If
our management team pursues a company with operations or opportunities outside of the United States for our initial business combination,
we may face additional burdens in connection with investigating, agreeing to and completing such combination, and if we effect
such initial business combination, we would be subject to a variety of additional risks that may negatively impact our operations.
If
our management team pursues a company with operations or opportunities outside of the United States for our initial business combination,
we would be subject to risks associated with cross-border business combinations, including in connection with investigating,
agreeing to and completing our initial business combination, conducting due diligence in a foreign jurisdiction, having such transaction
approved by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange
rates.
If
we effect our initial business combination with such a company, we would be subject to any special considerations or risks associated
with companies operating in an international setting, including any of the following:
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costs
and difficulties inherent in managing cross-border business operations and complying with commercial and legal requirements
of overseas markets;
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rules
and regulations regarding currency redemption;
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complex
corporate withholding taxes on individuals;
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laws
governing the manner in which future business combinations may be effected;
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tariffs
and trade barriers;
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regulations
related to customs and import/export matters;
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currency
fluctuations and exchange controls;
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challenges
in collecting accounts receivable;
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cultural
and language differences;
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employment
regulations;
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crime,
strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;
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deterioration
of political relations with the United States;
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obligatory
military service by personnel; and
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government
appropriation of assets.
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We
may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such initial
business combination or, if we complete such initial business combination, our operations might suffer, either of which may adversely
impact our business, results of operations and financial condition.
If
our management following our initial business combination is unfamiliar with U.S. securities laws, they may have to expend time
and resources becoming familiar with such laws, which could lead to various regulatory issues.
Following
our initial business combination, any or all of our management could resign from their positions as officers of the Company, and
the management of the target business at the time of the business combination could remain in place. Management of the target
business may not be familiar with U.S. securities laws. If new management is unfamiliar with U.S. securities laws, they may have
to expend time and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead
to various regulatory issues which may adversely affect our operations.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial
business combination with a target business whose management may not have the skills, qualifications or abilities to manage a
public company.
When
evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess
the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target business’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target business’s management not possess the skills, qualifications or abilities necessary
to manage a public company, the operations and profitability of the post-combination business may be negatively impacted.
Accordingly, any stockholders or warrant holders who choose to remain a stockholder or warrant holder following our initial business
combination could suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have
a remedy for such reduction in value.
The
officers and directors of an initial business combination candidate may resign upon completion of our initial business combination.
The departure of a business combination target’s key personnel could negatively impact the operations and profitability
of our post-combination business. The role of an initial business combination candidate’s key personnel upon the completion
of our initial business combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition
candidate’s management team will remain associated with the initial business combination candidate following our initial
business combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place.
As a result, we may need to reconstitute the management team of the post-transaction company in connection with our initial
business combination, which may adversely impact our ability to complete an initial business combination in a timely manner or
at all.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although
we have no commitments as of the date of this Report to issue any notes or other debt securities, or to otherwise incur outstanding
debt, we may choose to incur substantial debt to complete our initial business combination. We have agreed that we will not incur
any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to
the monies held in the trust account. As such, no issuance of debt will affect the per share amount available for redemption from
the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
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default
and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt
obligations;
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acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain
covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our
immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
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our
inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing
while the debt security is outstanding;
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our
inability to pay dividends on our common stock;
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using
a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends
on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
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limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
and
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limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution
of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
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We
may only be able to complete one business combination with the proceeds of our initial public offering and the sale of the private
placement warrants and the forward purchase shares, which will cause us to be solely dependent on a single business which may
have a limited number of products or services. This lack of diversification may materially negatively impact our operations and
profitability.
The
net proceeds from our initial public offering and the sale of the private placement warrants provides us with $275,000,000 that
we may use to complete our initial business combination (which includes $9,625,000 of deferred underwriting commissions being
held in the trust account). The proceeds from the sale of the forward purchase shares will be at least $100,000,000. However,
if the sale of the forward purchase shares does not close for any reason, including by reason of the failure to fund the purchase
price for example, we will receive no proceeds at all.
We
may effectuate our initial business combination with a single target business or multiple target businesses simultaneously or
within a short period of time. However, we may not be able to effectuate our initial business combination with more than one target
business because of various factors, including the existence of complex accounting issues and the requirement that we prepare
and file pro forma financial statements with the SEC that present operating results and the financial condition of several target
businesses as if they had been operated on a combined basis. By completing our initial business combination with only a single
entity our lack of diversification may subject us to numerous economic, competitive and regulatory risks. Further, we would not
be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities
which may have the resources to complete several business combinations in different industries or different areas of a single
industry. Accordingly, the prospects for our success may be:
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solely
dependent upon the performance of a single business, property or asset; or
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dependent
upon the development or market acceptance of a single or limited number of products, processes or services.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a
substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to
complete our initial business combination and give rise to increased costs and risks that could negatively impact our operations
and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which
may make it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business
combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations
and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation
of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately
address these risks, it could negatively impact our profitability and results of operations.
We
may attempt to complete our initial business combination with a private company about which little information is available, which
may result in a business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. Very
little public information generally exists about private companies, and we could be required to make our decision on whether to
pursue a potential initial business combination on the basis of limited information, which may result in a business combination
with a company that is not as profitable as we suspected, if at all.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to
complete our initial business combination with which a substantial majority of our stockholders do not agree.
Our
amended and restated certificate of incorporation does not provide a specified maximum redemption threshold, except that in no
event will we redeem our public shares in an amount that would cause our net tangible assets, after payment of the deferred underwriting
commissions, to be less than $5,000,001 (such that we do not then become subject to the SEC’s “penny stock”
rules), or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial
business combination. As a result, we may be able to complete our initial business combination even if a substantial majority
of our public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval
of our initial business combination and do not conduct redemptions in connection with our initial business combination pursuant
to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our sponsor, officers, directors,
advisors or any of their respective affiliates. In the event the aggregate cash consideration we would be required to pay for
all shares of common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant
to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the
business combination or redeem any shares, all shares of common stock submitted for redemption will be returned to the holders
thereof, and we instead may search for an alternate business combination.
In order to effectuate an initial business combination,
blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments,
including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated certificate of
incorporation or governing instruments, including our warrant agreement, in a manner that will make it easier for us to complete
our initial business combination that some of our stockholders or warrant holders may not support.
In order to effectuate an initial business
combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing
instruments, including their warrant agreements. For example, blank check companies have amended the definition of business combination,
increased redemption thresholds extended the time to consummate an initial business combination and, with respect to their warrants,
amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. We cannot assure you
that we will not seek to amend our charter or governing instruments or extend the time to consummate an initial business combination
in order to effectuate our initial business combination.
Certain provisions of our amended and restated certificate
of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement governing
the release of funds from our trust account) may be amended with the approval of holders of not less than 65% of our common stock,
which is a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore, to amend
our amended and restated certificate of incorporation and the trust agreement to facilitate the completion of an initial business
combination that some of our stockholders may not support.
Our amended and restated certificate of incorporation
provides that any of its provisions (other than amendments relating to the appointment of directors, which require the approval
by a majority of at least 90% of our common stock voting at a stockholder meeting) related to pre-business combination activity
(including the requirement to fund the trust account and not release such amounts except in specified circumstances and to provide
redemption rights to public stockholders as described herein) may be amended if approved by holders of at least 65% of our common
stock, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended
if approved by holders of 65% of our common stock. In all other instances, our amended and restated certificate of incorporation
provides that it may be amended by holders of a majority of our common stock, subject to applicable provisions of the DGCL, or
applicable stock exchange rules. We may not issue additional securities that can vote on amendments to our amended and restated
certificate of incorporation or on our initial business combination. Our initial stockholders, who beneficially own 20% of our
common stock, may participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement
and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our amended
and restated certificate of incorporation which will govern our pre-business combination behavior more easily than some other
blank check companies, and this may increase our ability to complete our initial business combination with which you do not agree.
Our stockholders may pursue remedies against us for any breach of our amended and restated certificate of incorporation.
Our sponsor, officers and directors have
agreed, pursuant to a written agreement, that they will not propose any amendment to our amended and restated certificate of incorporation
to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial
business combination or to redeem 100% of our public shares if we do not complete our initial business combination within the completion
window, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval
of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account,
divided by the number of then outstanding public shares. These agreements are contained in a letter agreement that we have entered
into with our sponsor, officers and directors. Our stockholders are not parties to, or third-party beneficiaries of, these
agreements and, as a result, will not have the ability to pursue remedies against our sponsor, officers or directors for any breach
of these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action,
subject to applicable law.
Certain agreements related to our initial public offering
may be amended without stockholder approval.
Certain agreements, including the underwriting
agreement relating to our initial public offering, the letter agreement among us and our sponsor, officers and directors, and the
registration rights agreement among us and our initial stockholders, may be amended without stockholder approval. These agreements
contain various provisions that our public stockholders might deem to be material. While we do not expect our board to approve
any amendment to any of these agreements prior to our initial business combination, it may be possible that our board, in exercising
its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments to any such agreement in connection
with the consummation of our initial business combination. Any such amendments would not require approval from our stockholders,
may result in the completion of our initial business combination that may not otherwise have been possible, and may have an adverse
effect on the value of an investment in our securities.
We may be unable to obtain additional financing to complete
our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure
or abandon a particular business combination.
Although we believe that the net proceeds
of our initial public offering and the sale of the private placement warrants and the forward purchase shares (if any) will be
sufficient to allow us to complete our initial business combination, because we have not yet identified any prospective target
business we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of our initial public
offering and the sale of the private placement warrants and the forward purchase shares (if any) prove to be insufficient, either
because of the size of our initial business combination, the depletion of the available net proceeds in search of a target business,
the obligation to redeem for cash a significant number of shares from stockholders who elect redemption in connection with our
initial business combination or the terms of negotiated transactions to purchase shares in connection with our initial business
combination, we may be required to seek additional financing or to abandon the proposed business combination. We cannot assure
you that such financing will be available on acceptable terms, if at all. To the extent that additional financing proves to be
unavailable when needed to complete our initial business combination, we would be compelled to either restructure the transaction
or abandon that particular business combination and seek an alternative target business candidate. In addition, even if we do not
need additional financing to complete our initial business combination, we may require such financing to fund the operations or
growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued
development or growth of the target business. None of our officers, directors or stockholders is required to provide any financing
to us in connection with or after our initial business combination. If we are unable to complete our initial business combination,
our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of
our trust account, and our warrants will expire worthless.
Our initial stockholders will control the election of
our board of directors until consummation of our initial business combination and will hold a substantial interest in us. As a
result, they will elect all of our directors prior to the consummation of our initial business combination and may exert a substantial
influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
Our initial stockholders own 20% of our outstanding
common stock. In addition, the founder shares, all of which are held by our initial stockholders, will entitle the holders to elect
all of our directors prior to the consummation of our initial business combination. Holders of our public shares will have no right
to vote on the election of directors during such time. These provisions of our amended and restated certificate of incorporation
may only be amended by a majority of at least 90% of our common stock voting at a stockholder meeting. As a result, you will not
have any influence over the election of directors prior to our initial business combination.
Neither our initial stockholders nor, to
our knowledge, any of our officers or directors, have any current intention to purchase additional securities, other than as disclosed
in this Report. Factors that would be considered in making such additional purchases would include consideration of the current
trading price of our Class A common stock. In addition, as a result of their substantial ownership in our company, our initial
stockholders may exert a substantial influence on other actions requiring a stockholder vote, potentially in a manner that you
do not support, including amendments to our amended and restated certificate of incorporation and approval of major corporate transactions.
If our initial stockholders purchase any additional shares of common stock in the aftermarket or in privately negotiated transactions,
this would increase their influence over these actions. Accordingly, our initial stockholders will exert significant influence
over actions requiring a stockholder vote.
Because we must furnish our stockholders with target business
financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective
target businesses.
The federal proxy rules require that a proxy
statement with respect to a vote on a business combination include historical and/or pro forma financial statement disclosure.
We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are
required under the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled
to, accounting principles generally accepted in the United States of America, or GAAP, or international financial reporting standards
as issued by the International Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial
statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United
States), or PCAOB. These financial statements may also be required to be prepared in accordance with GAAP in connection with our
current report on Form 8-K announcing the closing our initial business combination within four business days following such closing.
These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may
be unable to provide such financial statements in time for us to disclose such financial statements in accordance with federal
proxy rules and complete our initial business combination within the completion window.
Compliance obligations under the Sarbanes-Oxley Act may
make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources,
and increase the time and costs of completing an initial business combination.
Section 404 of the Sarbanes-Oxley Act
requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for
the year ending December 31, 2021. Only in the event we are deemed to be a large accelerated filer or an accelerated filer,
and no longer qualify as an emerging growth company, will we be required to comply with the independent registered public accounting
firm attestation requirement on our internal control over financial reporting. Further, for as long as we remain an emerging growth
company, we will not be required to comply with the independent registered public accounting firm attestation requirement on our
internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of
the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target business with
which we seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act
regarding adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with
the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such initial business combination.
You will not have any rights or interests in funds from
the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell
your public shares or warrants, potentially at a loss.
Our public stockholders will be entitled
to receive funds from the trust account only upon the earlier to occur of: (1) the completion of our initial business combination,
and then only in connection with those shares of Class A common stock that such stockholder properly elected to redeem, subject
to the limitations described herein; (2) the redemption of any public shares properly submitted in connection with a stockholder
vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to provide
for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares
if we do not complete our initial business combination within the completion window; and (3) the redemption of all of our
public shares if we are unable to complete our initial business combination within the completion window, subject to applicable
law and as further described herein. In addition, if we are unable to complete an initial business combination within the completion
window for any reason, compliance with Delaware law may require that we submit a plan of dissolution to our then-existing stockholders
for approval prior to the distribution of the proceeds held in our trust account. In that case, public stockholders may be forced
to wait beyond the completion window before they receive funds from our trust account. In no other circumstances will a public
stockholder have any right or interest of any kind in the trust account. Holders of warrants will not have any right to the proceeds
held in the trust account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your
public shares or warrants, potentially at a loss.
You will not be entitled to protections normally afforded
to investors of certain other blank check companies.
Since the net proceeds of our initial public
offering and the sale of the private placement warrants are intended to be used to complete an initial business combination with
a target business that has not been identified, we may be deemed to be a “blank check” company under the U.S. securities
laws. However, because we have net tangible assets in excess of $5,000,000, we are exempt from rules promulgated by the SEC to
protect investors in blank check companies, such as Rule 419. Accordingly, investors are not afforded the benefits or protections
of those rules. Among other things, this means that we have a longer period of time to complete our initial business combination
than do companies subject to Rule 419. Moreover, if our initial public offering were subject to Rule 419, that rule would
prohibit the release of any interest earned on funds held in the trust account to us unless and until the funds in the trust account
were released to us in connection with our completion of our initial business combination.
Because of our limited resources and the significant competition
for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we are
unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or
less in certain circumstances, on our redemption of their stock, and our warrants will expire worthless.
We have encountered and expect to continue
to encounter intense competition from other entities having a business objective similar to ours, including private investors (which
may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing
for the types of businesses we intend to acquire, including TWC Tech Holdings II Corp. Many of these individuals and entities are
well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies
operating in or providing services to various industries. Many of these competitors possess greater technical, human and other
resources or more local industry knowledge than we do and our financial resources are relatively limited when contrasted with those
of many of these competitors. While we believe there are numerous target businesses we could potentially acquire with the net proceeds
of our initial public offering and the sale of the private placement warrants, our ability to compete with respect to the acquisition
of certain target businesses that are sizable is limited by our available financial resources. Our sponsor, any of its affiliates
or any of their respective clients may make additional investments in us, although our sponsor and its affiliates have no obligation
or other duty to do so.
This inherent competitive limitation gives
others an advantage in pursuing the acquisition of certain target businesses. Furthermore, in the event we seek stockholder approval
of our initial business combination and we are obligated to pay cash for public shares that are redeemed, it will potentially reduce
the resources available to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage
in successfully negotiating and completing a business combination. If we are unable to complete our initial business combination,
our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of
our trust account and our warrants will expire worthless.
If the funds available to us outside of the trust account
are insufficient to allow us to operate for at least the completion window, we may be unable to complete our initial business combination.
The funds available to us outside of the
trust account may not be sufficient to allow us to operate for at least the completion window, assuming that our initial business
combination is not completed during that time. We expect to incur significant costs in pursuit of our acquisition plans. Management’s
plans to address this need for capital through our initial public offering and potential loans from certain of our affiliates are
discussed in the section of this Report titled “Management’s Discussion and Analysis of Financial Condition and Results
of Operations.” However, our affiliates are not obligated to make loans to us in the future, and we may not be able to raise
additional financing from unaffiliated parties necessary to fund our expenses. Any such event in the future may negatively impact
the analysis regarding our ability to continue as a going concern at such time.
We believe that the funds available to us
outside of the trust account as of December 31, 2021 of $1.0 million including permitted withdrawals and loans or additional investments
from our sponsor, are sufficient to allow us to operate for at least the completion window; however, we cannot assure you that
our estimate is accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants
to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop”
provision (a provision in letters of intent or merger agreements designed to keep target businesses from “shopping”
around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a
particular proposed business combination, although we do not have any current intention to do so. If we entered into a letter of
intent or merger agreement where we paid for the right to receive exclusivity from a target business and were subsequently required
to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching
for, or conduct due diligence with respect to, a target business. If we are unable to complete our initial business combination,
our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of
our trust account and our warrants will expire worthless.
We will depend on permitted withdrawals and loans from
our sponsor or management team to fund our search, to pay our taxes and to complete our initial business combination. If we are
unable to obtain such loans, we may be unable to complete our initial business combination.
None of the net proceeds of our initial public
offering and the sale of the private placement warrants will be available to us initially outside the trust account to fund our
working capital requirements. In the event that our offering expenses exceed our estimate of $1,150,000, we may fund such excess
from the funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account
would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $1,150,000,
the amount of funds we intend to be held outside the trust account would increase by a corresponding amount. We expect to fund
our working capital requirements prior to the time of our initial business combination with permitted withdrawals from the interest
earned on the trust account, subject to an annual limit of $500,000. In addition, our sponsor, an affiliate of our sponsor or our
officers and directors may, but none of them is obligated to, loan us funds as may be required to fund our working capital requirements.
Based upon current interest rates, we expect the trust account to generate approximately $275,000 of interest annually (assuming
an interest rate of 0.10% per year); however, we can provide no assurances regarding this amount. If we are required to seek additional
capital, we would need to borrow funds from our sponsor, management team or other third parties to operate or may be forced to
liquidate. Neither our sponsor, members of our management team nor any of their respective affiliates is under any obligation or
other duty to loan funds to us in such circumstances. Any such loans would be repaid only from funds held outside the trust account
or from funds released to us upon completion of our initial business combination. If we are unable to complete our initial business
combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust
account. In such case, our public stockholders may receive only $10.00 per share, or less in certain circumstances, and our warrants
will expire worthless.
Subsequent to our completion of our initial business combination,
we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant
negative effect on our financial condition, results of operations and the price of our securities, which could cause you to lose
some or all of your investment.
Even if we conduct extensive due diligence
on a target business with which we combine, we cannot assure you that this diligence will identify all material issues that may
be present with a particular target business, that it would be possible to uncover all material issues through a customary amount
of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of
these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment
or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected
risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Although
these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of
this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may
cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held
by a target business or by virtue of our obtaining post-combination debt financing. Accordingly, any stockholders or warrant
holders who choose to remain a stockholder or warrant holder following our initial business combination could suffer a reduction
in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction in value.
If third parties bring claims against us, the proceeds
held in the trust account could be reduced and the per share redemption amount received by stockholders may be less than $10.00
per share.
Our placing of funds in the trust account
may not protect those funds from third-party claims against us. Although we seek to have all vendors, service providers (other
than our independent registered public accounting firm), prospective target businesses or other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account
for the benefit of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements
they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement,
breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in
each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account.
If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management
will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has
not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to
us than any alternative. Making such a request of potential target businesses may make our acquisition proposal less attractive
to them and, to the extent prospective target businesses refuse to execute such a waiver, it may limit the field of potential target
businesses that we might pursue. Examples of possible instances where we may engage a third party that refuses to execute a waiver
include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly
superior to those of other consultants that would agree to execute a waiver or in cases where we are unable to find a service provider
willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have
in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against
the trust account for any reason. Upon redemption of our public shares, if we are unable to complete our initial business combination
within the completion window, or upon the exercise of a redemption right in connection with our initial business combination, we
will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years
following redemption. Accordingly, the per share redemption amount received by public stockholders could be less than the $10.00
per share initially held in the trust account, due to claims of such creditors.
Our sponsor has agreed that it will be liable
to us if and to the extent any claims by a third party (other than our independent registered public accounting firm) for services
rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement,
reduce the amount of funds in the trust account to below: (1) $10.00 per public share; or (2) the actual amount per public
share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions
in the value of the trust assets, in each case net of permitted withdrawals, except as to any claims by a third party that executed
a waiver of any and all rights to the monies held in the trust account (whether any such waiver is enforceable) and except as to
any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities
under the Securities Act. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity
obligations and we have not asked our sponsor to reserve for such indemnification obligations. We have not asked our sponsor to
reserve for such obligations. As a result, if any such claims were successfully made against the trust account, the funds available
for our initial business combination and redemptions could be reduced to less than $10.00 per public share. In such event, we may
not be able to complete our initial business combination, and you would receive such lesser amount per share in connection with
any redemption of your public shares. None of our officers or directors will indemnify us for claims by third parties including,
without limitation, claims by vendors and prospective target businesses.
Our independent directors may decide not to enforce the
indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for
distribution to our public stockholders.
In the event that the proceeds in the trust
account are reduced below the lesser of: (1) $10.00 per public share; or (2) the actual amount per share held in the
trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value
of the trust assets, in each case net of permitted withdrawals, and our sponsor asserts that it is unable to satisfy its obligations
or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether
to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent
directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible
that our independent directors in exercising their business judgment may choose not to do so in certain instances. For example,
the cost of such legal action may be deemed by the independent directors to be too high relative to the amount recoverable or the
independent directors may determine that a favorable outcome is not likely. If our independent directors choose not to enforce
these indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders
may be reduced below $10.00 per share.
If, after we distribute the proceeds in the trust account
to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not
dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as having
breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive
damages.
If, after we distribute the proceeds in the
trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy
laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court
could seek to recover some or all amounts received by our stockholders. In addition, our board of directors may be viewed as having
breached its fiduciary duty to our creditors and/or having acted in bad faith by paying public stockholders from the trust account
prior to addressing the claims of creditors, thereby exposing itself and us to claims of punitive damages.
If, before distributing the proceeds in the trust account
to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not
dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per share amount
that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the
trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included
in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent
any bankruptcy claims deplete the trust account, the per share amount that would otherwise be received by our public stockholders
in connection with our liquidation would be reduced.
Our stockholders may be held liable for claims by third
parties against us to the extent of distributions received by them upon redemption of their shares.
Under the DGCL, stockholders may be held
liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The
pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination within the completion window may be considered a liquidating distribution under
Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that
it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims
can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an
additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders
with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or
the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of
the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible following December 11,
2022 in the event we do not complete our initial business combination and, therefore, we do not intend to comply with the foregoing
procedures.
Because we do not intend to comply with Section 280,
Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our
payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following
our dissolution. However, because we are a blank check company, rather than an operating company, and our operations will be limited
to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers,
investment bankers, consultants and independent registered public accounting firm) or prospective target businesses. If our plan
of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution
is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder,
and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you
that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially
be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may
extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our
public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within
the completion window is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed
to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be
six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
We may not hold an annual meeting of stockholders until
after we consummate our initial business combination and you will not be entitled to any of the corporate protections provided
by such a meeting.
In accordance with Nasdaq corporate governance
requirements, we are not required to hold an annual meeting until no later than one year after our first fiscal year end following
our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders
for the purposes of electing directors in accordance with our bylaws unless such election is made by written consent in lieu of
such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial
business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting.
Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination,
they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c)
of the DGCL.
The grant of registration rights to our initial stockholders
and their permitted transferees and the forward purchasers with respect to the forward purchase shares may make it more difficult
to complete our initial business combination, and the future exercise of such rights may adversely affect the market price of our
Class A common stock.
Pursuant to an agreement entered into concurrently
with the issuance and sale of the securities in our initial public offering, our initial stockholders and their permitted transferees
can demand that we register the resale of their founder shares after those shares convert to shares of our Class A common
stock at the time of our initial business combination. In addition, our sponsor and its permitted transferees can demand that we
register the resale of the private placement warrants and the shares of Class A common stock issuable upon conversion of the
founder shares and exercise of the private placement warrants, and holders of warrants that may be issued upon conversion of working
capital loans may demand that we register the resale of such warrants or the Class A common stock issuable upon exercise of
such warrants. Holders of our forward purchase shares and their permitted transferees can demand that we register the forward purchase
shares as well. We will bear the cost of registering these securities. The registration and availability of such a significant
number of securities for trading in the public market may have an adverse effect on the market price of our Class A common
stock. In addition, the existence of the registration rights may make our initial business combination more costly or difficult
to complete. This is because the stockholders of the target business may increase the equity stake they seek in the combined entity
or ask for more cash consideration to offset the negative impact on the market price of our Class A common stock that is expected
when the common stock owned by our initial stockholders or their permitted transferees, the private placement warrants owned by
our sponsor, the warrants issued in connection with working capital loans or the Class A common stock owned by the forward
purchasers or their permitted transferees are registered for resale.
Our search for a business combination, and any target
business with which we ultimately consummate a business combination, may be materially adversely affected by the recent novel coronavirus
(“COVID-19”) outbreak.
On March 11, 2020, the World Health
Organization officially declared the outbreak of the COVID-19 a “pandemic.” A significant outbreak of COVID-19 and
other infectious diseases could result in a widespread health crisis that could adversely affect the economies and financial markets
worldwide, and the business of any potential target business with which we consummate a business combination could be materially
and adversely affected. Furthermore, we may be unable to complete a business combination if continued concerns relating to COVID-19 restrict
travel, limit the ability to have meetings with potential investors or the target company’s personnel, vendors and services
providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts
our search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including
new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its
impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period
of time, our ability to consummate a business combination, or the operations of a target business with which we ultimately consummate
a business combination, may be materially adversely affected.
Because we are neither limited to evaluating target businesses
in a particular industry nor have we identified any specific target businesses with which to pursue our initial business combination,
you will be unable to ascertain the merits or risks of any particular target business’s operations.
We may seek to complete a business combination
with an operating company in any industry or sector. However, we are not, under our amended and restated certificate of incorporation,
permitted to effectuate our initial business combination with another blank check company or similar company with nominal operations.
Because we have not yet identified or approached any specific target business with respect to a business combination, there is
no basis to evaluate the possible merits or risks of any particular target business’s operations, results of operations,
cash flows, liquidity, financial condition or prospects. To the extent we complete our initial business combination, we may be
affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially
unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in
the business and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor
to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess
all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks
may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact
a target business. We also cannot assure you that an investment in our securities will ultimately prove to be more favorable to
investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any stockholders
or warrant holders who choose to remain a stockholder or warrant holder following our initial business combination could suffer
a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction
in value.
In evaluating a prospective target business for our initial
business combination, our management will rely on the availability of all the funds from the sale of the forward purchase shares
to be used as part of the consideration to the sellers in the initial business combination. If the sale of the forward purchase
shares fails to close, we may lack sufficient funds to consummate our initial business combination.
In connection with the consummation of our
initial public offering, we have entered into several forward purchase agreements with the forward purchasers, pursuant to which
they have subscribed to purchase from us at least 10,000,000 shares of Class A common stock, or forward purchase shares,
for $10.00 per share, or an aggregate amount of at least $100,000,000, in a private placement that will close concurrently with
the closing of our initial business combination.
The proceeds from the sale of forward purchase
securities, if any, may be used as part of the consideration to the sellers in our initial business combination, expenses in connection
with our initial business combination or for working capital in the post-transaction company. The forward purchasers’
commitments under the forward purchase agreements are subject, among other conditions, to approval of their respective investment
committees. In addition, their obligations to purchase the forward purchase shares will be subject to fulfillment of customary
closing conditions, including that our initial business combination must be consummated substantially concurrently with the purchase
of the forward purchase shares. If the sale of the forward purchase shares does not close for any reason, including by reason of
the failure to fund the purchase price, for example, we may lack sufficient funds to consummate our initial business combination.
We may seek acquisition opportunities in acquisition targets
that may be outside of our management’s areas of expertise.
We will consider a business combination in
sectors which may be outside of our management’s areas of expertise if such business combination candidate is presented to
us and we determine that such candidate offers an attractive acquisition opportunity for our company. In the event we elect to
pursue an acquisition outside of the areas of our management’s expertise, our management’s expertise may not be directly
applicable to its evaluation or operation, and the information contained in this Report regarding the areas of our management’s
expertise would not be relevant to an understanding of the business that we elect to acquire. As a result, our management may not
be able to adequately ascertain or assess all of the significant risk factors relevant to such acquisition. Accordingly, any stockholders
or warrant holders who choose to remain a stockholder or warrant holder following our initial business combination could suffer
a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction
in value.
Although we have identified general criteria and guidelines
that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination with
a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial
business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified general criteria
and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our
initial business combination will not have all of these positive attributes. If we complete our initial business combination with
a target that does not meet some or all of these criteria and guidelines, such combination may not be as successful as a combination
with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination
with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption
rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum
net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by applicable law or
stock exchange rules, or we decide to obtain stockholder approval for business or other reasons, it may be more difficult for us
to attain stockholder approval of our initial business combination if the target business does not meet our general criteria and
guidelines. If we are unable to complete our initial business combination, our public stockholders may receive only approximately
$10.00 per share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
We may seek acquisition opportunities with an early stage
company, a financially unstable business or an entity lacking an established record of revenue or earnings, which could subject
us to volatile revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel.
To the extent we complete our initial business
combination with an early stage company, a financially unstable business or an entity lacking an established record of sales or
earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include
investing in a business without a proven business model and with limited historical financial data, volatile revenues or earnings,
intense competition and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor
to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant
risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our
control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We are not required to obtain a fairness opinion and consequently,
you may have no assurance from an independent source that the price we are paying for the business is fair to our company from
a financial point of view.
Unless we complete our initial business combination
with an affiliated entity or our board cannot independently determine the fair market value of the target business or businesses,
we are not required to obtain an opinion from an independent investment banking firm or another independent entity that commonly
renders valuation opinions that the price we are paying is fair to our company from a financial point of view. If no opinion is
obtained, our stockholders will be relying on the judgment of our board of directors, who will determine fair market value based
on standards generally accepted by the financial community. Such standards used will be disclosed in our proxy materials or tender
offer documents, as applicable, related to our initial business combination.
Resources could be wasted in researching initial business
combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge
with another business. If we are unable to complete our initial business combination, our public stockholders may receive only
approximately $10.00 per share, or less than such amount in certain circumstances, on the liquidation of our trust account and
our warrants will expire worthless.
We anticipate that the investigation of each
specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments
will require substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide
not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction likely
would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete
our initial business combination for any number of reasons including those beyond our control. Any such event will result in a
loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge
with another business. If we are unable to complete our initial business combination, our public stockholders may receive only
approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account and our warrants will
expire worthless.
Risks Relating to True Wind Capital,
our Sponsor and Management Team
Our officers and directors allocate their time to other
businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict
of interest could have a negative impact on our ability to complete our initial business combination.
Our officers and directors are not required
to, and do not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between
our operations and our search for a business combination and their other responsibilities. We do not intend to have any full-time employees
prior to the completion of our business combination. Each of our officers and directors is engaged in several other business endeavors
for which he or she may be entitled to substantial compensation and our officers and directors are not obligated to contribute
any specific number of hours per week to our affairs.
If our officers’ and directors’
other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment
levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete
our initial business combination.
We are dependent upon our officers and directors and their
departure could adversely affect our ability to operate.
Our operations are dependent upon a relatively
small group of individuals. We believe that our success depends on the continued service of our officers and directors, at least
until we have completed our initial business combination. We do not have an employment agreement with, or key-man insurance
on the life of any of our other directors or officers. The unexpected loss of the services of one or more of our directors or officers
could have a detrimental effect on us.
Our ability to successfully effect
our initial business combination and to be successful thereafter will be dependent upon the efforts of our key personnel, some
of whom may join us following our initial business combination. The loss of key personnel could negatively impact the operations
and profitability of our post-combination business.
Our ability to successfully effect our initial
business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target business,
however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management
or advisory positions following our initial business combination, we do not currently expect that any of them will do so. While
we intend to closely scrutinize any individuals we engage after our initial business combination, we cannot assure you that our
assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating
a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such
requirements.
In addition, the officers and directors of
an acquisition candidate may resign upon completion of our initial business combination. The departure of a business combination
target’s key personnel could negatively impact the operations and profitability of our post-combination business. The
role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained
at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated
with the acquisition candidate following our initial business combination, it is possible that members of the management of an
acquisition candidate will not wish to remain in place. The loss of key personnel could negatively impact the operations and profitability
of our post-combination business.
Our key personnel may negotiate employment or consulting
agreements with a target business in connection with a particular business combination, and a particular business combination may
be conditioned on the retention or resignation of such key personnel. These agreements may cause our key personnel to have conflicts
of interest in determining whether to proceed with a particular business combination. However, we do not expect that any of our
key personnel will remain with us after the completion of our initial business combination.
Our key personnel may be able to remain with
our company after the completion of our initial business combination only if they are able to negotiate employment or consulting
agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation
of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or
our securities for services they would render to us after the completion of the business combination. Such negotiations also could
make such key personnel’s retention or resignation a condition to any such agreement. The personal and financial interests
of such individuals may influence their motivation in identifying and selecting a target business. However, we believe the ability
of such individuals to remain with us after the completion of our initial business combination will not be the determining factor
in our decision as to whether or not we will proceed with any potential business combination, as we do not expect that any of our
key personnel will remain with us after the completion of our initial business combination. The determination as to whether any
of our key personnel will remain with us will be made at the time of our initial business combination.
Certain of our officers and directors are now, and all
of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted
by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity or other
transaction should be presented.
Until we consummate our initial business
combination, we will continue to engage in the business of identifying and combining with one or more businesses. Our sponsor and
officers and directors are, or may in the future become, affiliated with entities (such as operating companies or investment vehicles)
that are engaged in a similar business, including TWC Tech Holdings II Corp. We do not have employment contracts with our officers
and directors that will limit their ability to work at other businesses. In addition, our sponsor, officers and directors may participate
in the formation of, or become an officer or director of, any other blank check company prior to completion of our initial business
combination. As a result, our sponsor, officers or directors could have conflicts of interest in determining whether to present
business combination opportunities to us or to any other blank check company with which they are or may become involved, including
TWC Tech Holdings II Corp.
Each of our officers and directors presently
has, and any of them in the future may have additional, fiduciary, contractual or other obligations or duties to one or more other
entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such
entities, including TWC Tech Holdings II Corp. Accordingly, if any of our officers or directors becomes aware of a business combination
opportunity which is suitable for one or more entities to which he or she has fiduciary, contractual or other obligations or duties,
he or she will honor these obligations and duties to present such business combination opportunity to such entities first, and
only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us. These
conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation
to us. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity
offered to any director or officer unless (i) such opportunity is expressly offered to such person solely in his or her capacity
as a director or officer of our company, (ii) such opportunity is one we are legally and contractually permitted to undertake
and would otherwise be reasonable for us to pursue and (iii) the director or officer is permitted to refer the opportunity
to us without violating another legal obligation.
Our officers, directors, security holders and their respective
affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that expressly
prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest
in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact,
we may enter into a business combination with a target business that is affiliated with our sponsor or our directors or officers.
We do not have a policy that expressly prohibits any such persons from engaging for their own account in business activities of
the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.
In particular, affiliates of our sponsor,
our directors and our officers have invested, and may in the future invest, in a broad array of sectors, including those in which
our company may invest. As a result, there may be substantial overlap between companies that would be a suitable business combination
for us and companies that would make an attractive target for such other affiliates.
We may engage in a business combination with one or more
target businesses that have relationships with entities that may be affiliated with True Wind Capital, our sponsor, officers or
directors which may raise potential conflicts of interest.
In light of the involvement of our sponsor,
officers and directors with other businesses, we may decide to acquire one or more businesses affiliated with or competitive with
True Wind Capital, our sponsor, officers and directors, and their respective affiliates. Our directors also serve as officers and
board members for other entities. Such entities may compete with us for business combination opportunities. Despite our agreement
to obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm,
regarding the fairness to our stockholders from a financial point of view of a business combination with one or more domestic or
international businesses affiliated with True Wind Capital, our sponsor, officers or directors, potential conflicts of interest
still may exist and, as a result, the terms of the business combination may not be as advantageous to our public stockholders as
they would be absent any conflicts of interest.
Since our initial stockholders will lose their entire
investment in us if our initial business combination is not completed (other than with respect to any public shares they may hold),
a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial
business combination.
In September 2020, our sponsor purchased
an aggregate of 7,906,250 founder shares for an aggregate purchase price of $25,000, or approximately $0.003 per share. In September
and October 2020, our sponsor transferred 25,000 founder shares to each of Messrs. Kerko, Wagner, Thompson and Ms. Wellman,
our independent directors, in each case at the original per share purchase price. In November 2020, our sponsor cancelled 718,750
founder shares, resulting in our sponsor holding an aggregate of 7,087,500 founder shares. 312,500 founder shares held by our sponsor
were forfeited as a result of the partial exercise of underwriters’ over-allotment option. The founder shares will be worthless
if we do not complete an initial business combination.
In addition, our sponsor has purchased an
aggregate of 5,166,667 private placement warrants for a purchase price of $7,750,000, or $1.50 per warrant, that will also be worthless
if we do not complete our initial business combination. Each private placement warrant entitles the holder thereof to purchase
one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as provided herein.
The founder shares are identical to the shares
of Class A common stock included in the units being sold in our initial public offering, except that: (1) only holders
of the founder shares have the right to vote on the election and removal of directors prior to our initial business combination;
(2) the founder shares are subject to certain transfer restrictions, as described in more detail below; (3) our sponsor,
officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to: (a) waive their
redemption rights with respect to any founder shares and any public shares held by them in connection with the completion of our
initial business combination, (b) waive their redemption rights with respect to any founder shares and public shares held
by them in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation
to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial
business combination or to redeem 100% of our public shares if we have not consummated our initial business combination within
the completion window; and (c) waive their rights to liquidating distributions from the trust account with respect to any
founder shares held by them if we fail to complete our initial business combination within the completion window (although they
will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to
complete our initial business combination within the completion window); (4) the founder shares are automatically convertible into
shares of our Class A common stock at the time of our initial business combination on a one-for-one basis, subject to
adjustment pursuant to certain anti-dilution rights, as described herein; and (5) the holders of founder shares are entitled
to registration rights.
The personal and financial interests of our
sponsor, officers and directors may influence their motivation in identifying and selecting a target business combination, completing
an initial business combination and influencing the operation of the business following the initial business combination. This
risk may become more acute as the deadline for completing our initial business combination nears.
Our management may not be able to maintain control of
a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business,
new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure our initial business combination
so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests
or assets of a target business, but we will only complete such business combination if the post-transaction company owns or
acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target
business sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not
consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting
securities of the target, our stockholders prior to our initial business combination may collectively own a minority interest in
the post business combination company, depending on valuations ascribed to the target and us in our initial business combination.
For example, we could pursue a transaction in which we issue a substantial number of new shares of common stock in exchange for
all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result
of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could
own less than a majority of our outstanding shares of common stock subsequent to such transaction. In addition, other minority
stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s
stock than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain our
control of the target business.
Risks Relating to our Securities
The securities in which we invest the funds held in the
trust account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the per-share
redemption amount received by public shareholders may be less than $10.00 per share.
The proceeds held in the trust account will
be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain
conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations.
While short-term U.S. government treasury obligations currently yield a positive rate of interest, they have briefly yielded
negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and
the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies
in the United States. In the event that we are unable to complete our initial business combination or make certain amendments to
our amended and restated certificate of incorporation, our public shareholders are entitled to receive their pro-rata share
of the proceeds held in the trust account, plus any interest income, net of taxes paid or payable (less, in the case we are unable
to complete our initial business combination, $100,000 of interest). Negative interest rates could reduce the value of the assets
held in trust such that the per-share redemption amount received by public shareholders may be less than $10.00 per share.
If we are deemed to be an investment company under the
Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted,
which may make it difficult for us to complete our initial business combination.
If we are deemed to be an investment company
under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities;
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each of which may make it difficult for us to complete our initial
business combination. In addition, we may have imposed upon us burdensome requirements, including:
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registration as an investment company with the SEC;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure
requirements and compliance with other rules and regulations that we are currently not subject to.
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In order not to be regulated as an investment
company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily
in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting,
owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S.
government securities and cash items) on an unconsolidated basis. Our business will be to identify and complete a business combination
and thereafter to operate the post-transaction business or assets for the long-term. We do not plan to buy businesses or assets
with a view to resale or profit from their resale.
We do not plan to buy unrelated businesses
or assets or to be a passive investor.
We do not believe that our principal activities
subject us to the Investment Company Act. To this end, the proceeds held in the trust account may only be invested in United States
“government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185
days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company
Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee is not permitted
to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business
plan targeted at acquiring and growing businesses for the long-term (rather than on buying and selling businesses in the manner
of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning
of the Investment Company Act. The trust account is intended as a holding place for funds pending the earliest to occur of: (i)
the completion of our primary business objective, which is a business combination; (ii) the redemption of any public shares properly
submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance
or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination
or to redeem 100% of our public shares if we do not complete our initial business combination within the completion window; and
(iii) absent a business combination, our return of the funds held in the trust account to our public stockholders as part of our
redemption of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment
Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens
would require additional expenses for which we have not allotted funds and may hinder our ability to consummate our initial business
combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately
$10.00 per share on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our
public stockholders may receive less than $10.00 per share on the redemption of their shares.
Nasdaq may delist our securities from trading on its exchange,
which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
Our securities are currently listed on Nasdaq.
Although after giving effect to our initial public offering we expect to meet, on a pro forma basis, the minimum initial listing
standards set forth in the Nasdaq listing standards, we cannot assure you that our securities will continue to be listed on Nasdaq
in the future or prior to our initial business combination. In order to continue listing our securities on Nasdaq prior to our
initial business combination, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain
a minimum amount in stockholders’ equity (generally $2,500,000) and a minimum number of holders of our securities (generally
300 public holders). Additionally, in connection with our initial business combination, we will be required to demonstrate compliance
with Nasdaq’s initial listing requirements, which are more rigorous than Nasdaq’s continued listing requirements, in
order to continue to maintain the listing of our securities on Nasdaq. For instance, our stock price would generally be required
to be at least $4.00 per share, our stockholders’ equity would generally be required to be at least $5.0 million and
we would be required to have a minimum of 300 round lot holders (with at least 50% of such round lot holders holding securities
with a market value of at least $2,500) of our securities. We cannot assure you that we will be able to meet those initial listing
requirements at that time.
If Nasdaq delists our securities from trading
on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could
be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our Class A common stock is a “penny
stock” which will require brokers trading in our Class A common stock to adhere to more stringent rules and possibly result
in a reduced level of trading activity in the secondary trading market for our securities;
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a limited amount of news and analyst coverage; and
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a decreased ability to issue additional securities or
obtain additional financing in the future.
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The National Securities Markets Improvement
Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which
are referred to as “covered securities.” Because our units, our Class A common stock and warrants are listed on Nasdaq,
our units, Class A common stock and warrants are covered securities. Although the states are preempted from regulating the sale
of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if
there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case.
While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check
companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might
use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further,
if we were no longer listed on Nasdaq, our securities would not be covered securities and we would be subject to regulation in
each state in which we offer our securities, including in connection with our initial business combination.
If we seek stockholder approval of our initial business
combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of stockholders
are deemed to hold 15% or more of our Class A common stock, you will lose the ability to redeem all such shares in excess of 15%
of our Class A common stock.
If we seek stockholder approval of our initial
business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender
offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate
of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined
under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to an aggregate of 15% or
more of the shares sold in our initial public offering, without our prior consent, which we refer to as the “Excess Shares.”
However, our amended and restated certificate of incorporation does not restrict our stockholders’ ability to vote all of
their shares (including Excess Shares) for or against our initial business combination. Your inability to redeem the Excess Shares
will reduce your influence over our ability to complete our initial business combination and you could suffer a material loss on
your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions
with respect to the Excess Shares if we complete our initial business combination. And as a result, you will continue to hold the
Excess Shares and, in order to dispose of such shares, would be required to sell your Excess Shares in open market transactions,
potentially at a loss.
We have not registered the shares of Class A common stock
issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration
may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its
warrants except on a “cashless basis” and potentially causing such warrants to expire worthless.
We have not registered the shares of Class
A common stock issuable upon exercise of the warrants, issued in our initial public offering under the Securities Act or any state
securities laws at this time. However, under the terms of the warrant agreement, we have agreed that as soon as practicable, but
in no event later than 15 business days after the closing of our initial business combination, we will use our reasonable best
efforts to file with the SEC, and within 60 business days following our initial business combination to have declared effective,
a registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and
to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. We
cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change
in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by
reference therein are not current, complete or correct or the SEC issues a stop order. If the shares issuable upon exercise of
the warrants issued in our initial public offering are not registered under the Securities Act, we will be required to permit holders
to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we
will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon
such exercise is registered or qualified under the securities laws of the state of the exercising holder or an exemption from registration
or qualification is available. Notwithstanding the above, if our Class A common stock is at the time of any exercise of a warrant
not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section
18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so
on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will
not be required to file or maintain in effect a registration statement, but we will use our reasonable best efforts to register
or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In no event will we be required
to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we are
unable to register or qualify the shares underlying the warrants issued in our initial public offering under applicable state securities
laws and no exemption is available. If the issuance of the shares upon exercise of the warrants is not so registered or qualified
or exempt from registration or qualification, the holder of such warrant shall not be entitled to exercise such warrant and such
warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units
will have paid the full unit purchase price solely for the shares of Class A common stock included in the units. If and when the
warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying
shares of Class A common stock for sale under all applicable state securities laws.
Provisions in our amended and restated certificate of
incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the
future for our Class A common stock and could entrench management.
Our amended and restated certificate of incorporation
contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests.
These provisions include three-year director terms and the ability of the board of directors to designate the terms of and
issue new series of preferred shares, which may make more difficult the removal of management and may discourage transactions that
otherwise could involve payment of a premium over prevailing market prices for our securities.
Section 203 of the DGCL affects the ability
of an “interested stockholder” to engage in certain business combinations, for a period of three years following the
time that the stockholder becomes an “interested stockholder.” We have elected in our amended and restated certificate
of incorporation not to be subject to Section 203 of the DGCL. Nevertheless, our certificate of incorporation contains provisions
that have the same effect as Section 203 of the DGCL, except that it provides that affiliates of our sponsor and their transferees
will not be deemed to be “interested stockholders,” regardless of the percentage of our voting stock owned by them,
and will therefore not be subject to such restrictions. These charter provisions may limit the ability of third parties to acquire
control of our company.
Our amended and restated certificate of incorporation
requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers,
other employees or stockholders for breach of fiduciary duty and certain other actions may be brought only in the Court of Chancery
in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will, subject to certain exceptions,
be deemed to have consented to service of process on such stockholder’s counsel, which may have the effect of discouraging
lawsuits against our directors, officers, other employees or stockholders.
Our amended and restated certificate of incorporation
requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers,
other employees or stockholders for breach of fiduciary duty and certain other actions may be brought only in the Court of Chancery
in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented
to service of process on such stockholder’s counsel except any action (A) as to which the Court of Chancery in the State
of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable
party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B)
which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery or (C) for which the Court of
Chancery does not have subject matter jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares
of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate
of incorporation. This choice of forum provision may limit or make more costly a stockholder’s ability to bring a claim in
a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders,
which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision
contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur
additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results
and financial condition.
Our amended and restated certificate of incorporation
provides that the exclusive forum provision is applicable to the fullest extent permitted by applicable law, subject to certain
exceptions. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or
liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will
not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal
courts have exclusive jurisdiction. In addition, our amended and restated certificate of incorporation provides that, unless we
consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall,
to the fullest extent permitted by law, be the exclusive forum for the resolution of any complaint asserting a cause of action
arising under the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder. We note, however, that
there is uncertainty as to whether a court would enforce this provision and that investors cannot waive compliance with the federal
securities laws and the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for
state and federal courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and
regulations thereunder.
We may amend the terms of the warrants in a manner that
may be adverse to holders of public warrants with the approval by the holders of at least a majority of the then outstanding public
warrants. As a result, the exercise price of your warrants could be increased, the warrants could be converted into cash or stock
(at a ratio different than initially provided), the exercise period could be shortened and the number of shares of our Class A
common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants are issued in registered form
under a warrant agreement between American Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement
provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective
provision, but requires the approval by the holders of a majority of the then outstanding public warrants to make any change that
adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public
warrants in a manner adverse to a holder if holders of a majority of the then outstanding public warrants approve of such amendment.
Although our ability to amend the terms of the public warrants with the consent of a majority of the then outstanding public warrants
is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants,
convert the warrants into cash or stock (at a ratio different than initially provided), shorten the exercise period or decrease
the number of shares of our common stock purchasable upon exercise of a warrant. Our initial stockholders may purchase public warrants
with the intention of reducing the number of public warrants outstanding or to vote such warrants on any matters submitted to warrant
holders for approval, including amending the terms of the public warrants in a manner adverse to the interests of the registered
holders of public warrants. While our initial stockholders have no current commitments, plans or intentions to engage in such transactions
and have not formulated any terms or conditions for such transactions, there is no limit on the number of our public warrants that
our initial stockholders may purchase and it is not currently known how many public warrants, if any, our initial stockholders
may hold at the time of our initial business combination or at any other time during which the terms of the public warrants may
be proposed to be amended.
Our warrant agreement designates the courts of the State
of New York or the United States District Court for the Southern District of New York as the sole and exclusive
forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability
of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement provides that, subject
to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement,
including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States
District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which
jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive
jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding the foregoing, these provisions
of the warrant agreement does not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other
claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or
entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented
to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope the forum provisions
of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District
Court for the Southern District of New York (a “foreign action”) in the name of any holder of our warrants, such
holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the
State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement
action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service
upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
This choice-of-forum provision may limit
a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which
may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable
with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving
such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results
of operations and result in a diversion of the time and resources of our management and board of directors.
We may redeem your unexpired warrants prior to their exercise
at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem outstanding
warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that
the closing price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third
trading day prior to the date we send the notice of redemption to the warrant holders. If and when the warrants become redeemable
by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under
all applicable state securities laws.
In addition, we have the ability to redeem
the outstanding public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.10 per
warrant upon a minimum of 30 days’ prior written notice of redemption provided that the closing price of our Class A
common stock equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or
the exercise price of a warrant as described under the heading “Description of Securities — Warrants —
Public Stockholders’ Warrants — Anti-Dilution Adjustments”) for any 20 trading days within a 30 trading-day period
ending on the third trading day prior to proper notice of such redemption and provided that certain other conditions are met, including
that holders will be able to exercise their warrants prior to redemption for a number of shares of Class A common stock determined
based on the redemption date and the fair market value of our Class A common stock. The value received upon exercise of the
warrants (1) may be less than the value the holders would have received if they had exercised their warrants at a later time
where the underlying share price is higher and (2) may not compensate the holders for the value of the warrants, including
because the number of shares of Class A common stock received is capped at 0.361 shares of Class A common stock
per warrant (subject to adjustment) irrespective of the remaining life of the warrants.
If the reference value is less than $18.00
per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and
the like), then the private placement warrants must also concurrently be called for redemption on the same terms as the outstanding
public warrants, as described above.
Our warrants and founder shares may have an adverse effect
on the market price of our Class A common stock and make it more difficult to effectuate our initial business combination.
We issued warrants to purchase 5,500,000
shares of our Class A common stock, at a price of $11.50 per whole share (subject to adjustment as provided herein), as part
of the units offered in our initial public offering. Simultaneously with the closing of our initial public offering, we issued
in the private placement an aggregate of 5,166,667 private placement warrants, each exercisable to purchase one share of Class A
common stock at a price of $11.50 per share, subject to adjustment as provided herein. Our initial stockholders currently hold
6,875,000 founder. The founder shares are convertible into shares of Class A common stock on a one-for-one basis, subject
to adjustment as set forth herein. In addition, if our sponsor, an affiliate of our sponsor or certain of our officers and directors
make any working capital loans, up to $1,500,000 of such loans may be converted into warrants, at the price of $1.50 per warrant,
at the option of the lender. Such warrants would be identical to the private placement warrants.
To the extent we issue shares of Class A
common stock to effectuate a business transaction, the potential for the issuance of a substantial number of additional shares
of Class A common stock upon exercise of these warrants or conversion rights could make us a less attractive acquisition vehicle
to a target business. Any such issuance will increase the number of outstanding shares of our Class A common stock and reduce
the value of the Class A common stock issued to complete the business transaction. Therefore, our warrants and founder shares
may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business.
The private placement warrants are identical
to the warrants sold as part of the units in our initial public offering except that, so long as they are held by our sponsor or
its permitted transferees: (1) if the reference value is less than $18.00 per share (as adjusted for share splits, share dividends,
rights issuances, subdivisions, reorganizations, recapitalizations and the like), then the private placement warrants must also
concurrently be called for redemption on the same terms as the outstanding public warrants, as described above; (2) they (including
the Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred,
assigned or sold by our sponsor until 30 days after the completion of our initial business combination; (3) they may
be exercised by the holders on a cashless basis; and (4) the holders thereof (including with respect to the shares of common
stock issuable upon exercise of these warrants) are entitled to registration rights.
A provision of our warrant agreement may make it more
difficult for use to consummate an initial business combination.
If
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we issue additional shares of Class A common stock
or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination
at a Newly Issued Price of less than $9.20 per share;
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the aggregate gross proceeds from such issuances represent
more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination
on the date of the consummation of our initial business combination (net of redemptions); and
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the Market Value is below $9.20 per share;
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then the exercise price of the warrants will be adjusted to
be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger prices
described below under “Description of Securities — Warrants — Public Stockholders’ Warrants —
Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00” will be adjusted (to
the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption
trigger price described below under “Description of Securities — Warrants — Public Stockholders’
Warrants — Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00”
will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price. This may make
it more difficult for us to consummate an initial business combination with a target business.
The requirements of being a public company may strain
our resources and divert management’s attention.
As a public company, we are subject to the
reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes Oxley Act”), the Dodd-Frank
Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other applicable securities rules and regulations.
Compliance with these rules and regulations increase our legal and financial compliance costs, make some activities more difficult,
time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an “emerging
growth company.” The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and
procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls
and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight
may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely
affect our business and operating results. We may need to hire more employees in the future or engage outside consultants to comply
with these requirements, which will increase our costs and expenses.
A market for our securities may not develop, which would
adversely affect the liquidity and price of our securities.
The price of our securities may vary significantly
due to one or more potential business combinations and general market or economic conditions, including as a result of the COVID-19 outbreak.
Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be
unable to sell your securities unless a market can be established and sustained.
We may issue additional shares of Class A common stock
or preferred stock to complete our initial business combination or under an employee incentive plan after completion of our initial
business combination. We may also issue shares of Class A common stock to redeem the warrants upon conversion of the Class B common
stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions
described herein and we may also issue shares of Class A common stock upon redemption of the warrants in certain circumstances
as described herein. Any such issuances would dilute the interest of our stockholders and likely present other risks.
Our amended and restated certificate of incorporation
will authorize the issuance of up to 200,000,000 shares of Class A common stock, par value $0.0001 per share, and 20,000,000 shares
of Class B common stock, par value $0.0001 per share and 1,000,000 shares of undesignated preferred stock, par value $0.0001
per share. There are 165,625,000 and 13,125,000 authorized but unissued shares of Class A and Class B common stock, respectively,
available for issuance, which amount does not take into account shares reserved for issuance upon exercise of outstanding warrants
but not upon the conversion of the Class B common stock. Shares of Class B common stock are automatically convertible into shares
of our Class A common stock at the time of our initial business combination, initially at a one-for-one ratio but subject
to adjustment as set forth herein. There are currently no shares of preferred stock issued and outstanding.
We may issue a substantial number of additional
shares of Class A common stock, and may issue shares of preferred stock, in order to complete our initial business combination
or under an employee incentive plan after completion of our initial business combination (although our amended and restated certificate
of incorporation provides that we may not issue additional securities that can vote on amendments to our amended and restated certificate
of incorporation or on our initial business combination or that would entitle holders thereof to receive funds from the trust account).
We may also issue shares of Class A common stock to redeem the warrants upon conversion of the Class B common stock at a ratio
greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions described
herein, and we may also issue shares of Class A common stock upon redemption of the warrants in certain circumstances as described
herein. However, our amended and restated certificate of incorporation provides, among other things, that prior to our initial
business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to (1) receive
funds from the trust account or (2) vote on any initial business combination. The issuance of additional shares of common or preferred
stock:
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may significantly dilute the equity interest of investors
in our initial public offering;
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may subordinate the rights of holders of common stock
if preferred stock is issued with rights senior to those afforded our common stock;
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could cause a change in control if a substantial number
of shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards,
if any, and could result in the resignation or removal of our present officers and directors; and
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may adversely affect prevailing market prices for our
units, common stock and/or warrants.
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General Risk Factors
We are a recently incorporated early stage company with
no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a recently incorporated early company
with no operating results. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve
our business objective of completing our initial business combination with one or more target businesses. We may be unable to complete
our initial business combination. If we fail to complete our initial business combination, we will never generate any operating
revenues.
Past performance by members of our management team and
their affiliates may not be indicative of future performance of an investment in us.
Information regarding performance by, or
businesses associated with members of our management team and their affiliates is presented for informational purposes only. Any
past experience and performance, of members of our management team and their affiliates is not a guarantee either: (1) that we
will be able to successfully identify a suitable candidate for our initial business combination; or (2) of any results with respect
to any initial business combination we may consummate. You should not rely on the historical record and performance of members
of our management team or their affiliates as indicative of the future performance of an investment in us or the returns we will,
or are likely to, generate going forward.
Cyber incidents or attacks directed at us could result
in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital technologies, including
information systems, infrastructure and cloud applications and services, including those of third parties with which we may deal.
Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure
of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive
or confidential data. As an early stage company without significant investments in data security protection, we may not be sufficiently
protected against such occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate
any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse
consequences on our business and lead to financial loss.
Changes in laws or regulations, or a failure to comply
with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business
combination, and results of operations.
We are subject to laws and regulations enacted
by national, regional and local governments. In particular, we are required to comply with certain SEC and other legal requirements.
Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and
regulations and their interpretation and application may also change from time to time and those changes could have a material
adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or
regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate
and complete our initial business combination, and results of operations.
We are an emerging growth company within the meaning of
the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies,
this could make our securities less attractive to investors and may make it more difficult to compare our performance with other
public companies.
We are an “emerging growth company”
within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various
reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not
limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act,
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from
the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute
payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important.
We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier,
including if the market value of our common stock held by non-affiliates exceeds $700 million as of the end of any second
quarter of a fiscal year, in which case we would no longer be an emerging growth company as of the end of such fiscal year. We
cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors
find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be
lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our
securities may be more volatile.
Further, Section 102(b)(1) of the JOBS
Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private
companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of
securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The
JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply
to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended
transition period which means that when a standard is issued or revised and it has different application dates for public or private
companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new
or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging
growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible
because of the potential differences in accounting standards used.
There are risks related to the technology and technology-enabled
services sectors to which we may be subject.
Business combinations with companies with
operations in the technology and technology-enabled services sectors entail special considerations and risks. If we are successful
in completing a business combination with a target business with operations in such sectors, we will be subject to, and possibly
adversely affected by, the following risks, including but not limited to:
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if we do not develop successful new products or improve
existing ones, our business will suffer;
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we may invest in new lines of business that could fail
to attract or retain users or generate revenue;
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we will face significant competition and if we are not
able to maintain or improve our market share, our business could suffer;
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disruption or failure of our networks, systems, platform
or technology that frustrate or thwart our users’ ability to access our products and services, may cause our users, advertisers,
and partners to cut back on or stop using our products and services altogether, which could seriously harm our business;
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mobile malware, viruses, hacking and phishing attacks,
spamming, and improper or illegal use of our products could seriously harm our business and reputation;
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if we are unable to successfully grow our user base and
further monetize our products, our business will suffer;
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if we are unable to protect our intellectual property,
the value of our brand and other intangible assets may be diminished, and our business may be seriously harmed;
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we may be subject to regulatory investigations and proceedings
in the future, which could cause us to incur substantial costs or require us to change our business practices in a way that could
seriously harm our business; and
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components used in our products may fail as a result
of a manufacturing, design, or other defect over which we have no control, and render our devices inoperable.
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Any of the foregoing could have an adverse
impact on our operations following a business combination. However, our efforts in identifying prospective target businesses are
not limited to technology and technology-enabled services sectors. Accordingly, if we acquire a target business in another
sector, these risks will likely not affect us and we will be subject to other risks attendant with the specific industry in which
we operate or target business which we acquire, none of which can be presently ascertained.