Overview
We
are an early-stage blank check company incorporated in Delaware on August 24, 2020 under the name “Class Acquisition Corporation,”
whose business purpose is to effect an initial business combination. On November 16, 2020, we changed our name to “Class Acceleration
Corp.”
Our
management team has extensive experience with acquisitions and consummating business combinations. Led by Michael Moe, our Chief Executive
Officer, our management team’s shared vision is owning and building a market-dominant and agile education technology business.
Private technology companies are changing the world at an unprecedented pace by establishing new markets, creating new experiences and
disrupting legacy industries. This is happening at an accelerated pace in the digital learning industry, driven by the knowledge economy
and most recently by COVID-19. We seek to acquire a digital learning leader that benefits from the dual tailwinds of the knowledge economy
and the Internet. Digital economics reflect a disproportionate gain to the leaders of a category. Accordingly, we seek leading companies
who we believe have both competitive and sustainable advantages. We believe our management team’s significant operating and transaction
experience and relationships will continue to provide us with a substantial number of potential initial business combination targets.
The
underlying growth fundamentals in the digital learning industry has attracted substantial venture and growth capital over the past 10
years. In 2019, $7 billion was invested in private digital learning companies versus only $500 million in 2010, a 14x increase
in nearly a decade. Moreover, globally there are currently approximately 30 privately held digital learning companies with valuations
in excess of $1 billion, where none existed only five years ago. Our management team has been investing in the digital learning
market for over 10 years, which is why we believe we will be able to identify and source several targets that will meet our stringent
acquisition criteria.
Our
efforts to identify a prospective initial business combination target are not limited to a particular industry, sector or geographic
region. While we may pursue an initial business combination opportunity in any industry or sector, since our initial public offering,
we have capitalized on the ability of our management team to identify, acquire and operate a business or businesses that can benefit
from our management team’s established global relationships and operating experience. Our management team has extensive experience
in identifying and executing strategic investments globally and has done so successfully in a number of sectors, including media and
entertainment.
Initial
Public Offering
On
January 20, 2021, we consummated our initial public offering of 25,875,000 units. Each unit consists of one share of Class A common stock
of the Company, par value $0.0001 per share, and one-half redeemable warrant of the Company, with each warrant entitling the holder thereof
to purchase one share of Class A Common Stock for $11.50 per whole share. The units were sold at a price of $10.00 per unit, generating
gross proceeds to the Company of $258,750,000.
Simultaneously
with the closing of the initial public offering, we completed the private sale of an aggregate of 7,175,000 private placement warrants
to our sponsor at a purchase price of $1.00 per private placement warrant, generating gross proceeds of $7,175,000.
A
total of $258,750,000, comprised of $253,575,000 of the proceeds from the initial public offering and $5,175,000 of the proceeds of the
sale of the private placement warrants was placed in the trust account maintained by Continental, acting as trustee.
If
our initial business combination is not consummated by January 20, 2023, then our existence will terminate, and we will distribute all
amounts in the trust account.
Acquisition
Criteria
We
seek to acquire digital learning leaders that benefit from the dual tailwinds of the knowledge economy and the Internet. Digital economics
reflect a disproportionate gain to the leaders of a category. Accordingly, we are seeking leading companies who we believe have both
competitive and sustainable advantages. We believe the following general criteria and framework are important in evaluating prospective
target businesses, but we may decide to enter into a business combination with a target business that does not meet these criteria and
guidelines.
Targets
That Can Benefit from our Management Team’s Relationships and Experience. Our efforts to identify
a prospective initial business combination target are not limited to a particular industry, sector or geographic region. While we may
pursue an initial business combination opportunity in any industry or sector, since our initial public offering, we have capitalized
on the ability of our management team to identify, acquire and operate a business or businesses that can benefit from our management
team’s established global relationships and operating experience. Our management team has extensive experience in identifying and
executing strategic investments globally and has done so successfully in a number of sectors, including media and entertainment. We believe
our management’s significant operating and deal-making experience and relationships gives us a number of competitive advantages
and will present us with a substantial number of potential business combination targets, particularly in the education media and entertainment
industries. The factors we consider include growth prospects, competitive dynamics, opportunities for consolidation and need for capital
investment.
High-Growth Markets. We
seek out opportunities in faster-growing segments of developed markets and emerging international markets. Our management team has
extensive experience operating education media businesses and leading transactions in international markets.
Business
with Revenue and Earnings Growth Potential. We seek to acquire one or more businesses that have multiple,
diverse potential drivers of revenue and earnings growth.
Companies
with Potential for Strong Free Cash Flow Generation. We seek to acquire one or more businesses that have
the potential to generate strong and stable free cash flow.
Evaluation
Framework
These
acquisition criteria are supported by our investment framework which utilizes the “five Ps” which members of our management
team have used over their careers to identify and invest in growth businesses. Leveraging decades of investment experience, founding
members of our team developed the “five Ps” investment framework — a simple tool we use as part of our evaluation
of the thousands of entrepreneurs we meet each year. First shared publicly in Michael Moe’s business best-selling book “Finding
the Next Starbucks”, our team leverages this powerful investing framework daily.
People:
When
evaluating founders, we not only look at their experiences and strategic strengths, but we also look at the team that they are able to
build around them, including key partners, advisors, and early hires.
Product:
We
want to support companies that are leaders in what they do, have a proprietary product or service, or better yet, a “one-of-a-kind”
type of business, and create substantially better user experiences than existing alternatives.
Potential:
Determining
the total future market potential is a pillar of our research and influenced by megatrends as they provide “tailwinds” to
accelerate growth. We believe the companies with the most potential are where the biggest problems are — the bigger the problem,
the bigger the opportunity.
Predictability:
We
are looking for business models that create predictability, whether it’s through recurring revenue or a clear articulation of operating
metrics that drive the business. We believe that, as a public company, predictability of result will be critical in meeting expectations.
Purpose:
We
think there is a fundamental shift taking place in the best businesses of tomorrow. We believe there is a new “invisible hand”
that is aligning economic incentives with purpose and meaning, where we believe the best, most long-term sustainable businesses
will drive the highest returns. We believe the greatest companies have equal alliances amongst employees, customers, shareholders, the
environment, and the community.
Our
management team leverages the above framework, looking for companies that have high impact, provide essential services, and are critical
in the transformation of human capital. We intend to acquire companies that have the opportunity to solve some of society’s biggest
issues because that’s where we believe the biggest returns will be.
In
the event that we decide to enter into a business combination with a target business that does not meet the above criteria and framework,
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 proxy solicitation or tender offer materials, as applicable,
that we would file with the Securities and Exchange Commission, or the SEC. In evaluating a prospective target business, we have conducted
and will continue to conduct a due diligence review which may encompass, among other things, meetings with incumbent management and employees,
document reviews, interviews of customers and suppliers, inspections of facilities, as well as reviewing financial and other information
which will be made available to us.
Sourcing
of Potential Initial Business Combination Targets
We
believe our management team’s significant operating and transaction experience and relationships will continue to provide us with
a substantial number of potential initial business combination targets.
Over
the course of their careers, the members of our management team have developed a broad network of contacts and corporate relationships
around the world. This network has grown through the activities of our management team sourcing, acquiring and financing businesses,
the reputation of our management team for integrity and fair dealing with sellers, financing sources and target management teams and
the experience of our management team in executing transactions under varying economic and financial market conditions. In addition,
members of our management team have developed contacts from serving on the boards of directors of prominent media companies.
This
network has provided our management team with a flow of referrals that has resulted in numerous transactions which were proprietary or
where a limited group of investors were invited to participate in the sale process. We believe that the network of contacts and relationships
of our management team will continue to provide us important sources of investment opportunities. In addition, target business combination
candidates may be brought to our attention from various unaffiliated sources, including investment market participants, private equity
funds and large business enterprises seeking to divest non-core assets or divisions.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, executive officers
or directors, or completing the business combination through a joint venture or other form of shared ownership with our sponsor, executive
officers or directors. In the event we seek to complete an initial business combination with a target that is affiliated with our sponsor,
executive officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment
banking firm or another independent entity that commonly renders valuation opinions stating that such an initial business combination
is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be
based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management
may deem relevant. In the event that we decide to enter into our initial business combination with a target business that only meets
some but not all of 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.
Initial
Business Combination
In
accordance with the rules of the NYSE, our initial business combination must occur with one or more target businesses that together have
an aggregate fair market value of at least 80% of the assets held in the trust account (excluding the amount of deferred underwriting
discounts held in trust and taxes payable on the income 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 or another independent
entity that commonly renders valuation opinions with respect to satisfaction of such criteria. Our stockholders may not be provided with
a copy of such opinion nor will they be able to rely on such opinion. Subject to this requirement, our management will have virtually
unrestricted flexibility in identifying and selecting one or more prospective businesses, but if the business combination involves more
than one target business, the 80% fair market value test will be based on the aggregate value of all of the target businesses and we
will treat the target businesses together as our initial business combination for purposes of a seeking stockholder approval or conducting
a tender offer, as applicable. We do not currently intend to purchase multiple businesses in unrelated industries in conjunction with
our initial business combination.
We
will structure our initial business combination so that the post-transaction company in which our public stockholders own shares
will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial
business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target
business in order to meet certain objectives of the prior owners of the target business, the target management team or stockholders or
for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more
of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to
be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or
acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own
a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination
transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the
outstanding capital stock, shares or other equity interests of a 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 issued and 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 valued for purposes of the 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 will encompass,
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.
Our
Acquisition Process
In
evaluating a prospective target business, we have conducted and will continue to conduct a thorough due diligence review which will encompass,
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.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors.
In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors,
we, or a committee of independent directors, will obtain an opinion that our initial business combination is fair to our company from
a financial point of view from an independent investment banking firm or another independent entity that commonly renders valuation opinions.
Members
of our management team directly or indirectly own our common stock and/or private placement warrants, and, accordingly, 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 is 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 any of them in the future may have additional, fiduciary or contractual obligations
to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to
such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for
an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual
obligations to present such business combination opportunity to such other entity, subject to their fiduciary duties under Delaware law.
We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect
our ability to complete our initial business combination. Our second amended and restated certificate of incorporation provides that
we renounce our interest in any business combination opportunity offered to any director or officer unless such opportunity is expressly
offered to such person solely in his or her capacity as a director or officer of the Company and it is an opportunity that we are able
to complete on a reasonable basis.
We
currently do not have any specific business combination under consideration. Our officers and directors have neither individually identified
nor considered a target business, nor have they had any discussions regarding possible target businesses among themselves or with our
underwriters or other advisors. We are continuously made aware of potential business opportunities, one or more of which we may desire
to pursue for a business combination, but we have not (nor has anyone on our behalf) contacted any prospective target business or had
any substantive discussions, formal or otherwise, with respect to a business combination transaction with our company. We have not (nor
have any of our agents or affiliates) been approached by any candidates (or representative of any candidates) with respect to a possible
acquisition transaction with our company. Additionally, we have not, nor has anyone on our behalf, taken any substantive measure, directly
or indirectly, to identify or locate any suitable acquisition candidate for us, nor have we engaged or retained any agent or other representative
to identify or locate any such acquisition candidate.
Status
as a Public Company
We
believe our structure as a public company makes us an attractive business combination partner to target businesses. As an existing public
company, we offer a target business an alternative to the traditional initial public offering through a merger or other business combination
with us. In a business combination transaction with us, the owners of the target business may, for example, exchange their shares of
stock, shares or other equity interests in the target business for our Class A common stock (or shares of a new holding company)
or for a combination of our Class A common stock and cash, allowing us to tailor the consideration to the specific needs of the
sellers. We believe target businesses will find this method a more expeditious and cost-effective method to becoming a public company
than the typical initial public offering. The typical initial public offering process takes a significantly longer period of time than
the typical business combination transaction process, and there are significant expenses in the initial public offering process, including
underwriting discounts and commissions, that may not be present to the same extent in connection with a business combination with us.
Furthermore,
once a proposed business combination is completed, the target business will have effectively become public, whereas an initial public
offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could
delay or prevent the offering from occurring or could have negative valuation consequences. Once public, we believe the target business
would then have greater access to capital, an additional means of providing management incentives consistent with stockholders’
interests and the ability to use its shares as currency for acquisitions. Being a public company can offer further benefits by augmenting
a company’s profile among potential new customers and vendors and aid in attracting talented employees.
While
we believe that our structure and our management team’s backgrounds makes us an attractive business partner, some potential target
businesses may view our status as a blank check company, such as our lack of an operating history and our ability to seek stockholder
approval of any proposed initial business combination, negatively.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As
such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public
companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the 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 January 20, 2026,
(b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large
accelerated filer, which means the Market Value of our Class A common stock that are held by non-affiliates equals or exceeds
$700.0 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion
in non-convertible debt securities during the prior three-year period.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our
common stock held by non-affiliates exceeds $250million as of the prior June 30th, or (2) our annual revenues exceeded
$100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million
as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison
of our financial statements with other public companies difficult or impossible.
Financial
Position
With
funds available in the trust account for a business combination from our initial public offering and the sale of the private placement
warrants initially in the amount of $258,750,000, before fees and expenses associated with our initial business combination, we offer
a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth
and expansion of its operations or strengthening its balance sheet by reducing its debt leverage ratio. Because we are able to complete
our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility
to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs
and desires. However, we have not taken any steps to secure third party financing and there can be no assurance it will be available
to us.
Effecting
our Initial Business Combination
We
are not presently engaged in, and we will not engage in, any operations, other than searching for our initial business combination, until
we consummate our initial business combination. We will effectuate our initial business combination using cash from the proceeds of our
initial public offering, the private placements of the private placement warrants, our equity, debt or a combination of these as the
consideration to be paid in our initial business combination. We may seek to complete our initial business combination with a company
or business that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous
risks inherent in such companies and businesses.
If
our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust account
are used for payment of the consideration in connection with our initial business combination or used for redemptions of our Class A
common stock, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for
maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness
incurred in completing our initial business combination, to fund the purchase of other companies or for working capital. We currently
do not have any specific business combination under consideration. Our officers and directors have neither individually identified nor
considered a target business, nor have they had any discussions regarding possible target businesses among themselves or with our underwriters
or other advisors. We have not (nor has anyone on our behalf) contacted any prospective target business or had any discussions, formal
or otherwise, with respect to a business combination transaction. We have not (nor have any of our agents or affiliates) been approached
by any candidates (or representative of any candidates) with respect to a possible acquisition transaction with us. Additionally, we
have not, nor has anyone on our behalf, taken any measure, directly or indirectly, to identify or locate any suitable acquisition candidate
for us, nor have we engaged or retained any agent or other representative to identify or locate any such acquisition candidate.
We
have not engaged or retained any agent or other representative to identify or locate any suitable acquisition candidate, to conduct any
research or take any measures, directly or indirectly, to locate or contact a target business, other than our officers and directors.
Although our management will assess the risks inherent in a particular target business with which we may combine, we cannot assure you
that this assessment will result in our identifying all risks that a target business may encounter. Furthermore, some of those risks
may be outside of our control, meaning that we can do nothing to control or reduce the chances that those risks will adversely affect
a target business.
We
may need to obtain additional financing to complete our initial business combination, either because the transaction requires more cash
than is available from the proceeds held in our trust account, or because we become obligated to redeem a significant number of our public
shares upon completion of the business combination, in which case we may issue additional securities or incur debt in connection with
such business combination. There are no prohibitions on our ability to issue securities or incur debt in connection with our initial
business combination. We are not currently a party to any arrangement or understanding with any third party with respect to raising any
additional funds through the sale of securities, the incurrence of debt or otherwise.
Sources
of Target Businesses
Our
process of identifying acquisition targets leverages our sponsor and our management team’s industry experiences, proven deal sourcing
capabilities and broad and deep network of relationships in numerous industries, including executives and management teams, private equity
groups and other institutional investors, large business enterprises, lenders, investment bankers and other investment market participants,
restructuring advisers, consultants, attorneys and accountants, which we believe should provide us with a number of business combination
opportunities. The collective experience, capability and network of our directors and officers, combined with their individual and collective
reputations in the investment community, will help to create prospective business combination opportunities.
In
addition, target business candidates may be brought to our attention from various unaffiliated sources, including investment bankers
and private investment funds. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited
by us through calls or mailings. These sources may also introduce us to target businesses in which they think we may be interested on
an unsolicited basis, since many of these sources will have read this report and know what types of businesses we are targeting. Our
officers and directors, as well as their affiliates, may also bring to our attention target business candidates of which they become
aware through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending
trade shows or conventions.
We
also expect to receive a number of proprietary deal flow opportunities that would not otherwise necessarily be available to us as a result
of the business relationships of our officers and directors. While we have not engaged the services of professional firms or other individuals
that specialize in business acquisitions on any formal basis, we may engage these firms or other individuals in the future, in which
event we may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation based
on the terms of the transaction. We will engage a finder only to the extent our management determines that the use of a finder may bring
opportunities to us that may not otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction
that our management determines is in our best interest to pursue. Payment of 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 they are affiliated, be paid any finder’s fee, consulting
fee or other compensation by the company prior to, or for any services they render in order to effectuate, the completion of our initial
business combination (regardless of the type of transaction that it is). None of our sponsor, executive officers or directors, or any
of their respective affiliates, will be allowed to receive any compensation, finder’s fees or consulting fees from a prospective
business combination target in connection with a contemplated acquisition of such target by us.
We
are not prohibited from pursuing an initial business combination with a business combination target that is affiliated with our sponsor,
officers or directors or from making the acquisition through a joint venture or other form of shared ownership with our sponsor, officers
or directors. In the event we seek to complete our initial business combination with a business combination target that is affiliated
with our sponsor, executive officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent
investment banking firm or another independent entity that commonly renders valuation opinions stating that such an initial business
combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
Each
of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations
to other entities, including entities that are affiliates of our sponsor, pursuant to which such officer or director is or will be required
to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business
combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations,
he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such entity,
subject to their fiduciary duties under Delaware law.
Evaluation
of a Target Business and Structuring of our Initial Business Combination
Our
initial business combination must occur with one or more target businesses that together have an aggregate fair market value of at least
80% of our assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on
the trust account) at the time of the agreement to enter into the initial business combination. The fair market value of the target or
targets 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 or value of comparable businesses. 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 or
another independent entity that commonly renders valuation opinions, with respect to the satisfaction of such criteria. We do not intend
to purchase multiple businesses in unrelated industries in conjunction with our initial business combination. Subject to this requirement,
our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although
we will not be permitted to effectuate our initial business combination with another blank check company or a similar company with nominal
operations.
In
any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting securities
of the target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register as an investment
company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business
or businesses, the portion of such business or businesses that is owned or acquired is what will be taken into account for purposes of
the 80% fair market value test described above. We do not currently intend to purchase multiple businesses in unrelated industries in
conjunction with our initial business combination; however, in the event that the business combination does involve more than one target
business, the 80% fair market value test will be based on the aggregate value of all of the target businesses and we will treat the target
businesses together as our initial business combination for purposes of a seeking stockholder approval or conducting a tender offer,
as applicable.
To
the extent we effect our 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 will
encompass, among other things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers,
inspection of facilities, as well as a review of financial, operational, legal and other information which will be made available to
us. If we determine to move forward with a particular target, we will proceed to structure and negotiate the terms of the business combination
transaction.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the costs
associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification
and evaluation of, and negotiation with, a prospective target business with which our initial business combination is not ultimately
completed will result in our incurring losses and will reduce the funds we can use to complete another business combination. The company
will not pay any consulting fees to members of our management team, or any of their respective affiliates, for services rendered to or
in connection with our initial 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 closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial business
combination with that business, our assessment of the target business’s management may not prove to be correct. In addition, the
future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future
role of members of our management team, if any, in the target business cannot presently be stated with any certainty. The determination
as to whether any of the members of our management team will remain with the combined company will be made at the time of our initial
business combination. While it is possible that one or more of our directors will remain associated in some capacity with us following
our initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial
business combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge
relating to the operations of the particular target business.
We
cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company. The
determination as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business
combination.
Following
a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We
cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills,
knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve our Initial Business Combination
We
may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC subject to the provisions of our second
amended and restated certificate of incorporation. However, we will seek stockholder approval if it is required by law or applicable
stock exchange rule, or we may decide to seek stockholder approval for business or other legal reasons.
Under
the NYSE’s listing rules, stockholder approval would be required for our initial business combination if, for example:
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we
issue shares of common stock that will be equal to or in excess of 20% of the number of our
shares of common stock then outstanding (other than in a public offering);
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any
of our directors, officers or substantial stockholders (as defined by the NYSE rules) has
a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly
or indirectly, in the target business or assets to be acquired or otherwise and the present
or potential issuance of common stock could result in an increase in outstanding common stock
or voting power of 5% or more; or
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the
issuance or potential issuance of common stock will result in our undergoing a change of
control.
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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
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, our initial stockholders, directors, executive officers, advisors or their affiliates
may purchase shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion
of our initial business combination. However, they have no current commitments, plans or intentions to engage in such transactions and
have not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase
shares or public warrants in such transactions. If they engage in such transactions, they will not make any such purchases when they
are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation M
under the Exchange Act.
Such
a purchase may include a contractual acknowledgment 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. In the event that our sponsor, directors, officers,
advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to
exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares.
We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the
Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers
determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules.
The
purpose of any such purchases of shares could be to (i) vote such shares in favor of the business combination and thereby increase
the likelihood of obtaining stockholder approval of the business combination or (ii) to satisfy a closing condition in an agreement
with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination,
where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce
the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection
with our initial business combination. Any such purchases of our securities may result in the completion of our initial business combination
that may not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our Class A common stock or public warrants may be reduced
and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation,
listing or trading of our securities on a national securities exchange.
Our
sponsor, officers, directors and/or their affiliates may identify the stockholders with whom our sponsor, officers, directors or their
affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption
requests submitted by stockholders (in the case of our Class A common stock) following our mailing of proxy materials in connection
with our initial business combination. To the extent that our sponsor, officers, directors, advisors or their affiliates enter into a
private purchase, they would identify and contact only potential selling stockholders who have expressed their election to redeem their
shares for a pro rata share of the trust account or vote against our initial business combination, whether or not such stockholder
has already submitted a proxy with respect to our initial business combination but only if such shares have not already been voted at
the stockholder meeting related to our initial business combination. Our sponsor, executive officers, directors, advisors or any of their
affiliates will select which stockholders to purchase shares from based on the negotiated price and number of shares and any other factors
that they may deem relevant, and will only purchase shares if such purchases comply with Regulation M under the Exchange Act and
the other federal securities laws.
Any
purchases by our sponsor, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under
the Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe
harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has
certain technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor,
officers, directors and/or their affiliates will not make purchases of shares if the purchases would violate Section 9(a)(2) or
Rule 10b-5 of the Exchange Act. Any such purchases will be reported pursuant to Section 13 and Section 16 of the
Exchange Act to the extent such purchasers are subject to such reporting requirements.
Redemption
Rights for Public Stockholders upon Completion of our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their Class A common stock upon the completion
of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account calculated as of two business days prior to the completion of the initial business combination, including interest earned
on the funds held in the trust account and not previously released to us to pay our taxes, if any, divided by the number of then outstanding
public shares, subject to the limitations described herein. Immediately following our initial public offering (after payment of expenses
associated with our initial public offering) the amount in the trust account was approximately $10.00 per public share. The per-share amount
we will distribute to investor who properly redeem their shares will not be reduced by the deferred underwriting commissions we will
pay to the underwriters. The redemption rights will include the requirement that a beneficial holder must identify itself in order to
validly redeem its shares. There will be no redemption rights upon the completion of our initial business combination with respect to
our warrants. Our sponsor, directors and each member of our management team 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 in connection with (i) the
completion of our initial business combination and (ii) a stockholder vote to approve an amendment to our second amended and restated
certificate of incorporation that would affect the substance or timing of our obligation to allow redemption in connection with our initial
business combination or to redeem 100% of our public shares if we have not completed an initial business combination by January 20, 2023.
Limitations
on Redemptions
Our
second amended and restated certificate of incorporation provides that in no event will we redeem our public shares in an amount that
would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC’s “penny stock”
rules). However, the proposed business combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash
to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy
other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we
would be required to pay for all 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 Class A common stock submitted for redemption will be returned
to the holders thereof.
Manner
of Conducting Redemptions
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 either (i) in connection with a stockholder meeting called to approve the business combination or (ii) 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 or whether we were deemed to be a foreign private issuer (which would require a tender offer rather than seeking stockholder
approval under SEC rules). Asset acquisitions and share 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 shares of outstanding common stock
or seek to amend our second amended and restated certificate of incorporation would require stockholder approval. We currently intend
to conduct redemptions in connection with a stockholder vote unless stockholder approval is not required by applicable law or stock exchange
listing requirement and we choose to conduct redemptions pursuant to the tender offer rules of the SEC for business or other legal reasons.
So long as we obtain and maintain a listing for our securities on the NYSE, we will be required to comply with the NYSE rules.
If
we held a stockholder vote to approve our initial business combination, we will, pursuant to our second amended and restated certificate
of incorporation:
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conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A
of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the
tender offer rules; and
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file
proxy materials with the SEC.
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In
the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business combination.
If
we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common
stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the holder present in person
or by proxy of shares of outstanding capital stock of the Company representing a majority of the voting power of all outstanding shares
of capital stock of the Company entitled to vote at such meeting. Our initial stockholders will count towards this quorum and, pursuant
to the terms of a letter agreement entered into with us, our sponsor and members of our management team have agreed to vote their founder
shares and any public shares purchased during or after our initial public offering, in favor of our initial business combination. For
purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the
approval of our initial business combination once a quorum is obtained. As a result, in addition to our initial stockholders’ founder
shares, we would need 9,703,126, or 37.5%, of the 25,875,000 public shares sold in our initial public offering to be voted in favor of
an initial business combination in order to have our initial business combination approved(assuming all issued and outstanding shares
are voted). These quorum and voting thresholds, and the voting agreements of our initial stockholders, may make it more likely that we
will complete our initial business combination. Each public stockholder may elect to redeem its public shares irrespective of whether
they vote for or against the proposed transaction or whether they were a stockholder on the record date for the stockholder meeting held
to approve the proposed transaction. In addition, our sponsor, directors and each member of our management team, have entered into a
letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and
public shares in connection with (i) the completion of a business combination and (ii) a stockholder vote to approve an amendment
to our second amended and restated certificate of incorporation that would affect the substance or timing of our obligation to allow
redemption in connection with our initial business combination or to redeem 100% of our public shares if we have not completed an initial
business combination by January 20, 2023.
If,
however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder
approval for business or other legal reasons, we will, pursuant to our second amended and restated certificate of incorporation:
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conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange
Act, which regulate issuer tender offers; and
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file
tender offer documents with the SEC prior to completing our initial business combination
which contain substantially the same financial and other information about the initial business
combination and the redemption rights as is required under Regulation 14A of the Exchange
Act, which regulates the solicitation of proxies.
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Upon
the public announcement of our initial business combination, we or our sponsor will terminate any plan established in accordance with
Rule 10b5-1 to purchase 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 the number of public shares we are permitted to redeem. If public stockholders tender more shares than we have offered to purchase,
we will withdraw the tender offer and not complete the initial business combination.
Our
second amended and restated certificate of incorporation provides that in no event will we redeem our public shares in an amount that
would cause our net tangible assets to be less than $5,000,001 (so that we are not 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: (i) cash consideration
to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate
purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination.
In the event the aggregate cash consideration we would be required to pay for all shares of our 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 our 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 second 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 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 management to purchase their shares at a significant premium to the then-current market
price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares
sold in our initial public offering could threaten to exercise its redemption rights if such holder’s shares are not purchased
by us, our sponsor or our management at a premium to the then-current market price or on other undesirable terms. By limiting our
stockholders’ ability to redeem no more than 15% of the shares sold in our initial public offering without our prior consent, we
believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our initial
business combination, particularly in connection with a business combination with a target that requires as a closing condition that
we have a minimum net worth or a certain amount of cash.
However,
we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our
initial business combination.
Tendering
Share Certificates in Connection with a Tender Offer or Redemption Rights
Public
stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,”
are required to either tender their certificates (if any) to our transfer agent prior to the date set forth in the proxy solicitation
or tender offer materials, as applicable, mailed to such holders, or to deliver their shares to the transfer agent electronically using
DWAC System, at the holder’s option, in each case up to two business days prior to the initially scheduled vote to approve the
business combination. The proxy solicitation or tender offer materials, as applicable, that we will furnish to holders of our public
shares in connection with our initial business combination will indicate the applicable delivery requirements, which will include the
requirement that a beneficial holder 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 days prior to the
initial 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. Given the relatively short period in which to exercise redemption rights, it is advisable for stockholders
to use electronic delivery of their public shares.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them
through the DWAC System. The transfer agent will typically charge the tendering broker a fee of approximately $80.00 and it would be
up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether
or not we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of
exercising redemption rights regardless of the timing of when such delivery must be effectuated.
Any
request to redeem such shares, once made, may be withdrawn at any time up to two business days prior to the vote on the proposal to approve
the business combination, unless otherwise agreed to by us. Furthermore, if a holder of a public share delivered its certificate in connection
with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such
holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds
to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of
our initial business combination.
If
our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their
redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case,
we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If
our initial proposed business combination is not completed, we may continue to try to complete a business combination with a different
target until January 20, 2023.
Redemption
of Public Shares and Liquidation if no Initial Business Combination
Our
sponsor, officers and directors have agreed that we will have only until January 20, 2023 to complete an initial business combination.
If we have not completed an initial business combination by January 20, 2023, we will: (i) cease all operations except for the purpose
of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares,
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned
on the funds held in the trust account and not previously released to us to pay our taxes, if any (less up to $100,000 of interest to
pay dissolution expenses), divided by the number of the then outstanding public shares, which redemption will completely extinguish public
stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable
law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect
to our warrants, which will expire worthless if we do not complete an initial business combination by January 20, 2023.
Our
sponsor, directors and each member of our management team have entered into a letter agreement with us, pursuant to which they have waived
their rights to liquidating distributions from the trust account with respect to their founder shares if we do not complete an initial
business combination by January 20, 2023. However, if our sponsor, director or members of our management team acquire public shares in
or after our initial public offering, they will be entitled to liquidating distributions from the trust account with respect to such
public shares if we do not complete an initial business combination by January 20, 2023.
Our
sponsor, executive officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment
to our second amended and restated certificate of incorporation that would affect the substance or timing of our obligation to allow
redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete an initial
business combination by January 20, 2023, unless we provide our public stockholders with the opportunity to redeem their public shares
upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, if
any (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then outstanding public shares. However,
we may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are
not subject to the SEC’s “penny stock” rules). If this optional redemption right is exercised with respect to an excessive
number of public shares such that we cannot satisfy the net tangible asset requirement, we would not proceed with the amendment or the
related redemption of our public shares at such time. This redemption right shall apply in the event of the approval of any such amendment,
whether proposed by our sponsor, any executive officer, director or director nominee, or any other person.
If
we do not consummate our initial business combination by the deadline set forth in our second amended and restated certificate of incorporation,
we expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will
be funded from amounts remaining out of the approximately $950,000 held outside the trust account immediately after our initial public
offering (after payment of expenses associated with our initial public offering), although we cannot assure you that there will be sufficient
funds for such purpose.
If
we were to expend all of the net proceeds of our initial public offering the sale of the private placement warrants, other than the proceeds
deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption
amount received by stockholders upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account could,
however, become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders. We
cannot assure you that the actual per-share redemption amount received by stockholders will not be substantially less than $10.00.
Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision
for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make
any distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that
we will have funds sufficient to pay or provide for all creditors’ claims.
Although
we have sought and will continue to seek to have all vendors, service providers (other than our independent auditors), prospective target
businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any
kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee that they will execute
such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account including
but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the
enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds
held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account,
our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party
that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial
to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include
the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior
to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider
willing to execute a waiver. Oppenheimer & Co. will not execute agreements with us waiving such claims to the monies held in the
trust account. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a
result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account
for any reason. In order to protect the amounts held in the trust account, our sponsor have agreed that they will be liable to us if
and to the extent any claims by a third party for services rendered or products sold to us (other than our independent registered public
accounting firm), or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amounts
in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in
the trust account as of the date of the liquidation of the trust account if less than $10.00 per share, due to reductions in the value
of the trust assets, in each case net of the interest that may be withdrawn to pay our taxes, if any, provided that such liability will
not apply to any claims by a third party or prospective target business that executed a waiver of any and all rights to seek access to
the trust account nor will it apply to any claims under our indemnity of the underwriters of our initial public offering against certain
liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against
a third party, our sponsor will not be responsible to the extent of any liability for such third party claims. However, we have not asked
our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsor have sufficient funds
to satisfy their indemnity obligations and we believe that our sponsor’s only assets are securities of our company. Therefore,
we cannot assure you that our sponsor would be able to satisfy those obligations. None of our officers or directors are required to indemnify
us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per public share and (ii) the actual
amount per public share held in the trust account as of the date of the liquidation of the trust account if less than $10.00 per share,
due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay our taxes, if any,
and our sponsor asserts that they are unable to satisfy their indemnification obligations or that they have no indemnification obligations
related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce
their indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against
our sponsor to enforce their indemnification obligations to us, it is possible that our independent directors in exercising their business
judgment may choose not to do so in any particular instance. Accordingly, we cannot assure you that due to claims of creditors the actual
value of the per-share redemption price will not be less than $10.00 per share.
We 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 auditors), prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any
claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under
the Securities Act. We have access to the amounts held outside the trust accounts ($950,000 immediately following our initial public offering
(after payment of expenses associated with our initial public offering) with which to pay any such potential claims (including costs and
expenses incurred in connection with our liquidation, currently estimated to be no more than approximately $100,000). In the event that
we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received
funds from our trust account could be liable for claims made by creditors, however such liability will not be greater than the amount
of funds from our trust account received by any such stockholder. Because our offering expenses in connection with our initial public
offering (including underwriting commissions) exceeded our estimate of $750,000, we funded such excess with funds from the funds not to
be held in the trust account. Accordingly, the amount of funds we intend to hold outside the trust account decreased by approximately
$229,456.
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 January 20, 2023, may be considered a liquidating
distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended
to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims
can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional
150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect
to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed
to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in
the event we do not complete our initial business combination by January 20, 2023, is not considered a liquidating distribution under
Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a
party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute
of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years,
as in the case of a liquidating distribution. If we do not complete our initial business combination by January 20, 2023, we will: (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account including interest earned on the funds held in the trust account that may be released to us to pay our taxes, if any (less
up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will
completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions,
if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably
possible following January 20, 2023 and, therefore, we do not intend to comply with those procedures. As such, our stockholders could
potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders
may extend well beyond the third anniversary of such date.
Because
we will 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 10 years. However, because we are a blank check company, rather than an operating company, and our operations
will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors
(such as lawyers, investment bankers, and auditors) 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 auditor), prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the trust account. As a result of this obligation, the claims
that could be made against us are significantly limited and the likelihood that any claim that would result in any liability extending
to the trust account is remote. Further, our sponsor may be liable only to the extent necessary to ensure that the amounts in the trust
account are not reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account
as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount
of interest withdrawn to pay taxes and 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. In the event that an executed waiver is deemed
to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third-party claims.
If
we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us that is
not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy or insolvency 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 or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against
us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy
or insolvency laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy
or insolvency court could seek to recover some or all amounts received by our stockholders. Furthermore, our board of directors may be
viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our
company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
We cannot assure you that claims will not be brought against us for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account only (i) in the event of the redemption of our public
shares if we do not complete an initial business combination by January 20, 2023, (ii) in connection with a stockholder vote to
amend our second amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow
redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete an initial
business combination by January 20, 2023 or (B) with respect to any other provisions relating to the rights of holders of our Class A
common stock, or (iii) if they redeem their respective shares for cash upon the completion of the initial business combination.
Public stockholders who redeem their shares of our Class A common stock in connection with a stockholder vote described in clause
(ii) in the preceding sentence shall not be entitled to funds from the trust account upon the subsequent completion of an initial
business combination or liquidation if we have not completed an initial business combination by January 20, 2023, with respect to such
shares of our Class A common stock so redeemed. In no other circumstances will a stockholder have any right or interest of any kind
to or in the trust account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s
voting in connection with the business combination alone will not result in a stockholder’s redeeming its shares to us for an applicable
pro rata share of the trust account. Such stockholder must have also exercised its redemption rights described above. These provisions
of our second amended and restated certificate of incorporation, like all provisions of our second amended and restated certificate of
incorporation, may be amended with a stockholder vote.
Competition
In
identifying, evaluating and selecting a target business for our initial business combination, we 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.
Employees
We
currently have three executive officers. These individuals 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 they devote in any time period may vary based on whether a target business has been selected
for our initial business combination and the stage of the business combination process we are in. We do not intend to have any full time
employees prior to the completion of our initial business combination.
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 accountants.
We
will provide stockholders with audited financial statements of the prospective target business as part of the proxy solicitation or tender
offer materials, as applicable, sent to stockholders to assist them in assessing the target business. In all likelihood, these financial
statements may be required to be prepared in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the
historical financial statements may be required to be audited in accordance with the standards of the PCAOB. These financial statement
requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such statements
in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination within
the prescribed time frame. We cannot assure you that any particular target business identified by us as a potential acquisition candidate
will have financial statements prepared in accordance with the requirements outlined above, or that the potential 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 acquisition 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, 2022 as required by the Sarbanes-Oxley Act.
Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth
company, will we be required to have our internal control procedures audited. A target 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-OxleyAct, 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 January 20, 2026,
(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 the shares of our Class A common stock that are held by non-affiliates equals
or exceeds $700.0 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion
in non-convertible debt during the prior three-year period.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our
common stock held by non-affiliates exceeds $250million as of the prior June 30th, or (2) our annual revenues exceeded
$100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million
as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison
of our financial statements with other public companies difficult or impossible.