10-K
1
tm218095d1_10k.htm
FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31,
2020
OR
̈
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
Commission File Number 001-39982
Novus Capital Corporation II
(Exact name of Registrant as specified
in its Charter)
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number,
including area code: (317) 590-6959
Securities registered pursuant to Section 12(b) of
the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock par value $0.0001 per share NXU New York Stock Exchange
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ̈
NO x
Indicate
by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ̈
NO x
Indicate
by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x
NO ̈
Indicate
by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the Registrant was required to submit such files). YES x NO ̈
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained
herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check
mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company,
or an emerging growth company. See the definition of “large accelerated filer”, “accelerated filer”,
and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:
Large accelerated filer ̈ Accelerated filer ̈
Non-accelerated filer x Small reporting company x
Emerging growth company x
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ̈
Indicate by check mark whether the registrant has
filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ̈
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES x
NO ̈
The Registrant’s units
began trading on the New York Stock Exchange on February 4, 2021. The aggregate market value of the Registrant’s shares of
common stock outstanding, other than shares held by persons who may be deemed affiliates of the Registrant, at March 24, 2021, was $286,062,500.
As of March 24, 2021,
28,750,000 shares of Class A common stock, par value $0.0001 per share, and 7,187,500 shares of Class B common stock, par
value $0.0001 per share, were issued and outstanding.
Documents Incorporated by Reference: None.
TABLE OF CONTENTS
Page
PART I 1
Item 1. Business 1
Item 1A Risk Factors 18
Item 1B Unresolved Staff Comments 46
Item 2. Properties 47
Item 3. Legal Proceedings 47
Item 4. Mine Safety Disclosures 47
Item 6. Selected Financial Data 48
Item 7A Quantitative and Qualitative Disclosures About Market Risk 50
Item 8. Financial Statements and Supplementary Data 50
Item 9A Controls and Procedures 50
Item 9B. Other Information 51
PART III 51
Item 10. Directors, Executive Officers, Promoters and Corporate Governance. 51
Item 11. Executive Compensation 60
Item 14. Principal Accountant Fees and Services 65
Item 15. Exhibits, Financial Statement Schedules 66
SIGNATURES 69
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This annual report
includes, and oral statements made from time to time by representatives of the Company may include, forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations
and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and
assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different
from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.
In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,”
“would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,”
“continue,” or the negative of such terms or other similar expressions. Such statements include, but are not limited
to, possible business combinations and the financing thereof, and related matters, as well as all other statements other than statements
of historical fact included in this annual report. Factors that might cause or contribute to such a discrepancy include, but are
not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings. Forward-looking statements
in this annual report may include, for example, statements about:
• our ability to select an appropriate target business
or businesses;
• our ability to complete our initial business combination;
• our expectations around the performance of the prospective
target business or businesses;
• our success in retaining or recruiting, or changes required
in, our officers, key employees or directors following our initial business combination;
• our officers and directors allocating
their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business
combination, as a result of which they would then receive expense reimbursements;
• our potential ability to obtain additional financing
to complete our initial business combination;
• our pool of prospective target businesses;
• the ability of our officers and directors to generate
a number of potential acquisition opportunities;
• our public securities’ potential liquidity and
trading;
• the lack of a market for our securities;
• the use of proceeds not held in the trust account or
available to us from interest income on the trust account balance;
• the trust account not being subject to claims of third
parties; or
• our financial performance.
The forward-looking
statements contained in this annual report are based on our current expectations and beliefs concerning future developments and
their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated.
These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions
that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking
statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Item 1A.
Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect,
actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation
to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except
as may be required under applicable securities laws.
ii
PART I
References in this
annual report to “we,” “us,” “company” or “our company” are to Novus Capital Corporation,
a Delaware corporation. References to “management” or our “management team” are to our officers and directors.
References to our “initial stockholders” are to the holders of our founder shares prior to our initial public offering
(“IPO”).
Item 1. Business.
Introduction
We are a blank check
company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or other similar business combination with one or more businesses, which we refer to throughout this annual report as our initial
business combination. We have reviewed a number of opportunities to enter into a business combination. We have neither engaged
in any operations nor generated any revenue to date. Based on our business activities, the Company is a “shell company”
as defined under the Exchange Act because we have no operations and nominal assets consisting almost entirely of cash.
Our executive offices
are located at 8556 Oakmont Lane, Indianapolis, IN 46260 and our telephone number is (317) 590-6959. Our corporate website
address is novuscapitalcorporationII.com. Our website and the information contained on, or that can be accessed through, the website
is not deemed to be incorporated by reference in, and is not considered part of, this annual report. You should not rely on any
such information in making your decision whether to invest in our securities.
Company History
Novus Capital Corporation
II (the “Company”) was incorporated in Delaware on September 29, 2020. The Company is a blank check company formed
for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization
or other similar business combination with one or more businesses or entities (the “business combination”).
The Company is an
early stage and emerging growth company and, as such, the Company is subject to all the risks associated with early stage and emerging
growth companies.
In
October 2020, we issued an aggregate of 7,187,500 shares of our common stock, (the “founder shares”) for an aggregate
purchase price of $25,000, or approximately $0.003 per share, to our initial stockholders.
The registration statement
for the Company’s IPO was declared effective on February 3, 2021. On February 8, 2021, the Company consummated
the IPO of 28,750,000 units (the “units” and, with respect to the shares of common stock included in the units
sold, the “public shares”) at $10.00 per unit including 3,750,000 units issued as a result of the exercise of the underwriters’
overallotment option in full, generating gross proceeds of $287,500,000.
Simultaneously with
the closing of the IPO, the Company consummated the sale of 5,166,666 warrants (the “private warrants”) at a price
of $1.50 per private warrant in a private placement to the Company’s founding stockholders (the “initial stockholders”),
including NCCII Co-Invest LLC (“Cowen Investments”), an affiliate of the underwriter of our IPO (together with the
initial stockholders, the “founders”), generating gross proceeds of $7,750,000.
Following the closing
of the IPO on February 8, 2021, an amount of $287,500,000 ($10.00 per unit) from the net proceeds of the sale of the units
in the IPO and the sale of the private warrants was placed in a trust account (the “trust account”), and will be invested
in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity
of 185 days or less, or in any open-ended investment company that holds itself out as a money market fund meeting certain
conditions of Rule 2a-7 of the Investment Company Act of 1940, as amended (the “Investment Company Act”), as determined
by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds
in the trust account to the Company’s stockholders, as described below, except that interest earned on the trust account
can be released to the Company to pay its tax obligations (“permitted withdrawals”).
Our activities since February 8,
2021, have consisted of the search and evaluation of potential targets in contemplation of a business combination. All activity for the
period from September 29, 2020 (inception) through February 8, 2021 relates to the Company’s formation and the IPO, which
is described below. The Company will not generate any operating revenues until after the completion of a business combination, at the
earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the IPO.
Acquisition Strategy
While we have not yet selected a target
business with which to consummate our initial business combination, we believe based on our management’s business knowledge
and past experience that there are numerous potential candidates. We expect that our principal means of identifying potential target
businesses will be through the extensive contacts and relationships of our initial stockholders, officers and directors. While
our officers and directors are not required to commit any specific amount of time in identifying or performing due diligence on
potential target businesses, our officers and directors believe that the relationships they have developed over their careers and
their access to our initial stockholders and their affiliates’ contacts and resources will generate a number of potential
business combination opportunities that will warrant further investigation. We also anticipate that target business candidates
will be brought to our attention from various unaffiliated sources, including investment bankers, venture capital funds, private
equity funds, leveraged buyout funds, management buyout funds and other members of the financial community. Target businesses may
be brought to our attention by such unaffiliated sources as a result of being solicited by us through direct marketing programs,
calls or mailings. These sources may also introduce us to target businesses they think we may be interested in on an unsolicited
basis.
Investment Criteria
Consistent with our strategy, we have identified
the following criteria to evaluate prospective target businesses. We may however, decide to enter into our initial business combination
with a target business that does not meet these criteria. We have identified the following criteria that we believe are important
in evaluating candidates for our initial business combination:
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 criteria as well as other considerations, factors, criteria and guidelines that our management may deem relevant.
Our Acquisition Process
In evaluating a prospective target business,
we expect to conduct a thorough due diligence review which may encompass, among other things, meetings with incumbent management
and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information
that will be made available to us.
We are not prohibited from pursuing an
initial business combination with a business that is affiliated with our sponsors, officers or directors. In the event we seek
to complete our initial business combination with a business that is affiliated with our sponsors, officers or directors, we, or
a committee of independent and disinterested directors, will obtain an opinion from an independent investment banking firm that
is a member of the Financial Industry Regulatory Authority, or FINRA, or from an independent accounting firm, that such initial
business combination is fair to our company from a financial point of view.
Members of our management team may own
our securities, and accordingly, they may have a conflict of interest in determining whether a particular target business is an
appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may
have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any
such officers and directors was included by a target business as a condition to any agreement with respect to our initial business
combination.
Our officers and directors are from time
to time 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 us.
Each of our officers and directors presently
has, and any of them in the future may have additional, fiduciary, contractual or other obligations or duties to one or more other
entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such
entities.
Accordingly, if any of our officers or directors becomes aware
of a business combination opportunity which is suitable for one or more entities to which he or she has fiduciary, contractual
or other obligations or duties, he or she will honor these obligations and duties to present such business combination opportunity
to such entities first, and only present it to us if such entities reject the opportunity and he or she determines to present the
opportunity to us. For more information, see the section entitled “Management — Conflicts of Interest.”
We do not believe, however, that the fiduciary,
contractual or other obligations or duties of our officers or directors will materially affect our ability to complete our initial
business combination. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate
opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her
capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake
and would otherwise be reasonable for us to pursue.
Initial Business Combination
The NYSE rules require that an initial
business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of
the net assets held in the trust account (net of amounts disbursed to management for working capital purposes, if permitted, and
excluding the amount of any deferred underwriting discount). We refer to this as the 80% of net assets test. 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 currently intend to purchase multiple businesses in unrelated industries in conjunction
with our initial business combination, although there is no assurance that will be the case.
We anticipate structuring our initial business
combination so that the post-transaction company in which our public stockholders own or acquire shares will own or acquire 100%
of the outstanding equity interests or assets of the target business or businesses. We may, however, structure our initial business
combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business
in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete
such business combination if the post- transaction company owns or acquires 50% or more of the outstanding voting securities of
the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register
as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target, our stockholders prior to our initial
business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed
to the target and us in our initial 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 of a target, or issue a substantial number
of new shares to third parties in connection with financing our initial business combination. In such cases, we would acquire a
100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders
immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our
initial business combination. If less than 100% of the outstanding 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 by
us is what will be valued for purposes of the 80% of net assets test. If our initial business combination involves more than one
target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses.
We are subject to the rules and regulations
promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations
under the Exchange Act prior or subsequent to the consummation of our initial business combination.
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.
By completing our initial business combination
with only a single entity our lack of diversification may subject us to numerous economic, competitive and regulatory risks. Further,
we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike
other entities which may have the resources to complete several business combinations in different industries or different areas
of a single industry. Accordingly, the prospects for our success may be:
This lack of diversification may subject
us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular
industry in which we may operate subsequent to our initial business combination.
Limited ability to evaluate the target’s management
team
Although we intend to closely scrutinize
the management of a prospective target business when evaluating the desirability of effecting our initial business combination
with that business, our assessment of the target business’s management may not prove to be correct. In addition, the future
management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role
of members of our management team, if any, in the target business cannot presently be stated with any certainty. While it is possible
that one or more of our directors will remain associated in some capacity with us following our initial business combination, it
is highly unlikely that any of them will devote their full efforts to our affairs subsequent to our initial business combination.
Moreover, we cannot assure you that members of our management team will have significant experience or knowledge relating to the
operations of the particular target business.
We cannot assure you that any of our key
personnel will remain in senior management or advisory positions with the post-business combination company. The determination
as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following our initial business combination,
we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you
that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge
or experience necessary to enhance the incumbent management.
Stockholders may not have the ability to approve our initial
business combination
We may conduct redemptions without a stockholder
vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required by applicable
law or stock exchange rule, or we may decide to seek stockholder approval for business or other reasons. Presented in the table
below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder approval is
currently required under Delaware law for each such transaction.
Type of Transaction Whether Stockholder Approval is
Purchase of assets No
Purchase of stock of target not involving a merger with the company No
Merger of target into a subsidiary of the company No
Merger of the company with a target Yes
Under the NYSE’s listing rules, stockholder
approval would typically be required for our initial business combination if, for example:
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 applicable
law or stock exchange rule will be made by us, solely in our discretion, and will be based on business and other reasons,
which include a variety of factors, including, but not limited to:
• the expected cost of holding a stockholder vote;
• other time and budget constraints of the company; and
Permitted purchases and other transactions with respect to
our securities
In the event we seek stockholder approval
of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant
to the tender offer rules, our founders, directors, officers, advisors or any of their respective affiliates may purchase public
shares or warrants in privately negotiated transactions or in the open market either prior to or following the completion of our
initial business combination. There is no limit on the number of securities such persons may purchase. Additionally, at any time
at or prior to our initial business combination, subject to applicable securities laws (including with respect to material nonpublic
information), our founders, directors, officers, advisors or any of their respective affiliates may enter into transactions with
investors and others to provide them with incentives to acquire public shares, vote their public shares in favor of our initial
business combination or not redeem their public shares. However, they have no current commitments, plans or intentions to engage
in such purchases or other transactions and have not formulated any terms or conditions for any such purchases or other transactions.
None of the funds held in the trust account will be used to purchase public shares or warrants in such transactions. Such persons
will be subject to restrictions in making any such purchases when they are in possession of any material non- public information
or if such purchases are prohibited by Regulation M under the Exchange Act. Such a purchase may include a contractual acknowledgement
that such stockholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore
agrees not to exercise its redemption rights. We will adopt an insider trading policy which will require insiders to (1) refrain
from purchasing securities during certain blackout periods and when they are in possession of any material non-public information
and (2) clear all trades with our legal counsel prior to execution. We cannot currently determine whether our insiders will
make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon several factors, including but not limited
to, the timing and size of such purchases. Depending on such circumstances, our insiders may either make such purchases pursuant
to a Rule 10b5-1 plan or determine that such a plan is not necessary.
In the event that our founders, directors,
officers, advisors or any of their respective affiliates purchase public shares in privately negotiated transactions from public
stockholders who have already elected to exercise their redemption rights or submitted a proxy to vote against our initial business
combination, such selling stockholders would be required to revoke their prior elections to redeem their shares and any proxy to
vote against our initial business combination. We do not currently anticipate that such purchases, if any, would constitute a tender
offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private
rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are
subject to such rules, the purchasers will be required to comply with such rules.
The purpose of any such transaction could
be to (1) vote such shares in favor of the initial business combination and thereby increase the likelihood of obtaining stockholder
approval of the initial business combination, (2) 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 or (3) 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. Any such transactions
may result in the completion of our initial business combination that may not otherwise have been possible.
In addition, if such purchases are made,
the public “float” of our shares of Class A common stock or warrants may be reduced and the number of beneficial
holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of
our securities on a national securities exchange.
Our founders, officers, directors, advisors
and/or any of their respective affiliates anticipate that they may identify the stockholders with whom our founders, officers,
directors, advisors or any of their respective affiliates may pursue privately negotiated transactions by either the stockholders
contacting us directly or by our receipt of redemption requests submitted by stockholders (in the case of public shares) following
our mailing of proxy materials in connection with our initial business combination. To the extent that our founders, officers,
directors, advisors or any of their respective affiliates enter into a private transaction, they would identify and contact only
potential selling or redeeming stockholders who have expressed their election to redeem their shares for a pro rata share of the
trust account or vote against our initial business combination. Such persons would select the stockholders from whom to acquire
shares based on the number of shares available, the negotiated price per share and such other factors as any such person may deem
relevant at the time of purchase. The price per share paid in any such transaction may be different than the amount per share a
public stockholder would receive if it elected to redeem its shares in connection with our initial business combination. Our founders,
officers, directors, advisors or any of their respective affiliates will be restricted from purchasing shares if such purchases
do not comply with Regulation M under the Exchange Act and the other federal securities laws.
Any purchases by our founders, officers,
directors and/or any of their respective affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act
will be restricted unless such purchases are made in compliance with Rule 10b-18, which is a safe harbor from liability for
manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements
that must be complied with in order for the safe harbor to be available to the purchaser. Our founders, officers, directors and/or
any of their respective affiliates will be restricted from making purchases of common stock if such purchases would violate Section 9(a)(2) or
Rule 10b-5 of the Exchange Act.
Redemption rights for public stockholders upon completion
of our initial business combination
We will provide our public stockholders
with the opportunity to redeem all or a portion of their shares of common stock upon the completion of our initial business combination
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, calculated as of two
business days prior to the consummation of the initial business combination, including interest (which interest shall be net of
taxes payable), divided by the number of then outstanding public shares, subject to the limitations described herein. At completion
of the business combination, we will be required to purchase any public shares properly delivered for redemption and not withdrawn.
The amount in the trust account is initially anticipated to be $10.00 per public share. 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 initial stockholders, officers and directors
have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect
to any founder shares and any public shares held by them in connection with the completion of our initial business combination.
Manner of conducting redemptions
We will provide our public stockholders
with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial
business combination either: (1) in connection with a stockholder meeting called to approve the business combination; or (2) by
means of a tender offer. Except as required by applicable law or stock exchange rules, the decision as to whether we will seek
stockholder approval of a proposed business combination or 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. Asset acquisitions and stock purchases would not
typically require stockholder approval while direct mergers with our company where we do not survive and any transactions where
we issue more than 20.0% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation
would typically require stockholder approval. If we structure a business combination transaction with a target company in a manner
that requires stockholder approval, we will not have discretion as to whether to seek a stockholder vote to approve the proposed
business combination. We intend to conduct redemptions without a stockholder vote pursuant to the tender offer rules of the
SEC unless stockholder approval is required by applicable law or stock exchange listing requirement or we choose to seek stockholder
approval for business or other reasons.
If a stockholder vote is not required and
we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our amended and restated certificate
of incorporation:
Upon the public announcement of our initial
business combination, we and our officers and directors will terminate any plan established in accordance with Rule 10b5-1
to purchase shares of our Class A common stock in the open market if we elect to redeem our public shares through a tender
offer, to comply with Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions pursuant
to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under
the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender
offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number
of public shares, which number will be based on the requirement that we may not redeem public shares in an amount that would cause
our net tangible assets to be less than $5,000,001 following such redemptions or any greater net tangible asset or cash requirement
which may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares
than we have offered to purchase, we will withdraw the tender offer and not complete such initial business combination, and we
instead may search for an alternate business combination (including, potentially, with the same target).
If, however, stockholder approval of the
transaction is required by applicable law or stock exchange listing requirement, or we decide to obtain stockholder approval for
business or other reasons, we will, pursuant to our amended and restated certificate of incorporation:
• file proxy materials with the SEC.
We expect that a final proxy statement
would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft proxy statement
would be made available to such stockholders well in advance of such time, providing additional notice of redemption if we conduct
redemptions in conjunction with a proxy solicitation. Although we are not required to do so, we currently intend to comply with
the substantive and procedural requirements of Regulation 14A in connection with any stockholder vote even if we are not able to
maintain our NYSE listing or Exchange Act registration.
In the event that we seek stockholder approval
of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders
with the redemption rights described above upon completion of the initial business combination.
If we seek stockholder approval, we will
complete our initial business combination only if a majority of the outstanding shares of our common stock voted are voted in favor
of the business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding
capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company
entitled to vote at such meeting. Our initial stockholders, officers and directors will count towards this quorum and have agreed
to vote any founder shares and any public shares held by them in favor of our initial business combination. These quorum and voting
thresholds and agreements, may make it more likely that we will consummate our initial business combination. Each public stockholder
may elect to redeem its public shares without voting, and if they do vote, irrespective of whether they vote for or against the
proposed transaction. In addition, our initial stockholders have entered into a letter agreement with us, pursuant to which they
have agreed to waive their redemption rights with respect to any founder shares and any public shares held by them in connection
with the completion of a business combination.
Our amended and restated certificate of
incorporation provides that in no event will we redeem our public shares in an amount that would cause our net tangible assets
to be less than $5,000,001 following such redemptions. Redemptions of our public shares may also be subject to a higher net tangible
asset test or cash requirement pursuant to an agreement relating to our initial business combination. For example, the proposed
business combination may require: (1) cash consideration to be paid to the target or its owners; (2) cash to be transferred
to the target for working capital or other general corporate purposes; or (3) the retention of cash to satisfy other conditions
in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required
to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy
cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us,
we will not complete the business combination or redeem any shares, all shares of common stock submitted for redemption will be
returned to the holders thereof, and we instead may search for an alternate business combination (including, potentially, with
the same target).
Limitation on redemption upon completion of our initial business
combination if we seek stockholder approval
Notwithstanding the foregoing redemption
rights, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with
our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will
provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder
is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from
redeeming its shares with respect to more than an aggregate of 15% of the shares sold in our IPO, which we refer to as the “Excess
Shares,” without our prior consent. We believe the restriction described above will discourage stockholders from accumulating
large blocks of shares and subsequent attempts by such holders to use their ability to redeem their shares as a means to force
us or our founders or their affiliates to purchase their shares at a significant premium to the then-current market price or on
other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in
our IPO could threaten to exercise its redemption rights against a business combination if such holder’s shares are not purchased
by us or our founders or their affiliates at a premium to the then-current market price or on other undesirable terms. By limiting
our stockholders’ ability to redeem to no more than 15% of the shares sold in our IPO, we believe we will limit the ability
of a small group of stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly
in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or
a certain amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares (including
Excess Shares) for or against our initial business combination.
Tendering stock certificates in connection with a tender
offer or redemption rights
We may require our public stockholders
seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,”
to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials
mailed to such holders, or up to two business days prior to the vote on the proposal to approve the business combination in the
event we distribute proxy materials or to deliver their shares to the transfer agent electronically using The Depository Trust
Company’s DWAC (Deposit/Withdrawal At Custodian) System, rather than simply voting against the initial business combination
at the holder’s option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public
shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy
such delivery requirements, which will include the requirement that 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 business days prior to the scheduled vote on the business combination if we distribute
proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Pursuant to the tender
offer rules, the tender offer period will be not less than 20 business days and, in the case of a stockholder vote, a final proxy
statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft
proxy statement would be made available to such stockholders well in advance of such time, providing additional notice of redemption
if we conduct redemptions in conjunction with a proxy solicitation. Given the relatively short exercise period, it is advisable
for stockholders to use electronic delivery of their public shares.
There is a nominal cost associated with
the above-referenced tendering process and the act of certificating the shares or delivering them through The Depository Trust
Company’s DWAC (Deposit/Withdrawal At Custodian) System. The transfer agent will typically charge the tendering broker a
fee of approximately $80 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However,
this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender their
shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery
must be effectuated.
The foregoing is different from the procedures
used by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many
blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and
a holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was
seeking to exercise his or her redemption rights. After the business combination was approved, the company would contact such stockholder
to arrange for him or her to deliver his or her certificate to verify ownership. As a result, the stockholder then had an “option
window” after the completion of the business combination during which he or she could monitor the price of the company’s
stock in the market. If the price rose above the redemption price, he or she could sell his or her shares in the open market before
actually delivering his or her shares to the company for cancellation. As a result, the redemption rights, to which stockholders
were aware they needed to commit before the stockholder meeting, would become “option” rights surviving past the completion
of the business combination until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery
prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once the business combination is
approved.
Any request to redeem such shares, once
made, may be withdrawn at any time up to the date set forth in the tender offer materials or two business days prior to the scheduled
date of the stockholder meeting set forth in our proxy materials, as applicable (unless we elect to allow additional withdrawal
rights). 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 until 24 months from the closing of our IPO, or February 8,
2023, or during any extension period.
Redemption of public shares and liquidation if no initial
business combination
Our amended and restated certificate of
incorporation provides that we will have only 24 months from the closing of our IPO, or February 8, 2023, to complete our
initial business combination. If we have not completed our initial business combination within such period or during any Extension
Period, we will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible
but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable, and less up to $100,000
of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely
extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions,
if any); and (3) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with
respect to our warrants, which will expire worthless if we fail to complete our initial business combination within the prescribed
time period.
Our initial stockholders, officers and
directors have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions
from the trust account with respect to any founder shares and held by them if we fail to complete our initial business combination
within the prescribed time period. However, if our initial stockholders or any of our officers, directors or any of their respective
affiliates then hold any public shares, they will be entitled to liquidating distributions from the trust account with respect
to such public shares if we fail to complete our initial business combination within the allotted time frame to complete our initial
business combination.
Our initial stockholders, officers and
directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated
certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemptions in connection with
our initial business combination or to redeem 100% of our public shares if we have not consummated our initial business combination
within 24 months from the closing of our IPO, or February 8, 2023, or (B) with respect to any other provision relating
to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the
opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per- share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of
taxes payable), divided by the number of then outstanding public shares. However, we may not redeem our public shares in an amount
that would cause our net tangible assets to be less than $5,000,001 following such redemptions.
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
estimated $1,000,000 of proceeds held outside the trust account, although we cannot assure you that there will be sufficient funds
for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan
of dissolution, to the extent that there is any interest accrued in the trust account not required to pay taxes, we may request
the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds
of our IPO and the sale of the private placement warrants, other than the proceeds deposited in the trust account, and without
taking into account interest, if any, earned on the trust account and any tax payments or expenses for the dissolution of the trust,
the per-share redemption amount received by stockholders upon our dissolution would be $10.00. The proceeds deposited in the trust
account could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public
stockholders. We cannot assure you that the actual per-share redemption amount received by stockholders will not be substantially
less than $10.00. Please see “Risk Factors — If third parties bring claims against us, the proceeds held in the trust
account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share”
and other risk factors described above. 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.