10-K
1
f10k2020_sustainable.htm
ANNUAL REPORT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
SUSTAINABLE OPPORTUNITIES
ACQUISITION CORP.
(Exact name of registrant as specified in its charter)
(Address of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: (952) 456-5304
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b)
of the Act:
Title of Each Class: Trading Symbol: Name of Each Exchange on Which Registered:
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 ☒
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
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 ☒ 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 and post such files). Yes ☒
No ☐
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 definition
of “large accelerated filer,” “accelerated filer, “smaller reporting company” and “emerging
growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
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 ☒ No ☐
As of June 30, 2020, the last business day of the registrant’s
most recently completed second fiscal quarter, the aggregate market value of the ordinary shares outstanding, other than shares
held by persons who may be deemed affiliates of the registrant, computed by reference to the closing sales price for the ordinary
shares on June 30, 2020, as reported on the NYSE, was approximately $291,000,000.
As of March 30, 2021, 30,000,000 Class A ordinary
shares (which includes Class A ordinary shares that are underlying the company’s units), par value $0.0001, and 7,500,000 Class
B ordinary shares, par value $0.0001, were issued and outstanding.
Documents Incorporated by Reference:
None.
TABLE OF CONTENTS
Page
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS iii
PART I 1
Item 1. Business 1
Item 1A. Risk Factors 22
Item 1B. Unresolved Staff Comments 52
Item 2. Properties 52
Item 3. Legal Proceedings 52
Item 4. Mine Safety Disclosures 52
Item 6. Selected Financial Data 54
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 58
Item 8. Financial Statements and Supplementary Data 58
Item 9A. Controls and Procedures 58
Item 9B. Other Information 58
PART III 59
Item 10. Directors, Executive Officers and Corporate Governance 59
Item 11. Executive Compensation 66
Item 14. Principal Accountant Fees and Services 70
Item 15. Exhibit and Financial Statement Schedules 71
i
CERTAIN TERMS
Unless otherwise stated
in this Annual Report on Form 10-K (this “Report”), or the context otherwise requires, references to:
● “Founders” are to Scott Leonard and Scott Honour;
ii
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
Some of the statements contained
in this Report may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements
include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions
or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations
of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,”
“believe,” “continue,” “could,” “estimate,” “expect,” “intends,”
“may,” “might,” “plan,” “possible,” “potential,” “predict,”
“project,” “should,” “would” and similar expressions may identify forward-looking statements,
but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this
Report may include, for example, statements about our ability to consummate any acquisition or other business combination and
any other statements that are not statements of current or historical facts. These statements are based on management’s
current expectations, but actual results may differ materially due to various factors, including but not limited to:
● our expectations around the performance of the prospective target business;
● our pool of prospective target businesses;
● our public securities’ potential liquidity and trading;
● the lack of a market for our securities;
● the trust account not being subject to claims of third parties; or
● our financial performance.
Future developments affecting
us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some
of which are beyond our control) and 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 “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. These risks and others described under
“Risk Factors” may not be exhaustive.
By their nature, forward-looking
statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur
in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results
of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from
those made in or suggested by the forward-looking statements contained in this Report. In addition, even if our results or operations,
financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking
statements contained in this Report, those results or developments may not be indicative of results or developments in subsequent
periods.
iii
SUMMARY OF RISK FACTORS
The following is a summary
of the principal risks described below in Part I, Item 1A “Risk Factors” in this Report. We believe that the risks
described in the “Risk Factors” section are material to investors, but other factors not presently known to us or
that we currently believe are immaterial may also adversely affect us. The following summary should not be considered an exhaustive
summary of the material risks facing us, and it should be read in conjunction with the “Risk Factors” section and
the other information contained in this Report.
iv
v
PART I
ITEM 1. BUSINESS
Introduction
We are a blank check company
incorporated as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share
purchase, reorganization or similar business combination with one or more businesses or entities, which we refer to throughout
this Report as our initial business combination. We are an emerging growth company and, as such, we are subject to all of the
risks associated with emerging growth companies.
We believe that there are significant,
attractive investment opportunities that exist within industries that benefit from strong Environmental, Social and Governance
(“ESG”) profiles. While investing in ESG covers a broad range of themes, we are focused on evaluating suitable targets
that have existing environmental sustainability practices or that may benefit, both operationally and economically, from our management
team’s commitment and expertise in executing such practices. We believe our management team’s experience allows us
to evaluate targets in industries such as manufacturing (including auto, building materials), chemicals, services (including waste,
environmental, construction), logistics (including transportation, distribution), technology (hardware, software, devices), agriculture
(including biofuels) and energy (with focus on renewable generation, utility services, energy efficiency/management), among others.
Furthermore, our target universe could include companies undergoing a transition to increase their environmental sustainability
profiles, reflecting an opportunity to bring environmentally sustainable practices to companies that may not have historically
been focused on environmental sustainability. We believe there is a wide array of companies undergoing this “brown-to-green”
transition in our target universe. Companies in our target universe tend to have stable growth rates and would greatly benefit
from access to public market capital.
We believe in the ability of
our management team to add significant value to a target company from a commercial, operating, strategic and sustainability perspective.
In particular, we intend to identify and acquire a business that could benefit from a hands-on owner with extensive operational
experience and the public company expertise our management team possesses, or that relies on the target’s executive and
operational expertise but presents potential for an attractive risk-adjusted return profile under our stewardship. Even fundamentally
sound companies can often underperform their potential due to underinvestment, a temporary period of dislocation in the markets
in which they operate, over-levered capital structures, excessive cost structures, incomplete management teams and/or inappropriate
business strategies. Our management team has extensive experience in identifying and executing such strategies. In addition, our
team has significant hands-on experience working with private companies in preparing for and executing an initial public
offering and serving as active owners and directors by working closely with these companies to continue their transformations
and help create value in the public markets.
Our Founders, Our Board of Directors and
Management
Scott Leonard serves as our
Chief Executive Officer and on our board of directors. Mr. Leonard has over 15 years of experience leading highly successful
business transformations and transitions. Mr. Leonard also has deep expertise over the past eight years driving decarbonization
through technology adoption, product lifecycle management and development and industrial demand destruction. Mr. Leonard
has held various roles at both public and private companies including Chief Executive Officer, Chief Financial Officer, Chief
Restructuring Officer and Independent Director. Previously, Mr. Leonard served as Chief Financial Officer/Chief Restructuring
Officer at GenOn Energy from 2017 until 2018, and Chief Executive Officer of GenOn Mid-Atlantic LLC in 2018. From 2014 to
2016, Mr. Leonard was at Hewlett Packard Enterprise (NYSE: HPE), where he served as the Senior Vice President of Global Commercial
Functions for the Enterprise Services business. Prior to that, Mr. Leonard served as Deputy Executive Director, Chief Strategy & Administrative Officer for the Texas Department of Transportation from 2012 to 2014. From 2005 to 2012, Mr. Leonard
held positions as Senior Vice President, Performance Improvement and Vice President, Corporate Planning at TXU Corp. and its successor
Energy Future Holdings Corp. Mr. Leonard previously served on the board of directors of NRG REMA, LLC and Lonestar II Generation
Holdings. Earlier in his career, Mr. Leonard was with McKinsey & Co. as a management consultant and Donaldson Lufkin & Jenrette as an investment banker. Mr. Leonard earned a B.S. with Highest Honors from Georgia Tech, and an M.B.A. with
Distinction from The Kellogg Graduate School of Management at Northwestern.
Scott Honour serves as the
Chairman of our board of directors. Mr. Honour has over 30 years of private equity investment experience and has been involved
in over 100 transactions totaling over $20 billion in transaction value. Mr. Honour is Managing Partner of Northern
Pacific Group (“NPG”), a private equity firm, which he co-founded in 2012. Prior to that, Mr. Honour
was at The Gores Group, a Los Angeles based private equity firm, for ten years, serving as Senior Managing Director and one of
the firm’s top executives. During his time at The Gores Group, the firm raised four funds, totaling $4 billion in aggregate,
and made over 35 investments. Mr. Honour also served on the investment committee for The Gores Group. Prior to joining The
Gores Group, Mr. Honour was a Managing Director at UBS Investment Bank from 2000 to 2002 and was an investment banker at
Donaldson, Lufkin & Jenrette from 1991 to 2000. Mr. Honour began his career at Trammell Crow Company in 1988. Mr. Honour
has served on the board of directors of numerous public and private companies, including Solar Spectrum Holdings LLC, Anthem Sports & Entertainment Inc., 1st Choice Delivery, LLC, United Language Group, Inc., Renters Warehouse LLC, Real Dolmen
(REM:BB) and Westwood One, Inc. (formerly Nasdaq: WWON), and is a co-founder of Titan CNG LLC and YapStone Inc. Mr. Honour
earned a B.S. and B.A., cum laude, in Business Administration and Economics from Pepperdine University and an M.B.A.
in Finance and Marketing from the Wharton School of the University of Pennsylvania.
1
David Quiram serves as our
Chief Financial Officer. Dr. Quiram has over 20 years of leadership experience in technology, strategy and finance organizations
with a deep understanding of the chemicals, emerging technology, bioscience and energy sectors. Previously, Dr. Quiram served
as Head of Financial Planning and Analysis and Tax at GenOn Energy (“GenOn”) from 2017 until 2019, where he was responsible
for standing up the financial and administrative functions of GenOn as a stand-alone entity from NRG Energy Inc. (NYSE: NRG).
Prior to that, Dr. Quiram served as Head of Investments for Enterprise Services of Hewlett Packard Enterprise (NYSE: HPE) from
2014 until 2017, where he directed investments into products and services. From 2010 to 2014, Dr. Quiram was with Accenture (NYSE:
ACN) as a Senior Manager in their Strategy practice focused on transforming utilities, independent power producers, and energy
retailers. From 2006 to 2009, Dr. Quiram worked at multiple roles at TXU Energy starting in finance and later served as Vice President
of Retail Pricing and Procurement where he led the pricing and hedging for TXU Energy’s retail portfolio. Dr. Quiram began
his career at McKinsey & Co where he worked as an Engagement Manager from 2001 until 2005, and as a Research Scientist at
DuPont (NYSE: DD) from 1998 to 2001. Dr. Quiram earned a B.S. in Chemical Engineering with Highest Distinction from the University
of Virginia, and an M.S. and Ph.D. in Chemical Engineering from the Massachusetts Institute of Technology.
Rick Gaenzle serves on our
board of directors. Mr. Gaenzle has over 30 years of private equity investment and corporate finance experience; he is the
founder and currently serves as a Managing Director of Gilbert Global Equity Capital, L.L.C., the principal investment advisor
to Gilbert Global Equity Partners, L.P. and related entities, a $1.2 billion leveraged buyout and private equity fund. Mr. Gaenzle
spent twenty-eight years at Gilbert Global and its predecessor entity, completing over 110 direct equity investments, co-investments and
add-on acquisitions for portfolio companies. Previously, Mr. Gaenzle was a Principal of Soros Capital L.P., the principal
venture capital and leveraged equity entity of the Quantum Group of Funds and a principal advisor to Quantum Industrial Holdings
Ltd. Prior to joining Soros Capital, Mr. Gaenzle held various positions at PaineWebber Inc. Mr. Gaenzle currently serves
as a Senior Advisor to Impact Delta, an impact-investing and impact-measurement advisory firm; an Operating Partner
of NPG; and Chairman of Lake Street Homes, a single-family rental investment vehicle. Mr. Gaenzle holds a B.A. from
Hartwick College and an M.B.A. from Fordham University.
Isaac Barchas serves on our
board of directors. Mr. Barchas is the President and Chief Executive Officer of Research Bridge Partners (“RBP”),
a socially-driven investment company, which he founded in 2016. RBP uses both concessionary and nonconcessionary investment
to create startup companies based on university research and advance those companies into the venture capital markets. Prior to
founding RBP, Mr. Barchas led the Austin Technology Incubator (“ATI”) at The University of Texas at Austin from
2006 to 2016. ATI’s Clean Energy Incubator was the first university clean tech incubation program in the United States.
During Mr. Barchas’ leadership, ATI companies raised over $1 billion in the capital markets. Mr. Barchas
joined the university from McKinsey & Co., where he worked in the Chicago, Sydney, Auckland, and Dallas offices, from 1996
to 2006 and served on the leadership teams of McKinsey’s North American Healthcare Practice and Global Organization Practice.
Mr. Barchas has served on multiple private company boards and on philanthropic boards including Pecan Street Inc., the largest
analytically-focused clean energy and climate data consortium in the United States, where he was a founding board member.
Mr. Barchas earned a J.D. (honors) and M.A. (Century Fellowship) from The University of Chicago. He received an A.B. from
Stanford University (honors and Phi Beta Kappa).
Justin Kelly serves on our
board of directors. Mr. Kelly is currently the Chief Executive Officer and Chief Investment Officer of Winslow Capital Management,
LLC (“Winslow Capital”), Nuveen’s center of excellence for growth investing. Mr. Kelly also serves
as lead portfolio manager on the firm’s flagship U.S. Large Cap Growth Strategy. Mr. Kelly has been with Winslow Capital
for over two decades and has transformed the firm from a single strategy, niche investment firm to a thought leader globally in
growth equity investing with four strategies. Prior to joining Winslow Capital in 1999, Mr. Kelly was an equity analyst at
Investment Advisors in Minneapolis. Prior to that, Mr. Kelly worked at Prudential Bache, from 1993 to 1996 as Investment
Banker, and Salomon Brothers, from 1996 to 1997 as Investment Banker. Mr. Kelly earned a B.S. in Finance/Investments from
Babson College.
2
We are further supported by
our team of advisors comprised of former senior executives from leading global companies with experience in a wide range of sub-sectors and
functional areas, who have previously worked together over the last decade or more. They provide us with access to their expertise
and extensive industry networks from which we intend to source and evaluate targets as well as devise plans to optimize any business
that we acquire.
Our management team is supported
by NPG, a technology and business services focused private equity firm based in Wayzata, Minnesota. NPG has considerable experience
investing in ESG related portfolio companies with community impact, workplace diversity and integrity, and environmental resource
management acting as cornerstones to key investment decisions. NPG has offset its carbon footprint to net zero, achieving CarbonNeutral®
status. The partners of NPG have been involved in acquisitions, financings and advisory transactions totaling over $20 billion
in transaction value and have significant experience investing across a variety of economic cycles and a track record of identifying
high-quality assets, businesses and management teams with significant resources, capital and optimization potential.
With respect to the above,
past performance of our management team is not a guarantee of either (i) success with respect to a business combination that may
be consummated or (ii) the ability to successfully identify and execute a transaction. You should not rely on the historical record
of management or their respective affiliates as indicative of future performance. See “Item 1A. Risk Factors — Past
performance by our management team, including investments and transactions in which they have participated and businesses with
which they have been associated, may not be indicative of future performance of an investment in us, and we may be unable to provide
positive returns to shareholders.” For a list of our executive officers and entities for which a conflict of interest may
or does exist between such officers and the company, please refer to “Item 10. Directors, Executive Officers and Corporate
Governance—Conflicts of Interest.”
Proposed Business Combination
Merger Agreement
On March 4, 2021, we entered
into a Business Combination Agreement (as it may be amended, supplemented or otherwise modified from time to time, the “Business
Combination Agreement”), by and among SOAC, 1291924 B.C. Unlimited Liability Company, an unlimited liability company existing
under the laws of British Columbia, Canada (“NewCo Sub”), and DeepGreen Metals Inc., a company existing under the
laws of British Columbia, Canada (“DeepGreen”).
The Business Combination
Pursuant to the Business Combination
Agreement, SOAC will migrate to and be continued as a company in British Columbia, Canada (the “SOAC Continuance”).
Following the SOAC Continuance, pursuant to a plan of arrangement (the “Plan of Arrangement”) under the Business
Corporations Act (British Columbia), (i) SOAC will acquire all of the issued and outstanding shares in the capital of
DeepGreen (the “DeepGreen Shares”) from DeepGreen shareholders in exchange for SOAC Common Shares (as defined below)
and Company Earnout Shares (as defined below) (the “Share Exchange”), (ii) DeepGreen will become a wholly-owned
subsidiary of SOAC, and (iii) DeepGreen and NewCo Sub will amalgamate to continue as one unlimited liability company, in each
case, on the terms and subject to the conditions set forth in the Business Combination Agreement and the Plan of Arrangement and
in accordance with the provisions of applicable law (collectively, with the Share Exchange, the “Share Exchange and Amalgamation”
and, together with the other transactions contemplated by the Business Combination Agreement, the Plan of Arrangement and the
ancillary documents entered into in connection with the Business Combination Agreement, collectively, the “Business Combination”).
In accordance with the terms
and subject to the conditions of the Business Combination Agreement, pursuant to the Plan of Arrangement, each option to purchase
common shares in the capital of DeepGreen (the “DeepGreen Options”) will become an option to purchase SOAC Common
Shares and Company Earnout Shares on the same terms and conditions (including applicable vesting, expiration and forfeiture provisions)
that applied to the corresponding DeepGreen Options immediately prior to closing of the Business Combination.
3
The Business Combination is
expected to close in the second quarter of 2021, following the receipt of the required approval by SOAC’s shareholders and
the fulfillment of other conditions.
Business Combination Consideration
In accordance with the terms
and subject to the conditions of the Business Combination Agreement, pursuant to the Plan of Arrangement, the shareholders and
the optionholders of DeepGreen will be entitled to receive, in exchange for their DeepGreen Shares or DeepGreen Options, as applicable,
(i) shares in the capital of SOAC or comparable equity awards that are settled or are exercisable for shares in the capital of
SOAC, as applicable, based on an implied company equity value of $2.25 billion after giving effect to the SOAC Continuance (the
“SOAC Common Shares”), (ii) 5,000,000 Class A Special Shares, (iii) 10,000,000 Class B Special Shares, (iv) 10,000,000
Class C Special Shares, (v) 20,000,000 Class D Special Shares, (vi) 20,000,000 Class E Special Shares, (vii) 20,000,000 Class
F Special Shares, (viii) 25,000,000 Class G Special Shares and (ix) 25,000,000 Class H Special Shares, in each case, in the capital
of SOAC (collectively, the “Company Earnout Shares”), or, as applicable, options to purchase such SOAC Common Shares
and Company Earnout Shares.
In accordance with the terms
and subject to the conditions of the Business Combination Agreement, immediately prior to closing of the Business Combination,
the Sponsor will exchange 10% of the SOAC Common Shares it will own following the SOAC Continuance for (i) 500,000 Class I Special
Shares (the “Sponsor Earnout Shares”) in the capital of SOAC, and (ii) 741,000 Class J Special Shares in the capital
of SOAC (the “Class J Special Shares”).
Representations and Warranties; Covenants
The Business Combination Agreement
contains representations, warranties and covenants of each of the parties thereto that are customary for transactions of this
type. Each of SOAC and DeepGreen has also agreed to take all action within its power as may be necessary or appropriate such that,
effective immediately after the closing of the Business Combination, the SOAC board of directors shall consist of nine directors,
which shall be comprised of eight individuals determined by DeepGreen prior to the effectiveness of the Registration
Statement on Form S-4 (the “Registration Statement”) and one director determined by the Sponsor,
prior to the effectiveness of the Registration Statement. In addition, SOAC has agreed to adopt an equity incentive plan, as described
in the Business Combination Agreement.
Conditions to Each Party’s Obligations
The
obligation of SOAC and DeepGreen to consummate the Business Combination is subject to certain closing conditions, including, but
not limited to, (i) the absence of any order, law or other legal restraint or prohibition issued by any court of competent jurisdiction
or other governmental entity of competent jurisdiction preventing the consummation of the Business Combination, (ii) the effectiveness
of the Registration Statement, (iii) the approval of SOAC’s shareholders, (iv)
the approval of DeepGreen’s shareholders and optionholders, (v) receipt of a final Canadian court order with respect to
the Plan of Arrangement (the “Final Order”), (vi) receipt of approval or deemed approval by the applicable minister
under Part IV of the Investment Canada Act (Canada) (if required), (vii) the approval by NYSE of SOAC’s initial listing
application in connection with the Business Combination and (viii) SOAC having at least $5,000,001 of net tangible assets
(as determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act of 1934, as amended) remaining after the closing
of the Business Combination.
In
addition, the obligation of DeepGreen to consummate the Business Combination is subject to the fulfillment of other closing conditions,
including, but not limited to, (i) the aggregate cash proceeds from SOAC’s trust account, together with the proceeds from
the PIPE financing, equaling no less than $250,000,000 (after deducting any amounts paid to SOAC shareholders that exercise their
redemption rights in connection with the Business Combination and net of SOAC’s unpaid transaction expenses and SOAC’s
unpaid liabilities), (ii) no SOAC Material Adverse Effect (as defined in the Business Combination Agreement) having occurred that
is continuing, (iii) SOAC having delivered, or caused to be delivered, to DeepGreen, the Registration Rights Agreement (as defined
in the Business Combination Agreement), duly executed by an authorized officer of SOAC and (iv) SOAC having taken all actions
necessary or appropriate such that the board of directors of SOAC consists of the number of directors, and is comprised of the
individuals, determined pursuant to the Business Combination Agreement.
4
Termination
The
Business Combination Agreement may be terminated under certain customary and limited circumstances prior to the closing of the
Business Combination, including, but not limited to, by (i) mutual written consent of SOAC and DeepGreen, (ii) SOAC if the representations
and warranties of DeepGreen are not true and correct or if DeepGreen fails to perform any covenant or agreement set forth in the
Business Combination Agreement such that certain conditions to closing cannot be satisfied and the breach or breaches of such
representations or warranties or the failure to perform such covenant or agreement, as applicable, are not cured or cannot be
cured within certain specified time periods, (iii) DeepGreen if the representations and warranties of any SOAC Party (as defined
in the Business Combination Agreement) are not true and correct or if any SOAC Party fails to perform any covenant or agreement
set forth in the Business Combination Agreement such that certain conditions to closing cannot be satisfied and the breach or
breaches of such representations or warranties or the failure to perform such covenant or agreement, as applicable, are not cured
or cannot be cured within certain specified time periods, (iv) either SOAC or DeepGreen if the Business Combination is not consummated
by October 4, 2021, subject to certain limited exceptions, (v) either SOAC or DeepGreen, if any governmental entity of competent
jurisdiction shall have issued an order permanently enjoining or prohibiting the Business Combination and such order shall have
become final and nonappealable, (vi) either SOAC or DeepGreen if certain required approvals are not obtained by SOAC shareholders
after the conclusion of a meeting of SOAC’s shareholders held for such purpose at which such shareholders voted on such
approvals and (vi) SOAC if DeepGreen Required Approval (as defined in the Business Combination Agreement) is not obtained at the
DeepGreen Shareholder Meeting (as defined in the Business Combination Agreement).
If
the Business Combination Agreement is validly terminated, none of the parties to the Business Combination Agreement will have
any liability or any further obligation under the Business Combination Agreement, except in the case of Willful Breach or Fraud
(each, as defined in the Business Combination Agreement) and for customary obligations that survive the termination thereof (such
as confidentiality obligations).
Alternative Transaction
In
the event that the Final Order is not obtained (for any reason other than as a result of a material breach of SOAC’s covenants
or obligations under the Business Combination Agreement), the parties to the Business Combination Agreement have agreed to take
all actions reasonably required to execute and deliver all related documentation in order to complete the Business Combination
by way of an amalgamation under Part 9, Division 3 of the BCBCA (an “Alternative Transaction”). In such event, the
parties may consider effecting a share exchange for certain shareholders prior to consummating the Alternative Transaction.
This description of the Business
Combination Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Business
Combination Agreement, a copy of which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
Business Strategy
Our acquisition and value creation
strategy is to identify and complete our initial business combination with a company in an industry that complements the experience
and expertise of our management team and is focused on, or could benefit from, environmentally sustainable business practices.
We seek to:
5
● Deliver creative approaches to transaction sourcing;
Our selection process in choosing
an attractive investment opportunity leverages our management team’s network of industry, private equity sponsor, credit
fund sponsor and lending community relationships as well as relationships with management teams of public and private companies,
investment bankers, restructuring advisers, attorneys and accountants, which provides us with a number of business combination
opportunities. We have deployed a proactive, thematic sourcing strategy and focus on companies where we believe the combination
of our operating experience, relationships, capital and capital markets expertise can be a catalyst to transform a target company
and can help accelerate the target’s growth, performance and sustainability profile. Since the completion of our initial
public offering, members of our management team have communicated with their network of relationships to articulate our initial
business combination criteria, including the parameters of our search for a target business, and have begun the disciplined process
of pursuing and reviewing promising leads.
The members of our management
team have experience in:
● Sourcing, structuring, acquiring and selling businesses;
Competitive Strengths
The sourcing, valuation, diligence
and execution capabilities of our management team provide us with a significant pipeline of opportunities from which to evaluate
and select a business that will benefit from our expertise. Our competitive strengths include the following:
6
Investment Criteria
Consistent with our strategy,
we have identified the following general criteria and guidelines which we believe are important in evaluating prospective target
businesses. We have used these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into
our initial business combination with a target business that does not meet these criteria and guidelines. We intend to acquire
one or more businesses or entities that we believe:
7
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 does not meet the above
criteria and guidelines, we will disclose that the target business does not meet the above criteria in our shareholder communications
related to our initial business combination, which, as discussed in this Report, would be in the form of tender offer documents
or proxy solicitation materials that we would file with the SEC.
Our Acquisition Process
In evaluating a prospective
target business, we expect to conduct a thorough due diligence review that 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 will also utilize our operational and capital planning experience.
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 either an independent investment banking firm or other independent entity that commonly renders
valuation opinions or an independent accounting firm.
Members of our management team
may directly or indirectly own our ordinary shares and/or private placement warrants following our initial public offering, 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.
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 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 signing the agreement to enter into the initial business combination. If our board
of directors is not able to independently determine the fair market value of the target business or businesses or we are considering
an initial business combination with an affiliated entity, we will obtain an opinion with respect to the satisfaction of such
criteria from an independent investment banking firm or other independent entity that commonly renders valuation opinions. We
do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination. Subject
to this requirement, our management has virtually unrestricted flexibility in identifying and selecting one or more prospective
businesses, although we are not permitted to effectuate our initial business combination with another blank check company or a
similar company with nominal operations.
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We anticipate structuring our
initial business combination so that the post-transaction company in which our public shareholders 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 shareholders
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 of 1940, as amended, or the Investment
Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our
shareholders 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 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 shareholders 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% of net assets test. If the 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
and we will treat the target businesses together as the initial business combination for purposes of a tender offer or for seeking
shareholder approval, as applicable. In addition, we have agreed not to enter into a definitive agreement regarding an initial
business combination without the prior consent of our Sponsor.
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 expect 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.
Other Considerations
We are not prohibited from
pursuing an initial business combination or subsequent transaction with a company that is affiliated with our Sponsor, Founders,
officers or directors. In the event we seek to complete our initial business combination or, subject to certain exceptions, subsequent
material transactions with a company that is affiliated with our Sponsor or any of our Founders, officers or directors, we, or
a committee of independent directors, will obtain an opinion from an independent investment banking firm or other independent
entity that commonly renders valuation opinions that such initial business combination or transaction is fair to our company from
a financial point of view.
In addition, certain of our
Founders, officers and directors presently have, and any of them in the future may have, additional fiduciary and contractual
duties to other entities. As a result, if any of our Founders, officers or directors becomes aware of a business combination opportunity
which is suitable for an entity to which he, she or it has then-current fiduciary or contractual obligations, then, subject
to their fiduciary duties under Cayman Islands law, he, she or it will need to honor such fiduciary or contractual obligations
to present such business combination opportunity to such entity, before we can pursue such opportunity. If these other entities
decide to pursue any such opportunity, we may be precluded from pursuing the same. However, we do not expect these duties to materially
affect our ability to complete our initial business combination. Our amended and restated memorandum and articles of association
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.
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Our Sponsor, directors and
officers may sponsor, form or participate in other blank check companies similar to ours or may pursue other business or investment
ventures during the period in which we are seeking an initial business combination. Any such companies, businesses or investments
may present additional conflicts of interest in pursuing an initial business combination. However, we do not believe that any
such potential conflicts would materially affect our ability to complete our initial business combination. In addition, our Founders,
officers and directors are not required to commit any specified amount of time to our affairs, and, accordingly, will have conflicts
of interest in allocating management time among various business activities, including identifying potential business combinations
and monitoring the related due diligence.
Status as a Public Company
We believe our structure will
make us an attractive business combination partner to target businesses. As an existing public company, we offer a target business
an alternative to the traditional initial public offering through a merger or other business combination with us. In a business
combination transaction with us, the owners of the target business may, for example, exchange their shares of stock in the target
business for our Class A ordinary shares (or shares of a new holding company) or for a combination of our Class A ordinary shares
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 underwriter’s ability to complete the offering, as well as general market conditions, which could
delay or prevent the offering from occurring or 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 shareholders’
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 will make us an attractive business partner, some potential target businesses may
view our status as a blank check company, including our lack of an operating history and our potential need to seek shareholder
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 shareholder 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.
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We will remain an emerging
growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion
of our initial public offering, (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 ordinary shares that are held by non-affiliates exceeds
$700 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.
Financial Position
With funds available for a
business combination initially in the amount of $292,000,000, after payment of the expenses of our initial public offering and
$10,500,000 of deferred underwriting fees, we offer a target business a variety of options such as creating a liquidity event
for its owners, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet
by reducing its debt ratio. Because we are able to complete our initial business combination using our cash, debt or equity securities,
or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor
the consideration to be paid to the target business to fit its needs and desires. However, we have not taken any steps to secure
third-party financing and there can be no assurance it will be available to us.
Effecting Our Initial Business Combination
General
We are not presently engaged
in, and we will not engage in, any operations for an indefinite period of time following our initial public offering. We intend
to 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 ordinary shares, we may
apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance
or expansion of operations of 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.
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.
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Sources of Target Businesses
We anticipate that target business
candidates will be brought to our attention from various unaffiliated sources, including investment market participants, private
equity groups, investment banking firms, consultants, accounting firms and large business enterprises. 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 the prospectus relating to our initial public offering 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 that they
become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well
as attending trade shows or conventions. In addition, we 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 do not presently anticipate engaging the services of professional firms or other individuals that specialize in business acquisitions
on any formal basis, we may engage these firms or other individuals in the future, in which event we may pay a finder’s
fee, consulting fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction.