Item 1.
Business.
Introduction
We
are a blank check company incorporated on May 10, 2019 as a Delaware corporation and formed for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
We have reviewed, and continue to review, a number of opportunities to enter into an initial business combination with an operating
business, but we are not able to determine at this time whether we will complete an initial business combination with any of the
target businesses that we have reviewed or with any other target business.
Prior
to our Public Offering, on May 16, 2019, our Sponsor purchased an aggregate of 8,625,000 shares of our Class B common stock,
par value $0.0001 per share (the “Founder Shares”), for an aggregate purchase price of $25,000, or approximately $0.003
per share. Our Sponsor agreed to forfeit up to 1,125,000 Founder Shares to the extent that the overallotment option for the Public
Offering was not exercised in full by the underwriters. In July 2019, our Sponsor transferred 40,000 Founder Shares to each of
our independent director nominees at their original purchase price. In September 2019, the underwriters purchased 1,411,763 of
the Overallotment Units (as defined below), and the remaining overallotment option subsequently expired. As a result, our Sponsor
forfeited an aggregate of 772,059 Founder Shares. The holders of our Founder Shares (including our Sponsor and our independent
directors) are referred to herein as our “initial stockholders.”
On
the Closing Date, we consummated our Public Offering of 30,000,000 units at a price of $10.00 per unit, generating gross proceeds
to us of $300.0 million. Each unit (“Unit”) consists of one share of our Class A common stock, par value $0.0001 per
share, and one-third of one warrant (“Warrant”). Each whole Warrant entitles the holder thereof to purchase one share
of our Class A common stock at a price of $11.50 per share, subject to adjustment. Simultaneously with the consummation of the
Public Offering, we completed the private sale of 5,333,333 private placement warrants (the “Private Placement Warrants”)
at a purchase price of $1.50 per warrant to our Sponsor, generating gross proceeds to us of approximately $8.0 million. Each Private
Placement Warrant entitles the holder thereof to purchase one share of our Class A common stock at a price of $11.50 per share,
subject to adjustment.
In
connection with the Public Offering, the underwriters of the Public Offering were granted an option to purchase up to an additional
4,500,000 units (the “Overallotment Units”). On September 4, 2019, the underwriters partially exercised their overallotment
option and, on September 6, 2019, the underwriters purchased 1,411,763 of the Overallotment Units at an offering price of $10.00
per unit, generating gross proceeds to us of approximately $14.1 million. Simultaneously with the sale of these Overallotment
Units, we completed a private placement with our Sponsor for an additional 188,235 Private Placement Warrants at a purchase price
of $1.50 per warrant, generating gross proceeds of approximately $282,000.
We
received gross proceeds from the Public Offering and the sale of the Private Placement Warrants of approximately $314.1 million
and $8.3 million, respectively, for an aggregate of approximately $322.4 million. Approximately $314.1 million of the gross proceeds
were deposited into a U.S. based trust account (the “Trust Account”), with Continental Stock Transfer & Trust
Company acting as trustee (“Trustee”). The approximately $314.1 million of net proceeds held in the Trust Account
includes approximately $10.9 million of deferred underwriting discounts and commissions that will be released to the underwriters
of the Public Offering upon completion of our initial business combination. Of the gross proceeds from the Public Offering and
the sale of the Private Placement Warrants that were not deposited in the Trust Account, approximately $6.2 million was used to
pay underwriting discounts and commissions in the Public Offering, $251,000 was used to repay loans and advances from our Sponsor,
and the balance was reserved to pay accrued offering and formation costs, business, legal and accounting due diligence expenses
on prospective acquisitions and continuing general and administrative expenses.
The
shares of our Class B common stock will automatically convert into shares of our Class A common stock at the time of our initial
business combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations
and the like. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued
in excess of the amounts sold in our Public Offering and related to the closing of the initial business combination, the ratio
at which the shares of our Class B common stock will convert into shares of our Class A common stock will be adjusted (unless
the holders of a majority of the outstanding shares of our Class B common stock agree to waive such adjustment with respect to
any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all issued
and outstanding shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total
number of all shares of common stock outstanding upon the completion of our Public Offering plus all shares of Class A common
stock and equity-linked securities issued or deemed issued in connection with the business combination (excluding any securities
issued or issuable to any seller in the initial business combination).
On
September 16, 2019, we announced that holders of the Units sold in our Public Offering may elect to separately trade the shares
of Class A common stock and Warrants included in the Units. The shares of Class A common stock and Warrants that are separated
trade on the New York Stock Exchange (“NYSE”) under the symbols “SBE” and “SBE WS,” respectively.
Those units not separated continue to trade on the NYSE under the symbol “SBE.U.”
Our
Company
Our
Sponsor is a portfolio company of NGP XII, an energy-focused private equity fund with a mandate to make investments in energy
and natural resources, with an emphasis on investments in businesses and/or assets in: the upstream and midstream energy sectors,
principally in North America (including, without limitation, the exploration and/or production of hydrocarbons, the ownership
and management of mineral and royalty interests, and the processing, transportation, storage and/or logistics relating to hydrocarbons);
and the oilfield and related energy services sectors. Although we may pursue an acquisition opportunity in any business or industry,
or one that does not fit with NGP XII’s mandate, we intend to capitalize on the ability of our management team and the broader
NGP platform to identify, acquire and operate a business in the energy industry that may provide opportunities for attractive
risk-adjusted returns for our stockholders.
We
intend to identify and acquire a business that could benefit from a hands-on owner with extensive operational experience in the
energy sector 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 under-perform 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 full-potential acquisitions
in the energy industry. 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.
We
believe that our management team is well positioned to identify attractive risk-adjusted returns in the marketplace and that its
contacts and transaction sources, ranging from industry executives, private owners, private equity funds, and investment bankers,
in addition to the energy industry reach of the NGP platform, will enable us to pursue a broad range of opportunities. Our management
believes that its ability to identify and implement value creation initiatives will remain central to its differentiated acquisition
strategy.
Scott
McNeill, our Chief Executive Officer, Chief Financial Officer and director, has over 20 years of experience in the energy industry.
Mr. McNeill served as Chief Financial Officer of RSP Permian, Inc. (“RSP”) from April 2013 through the completion
of its acquisition by Concho Resources, Inc. (“Concho”) in July 2018. Mr. McNeill also served as a member of the board
of directors of RSP from December 2013 through July 2018. Mr. McNeill joined RSP prior to its initial public offering in January
2014 (“IPO”) and helped build the organization during its early growth phase while positioning it for its IPO. During
Mr. McNeill’s tenure at RSP, RSP’s production grew from approximately 2,500 barrels of oil equivalents (“boe”)
per day to approximately 80,000 boe per day, and RSP executed over $13 billion in M&A transactions and approximately $7 billion
of financings. Before joining RSP, Mr. McNeill served as a managing director in the energy investment banking group of Raymond
James Financial, Inc., advising companies operating in the exploration and production, midstream, and energy service and equipment
segments of the energy industry. Mr. McNeill holds a B.B.A from Baylor University and an M.B.A from the University of Texas at
Austin and is a certified public accountant in the State of Texas.
Jim
Mutrie, our Chief Commercial Officer, General Counsel, Secretary and director, served as RSP’s Vice President, General Counsel
and Corporate Secretary from June 2014 through the completion of the acquisition of RSP by Concho in July 2018. During his tenure,
Mr. Mutrie led the negotiation and execution of approximately $13 billion of M&A transactions and over $6 billion of financings,
and oversaw Legal, Information Technology, Health and Safety, Human Resources and Government Affairs at RSP. While at RSP, Mr.
Mutrie was a board member of the Texas Oil and Gas Association, the largest and oldest group in Texas representing petroleum interests.
Prior to RSP, Mr. Mutrie served as General Counsel and Compliance Officer at United Surgical Partners International (NASDAQ: USPI).
From October 2003 to January 2007, Mr. Mutrie practiced corporate law at Vinson & Elkins L.L.P., representing public and private
companies in M&A transactions and capital market offerings, predominantly in the oil and gas industry. Mr. Mutrie holds a
B.A. from Cornell University, a J.D. from Northwestern University School of Law, a Certificate in Financial Management from Cornell
University and a Certificate in Financial Skills for The Energy Industry from SMU Cox School of Business, Executive Education.
Josh
Rosinski, our Chief Operating Officer, joined RSP in September 2014 and served as RSP’s Vice President of Reservoir Engineering
from February 2017 through the completion of RSP’s acquisition by Concho in July 2018. At RSP, Mr. Rosinski led the valuation
and technical analysis of M&A opportunities and oversaw the company’s corporate engineering functions, including production
forecasting and budgeting, reserve additions and RSP’s asset development efforts. Prior to RSP, Josh served as Vice President
of Engineering at Simmons & Company International (“Simmons & Co.”) in the upstream advisory group where he
directed engineering valuations supporting transactions across a variety of basins across the continental United States. Prior
to Simmons & Co., Mr. Rosinski managed and implemented completion engineering operations in the East Texas Haynesville asset
for Exco Resources, Inc. Mr. Rosinski began his career at Devon Energy Corporation in Houston and worked in multiple operational,
reservoir, and corporate engineering functions throughout Texas and Louisiana assets. Mr. Rosinski graduated from Texas A&M
with a B.S. in Petroleum Engineering.
Our
Sponsor is a portfolio company of NGP XII, and is owned by NGP XII and certain members of our management team. NGP has considerable
experience investing in the energy industry. Since NGP’s founding in 1988, NGP Funds have raised approximately $20.0 billion
of capital commitments from investors and invested in more than 215 portfolio companies across 12 private funds. NGP has experience
investing across a variety of commodity price cycles and a track record of identifying high-quality assets, businesses and management
teams with significant resources, capital and optimization potential.
The
past performance of our management team and NGP is not a guarantee either (i) of success with respect to any business combination
we may consummate or (ii) that we will be able to identify a suitable candidate for our initial business combination. You should
not rely on the historical record of our management’s or NGP’s performance as indicative of our future performance.
Business
Strategy
Our
acquisition and value creation strategy is to identify, acquire and, after our initial business combination, build a company in
the energy industry in North America that complements the experience of our management team and can benefit from its operational
expertise and/or executive oversight. Our acquisition strategy will leverage our team’s network of potential proprietary
and public transaction sources where we believe a combination of our relationships, knowledge and experience in the energy industry
could effect a positive transformation or augmentation of existing businesses or properties to improve their overall value proposition.
Our goal is to form a focused business with multiple competitive advantages and the potential to generate cash flow in excess
of its capital. We would expect to grow the business over time, both organically and through acquisitions, with a focus on consistently
achieving attractive returns on capital and maintaining conservative balance sheet metrics.
We
plan to utilize the network and industry experience of our management team and NGP in seeking an initial business combination
and employing our acquisition strategy. Over the course of their careers, the members of our management team and their affiliates
have developed a broad network of contacts and corporate relationships that we believe will serve as a useful source of acquisition
opportunities. This network has been developed through our management team’s extensive experience in both investing in and
operating in the energy industry. We will additionally leverage NGP’s considerable experience investing in the energy industry;
since 1988, NGP Funds have raised approximately $20.0 billion of capital commitments from investors and invested in more than
215 portfolio companies across 12 private funds.
Acquisition
Criteria
Consistent
with this strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating
prospective targets. We will use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter
into our initial business combination with a target that does not meet these criteria and guidelines. We intend to acquire target
businesses that we believe:
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are fundamentally sound but that we believe
can achieve better results by leveraging the operating and financial experience of our management team and NGP and/or combining
these businesses into a public vehicle run by our management team;
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can utilize the extensive networks and insights
that our management team and NGP have built in the energy industry;
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are at an inflection point, such as requiring
additional management expertise, are able to innovate through new operational techniques, or where we believe we can drive
improved financial performance;
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exhibit unrecognized value or other characteristics,
desirable returns on capital, and a need for capital to achieve the company’s growth strategy, that we believe have
been misevaluated by the marketplace based on our analysis and due diligence review; and
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will offer an attractive risk-adjusted return
for our stockholders.
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We
will seek to acquire the target on terms and in a manner that leverages our management team’s experience investing within
the energy industry. Potential upside from growth in the target business and an improved capital structure will be weighed against
any identified downside risks.
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 stockholder communications related to our initial business combination, which would be in the form of proxy solicitation
or tender offer materials that we would file with the SEC.
Initial
Business Combination
The
NYSE rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80%
of the net assets held in trust (net of amounts disbursed to management for working capital purposes and excluding the amount
of any deferred underwriting discount held in trust) at the time of the agreement to enter into the initial business combination.
Our board will make the determination as to the fair market value of a target business or businesses. If our board is not able
to independently determine the fair market value of a target business or businesses, we will obtain an opinion from an independent
investment banking firm that is a member of the Financial Industry Regulatory Authority (“FINRA”) or an independent
accounting firm with respect to the satisfaction of such criteria.
Our
amended and restated certificate of incorporation requires the affirmative vote of a majority of our board of directors, which
must include a majority of our independent directors and each of the non-independent directors nominated by our Sponsor, to approve
our initial business combination.
We
may pursue an acquisition opportunity jointly with our Sponsor, or one or more other entities affiliated with NGP, including other
NGP Funds, other NGP Fund portfolio companies, and/or one or more investors in the NGP Funds, which we refer to as an “Affiliated
Joint Acquisition.” Any such parties may co-invest with us in the target business at the time of our initial business combination,
or we could raise additional proceeds to complete the acquisition by issuing to such parties a class of equity or equity-linked
securities. Any such issuance of equity or equity-linked securities would, on a fully diluted basis, reduce the percentage ownership
of our then-existing stockholders. Notwithstanding the foregoing, pursuant to the anti-dilution provisions of our Class B common
stock, issuances or deemed issuances of Class A common stock or equity-linked securities would result in an adjustment to the
ratio at which shares of Class B common stock shall convert into shares of Class A common stock such that our initial stockholders
and their permitted transferees, if any, would retain their aggregate percentage ownership at 20% of the sum of the total number
of all shares of common stock outstanding upon completion of our Public Offering plus all shares of Class A common stock and equity-linked
securities issued or deemed issued in connection with the business combination (excluding any shares or equity-linked securities
issued, or to be issued, to any seller in the business combination), unless the holders of a majority of the then-outstanding
shares of Class B common stock agreed to waive such adjustment with respect to such issuance or deemed issuance at the time thereof.
Our Sponsor and its affiliates have no obligation to make any such investment, and may compete with us for potential business
combinations.
We
anticipate structuring our initial business combination either (i) in such a way so that the post-transaction company in which
our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses,
or (ii) in such a way so that the post-transaction company owns or acquires less than 100% of such interests or assets of the
target business in order to meet certain objectives of the target management team or stockholders, or for other reasons, including
an Affiliated Joint Acquisition as described above. However, we will only complete a 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 (the “Investment Company Act”). Even if the post-transaction company owns or acquires 50% or more of the
voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in
the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For
example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding
capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the
issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own
less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity
interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such
business or businesses that is owned or acquired is what will be 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 transactions and we will treat the target businesses together as the initial business combination for seeking stockholder
approval or for purposes of a tender offer, as applicable.
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
and other information that will be made available to us. We will also utilize our operational and capital allocation 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 from an independent investment banking
firm which is a member of FINRA or an independent accounting firm that our initial business combination is fair to the Company
from a financial point of view.
NGP
XII, members of our management team (other than members of our board of directors who are employees of NGP), and our independent
directors own (directly or indirectly) Founder Shares and/or Private Placement Warrants. Through their direct or indirect interest
in NGP XII, members of our board of directors who are employees of NGP currently own an indirect interest in us. Each member of
our management team 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.
Certain
of our directors presently have, and any of our officers and directors in the future may have additional, fiduciary or contractual
obligations to other entities pursuant to which such officer or director is or will be required to present a business combination
opportunity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity that is suitable
for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary
or contractual obligations to present such opportunity to such other entity. We do not believe, however, that the fiduciary duties
or contractual obligations of our officers or directors will materially affect our ability to complete our business combination.
In addition, we may pursue an Affiliated Joint Acquisition opportunity with an entity to which an officer or director has a fiduciary
or contractual obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination,
or we could raise additional proceeds to complete the acquisition by issuing to such entity a class of equity or equity-linked
securities. Our amended and restated certificate of incorporation provides 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 the Company and such opportunity is one we are legally and contractually permitted to undertake and would
otherwise be reasonable for us to pursue.
Our
Sponsor, officers and directors have agreed not to participate in the formation of, or become an officer or director of, any other
blank check company until we have entered into a definitive agreement regarding our initial business combination or we have failed
to complete our initial business combination within the required timeframe.
Our
Management Team
Members
of our management team are not obligated to devote any specific number of hours to our matters but they intend to devote as much
of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time
that any members of our management team will devote in any time period will vary based on whether a target business has been selected
for our initial business combination and the current stage of the business combination process.
Over the course of their careers, the members
of our management team have developed a broad network of contacts and corporate relationships. This network has grown through
the activities of our management team sourcing, acquiring and financing businesses, our management team’s relationships
with sellers, financing sources and target management teams and the experience of our management team in executing transactions
under varying economic and financial market conditions. See “Part III, Item 10. Directors, Executive Officers and Corporate
Governance” for a more complete description of our management team’s experience.
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 shares of our Class A common stock (or shares of a new holding company) or for a combination
of shares of our Class A common stock and cash, allowing us to tailor the consideration to the specific needs of the sellers.
Although there are various costs and obligations associated with being a public company, we believe target businesses will find
this method a more certain and cost-effective method to becoming a public company than the typical initial public offering. The
typical initial public offering process takes a significantly longer period of time than the typical business combination transaction
process, and there are significant expenses in the initial public offering process, including underwriting discounts and commissions,
that may not be present to the same extent in connection with a business combination with us.
Furthermore,
once a proposed business combination is completed, the target business will have effectively become public, whereas an initial
public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions,
which could delay or prevent the offering from occurring or could have negative valuation consequences. Once public, we believe
the target business would then have greater access to capital, an additional means of providing management incentives consistent
with stockholders’ interests and the ability to use its equity 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, such as our lack of an operating history and our ability to seek
stockholder approval of any proposed initial business combination, negatively.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities
Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, we are eligible
to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our
periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive
compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities
less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may
be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary
of the completion of our Public Offering, (b) in which we have total annual gross revenue of at least $1.07 billion (as adjusted
for inflation pursuant to SEC rules from time to time), or (c) in which we are deemed to be a large accelerated filer, which means
the market value of our Class A common stock that is 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 securities during the prior three-year period.
Effecting
our Initial Business Combination
We
intend to effectuate our initial business combination using cash from the proceeds of our Public Offering and the sale of the
Private Placement Warrants, our capital stock, debt or a combination of the foregoing. 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 business combination or used for redemptions of purchases
of our Class A common stock, we may apply the balance of the cash released to us from the Trust Account for general corporate
purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest
due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working
capital.
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 the Trust Account or because we become obligated to redeem a significant
number of shares of our Class A common stock upon completion of the business combination, in which case we may issue additional
securities or incur debt in connection with such business combination. There are no prohibitions on our ability to issue securities
or incur debt in connection with our initial business combination. We are not currently a party to any arrangement or understanding
with any third party with respect to raising any additional funds through the sale of securities, the incurrence of debt or otherwise.
Sources
of Target Businesses
We
are not prohibited from pursuing an initial business combination with a business combination target that is affiliated with our
Sponsor, officers or directors, or from making the acquisition through a joint venture or other form of shared ownership with
our Sponsor, officers or directors. In the event we seek to complete our initial business combination with a business combination
target that is affiliated with our Sponsor, officers or directors, we, or a committee of independent directors, would obtain an
opinion from an independent investment banking firm which is a member of FINRA or an independent accounting firm that such an
initial business combination is fair to the Company from a financial point of view. We are not required to obtain such an opinion
in any other context.
If
any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of
any entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such
business combination opportunity to such entity prior to presenting such business combination opportunity to us. Our officers
and directors currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties
to us. We may pursue an Affiliated Joint Acquisition opportunity with an entity to which an officer or director has a fiduciary
or contractual obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination,
or we could raise additional proceeds to complete the acquisition by issuing to such entity a class of equity or equity-linked
securities.
Selection
of a Target Business and Structuring of our Initial Business Combination
The
NYSE rules require that 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 net assets held in the Trust Account (net of amounts disbursed to management for working
capital purposes and excluding the amount of any deferred underwriting discount held in trust) at the time of the agreement to
enter into the initial business combination. The fair market value of the target or targets will be determined by our board of
directors based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation
or value of comparable businesses. If our board is not able to independently determine the fair market value of the target business
or businesses, we will obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent
accounting firm with respect to the satisfaction of such criteria. We do not intend to purchase multiple businesses in unrelated
industries in conjunction with our initial business combination. Subject to this requirement, our management will have virtually
unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will not be permitted
to effectuate our initial business combination with another blank check company or a similar company with nominal operations.
In
any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting
securities of the target or otherwise acquire an interest in the target sufficient for the post-transaction company not to be
required to register as an investment company under the Investment Company Act. If we own or acquire less than 100% of the equity
interests or assets of a target business or businesses, the portion of such business or businesses that are owned or acquired
by the post-transaction company is what will be valued for purposes of the NYSE’s 80% of net assets test.
To
the extent we effect our business combination with a company or business that may be financially unstable or in its early stages
of development or growth, we may be affected by numerous risks inherent in such company or business. Although our management will
endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain
or assess all significant risk factors.
In
evaluating a prospective target business, we expect to conduct a thorough due diligence review, which may encompass, among other
things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection
of facilities, as applicable, as well as a review of financial, operational, legal and other information which will be made available
to us. If we determine to move forward with a particular target, we will proceed to structure and negotiate the terms of the business
combination transaction.
Any
costs incurred with respect to the identification and evaluation of, and negotiation with, a prospective target business with
which our business combination is not ultimately completed will result in our incurring losses and will reduce the funds we can
use to complete another business combination. The Company will not pay any consulting fees to members of our management team,
or any of their respective affiliates, for services rendered to or in connection with our initial business combination.
Lack
of Business Diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend
entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations
with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations
and mitigate the risks of being in a single line of business. In addition, we intend to focus our search for an initial business
combination in a single industry. By completing our business combination with only a single entity, our lack of diversification
may:
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subject us to negative economic, competitive
and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which
we operate after our initial business combination, and
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cause us to depend on the marketing and sale
of a single product or limited number of products or services.
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Limited
Ability to Evaluate the Target’s Management Team
Although
we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting
our business combination with that business, our assessment of the target business’s management may not prove to be correct.
In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public company.
Furthermore, the future role of members of our management team, if any, in the target business cannot presently be stated with
any certainty. The determination as to whether any of the members of our management team will remain with the combined company
will be made at the time of our initial business combination. While it is possible that one or more of our directors will remain
associated in some capacity with us following our business combination, it is unlikely that any of them will devote their full
efforts to our affairs subsequent to our business combination. Moreover, we cannot assure you that members of our management team
will have significant experience or knowledge relating to the operations of the particular target business.
We
cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company.
The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our
initial business combination.
Following
a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite
skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve our Initial Business Combination
We
may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC, subject to the provisions of
our amended and restated certificate of incorporation. However, we will seek stockholder approval if it is required by law or
applicable stock exchange rule, or we may decide to seek stockholder approval for business or other legal reasons. Presented in
the table below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder
approval is currently required under Delaware law for each such transaction.
Type
of Transaction
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Whether
Stockholder Approval is Required
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Purchase of assets
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No
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Purchase of stock of target not involving a
merger with the company
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No
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Merger of target into a subsidiary of the company
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No
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Merger of the company with a target
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Yes
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Under
the NYSE’s listing rules, stockholder approval would be required for our initial business combination if, for example:
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we issue shares of Class A common stock that
will be equal to or in excess of 20% of the number of shares of our Class A common stock then outstanding (other than in a
public offering);
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any of our directors, officers or substantial
security holders (as defined by the NYSE rules) has a 5% or greater interest, directly or indirectly, in the target business
or assets to be acquired and if the number of shares of common stock to be issued, or if the number of shares of common stock
into which the securities may be convertible or exercisable, exceeds either (a) 1% of the number of shares of common stock
or 1% of the voting power outstanding before the issuance in the case of any of our directors or officers (b) 5% of the number
of shares of common stock or 5% of the voting power outstanding before the issuance in the case of any substantial security
holders; or
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the issuance or potential issuance of common
stock will result in our undergoing a change of control.
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Permitted
Purchases of our Securities
In
the event we seek stockholder approval of our business combination and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our Sponsor, directors, officers, advisors or their affiliates may purchase shares
or Warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial
business combination. However, they have no current commitments, plans or intentions to engage in such transactions and have not
formulated any terms or conditions for any such transactions. None of the funds in the Trust Account will be used to purchase
shares or Warrants in such transactions. If they engage in such transactions, they will not make any such purchases when they
are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation
M under the Securities Exchange Act of 1934, as amended (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.
In
the event that our Sponsor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions
from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required
to revoke their prior elections to redeem their shares. We do not currently anticipate that such purchases, if any, would constitute
a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private
rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject
to such rules, the purchasers will comply with such rules.
The
purpose of any such purchases of shares could be to (i) vote such shares in favor of the business combination and thereby increase
the likelihood of obtaining stockholder approval of the business combination or (ii) to satisfy a closing condition in an agreement
with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our business combination,
where it appears that such requirement would otherwise not be met. The purpose of any such purchases of Warrants could be to reduce
the number of Warrants outstanding or to vote such Warrants on any matters submitted to the warrantholders for approval in connection
with our initial business combination. Any such purchases of our securities may result in the completion of our business combination
that may not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our 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
Sponsor, officers, directors and/or their affiliates anticipate that they may identify the stockholders with whom our Sponsor,
officers, directors or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly
or by our receipt of redemption requests submitted by stockholders (in the case of shares of Class A common stock) following our
mailing of proxy materials in connection with our initial business combination. To the extent that our Sponsor, officers, directors,
advisors or their affiliates enter into a private purchase, they would identify and contact only potential selling stockholders
who have expressed their election to redeem their shares for a pro rata share of the Trust Account or vote against our initial
business combination, whether or not such stockholder has already submitted a proxy with respect to our initial business combination
but only if such shares have not already been voted at the stockholder meeting related to our initial business combination. Our
Sponsor, officers, directors, advisors or any of their affiliates will select which stockholders to purchase shares from based
on the negotiated price and number of shares and any other factors that they may deem relevant, and will only purchase shares
if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any
purchases by our Sponsor, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the
Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe
harbor from liability for manipulation under Section 9(a)(2) of and Rule 10b-5 under the Exchange Act. Rule 10b-18 has certain
technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our Sponsor,
officers, directors and/or their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2)
of or Rule 10b-5 under the Exchange Act. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange
Act to the extent such purchasers are subject to such reporting requirements.
Redemption
Rights for Public Stockholders upon Completion of our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon
the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on
deposit in the Trust Account calculated as of two business days prior to the consummation of the initial business combination
including interest earned on the funds held in the Trust Account and not previously released to us to pay our franchise and income
taxes, divided by the number of then outstanding public shares, subject to the limitations described herein. The per-share amount
that we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting discounts
and commissions we will pay to the underwriters of the Public Offering. Our Sponsor, officers and directors have entered into
a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any Founder Shares
held by them and any public shares held by them in connection with the completion of our business combination.
Limitations
on Redemptions
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 (so that we are not subject to the SEC’s “penny stock”
rules). However, the proposed business combination may require (i) cash consideration to be paid to the target or its owners,
(ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash
to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash
consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption plus
any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate
amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares of Class A
common stock submitted for redemption will be returned to the holders thereof.
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 (i) in connection with a stockholder meeting called to approve the business
combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business
combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors
such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under
applicable law or stock exchange listing requirement. Asset acquisitions and stock purchases would not typically require stockholder
approval, while direct mergers with the Company where we do not survive and any transactions where we issue more than 20% of our
outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval.
If we structure a business combination transaction with a target business in a manner that requires stockholder approval, we will
not have discretion as to whether to seek a stockholder vote to approve the proposed business combination. We currently intend
to conduct redemptions in connection with a stockholder vote unless stockholder approval is not required by applicable law or
stock exchange listing requirement and we choose to conduct redemptions pursuant to the tender offer rules of the SEC for business
or other legal reasons.
If
we hold a stockholder vote to approve our initial business combination, we will, pursuant to our amended and restated certificate
of incorporation:
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conduct the redemptions in conjunction with
a proxy solicitation pursuant to Regulation 14A under the Exchange Act, which regulates the solicitation of proxies, and not
pursuant to the tender offer rules, and
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file proxy materials with the SEC.
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In
the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business
combination.
If
we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of
common stock voted are voted in favor of the 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 will count toward
this quorum and have agreed to vote their Founder Shares and any public shares purchased during or after the Public Offering in
favor of our initial business combination. These quorum and voting thresholds, and the voting agreements of our initial stockholders,
may make it more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem
its public shares irrespective of whether it votes for or against the proposed transaction. In addition, our Sponsor, officers
and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights
with respect to any Founder Shares and any public shares held by them in connection with the completion of a business combination.
If
we conduct redemptions pursuant to the tender offer rules of the SEC, we will, pursuant to our amended and restated certificate
of incorporation:
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conduct the redemptions pursuant to Rule 13e-4
and Regulation 14E under the Exchange Act, which regulate issuer tender offers, and
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file tender offer documents with the SEC prior
to completing our initial business combination which contain substantially the same financial and other information about
the initial business combination and the redemption rights as is required under Regulation 14A under the Exchange Act, which
regulates the solicitation of proxies.
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Upon
the public announcement of our business combination, we or our Sponsor will terminate any plan established in accordance with
Rule 10b5-1 under the Exchange Act 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 the number of public shares we are permitted to redeem. If public stockholders tender more shares than we
have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
Limitation
on Redemption upon Completion of our Initial Business Combination if we Seek Stockholder Approval
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder,
together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13(d)(3) of the Exchange Act), will be restricted from seeking redemption rights with respect to more
than an aggregate of 20% of the shares sold in our Public Offering, which we refer to as the “Excess Shares.” We believe
this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders
to use their ability to exercise their redemption rights against a proposed business combination as a means to force us or our
management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent
this provision, a public stockholder holding more than an aggregate of 20% of the shares sold in our Public Offering could threaten
to exercise its redemption rights if such holder’s shares are not purchased by us, our Sponsor or our management at a premium
to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem no more
than 20% of the shares sold in our Public Offering without our prior consent, we believe we will limit the ability of a small
group of stockholders to unreasonably attempt to block our ability to complete our 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 business combination.
Redemption
of Public Shares and Liquidation if no Initial Business Combination
Our
amended and restated certificate of incorporation provides that we have 24 months from the closing of the Public Offering to complete
our initial business combination. If we are unable to complete our business combination within such 24-month period, we will:
(i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business
days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to us to pay
our franchise and income taxes (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), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of our remaining stockholders and our board of directors, 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 business combination within the 24-month time period.
Our
Sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights
to liquidating distributions from the Trust Account with respect to any Founder Shares held by them if we fail to complete our
initial business combination within 24 months from the closing of the Public Offering. However, our Sponsor, officers or directors
will be entitled to liquidating distributions from the Trust Account with respect to any public shares that they acquired in or
after our Public Offering if we fail to complete our initial business combination within the allotted 24-month time period.
Our
Sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem
100% of our public shares if we have not consummated an initial business combination within 24 months from the closing of our
Public Offering, 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 earned on the funds held in the Trust Account and not previously released to us to pay our franchise
and income taxes, 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 (so that we are not subject to the SEC’s “penny
stock” rules). If this optional redemption right is exercised with respect to an excessive number of public shares such
that we cannot satisfy the net tangible asset requirement, we would not proceed with the amendment or the related redemption of
our public shares at such time. Pursuant to our amended and restated certificate of incorporation, such an amendment would need
to be approved by the affirmative vote of the holders of at least 65% of all then outstanding shares of our common stock.
We
expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors,
will be funded from amounts held outside the Trust Account, although we cannot assure you that there will be sufficient funds
for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our
plan of dissolution, to the extent that there is any interest accrued in the Trust Account not required to pay franchise and income
taxes on interest income earned on the Trust Account balance, 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.
The
proceeds deposited in the Trust Account could become subject to the claims of our creditors, which would have higher priority
than the claims of our public stockholders. Under Section 281(b) of the Delaware General Corporation Law (the “DGCL”),
our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments to be made in
full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution
of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have
funds sufficient to pay or provide for all creditors’ claims.
Although
we will seek to have all vendors (except for our independent registered public accounting firm), service providers, prospective
target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or
claim of any kind in or to any monies held in the Trust Account for the benefit of our public stockholders, there is no guarantee
that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims
against the Trust Account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar
claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect
to a claim against our assets, including the funds held in the Trust Account. If any third-party refuses to execute an agreement
waiving such claims to the monies held in the Trust Account, our management will perform an analysis of the alternatives available
to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such
third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances
where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular
expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to
execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there
is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Our Sponsor
has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent public accountants)
for services rendered or products sold to us, or a prospective target business with which we have entered into a letter of intent,
confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the Trust Account
to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the Trust Account as of the date of the
liquidation of the Trust Account, due to reductions in value of the trust assets, in each case net of the amount of interest which
may be withdrawn to pay taxes, except as to any claims by a third party or prospective target business who executed a waiver of
any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) and except as to any claims
under our indemnity of the underwriters of our Public Offering against certain liabilities, including liabilities under the Securities
Act. However, we have not asked our Sponsor to reserve for such indemnification obligations, nor have we independently verified
whether our Sponsor has sufficient funds to satisfy its indemnity obligations. Therefore, we cannot assure you that our Sponsor
would be able to satisfy those obligations. None of our officers or directors will indemnify us for claims by third parties including,
without limitation, claims by vendors and prospective target businesses.
In
the event that the proceeds in the Trust Account are reduced below (i) $10.00 per public share or (ii) such lesser amount per
public share held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in value of the
trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, and our Sponsor asserts that it
is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim,
our independent directors would determine whether to take legal action against our Sponsor to enforce its indemnification obligations.
While we currently expect that our independent directors would take legal action on our behalf against our Sponsor to enforce
its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may
choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative
to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. We have not asked
our Sponsor to reserve for such indemnification obligations and we cannot assure you that our Sponsor would be able to satisfy
those obligations.
We
will seek to reduce the possibility that our Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring
to have all vendors, service providers (except for our independent registered public accounting firm), prospective target businesses
or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind
in or to monies held in the Trust Account. Our Sponsor will also not be liable as to any claims under our indemnity of the underwriters
of our Public Offering against certain liabilities, including liabilities under the Securities Act.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received
by them in a dissolution. The pro rata portion of our Trust Account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our business combination within 24 months from the closing of our Public
Offering may be considered a liquidating distribution under Delaware law. If the corporation complies with certain procedures
set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including
a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which
the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are
made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such
stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder
would be barred after the third anniversary of the dissolution.
Furthermore,
if the pro rata portion of the Trust Account distributed to our public stockholders upon the redemption of our public shares in
the event we do not complete our business combination within 24 months from the closing of our Public Offering is not considered
a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section
174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution,
instead of three years, as in the case of a liquidating distribution. If we are unable to complete our business combination within
24 months from the closing of our Public Offering, we will: (i) cease all operations except for the purpose of winding up, (ii)
as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held
in the Trust Account and not previously released to us to pay our franchise and income taxes (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),
subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of
our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem
our public shares as soon as reasonably possible following our 24th month and, therefore, we do not intend to comply with those
procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them
(but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the subsequent ten years. However, because we are a blank check company, rather than an operating company, and our operations
will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors
(such as lawyers, investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained
in our underwriting agreement, we will seek to have all vendors, service providers (except for our independent registered public
accounting firm), prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the Trust Account.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held
in the Trust Account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to
the claims of third parties with priority over the claims of our stockholders. Additionally, if we file a bankruptcy petition
or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could
be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent
conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore,
our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith,
thereby exposing itself and the Company to claims of punitive damages, by paying public stockholders from the Trust Account prior
to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our
public stockholders will be entitled to receive funds from the Trust Account only (i) in the event of the redemption of our public
shares if we are unable to complete our business combination within 24 months from the closing of our Public Offering, subject
to applicable law, (ii) in connection with a stockholder vote to approve an amendment to our amended and restated certificate
of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public shares if we have not
consummated an initial business combination within 24 months from the closing of our Public Offering or (iii) if they redeem their
respective shares for cash upon the completion of the initial business combination. In no other circumstances will a stockholder
have any right or interest of any kind to or in the Trust Account. In the event we seek stockholder approval in connection with
our initial business combination, a stockholder’s voting in connection with the business combination alone will not result
in a stockholder’s redeeming its shares to us for an applicable pro rata share of the Trust Account. Such stockholder must
have also exercised its redemption rights described above. These provisions of our amended and restated certificate of incorporation,
like all provisions of our amended and restated certificate of incorporation, may be amended with a stockholder vote.
Limited
Payments to Insiders
There
will be no finder’s fees, reimbursements or cash payments made by the Company to our Sponsor, officers or directors, or
our or their affiliates, for services rendered to us prior to or in connection with the completion of our initial business combination,
other than the following payments, none of which will be made from the proceeds of our Public Offering and the sale of the Private
Placement Warrants held in the Trust Account prior to the completion of our initial business combination:
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repayment of up to an aggregate of $300,000
in loans made to us by our Sponsor to cover offering-related and organizational expenses;
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reimbursement for office space, utilities, secretarial
support and administrative services provided to us by our Sponsor, in an amount equal to $10,000 per month;
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reimbursement for any out-of-pocket expenses
related to identifying, investigating, negotiating and completing an initial business combination; and
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repayment of loans made by our Sponsor or an
affiliate of our Sponsor or certain of our officers and directors to finance transaction costs in connection with an intended
initial business combination. Up to $1,500,000 of such loans may be convertible into warrants of the post business combination
entity at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the Private Placement
Warrants, including as to exercise price, exercisability and exercise period.
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Competition
In
identifying, evaluating and selecting a target business for our business combination, we may encounter intense competition from
other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged
buyout funds, and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive
experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors
possess greater financial, technical, human and other resources than we do. Our ability to acquire larger target businesses will
be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition
of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their redemption
rights may reduce the resources available to us for our initial business combination and our outstanding warrants, and the future
dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place
us at a competitive disadvantage in successfully negotiating an initial business combination.
Employees
We
currently have three officers. These individuals are not obligated to devote any specific number of hours to our matters but they
intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination.
The amount of time that they will devote in any time period will vary based on whether a target business has been selected for
our initial business combination and the stage of the business combination process we are in.
Periodic
Reporting and Financial Information
We
have registered our Units, Class A common stock and Warrants under the Exchange Act and have reporting obligations, including
the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange
Act, our annual reports will contain financial statements audited and reported on by our independent registered public accountants.
We
will provide stockholders with audited financial statements of the prospective target business as part of the proxy solicitation
or tender offer materials (as applicable) sent to stockholders. These financial statements may be required to be prepared in accordance
with U.S. generally accepted accounting principles (“GAAP”), or reconciled to, GAAP, or International Financial Reporting
Standards (“IFRS”), depending on the circumstances, and the historical financial statements may be required to be
audited in accordance with the standards of the Public Company Accounting Oversight Board (the “PCAOB”). These financial
statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to
provide such statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial
business combination within the prescribed time frame. We cannot assure you that any particular target business identified by
us as a potential acquisition candidate will have financial statements prepared in accordance with the requirements outlined above,
or that the potential target business will be able to prepare its financial statements in accordance with the requirements outlined
above. To the extent that any applicable requirements cannot be met, we may not be able to acquire the proposed target business.
While this may limit the pool of potential acquisition candidates, we do not believe that this limitation will be material.
Item 1A.
Risk Factors.
An
investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together
with the other information contained in this Annual Report on Form 10-K, including our financial statements and related notes,
before making a decision to invest in our securities. If any of the following events occur, our business, financial condition
and operating results may be materially adversely affected. In that event, the trading price of our securities could decline,
and you could lose all or part of your investment.
We
are a recently formed company with no operating history and no revenues (other than interest earned on the funds held in the Trust
Account), and you have no basis on which to evaluate our ability to achieve our business objective.
We
are a recently formed company with no operating results. Because we lack an operating history, you have no basis upon which to
evaluate our ability to achieve our business objective of completing our initial business combination with one or more target
businesses. We may be unable to complete our business combination. If we fail to complete our business combination, we will never
generate any operating revenues.
Our
public stockholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete
our initial business combination even though a majority of our public stockholders do not support such a combination.
We
may choose not to hold a stockholder vote to approve our initial business combination if the business combination would not require
stockholder approval under applicable law or stock exchange listing requirements. Except as required by applicable law or stock
exchange requirement, the decision as to whether we will seek stockholder approval of a proposed business combination or will
allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based
on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require
us to seek stockholder approval. Accordingly, we may complete our initial business combination even if holders of a majority of
our public shares do not approve of the business combination we complete. Please refer to “Part I, Item 1. Business —
Stockholders May Not Have the Ability to Approve Our Initial Business Combination” for additional information.
Your
only opportunity to affect the investment decision regarding a potential business combination may be limited to the exercise of
your right to redeem your shares from us for cash.
Since
our board of directors may complete a business combination without seeking stockholder approval, public stockholders may not have
the right or opportunity to vote on the business combination, unless we seek such stockholder approval. Accordingly, if we do
not seek stockholder approval, your only opportunity to affect the investment decision regarding a potential business combination
may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth
in our tender offer documents mailed to our public stockholders in which we describe our initial business combination.
If
we seek stockholder approval of our initial business combination, our initial stockholders and management team have agreed to
vote in favor of such initial business combination, regardless of how our public stockholders vote.
Our
initial stockholders own 20.3% of our outstanding shares of common stock. Our initial stockholders and management team also may
from time to time purchase shares of Class A common stock prior to our initial business combination. Our amended and restated
certificate of incorporation provides that, if we seek stockholder approval of an initial business combination, such initial business
combination will be approved if we receive the affirmative vote of a majority of the shares voted at such meeting, including the
Founder Shares. Accordingly, if we seek stockholder approval of our initial business combination, the agreement by our initial
stockholders and management team to vote in favor of our initial business combination will increase the likelihood that we will
receive the requisite stockholder approval for such initial business combination.
The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential
business combination targets, which may make it difficult for us to enter into a business combination with a target.
We
may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition
that we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights,
we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination.
Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than
$5,000,001 (so that we are not subject to the SEC’s “penny stock” rules). Consequently, if accepting all properly
submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or such greater amount necessary
to satisfy a closing condition as described above, we would not proceed with such redemption and the related business combination
and may instead search for an alternate business combination. Prospective targets will be aware of these risks and, thus, may
be reluctant to enter into a business combination transaction with us.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us
to complete the most desirable business combination or optimize our capital structure.
At
the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise
their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares
that will be submitted for redemption. If our business combination agreement requires us to use a portion of the cash in the Trust
Account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion
of the cash in the Trust Account to meet such requirements, or arrange for third party financing. In addition, if a larger number
of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater
portion of the cash in the Trust Account or arrange for third party financing. Raising additional third-party financing may involve
dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit
our ability to complete the most desirable business combination available to us or optimize our capital structure. The amount
of the deferred underwriting discounts and commissions payable to the underwriters will not be adjusted for any shares that are
redeemed in connection with a business combination. The per-share amount we will distribute to stockholders who properly exercise
their redemption rights will not be reduced by the deferred underwriting discounts and commissions and after such redemptions,
the amount held in trust will continue to reflect our obligation to pay the entire deferred underwriting discounts and commissions.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the
probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order
to redeem your stock.
If
our business combination agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price, or
requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful
is increased. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the Trust Account
until we liquidate the Trust Account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open
market; however, at such time our stock may trade at a discount to the pro rata amount per share in the Trust Account. In either
situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption
until we liquidate or you are able to sell your stock in the open market.
The
requirement that we complete our initial business combination within 24 months after the closing of our Public Offering may give
potential target businesses leverage over us in negotiating a business combination and may limit the time we have to conduct due
diligence on potential business combination targets as we approach our dissolution deadline, which could undermine our ability
to complete our business combination on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete
our initial business combination within 24 months from the closing of our Public Offering. Consequently, such target business
may obtain leverage over us in negotiating a business combination, knowing that if we do not complete our initial business combination
with that particular target business, we may be unable to complete our initial business combination with any target business.
This risk will increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due
diligence and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
We
may not be able to complete our initial business combination within 24 months after the closing of our Public Offering, in which
case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate.
We
may not be able to find a suitable target business and complete our initial business combination within 24 months after the closing
of our Public Offering. Our ability to complete our initial business combination may be negatively impacted by general market
conditions, volatility in the capital and debt markets and the other risks described herein. If we have not completed our initial
business combination within such time period, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the
Trust Account and not previously released to us to pay our franchise and income taxes (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), subject
to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining
stockholders and our board of directors, 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.
If
we seek stockholder approval of our initial business combination, our Sponsor, directors, officers, advisors and their affiliates
may elect to purchase shares or Warrants from public stockholders or public warrantholders, which may influence a vote on a proposed
business combination and reduce the public “float” of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our Sponsor, directors, officers, advisors or their affiliates may purchase shares
or Warrants or a combination thereof in privately negotiated transactions or in the open market either prior to or following the
completion of our initial business combination, although they are under no obligation to do so. However, other than as expressly
stated herein, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any
terms or conditions for any such transactions. None of the funds in the Trust Account will be used to purchase shares or Warrants
in such transactions.
In
the event that our Sponsor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions
from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required
to revoke their prior elections to redeem their shares. The purpose of any such purchases of shares could be to vote such shares
in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of the business combination
or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount
of cash at the closing of our business combination, where it appears that such requirement would otherwise not be met. The purpose
of any such purchases of Warrants could be to reduce the number of Warrants outstanding or to vote such Warrants on any matters
submitted to the warrantholders for approval in connection with our initial business combination. Any such purchases of our securities
may result in the completion of our business combination that may not otherwise have been possible. Any such purchases will be
reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent the purchasers are subject to such reporting
requirements. See “Part I, Item 1. Business — Permitted Purchases of our Securities” for a description of how
our Sponsor, directors, officers, advisors or any of their affiliates will select which stockholders to purchase securities from
in any private transaction.
In
addition, if such purchases are made, the public “float” of our Class A common stock or Warrants and the number of
beneficial holders of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing
or trading of our securities on a national securities exchange.
If
a stockholder fails to receive notice of our offer to redeem our public shares in connection with our business combination, or
fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our business
combination. Despite our compliance with these rules, if a stockholder fails to receive our proxy solicitation or tender offer
materials, as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, the proxy
solicitation or tender offer materials, as applicable, that we will furnish to holders of our public shares in connection with
our initial business combination will describe the various procedures that must be complied with in order to validly redeem or
tender public shares. For example, we may require our public stockholders seeking to exercise their redemption rights, whether
they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer
agent prior to the date set forth in the proxy solicitation or tender offer 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. In the event that a stockholder fails to comply with these or any other procedures,
its shares may not be redeemed.
You
will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. Therefore,
to liquidate your investment, you may be forced to sell your public shares or Warrants, potentially at a loss.
Our
public stockholders will be entitled to receive funds from the Trust Account only upon the earliest to occur of: (i) the redemption
of any public shares properly submitted in connection with our completion of an initial business combination (including the release
of funds to pay any amounts due to any public stockholders who properly exercise their redemption rights in connection therewith),
(ii) the redemption of any public shares properly submitted in connection with a stockholder vote to approve an amendment to our
amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of
our public shares if we have not consummated an initial business combination within 24 months from the closing of our Public Offering,
or (iii) the redemption of our public shares if we are unable to complete an initial business combination within 24 months from
the closing of our Public Offering, subject to applicable law and as further described herein. In addition, if we are unable to
complete an initial business combination within 24 months from the closing of our Public Offering for any reason, compliance with
Delaware law may require that we submit a plan of dissolution to our then-existing stockholders for approval prior to the distribution
of the proceeds held in the Trust Account. In that case, public stockholders may be forced to wait beyond 24 months from the closing
of our Public Offering before they receive funds from the Trust Account. In no other circumstances will a public stockholder have
any right or interest of any kind in the Trust Account. Holders of Warrants will not have any right to the proceeds held in the
Trust Account with respect to the Warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares
or Warrants, potentially at a loss.
The
NYSE may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in
our securities and subject us to additional trading restrictions.
We
cannot assure you that our securities will continue to be listed on the NYSE in the future or prior to our initial business combination.
In order to continue listing our securities on the NYSE prior to our initial business combination, we must maintain certain financial,
distribution and stock price levels. Generally, we must maintain a minimum market capitalization ($50 million in the aggregate
and $40 million of publicly-held shares) and a minimum number of holders of our securities (300 public holders).
Additionally,
in connection with our initial business combination, we will be required to demonstrate compliance with the NYSE’s initial
listing requirements, which are more rigorous than the NYSE’s continued listing requirements, in order to continue to maintain
the listing of our securities on the NYSE. We cannot assure you that we will be able to meet those initial listing requirements
at that time.
If
the NYSE delists our securities from trading on its exchange and we are not able to list our securities on another national securities
exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant
material adverse consequences, including:
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a limited availability of market quotations
for our securities;
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reduced liquidity for our securities;
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a determination that our Class A common stock
is a “penny stock” which will require brokers trading in our Class A common stock to adhere to more stringent
rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
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a limited amount of news and analyst coverage;
and
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a decreased ability to issue additional securities
or obtain additional financing in the future.
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The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating
the sale of certain securities, which are referred to as “covered securities.” Because our Units, Class A common stock
and Warrants are listed on the NYSE, our Units, Class A common stock and Warrants qualify are covered securities. Although the
states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies
if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale
of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict
the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view
blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities
of blank check companies in their states. Further, if we were no longer listed on the NYSE, our securities would not be covered
securities and we would be subject to regulation in each state in which we offer our securities.
You
will not be entitled to protections normally afforded to investors of many other blank check companies.
Because
we have net tangible assets in excess of $5,000,000 and timely filed a Current Report on Form 8-K after the Closing Date, including
an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank
check companies, such as Rule 419 under the Securities Act (“Rule 419”). Accordingly, investors will not be afforded
the benefits or protections of those rules. Among other things, this means we will have a longer period of time to complete our
business combination than do companies subject to Rule 419. Moreover, if we were subject to Rule 419, that rule would prohibit
the release of any interest earned on funds held in the Trust Account to us unless and until the funds in the Trust Account were
released to us in connection with our completion of an initial business combination.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer
rules, and if you or a “group” of stockholders are deemed to hold in excess of 20% of our Class A common stock, you
will lose the ability to redeem all such shares in excess of 20% of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a
public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in
concert or as a “group” (as defined under Section 13(d)(3) of the Exchange Act), will be restricted from seeking redemption
rights with respect to more than an aggregate of 20% of the public shares without our prior consent, which we refer to as the
“Excess Shares.” However, we would not be restricting our stockholders’ ability to vote all of their shares
(including Excess Shares) for or against our business combination. Your inability to redeem the Excess Shares will reduce your
influence over our ability to complete our business combination and you could suffer a material loss on your investment in us
if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect
to the Excess Shares if we complete our business combination. As a result, you will continue to hold that number of shares exceeding
20% and, in order to dispose of such shares, would be required to sell your stock in open market transactions, potentially at
a loss.
Because
of our limited resources and the significant competition for business combination opportunities, it may be more difficult for
us to complete our initial business combination. If we are unable to complete our initial business combination, our public stockholders
may receive only their pro rata portion of the funds in the Trust Account that are available for distribution to public stockholders,
and our Warrants will expire worthless.
We
expect to encounter intense competition from other entities having a business objective similar to ours, including private investors
(which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international,
competing for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have
extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing
services to various industries. Many of these competitors possess greater technical, human and other resources or more local industry
knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors.
While we believe there are numerous target businesses we could potentially acquire with the net proceeds of our Public Offering
and the sale of the Private Placement Warrants, our ability to compete with respect to the acquisition of certain target businesses
that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage
in pursuing the acquisition of certain target businesses. Furthermore, we are obligated to offer holders of our public shares
the right to redeem their shares for cash at the time of our initial business combination, in conjunction with a stockholder vote
or via a tender offer. Target businesses will be aware that this may reduce the resources available to us for our initial business
combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination.
If we are unable to complete our initial business combination, our public stockholders may receive only their pro rata portion
of the funds in the Trust Account that are available for distribution to public stockholders, and our Warrants will expire worthless.
If
the net proceeds of our Public Offering and the sale of the Private Placement Warrants not being held in the Trust Account are
insufficient to allow us to operate for at least 24 months after the Closing Date, we may be unable to complete our initial business
combination, in which case our public stockholders may only receive $10.00 per share, or less than such amount in certain circumstances,
and our Warrants will expire worthless.
The
funds available to us outside of the Trust Account may not be sufficient to allow us to operate for at least 24 months after the
Closing Date, assuming that our initial business combination is not completed during that time. We could use a portion of the
funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion
of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent or merger agreements
designed to keep target businesses from “shopping” around for transactions with other companies on terms more favorable
to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention
to do so. If we entered into a letter of intent or merger agreement where we paid for the right to receive exclusivity from a
target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might
not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.
Subsequent
to our completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and
impairment or other charges that could have a significant negative effect on our financial condition, results of operations and
our stock price, which could cause you to lose some or all of your investment.
Even
if we conduct due diligence on a target business with which we combine, we cannot assure you that this diligence will surface
all material issues with a particular target business, that it would be possible to uncover all material issues through a customary
amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a
result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment
or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected
risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even
though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges
of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature
may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held
by a target business or by virtue of our obtaining post-combination debt financing. Accordingly, any stockholders who choose to
remain stockholders following the business combination could suffer a reduction in the value of their securities. Such stockholders
are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due
to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully
bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to
the business combination contained an actionable material misstatement or material omission.
If
third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share.
Our
placing of funds in the Trust Account may not protect those funds from third-party claims against us. Although we will seek to
have all vendors, service providers (except for our independent registered public accounting firm), prospective target businesses
and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind
in or to any monies held in the Trust Account for the benefit of our public stockholders, such parties may not execute such agreements,
or even if they execute such agreements, they may not be prevented from bringing claims against the Trust Account, including,
but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging
the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including
the funds held in the Trust Account. If any third-party refuses to execute an agreement waiving such claims to the monies held
in the Trust Account, our management will perform an analysis of the alternatives available to it and will only enter into an
agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would
be significantly more beneficial to us than any alternative.
Examples
of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party
consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants
that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for
any reason. Upon redemption of our public shares, if we are unable to complete our business combination within the prescribed
timeframe, or upon the exercise of a redemption right in connection with our business combination, we will be required to provide
for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption.
Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.00 per public share initially
held in the Trust Account, due to claims of such creditors. Our Sponsor has agreed that it will be liable to us if and to the
extent any claims by a third party (other than our independent public accountants) for services rendered or products sold to us,
or a prospective target business with which we have entered into a written letter of intent, confidentiality or other similar
agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00
per public share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the
Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets, in each case net of the interest
which may be withdrawn to pay taxes, provided that such liability will not apply to any claims by a third party or prospective
target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver
is enforceable) nor will it apply to any claims under our indemnity of the underwriters of our Public Offering against certain
liabilities, including liabilities under the Securities Act. However, we have not asked our Sponsor to reserve for such indemnification
obligations, nor have we independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations.
Therefore, we cannot assure you that our Sponsor would be able to satisfy those obligations. As a result, if any such claims were
successfully made against the Trust Account, the funds available for our initial business combination and redemptions could be
reduced to less than $10.00 per public share. In such event, we may not be able to complete our initial business combination,
and you would receive such lesser amount per share in connection with any redemption of your public shares. None of our officers
or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target
businesses.
Our
directors may decide not to enforce the indemnification obligations of our Sponsor, resulting in a reduction in the amount of
funds in the Trust Account available for distribution to our public stockholders.
In
the event that the proceeds in the Trust Account are reduced below the lesser of (i) $10.00 per public share and (ii) the actual
amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00
per share due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes,
and our Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to
a particular claim, our independent directors would determine whether to take legal action against our Sponsor to enforce its
indemnification obligations.
While
we currently expect that our independent directors would take legal action on our behalf against our Sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary
duties may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification
obligations, the amount of funds in the Trust Account available for distribution to our public stockholders may be reduced below
$10.00 per share.
We
may not have sufficient funds to satisfy indemnification claims of our directors and officers.
We
have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors
have agreed to waive any right, title, interest or claim of any kind in or to any monies in the Trust Account. Accordingly, any
indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds outside of the Trust Account
or (ii) we consummate an initial business combination. Our obligation to indemnify our officers and directors may discourage stockholders
from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have the
effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if
successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected
to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification
provisions.
If,
after we distribute the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members
of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members
of our board of directors and us to claims of punitive damages.
If,
after we distribute the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. In addition, our board
of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing
itself and us to claims of punitive damages, by paying public stockholders from the Trust Account prior to addressing the claims
of creditors.
If,
before distributing the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over
the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with
our liquidation may be reduced.
If,
before distributing the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable
bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the
claims of our stockholders. To the extent any bankruptcy claims deplete the Trust Account, the per-share amount that would otherwise
be received by our stockholders in connection with our liquidation may be reduced.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance
requirements and our activities may be restricted, which may make it difficult for us to complete our business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments;
and
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restrictions on the issuance of securities,
each of which may make it difficult for us to complete our business combination.
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In
addition, we may have imposed upon us burdensome requirements, including:
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registration as an investment company;
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adoption of a specific form of corporate structure;
and
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reporting, record keeping, voting, proxy and
disclosure requirements and other rules and regulations.
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In
order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we
must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our
activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting
more than 40% of our assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business
will be to identify and complete a business combination and thereafter to operate the post-transaction business or assets for
the long term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to
buy unrelated businesses or assets or to be a passive investor.
We
do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds
held in the Trust Account may only be invested in United States “government securities” within the meaning of Section
2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions
under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations.
Pursuant to the trust agreement governing the Trust Account, the Trustee is not permitted to invest in other securities or assets.
By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing
businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity
fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act. The
Trust Account is intended as a holding place for funds pending the earliest to occur of: (i) the completion of our initial business
combination; (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to approve an amendment
to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem
100% of our public shares if we have not consummated an initial business combination within 24 months from the closing of our
Public Offering; or (iii) the redemption of our public shares if we are unable to complete our business combination within 24
months from the closing of our Public Offering, subject to applicable law. If we do not invest the proceeds as discussed above,
we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance
with additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability
to complete a business combination. If we are unable to complete our initial business combination, our public stockholders may
only receive their pro rata portion of the funds in the Trust Account that are available for distribution to public stockholders,
and our Warrants will expire worthless.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our
ability to negotiate and complete our initial business combination, and results of operations.
We
are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply
with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult,
time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time
and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a
failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our
business, including our ability to negotiate and complete our initial business combination, and results of operations.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption
of their shares.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received
by them in a dissolution. The pro rata portion of our Trust Account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our initial business combination within 24 months from the closing of our
Public Offering may be considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures
set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including
a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which
the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are
made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such
stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder
would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon
as reasonably possible following the 24th month from the closing of our Public Offering in the event we do not complete our business
combination and, therefore, we do not intend to comply with the foregoing procedures.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company,
and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise
would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution
complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited
to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability
of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly
assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims
to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third
anniversary of such date. Furthermore, if the pro rata portion of our Trust Account distributed to our public stockholders upon
the redemption of our public shares in the event we do not complete our initial business combination within 24 months from the
closing of our Public Offering is not considered a liquidating distribution under Delaware law and such redemption distribution
is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then
be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
We
may not hold an annual meeting of stockholders until after the consummation of our initial business combination, which could delay
the opportunity for our stockholders to elect directors.
In
accordance with NYSE corporate governance requirements, we are not required to hold an annual meeting until no later than one
year after our first fiscal year end following our listing on the NYSE. Under Section 211(b) of the DGCL, we are, however, required
to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election
is made by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors
prior to the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the
DGCL, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation
of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court
of Chancery in accordance with Section 211(c) of the DGCL.
We
have not registered the shares of Class A common stock issuable upon exercise of the Warrants under the Securities Act or any
state securities laws, and such registration may not be in place when an investor desires to exercise Warrants, thus precluding
such investor from being able to exercise its Warrants except on a cashless basis and potentially causing such Warrants to expire
worthless.
We
have not registered the shares of Class A common stock issuable upon exercise of the Warrants under the Securities Act or any
state securities laws. However, under the terms of the warrant agreement governing the terms of our warrants, we have agreed that
as soon as practicable, but in no event later than 15 business days after the closing of our initial business combination, we
will use our best efforts to file a registration statement under the Securities Act covering such shares. We will use our best
efforts to cause the same to become effective, but in no event later than 60 business days after the closing of our initial business
combination, and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until
the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you that we will be
able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in
the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current
or correct or the SEC issues a stop order. If the shares issuable upon exercise of the Warrants are not registered under the Securities
Act, we will be required to permit holders to exercise their Warrants on a cashless basis. However, no Warrant will be exercisable
for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their Warrants,
unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the
exercising holder, or an exemption from registration is available. Notwithstanding the above, if our Class A common stock is at
the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a
“covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of Warrants
who exercise their Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act
and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, but we will be
required to use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is
not available. In no event will we be required to net cash settle any Warrant, or issue securities or other compensation in exchange
for the Warrants in the event that we are unable to register or qualify the shares underlying the Warrants under the Securities
Act or applicable state securities laws, and there is no exemption available. If the issuance of the shares upon exercise of the
Warrants is not so registered or qualified or exempt from registration or qualification, the holder of such Warrant shall not
be entitled to exercise such Warrant and such Warrant may have no value and expire worthless. In such event, holders who acquired
their Warrants as part of a purchase of Units will have paid the full Unit purchase price solely for the shares of Class A common
stock included in the Units. If and when the Warrants become redeemable by us, we may exercise our redemption right even if we
are unable to register or qualify the underlying shares of Class A common stock for sale under all applicable state securities
laws.
The
grant of registration rights to our initial stockholders may make it more difficult to complete our initial business combination,
and the future exercise of such rights may adversely affect the market price of our Class A common stock.
Pursuant
to an agreement entered into in connection with our Public Offering, our initial stockholders and their permitted transferees
can demand that we register the shares of Class A common stock into which Founder Shares are convertible, holders of our Private
Placement Warrants and their permitted transferees can demand that we register the Private Placement Warrants and the shares of
Class A common stock issuable upon exercise of the Private Placement Warrants and holders of warrants that may be issued upon
conversion of working capital loans may demand that we register the Class A common stock issuable upon exercise of such warrants.
We will bear the cost of registering these securities. The registration and availability of such a significant number of securities
for trading in the public market may have an adverse effect on the market price of our Class A common stock. In addition, the
existence of the registration rights may make our initial business combination more costly or difficult to conclude. This is because
the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration
to offset the negative impact on the market price of our Class A common stock that is expected when the securities owned by our
initial stockholders, holders of our Private Placement Warrants, holders of warrants that may be issued upon conversion of working
capital loans or their respective permitted transferees are registered.
Because
we are not limited to a particular industry, sector or any specific target businesses with which to pursue our initial business
combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
Although
we expect to focus our search for a target business in the energy industry, we may complete a business combination with an operating
company in any industry or sector. However, we will not, under our amended and restated certificate of incorporation, be permitted
to effectuate our business combination with another blank check company or similar company with nominal operations. There is no
basis to evaluate the possible merits or risks of any particular target business’s operations, results of operations, cash
flows, liquidity, financial condition or prospects. To the extent we complete our business combination, we may be affected by
numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable
business or an entity lacking an established record of revenues or earnings, we may be affected by the risks inherent in the business
and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate
the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the
significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be
outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a
target business. We also cannot assure you that an investment in our securities will ultimately prove to be more favorable to
investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any stockholders
who choose to remain stockholders following the business combination could suffer a reduction in the value of their securities.
Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the
reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they
are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials (as
applicable) relating to the business combination contained an actionable material misstatement or material omission.
Because
we intend to seek a business combination with a target business or businesses in the energy industry, we expect our future operations
to be subject to risks associated with this industry.
We
intend to focus our search for a target business in the energy industry in North America. Because we have not yet selected or
approached any specific target business or sector, we cannot provide specific risks of any business combination. However, risks
inherent in investments in the energy industry include, but are not limited to, the following:
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volatility
of oil and natural gas prices, including volatility caused by the
lack of agreement on production levels by the Organization of the Petroleum Exporting Countries and Russia;
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uncertainty about the duration of the COVID-19 pandemic and the risk of oil and gas production outweighing consumption;
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price
and availability of alternative fuels, such as solar, coal, nuclear and wind energy;
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competitive
pressures in the utility industry, primarily in wholesale markets, as a result of consumer
demand, technological advances, greater availability of natural gas and other factors;
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significant
federal, state and local regulation, taxation and regulatory approval processes as well
as changes in applicable laws and regulations;
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the
speculative nature of and high degree of risk involved in investments in the upstream,
midstream and energy services sectors, including relying on estimates of oil and gas
reserves and the impacts of regulatory and tax changes;
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drilling,
exploration and development risks, including encountering unexpected formations or pressures,
premature declines of reservoirs, blow-outs, equipment failures and other accidents,
cratering, sour gas releases, uncontrollable flows of oil, natural gas or well fluids,
adverse weather conditions, pollution, fires, spills and other environmental risks, any
of which could lead to environmental damage, injury and loss of life or the destruction
of property;
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proximity
and capacity of oil, natural gas and other transportation and support infrastructure
to production facilities;
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availability
of key inputs, such as strategic consumables, raw materials and drilling and processing
equipment;
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changes
in global supply and demand and prices for commodities;
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impact
of energy conservation efforts;
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technological
advances affecting energy production and consumption;
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overall
domestic and global economic conditions;
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availability
of, and potential disputes with, independent contractors;
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natural
disasters, terrorist acts and similar dislocations; and
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value
of U.S. dollar relative to the currencies of other countries.
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Our
search for a business combination, and any target business with which we ultimately consummate a business combination, may be
materially adversely affected by the recent coronavirus (COVID-19) outbreak.
In
December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread
throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization
declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.”
On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United
States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized
the outbreak as a “pandemic”. A significant outbreak of COVID-19 and other infectious diseases could result in a widespread
health crisis that could adversely affect the economies and financial markets worldwide, and the business of any potential target
business with which we consummate a business combination could be materially and adversely affected. Furthermore, we may be unable
to complete a business combination if continued concerns relating to COVID-19 restrict travel, limit the ability to have meetings
with potential investors or the target company’s personnel, vendors and services providers are unavailable to negotiate
and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for a business combination will
depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge
concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions
posed by COVID-19 or other matters of global concern continue for an extensive period of time, our ability to consummate a business
combination, or the operations of a target business with which we ultimately consummate a business combination, may be materially
adversely affected.
Past
performance by NGP and our management team may not be indicative of future performance of an investment in us.
Information
regarding performance by, or businesses associated with, NGP and its affiliates and our management team is presented for informational
purposes only. Past performance by NGP and our management team is not a guarantee either (i) of success with respect to any business
combination we may consummate or (ii) that we will be able to locate a suitable candidate for our initial business combination.
You should not rely on the historical record of NGP’s or our management team’s performance as indicative of our future
performance or of an investment in us or the returns we will, or are likely to, generate going forward. Other than Scott Gieselman
and Joseph Armes, none of our officers or directors has had experience with blank check companies or special purpose acquisition
companies in the past.
We
may seek acquisition opportunities in industries or sectors outside of the energy industry (which industries may or may not be
outside of our management’s areas of expertise).
Although
we intend to focus on identifying business combination candidates in the energy industry, we will consider a business combination
outside of the energy industry if a business combination candidate is presented to us and we determine that such candidate offers
an attractive acquisition opportunity for the Company or we are unable to identify a suitable candidate in the energy industry
after having expended a reasonable amount of time and effort in an attempt to do so. Although our management will endeavor to
evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will adequately ascertain
or assess all of the significant risk factors. We also cannot assure you that an investment in our securities will not ultimately
prove to be less favorable than a direct investment, if an opportunity were available, in a business combination candidate. In
the event we elect to pursue an acquisition outside of the energy industry, our management’s expertise may not be directly
applicable to its evaluation or operation, and the information contained in this Annual Report on Form 10-K regarding the energy
industry would not be relevant to an understanding of the business that we elect to acquire. As a result, our management may not
be able to adequately ascertain or assess all of the significant risk factors. Accordingly, any stockholders who choose to remain
stockholders following our business combination could suffer a reduction in the value of their shares. Such stockholders are unlikely
to have a remedy for such reduction in value.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses,
we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result,
the target business with which we enter into our initial business combination may not have attributes entirely consistent with
our general criteria and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target
business with which we enter into our initial business combination will not have all of these positive attributes. If we complete
our initial business combination with a target that does not meet some or all of these guidelines, such combination may not be
as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce
a prospective business combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders
may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business
that requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction
is required by law, or we decide to obtain stockholder approval for business or other legal reasons, it may be more difficult
for us to attain stockholder approval of our initial business combination if the target business does not meet our general criteria
and guidelines. If we are unable to complete our initial business combination, our public stockholders may only receive their
pro rata portion of the funds in the Trust Account that are available for distribution to public stockholders, and our Warrants
will expire worthless.
We
may seek acquisition opportunities with a financially unstable business or an entity lacking an established record of revenue
or earnings, which could subject us to volatile revenues, cash flows or earnings or difficulty in retaining key personnel.
To
the extent we complete our initial business combination with a financially unstable business or an entity lacking an established
record of revenues, cash flows or earnings, we may be affected by numerous risks inherent in the operations of the business with
which we combine. These risks include volatile revenues, cash flows or earnings and difficulties in obtaining and retaining key
personnel. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we
may not be able to properly ascertain or assess all of the significant risk factors and we may not have adequate time to complete
due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce
the chances that those risks will adversely impact a target business.
We
are not required to obtain an opinion from an independent investment banking firm or from an independent accounting firm, and
consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to the
Company from a financial point of view.
Unless
we complete our business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment
banking firm that is a member of FINRA or from an independent accounting firm that the price we are paying is fair to the Company
from a financial point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors,
who will determine fair market value based on standards generally accepted by the financial community. Such standards used will
be disclosed in our proxy solicitation or tender offer materials, as applicable, related to our initial business combination.
If our board of directors is not able to independently determine the fair market value of our initial business combination, we
will obtain an opinion from an independent investment banking firm. However, our stockholders may not be provided with a copy
of such opinion, nor will they be able to rely on such opinion.
We
may issue additional common stock or preferred stock to complete our initial business combination or under an employee incentive
plan after completion of our initial business combination. We may also issue shares of Class A common stock upon the conversion
of the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of
the anti-dilution provisions contained in our amended and restated certificate of incorporation. Any such issuances would dilute
the interest of our stockholders and likely present other risks.
We
may issue a substantial number of additional shares of common or preferred stock to complete our initial business combination
or under an employee incentive plan after completion of our initial business combination. We may also issue shares of Class A
common stock upon conversion of the Class B common stock at a ratio greater than one-to-one at the time of our initial business
combination as a result of the anti-dilution provisions contained in our amended and restated certificate of incorporation. The
issuance of additional shares of common or preferred stock:
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may significantly dilute the equity interests
of our investors;
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may subordinate the rights of holders of common
stock if preferred stock is issued with rights senior to those afforded our common stock;
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could cause a change in control if a substantial
number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating
loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and
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may adversely affect prevailing market prices
for our Units, Class A common stock and/or Warrants.
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Unlike
some other similarly structured blank check companies, our initial stockholders will receive additional shares of Class A common
stock if we issue shares to consummate an initial business combination.
The
Founder Shares will automatically convert into shares of Class A common stock at the time of our initial business combination
on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like.
In the case that additional shares of Class A common stock, or equity-linked securities convertible or exercisable for shares
of Class A common stock, are issued or deemed issued in excess of the amounts sold in our Public Offering and related to the closing
of our initial business combination, the ratio at which Founder Shares will convert into shares of Class A common stock will be
adjusted so that the number of shares of Class A common stock issuable upon conversion of all Founder Shares will equal, in the
aggregate 20% of the sum of our shares of common stock outstanding upon completion of our Public Offering plus the number of shares
of Class A common stock and equity-linked securities issued or deemed issued in connection with our initial business combination,
excluding and any shares of Class A common stock or equity-linked securities issued, or to be issued, to any seller in our initial
business combination.
Resources
could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public
stockholders may only receive their pro rata portion of the funds in the Trust Account that are available for distribution to
public stockholders, and our Warrants will expire worthless.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys, consultants and others. If we decide not to complete a specific initial business combination, the costs incurred up
to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to
a specific target business, we may fail to complete our initial business combination for any number of reasons including those
beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely
affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business
combination, our public stockholders may only receive their pro rata portion of the funds in the Trust Account that are available
for distribution to public stockholders, and our Warrants will expire worthless.
We
are dependent upon our officers and directors, and their loss could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals and, in particular, our officers and directors. We believe
that our success depends on the continued service of our officers and directors, at least until we have completed our initial
business combination. In addition, our 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 their time among various business activities, including identifying
potential business combinations and monitoring the related due diligence. We do not have an employment agreement with, or key-man
insurance on the life of, any of our directors or officers. The unexpected loss of the services of one or more of our directors
or officers could have a detrimental effect on us.
Our
ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon
the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel
could negatively impact the operations and profitability of our post-combination business.
Our
ability to successfully effect our business combination is dependent upon the efforts of our key personnel. The role of our key
personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with
the target business in senior management or advisory positions following our business combination, it is likely that some or all
of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage
after our initial business combination, we cannot assure you that our assessment of these individuals will prove to be correct.
These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to
have to expend time and resources helping them become familiar with such requirements.
In
addition, the officers and directors of an acquisition candidate may resign upon completion of our initial business combination.
The departure of a business combination target’s key personnel could negatively impact the operations and profitability
of our post-combination business. The role of an acquisition candidate’s key personnel upon the completion of our initial
business combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s
management team will remain associated with the acquisition candidate following our initial business combination, it is possible
that members of the management of an acquisition candidate will not wish to remain in place. The loss of key personnel could negatively
impact the operations and profitability of our post-combination business.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business
combination, and a particular business combination may be conditioned on the retention or resignation of such key personnel. These
agreements may provide for them to receive compensation following our business combination and, as a result, may cause them to
have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our
key personnel may be able to remain with our company after the completion of our business combination only if they are able to
negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place
simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation
in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination.
Such negotiations also could make such key personnel’s retention or resignation a condition to any such agreement. The personal
and financial interests of such individuals may influence their motivation in identifying and selecting a target business.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may effect our initial
business combination with a target business whose management may not have the skills, qualifications or abilities to manage a
public company, which could, in turn, negatively impact the value of our stockholders’ investment in us.
When
evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess
the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target business’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target business’s management not possess the skills, qualifications or abilities necessary
to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly,
any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of
their securities. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully
claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to
them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer
materials (as applicable) relating to the business combination contained an actionable material misstatement or material omission.
The
officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The loss of
a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination
business.
The
role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained
at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated
with the acquisition candidate following our initial business combination, it is possible that members of the management of an
acquisition candidate will not wish to remain in place.
Our
officers and directors may allocate their time to other businesses thereby causing conflicts of interest in their determination
as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete
our initial business combination.
Our
officers and directors are not required to, and our directors will not, commit their full time to our affairs, which may result
in a conflict of interest in allocating their time between our operations and our search for a business combination and other
businesses. We do not intend to have any full-time employees prior to the completion of our initial business combination. Our
officers are not obligated to contribute any specific number of hours per week to our affairs. In addition, certain of our directors
are employed by NGP, which is an investment manager to various private investment funds, which make investments in securities
or other interests of or relating to companies in industries we may target for our initial business combination. Our independent
directors may also serve as officers or board members for other entities. If our officers’ and directors’ other business
affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could
limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business
combination.
Certain
of our directors are now and may in the future become affiliated with entities engaged in business activities similar to those
intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which
entity a particular business opportunity should be presented.
Until
we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more
businesses. Certain of our directors are and may in the future become affiliated with entities that are engaged in a similar business.
Our
directors also may become aware of business opportunities which may be appropriate for presentation to us and the other entities
to which they owe certain fiduciary or contractual duties.
Accordingly,
they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These
conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation
to us. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity
offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as
a director or officer of the Company and such opportunity is one we are legally and contractually permitted to undertake and would
otherwise be reasonable for us to pursue.
Our
officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with
our interests.
We
have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct
or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which
we are a party or have an interest. In fact, we may enter into a business combination with a target business that is affiliated
with our Sponsor, our directors or officers, although we do not intend to do so, or we may acquire a target business through an
Affiliated Joint Acquisition with one or more affiliates of NGP and/or one or more investors in the NGP Funds. We do not have
a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted
by us. Accordingly, such persons or entities may have a conflict between their interests and ours.
In
particular, NGP and its affiliates also are focused on investments in the energy industry. As a result, there may be substantial
overlap between companies that would be a suitable business combination for us and companies that would make an attractive target
for such other affiliates.
We
may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated
with our Sponsor, officers, directors or existing holders which may raise potential conflicts of interest.
In
light of the involvement or potential involvement of our Sponsor, officers and directors with other entities, we may decide to
acquire one or more businesses affiliated with our Sponsor, officers, directors or existing holders. Our directors also serve
as officers and board members for other entities. Such entities may compete with us for business combination opportunities. Although
we will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction
if we determined that such affiliated entity met our criteria for a business combination and such transaction was approved by
a majority of our independent and disinterested directors. Despite our obligation to obtain an opinion from an independent investment
banking firm that is a member of FINRA or from an independent accounting firm regarding the fairness to the Company from a financial
point of view of a business combination with one or more domestic or international businesses affiliated with our Sponsor, officers
or directors, potential conflicts of interest still may exist and, as a result, the terms of the business combination may not
be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Moreover,
we may pursue an Affiliated Joint Acquisition opportunity with an entity affiliated with NGP and/or one or more investors in the
NGP Funds. Any such parties may co-invest with us in the target business at the time of our initial business combination, or we
could raise additional proceeds to complete the acquisition by issuing to such parties a class of equity or equity-linked securities.
Since
our Sponsor, officers and directors will lose their entire investment in us if our business combination is not completed (other
than with respect to public shares they may acquire), a conflict of interest may arise in determining whether a particular business
combination target is appropriate for our initial business combination.
On
May 16, 2019, our Sponsor purchased an aggregate of 8,625,000 Founder Shares for an aggregate purchase price of $25,000, or approximately
$0.003 per share. In July 2019, our Sponsor transferred 40,000 Founder Shares to each of our independent directors at their original
purchase price. In September 2019, our Sponsor forfeited an aggregate of 772,059 Founder Shares. The Founder Shares will be worthless
if we do not complete an initial business combination. In addition, our Sponsor has purchased an aggregate of 5,521,568 Private
Placement Warrants, each exercisable for one share of our Class A common stock at $11.50 per share, for an aggregate purchase
price of approximately $8.3 million, or $1.50 per warrant, that will also be worthless if we do not complete a business combination.
The Founder Shares are identical to the shares of Class A common stock included in the units being sold in this offering, except
that only holders of the Founder Shares have the right to vote on the election of directors prior to our initial business combination
and they are shares of Class B common stock that automatically convert into shares of our Class A common stock at the time of
our initial business combination on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described
herein. However, the holders have agreed (A) to vote any shares owned by them in favor of any proposed business combination and
(B) not to redeem any Founder Shares in connection with a stockholder vote to approve a proposed initial business combination.
In addition, we may obtain loans from our Sponsor, affiliates of our Sponsor or an officer or director. The personal and financial
interests of our officers and directors may influence their motivation in identifying and selecting a target business combination,
completing an initial business combination and influencing the operation of the business following our initial business combination.
This risk may become more acute as the 24-month anniversary of the closing of our Public Offering nears, which is the deadline
for our completion of an initial business combination.
Since
our Sponsor paid only approximately $0.003 per share for the Founder Shares, our officers and directors could potentially make
a substantial profit even if we acquire a target business that subsequently declines in value.
On
May 16, 2019, our Sponsor purchased an aggregate of 8,625,000 Founder Shares for an aggregate purchase price of $25,000, or approximately
$0.003 per share. In July 2019, our Sponsor transferred 40,000 Founder Shares to each of our independent directors at their original
purchase price. In September 2019, our Sponsor forfeited an aggregate of 772,059 Founder Shares. Our officers and directors have
a significant economic interest in our Sponsor. As a result, the low acquisition cost of the Founder Shares creates an economic
incentive whereby our officers and directors could potentially make a substantial profit even if we acquire a target business
that subsequently declines in value and is unprofitable for public investors.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
We
may choose to incur substantial debt to complete our business combination. The incurrence of debt could have a variety of negative
effects, including:
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default and foreclosure on our assets if our
operating revenues after an initial business combination are insufficient to repay our debt obligations;
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acceleration of our obligations to repay the
indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the
maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our immediate payment of all principal and accrued
interest, if any, if the debt security is payable on demand;
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our inability to obtain necessary additional
financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security
is outstanding;
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our inability to pay dividends on our common
stock;
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using a substantial portion of our cash flow
to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared,
to pay expenses, make capital expenditures and acquisitions and fund other general corporate purposes;
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limitations on our flexibility in planning for
and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in
general economic, industry and competitive conditions and adverse changes in government regulation;
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limitations on our ability to borrow additional
amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and
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other disadvantages compared to our competitors
who have less debt.
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We
may only be able to complete one business combination with the proceeds of our Public Offering and the sale of the Private Placement
Warrants, which will cause us to be solely dependent on a single business which may have a limited number of products or services.
This lack of diversification may negatively impact our operations and profitability.
We
may effectuate our business combination with a single target business or multiple target businesses simultaneously or within a
short period of time. However, we may not be able to effectuate our business combination with more than one target business because
of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma
financial statements with the SEC that present operating results and the financial condition of several target businesses as if
they had been operated on a combined basis. By completing our initial business combination with only a single entity, our lack
of diversification may subject us to numerous economic, competitive and regulatory developments. 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.
In addition, we intend to focus our search for an initial business combination in a single industry. Accordingly, the prospects
for our success may be:
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solely dependent upon the performance of a single
business, property or asset, or
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dependent upon the development or market acceptance
of a single or limited number of products, processes or services.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a
substantial adverse impact upon the particular industry in which we may operate subsequent to our business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to
complete our business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which
may make it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business
combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations
and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation
of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately
address these risks, it could negatively impact our profitability and results of operations.
We
may attempt to complete our initial business combination with a private company about which little information is available, which
may result in a business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our business combination strategy, we may seek to effectuate our initial business combination with a privately held company.
Very little public information generally exists about private companies, and we could be required to make our decision on whether
to pursue a potential initial business combination on the basis of limited information, which may result in a business combination
with a company that is not as profitable as we suspected, if at all.
Our
management may not be able to maintain control of a target business after our initial business combination. We cannot provide
assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities
necessary to profitably operate such business.
We
may structure a business combination so that the post-transaction company in which our public stockholders own shares will own
less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if
the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
an interest in the target sufficient for the post-transaction company not to be required to register as an investment company
under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction
company owns 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively
own a minority interest in the post business combination 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% interest in the target.
However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to such transaction
could own less than a majority of our outstanding shares of common stock subsequent to such transaction. In addition, other minority
stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the Company’s
stock than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain control
of the target business.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to
complete a business combination with which a substantial majority of our stockholders do not agree.
Our
amended and restated certificate of incorporation does not provide a specified maximum redemption threshold, except that in no
event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that
we are not subject to the SEC’s “penny stock” rules). As a result, we may be able to complete our business combination
even though a substantial majority of our public stockholders do not agree with the transaction and have redeemed their shares
or, if we seek stockholder approval of our initial business combination and do not conduct redemptions in connection with our
business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares
to our Sponsor, officers, directors, advisors or any of their affiliates. 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 exceeds the aggregate amount of cash available
to us, we will not complete the business combination or redeem any shares, all shares of Class A common stock submitted for redemption
will be returned to the holders thereof, and we instead may search for an alternate business combination.
In
order to effectuate our initial business combination, we may seek to amend our amended and restated certificate of incorporation
or other governing instruments in a manner that will make it easier for us to complete our initial business combination but that
our stockholders or warrantholders may not support.
In
order to effectuate a business combination, we may amend various provisions of our charter and governing instruments, including
the warrant agreement, the underwriting agreement relating to our Public Offering, the letter agreement among us and our Sponsor,
officers and directors, and the registration rights agreement among us and our initial stockholders. These agreements contain
various provisions that our public stockholders might deem to be material. While we do not expect our board to approve any amendment
to any of these agreements prior to our initial business combination, it may be possible that our board, in exercising its business
judgment and subject to its fiduciary duties, chooses to approve one or more amendments to any such agreement in connection with
the consummation of our initial business combination. Except in relation to the charter, any such amendments would not require
approval from our stockholders and may have an adverse effect on the value of an investment in our securities. We cannot assure
you that we will not seek to amend our charter or other governing instruments or change our industry focus in order to effectuate
our initial business combination.
The
provisions of our amended and restated certificate of incorporation that relate to our pre-business combination activity (and
corresponding provisions of the agreement governing the release of funds from the Trust Account) may be amended with the approval
of holders of 65% of our common stock, which is a lower amendment threshold than that of some other blank check companies. It
may be easier for us, therefore, to amend our amended and restated certificate of incorporation and the trust agreement to facilitate
the completion of an initial business combination that some of our stockholders may not support.
Some
other blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including
those which relate to a company’s pre-business combination activity, without approval by a certain percentage of the company’s
stockholders. In those companies, amendment of these provisions requires approval by between 90% and 100% of the company’s
public stockholders. Our amended and restated certificate of incorporation provides that any of its provisions (other than amendments
relating to the appointment of directors, which require the approval of a majority of at least 90% of our common stock voting
at a stockholder meeting) related to pre-business combination activity (including the requirement to deposit proceeds of our Public
Offering and the private placement of warrants into the Trust Account and not release such amounts except in specified circumstances,
and to provide redemption rights to public stockholders) may be amended if approved by holders of 65% of our common stock entitled
to vote thereon, and corresponding provisions of the trust agreement governing the release of funds from our Trust Account may
be amended if approved by holders of 65% of our common stock entitled to vote thereon. In all other instances, our amended and
restated certificate of incorporation may be amended by holders of a majority of our outstanding common stock entitled to vote
thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. Our initial stockholders, who collectively
beneficially own 20.3% of our common stock, will participate in any vote to amend our amended and restated certificate of incorporation
and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the
provisions of our amended and restated certificate of incorporation which govern our pre-business combination behavior more easily
than some other blank check companies, and this may increase our ability to complete a business combination with which you do
not agree. Our stockholders may pursue remedies against us for any breach of our amended and restated certificate of incorporation.
Our
Sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem
100% of our public shares if we have not consummated an initial business combination within 24 months from the closing of our
Public Offering, 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 earned on the funds held in the Trust Account and not previously released to us to pay our franchise
and income taxes, divided by the number of then outstanding public shares. These agreements are contained in a letter agreement
that we have entered into with our Sponsor, officers and directors. Our stockholders are not parties to, or third-party beneficiaries
of, these agreements and, as a result, will not have the ability to pursue remedies against our Sponsor, officers or directors
for any breach of these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder
derivative action, subject to applicable law.
We
may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth
of a target business, which could compel us to restructure or abandon a particular business combination. If we are unable to complete
our initial business combination, our public stockholders may only receive their pro rata portion of the funds in the Trust Account
that are available for distribution to public stockholders, and our Warrants will expire worthless.
If
the net proceeds of our Public Offering and the sale of the Private Placement Warrants prove to be insufficient to complete our
initial business combination, either because of the size of our initial business combination, the depletion of the available net
proceeds in search of a target business, the obligation to redeem for cash a significant number of shares from stockholders who
elect redemption in connection with our initial business combination or the terms of negotiated transactions to purchase shares
in connection with our initial business combination, we may be required to seek additional financing or to abandon the proposed
business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent
that additional financing proves to be unavailable when needed to complete our initial business combination, we would be compelled
to either restructure the transaction or abandon that particular business combination and seek an alternative target business
candidate. If we are unable to complete our initial business combination, our public stockholders may only receive their pro rata
portion of the funds in the Trust Account that are available for distribution to public stockholders, and our Warrants will expire
worthless. In addition, even if we do not need additional financing to complete our business combination, we may require such
financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material
adverse effect on the continued development or growth of the target business. None of our officers, directors or stockholders
is required to provide any financing to us in connection with or after our business combination.
Our
initial stockholders will control the election of our board of directors until consummation of our initial business combination
and will hold a substantial interest in us. As a result, they will elect all of our directors prior to our initial business combination
and may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
Our
initial stockholders own shares representing 20.3% of our issued and outstanding shares of common stock. In addition, the Founder
Shares, all of which are held by our initial stockholders, will entitle the holders to elect all of our directors prior to our
initial business combination. Holders of our public shares will have no right to vote on the election of directors during such
time. These provisions of our amended and restated certificate of incorporation may only be amended by a majority of at least
90% of our common stock voting at a stockholder meeting. As a result, you will not have any influence over the election of directors
prior to our initial business combination. Accordingly, our initial stockholders may exert a substantial influence on actions
requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our amended and restated
certificate of incorporation and approval of major corporate transactions. In addition, our board of directors, whose members
were elected by our initial stockholders, is and will be divided into three classes, each of which will generally serve for a
term of three years with only one class of directors being elected in each year. We may not hold an annual meeting of stockholders
to elect new directors prior to the completion of our business combination, in which case all of the current directors will continue
in office until at least the completion of the business combination. If there is an annual meeting, as a consequence of our “staggered”
board of directors, only a minority of the board of directors will be considered for election and our initial stockholders, because
of their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will
continue to exert control at least until the completion of our business combination.
We
may amend the terms of the Warrants in a manner that may be adverse to holders of Warrants with the approval by the holders of
at least 50% of the then-outstanding Warrants (or, if applicable, 65% of the then-outstanding Warrants and 65% of the then-outstanding
Private Placement Warrants, voting as separate classes). As a result, the exercise price of your Warrants could be increased,
the Warrant could be converted into cash or stock (at a ratio different than initially provided), the exercise period could be
shortened and the number of shares of our Class A common stock purchasable upon exercise of a Warrant could be decreased, all
without your approval.
The
Warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant
agent, and us. The warrant agreement provides that the terms of the Warrants may be amended without the consent of any holder
to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then-outstanding
Warrants to make any change that adversely affects the interests of the registered holders of the Warrants. If an amendment adversely
affects the Private Placement Warrants in a different manner than the Warrants or vice versa, then approval of holders of at least
65% of the then-outstanding Warrants and 65% of the then-outstanding Private Placement Warrants, voting as separate classes, will
be required. Accordingly, we may amend the terms of the Warrants in a manner adverse to a holder if holders of at least 50% of
the then-outstanding Warrants (or, if applicable, 65% of the then-outstanding Warrants and 65% of the then-outstanding Private
Placement Warrants, voting as separate classes) approve of such amendment. Although our ability to amend the terms of the Warrants
with the consent of at least 50% of the then-outstanding Warrants (or, if applicable, 65% of the then-outstanding Warrants and
65% of the then-outstanding Private Placement Warrants, voting as separate classes) is unlimited, examples of such amendments
could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash or stock
(at a ratio different than initially provided), shorten the exercise period or decrease the number of shares of our Class A common
stock purchasable upon exercise of a warrant.
We
may redeem your unexpired Warrants prior to their exercise at a time that is disadvantageous to you, thereby making your Warrants
worthless.
We
have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a
price of $0.01 per warrant, provided that the last reported sales price of our Class A common stock equals or exceeds $18.00 per
share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days
within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption
and provided certain other conditions are met. If and when the Warrants become redeemable by us, we may exercise our redemption
right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption of the outstanding Warrants could force you (i) to exercise your Warrants and pay the exercise price therefor at a
time when it may be disadvantageous for you to do so, (ii) to sell your Warrants at the then-current market price when you might
otherwise wish to hold your Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding Warrants
are called for redemption, is likely to be substantially less than the market value of your Warrants. None of the Private Placement
Warrants will be redeemable by us for cash so long as they are held by our Sponsor or its permitted transferees.
In
addition, we may redeem your Warrants after they become exercisable for a number of shares of Class A common stock determined
based on the redemption date and the fair market value of our Class A common stock. Any such redemption may have similar consequences
to a cash redemption described above. In addition, such redemption may occur at a time when the Warrants are “out-of-the-money,”
in which case you would lose any potential embedded value from a subsequent increase in the value of the Class A common stock
had your Warrants remained outstanding.
Our
ability to require holders of our Warrants to exercise such Warrants on a cashless basis after we call the Warrants for redemption
or if there is no effective registration statement covering the Class A common stock issuable upon exercise of these Warrants
will cause holders to receive fewer shares of Class A common stock upon their exercise of the Warrants than they would have received
had they been able to pay the exercise price of their Warrants in cash.
If
our shares of Class A common stock are at the time of any exercise of a Warrant not listed on a national securities exchange such
that our shares of Class A common stock satisfy the definition of a “covered security” under Section 18(b)(1) of the
Securities Act, we may, at our option, require holders of Warrants who exercise their Warrants to do so on a cashless basis in
accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain
in effect a registration statement, but we will be required to use our best efforts to register or qualify the shares under applicable
blue sky laws to the extent an exemption is not available. “Cashless exercise” means the warrantholder pays the exercise
price by giving up some of the shares for which the Warrant is being exercised, with those shares valued at the then-current market
price. Accordingly, each holder would pay the exercise price by surrendering the exercised Warrants in exchange for the issuance
of that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares
of Class A common stock underlying the exercised Warrants, multiplied by the difference between the exercise price of the Warrants
and the “fair market value” by (y) the fair market value. The “fair market value” shall mean the average
reported last sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date
on which the notice of redemption is sent to the holders of the Warrants.
In
addition, if a registration statement covering the shares of Class A common stock issuable upon exercise of the Warrants is not
effective within a specified period following the consummation of our initial business combination, warrantholders may, until
such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective
registration statement, exercise Warrants on a cashless basis. For purposes of calculating the number of shares issuable upon
such cashless exercise, the “fair market value” shall mean the volume weighted average price of the Class A common
stock for the 10 trading day period ending on the trading day prior to the date on which notice of exercise is received by the
warrant agent.
If
we choose to require holders to exercise their Warrants on a cashless basis, which we may do at our sole discretion, or if holders
elect to do so when there is no effective registration statement, the number of shares of Class A common stock received by a holder
upon exercise will be fewer than it would have been had such holder exercised his or her warrant for cash. This will have the
effect of reducing the potential “upside” of the holder’s investment in the Company because the warrantholder
will hold a smaller number of shares of Class A common stock upon a cashless exercise of the warrants they hold.
Our
warrants and Founder Shares may have an adverse effect on the market price of our Class A common stock and make it more difficult
to effectuate our business combination.
We
issued Warrants to purchase 10,470,587 shares of Class A common stock as part of the Units. We also issued 5,521,568 Private Placement
Warrants, each exercisable to purchase one share of Class A common stock at $11.50 per share. Our initial stockholders currently
own an aggregate of 7,852,941 Founder Shares. The Founder Shares are convertible into shares of Class A common stock on a one-for-one
basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like. In addition,
if our Sponsor makes any working capital loans, it may convert those loans into up to an additional 1,000,000 Private Placement
Warrants, at the price of $1.50 per warrant. To the extent we issue shares of Class A common stock to effectuate a business combination,
the potential for the issuance of a substantial number of additional shares of Class A common stock upon exercise of these warrants
and conversion rights could make us a less attractive acquisition vehicle to a target business. Any such issuance will increase
the number of issued and outstanding shares of our Class A common stock and reduce the value of the shares of Class A common stock
issued to complete the business combination. Therefore, our warrants and Founder Shares may make it more difficult to effectuate
a business combination or increase the cost of acquiring the target business.
Because
each Unit contains one-third of one Warrant and only a whole Warrant may be exercised, the Units may be worth less than units
of other blank check companies.
Each
Unit contains one-third of one Warrant. Pursuant to the warrant agreement, no fractional Warrants will be issued upon separation
of the Units, and only whole Warrants will trade. This is different from other blank check companies similar to ours whose units
include one share of common stock and one warrant to purchase one whole share. We have established the components of the Units
in this way in order to reduce the dilutive effect of the Warrants upon completion of a business combination since the Warrants
will be exercisable in the aggregate for one-third of the number of shares compared to units that each contain a whole warrant
to purchase one share, thus making us, we believe, a more attractive merger partner for target businesses. Nevertheless, this
Unit structure may cause our Units to be worth less than if they included a warrant to purchase one whole share.
A
provision of our warrant agreement may make it more difficult for us to consummate an initial business combination.
Unlike
most blank check companies, if we issue additional shares of common stock or equity-linked securities for capital raising purposes
in connection with the closing of our initial business combination at a newly issued price of less than $9.20 per share of common
stock, then the exercise price of the warrants will be adjusted to equal 115% of the newly issued price. This may make it more
difficult for us to consummate an initial business combination with a target business.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial
significance tests include target historical and/or pro forma financial statement disclosure. We will include the same financial
statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules.
These financial statements may be required to be prepared in accordance with, or be reconciled to, GAAP or IFRS, depending on
the circumstances, and the historical financial statements may be required to be audited in accordance with the standards of the
PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets
may be unable to provide such financial statements in time for us to disclose such financial statements in accordance with federal
proxy rules and complete our initial business combination within the prescribed time frame.
We
are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure
requirements available to emerging growth companies, this could make our securities less attractive to investors and may make
it more difficult to compare our performance with other public companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are
not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports
and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and
stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access
to certain information they may deem important. We could be an emerging growth company until the last day of the fiscal year following
the fifth anniversary of the completion of our Public Offering, although circumstances could cause us to lose that status earlier,
including if the market value of our Class A common stock held by non-affiliates exceeds $700 million as of any June 30 before
that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether
investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities
less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise
would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We
have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has
different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard
at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another
public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended
transition period difficult or impossible because of the potential differences in accountant standards used.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our business combination, require substantial
financial and management resources, and increase the time and costs of completing our initial business combination.
Section
404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual
Report on Form 10-K for the year ending December 31, 2020. Only in the event we are deemed to be a large accelerated filer or
an accelerated filer will we be required to comply with the independent registered public accounting firm attestation requirement
on our internal control over financial reporting. Further, for as long as we remain an emerging growth company, we will not be
required to comply with the independent registered public accounting firm attestation requirement on our internal control over
financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act
particularly burdensome for us as compared to other public companies because a target business with which we seek to complete
our business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal
controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase
the time and costs necessary to complete any such acquisition.
Provisions
in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the
price investors might be willing to pay in the future for our Class A common stock and could entrench management.
Our
amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that
stockholders may consider to be in their best interests. These provisions include a staggered board of directors and the ability
of the board of directors to designate the terms of and issue new series of preferred stock, which may make the removal of management
more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices
for our securities.
We
are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together, these
provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve payment
of a premium over prevailing market prices for our securities.
Provisions
in our amended and restated certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against
our directors and officers.
Our
amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought
in our name, actions against directors, officers and employees for breach of fiduciary duty and other similar actions (other than
actions arising under the Securities Act or the Exchange Act) may be brought only in the Court of Chancery in the State of Delaware
(or, if such court does not have subject matter jurisdiction thereof, any other court located in the State of Delaware with subject
matter jurisdiction) and, if brought outside of Delaware, the stockholder bringing such suit will be deemed to have consented
to service of process on such stockholder’s counsel. This provision may limit a stockholder’s ability to bring a claim
in a judicial forum that it finds favorable for disputes with us and our directors, officers or other employees and may have the
effect of discouraging lawsuits against our directors and officers.
Cyber
incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial
loss.
We
depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those
of third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure,
or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary
information and sensitive or confidential data. As an early stage company without significant investments in data security protection,
we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against,
or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination
of them, could have adverse consequences on our business and lead to financial loss.