As filed with the U.S. Securities and Exchange Commission on March 15, 2022.
Registration No. 333-261765
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 4
to
FORM S-1
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
RF Acquisition Corp.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation or organization)
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6770
(Primary Standard Industrial
Classification Code Number)
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61-1991323
(I.R.S. Employer
Identification Number)
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111 Somerset, #05-06
Singapore 238164
+65 6904 0766
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Puglisi & Associates
850 Library Avenue
Newark, Delaware 19711
Tel: (302) 738-6680
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
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Simon Luk
Winston & Strawn LLP
42nd Floor
Bank of China Tower
1 Garden Road
Central, Hong Kong
Tel: +852 2292 2000
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Michael J. Blankenship
Winston & Strawn LLP
800 Capitol Street, Suite 2400
Houston, Texas 77002
Tel: (713) 651-2600
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Mitchell S. Nussbaum
Giovanni Caruso
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154
Telephone: (212) 407-4000
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Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non- accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☒
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Smaller reporting company ☒
Emerging growth company ☒
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Security Being Registered
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Amount Being
Registered
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Proposed Maximum
Offering Price per
Security(1)
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Proposed Maximum
Aggregate Offering
Price(1)
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Amount of
Registration
Fee
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Units, each consisting of one share of Class A common stock, $0.0001 par value, one redeemable warrant, and one right to receive one-tenth of one share of Class A common stock(2)
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11,500,000 Units
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$ |
10.00 |
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$ |
115,000,000 |
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$ |
10,661 |
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Shares of Class A common stock included as part of the units(3)
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11,500,000 Shares
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— |
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— |
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—(4) |
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Redeemable Warrants included as part of the
units(3)
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11,500,000 Warrants
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— |
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— |
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—(4) |
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Rights included as part of the units
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11,500,000 Rights
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— |
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— |
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—(4) |
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Shares of Class A common stock underlying the Redeemable Warrants included as part of the
Units
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11,500,000 Shares
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$ |
11.50(5) |
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$ |
132,250,000 |
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$ |
12,260 |
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EBC founder shares of Class A common stock
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200,000 Shares
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$ |
0.0001 |
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$ |
20 |
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$ |
0.002 |
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Shares of Class A common stock underlying the Rights included as part of the Units
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1,150,000 Shares
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$ |
10.00 |
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$ |
11,500,000 |
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$ |
1,066 |
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Total
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$ |
258,750,020 |
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$ |
23,987(6) |
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(1)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended (the “Securities Act”).
(2)
Includes 1,500,000 units, consisting of (i) 1,500,000 shares of Class A common stock, 1,500,000 redeemable warrants, which may be issued upon exercise of a 45-day option granted to the underwriter to cover over-allotments, if any; and (ii) 1,500,000 rights, with each right entitling the holder to receive one-tenth of one Class A common stock upon the closing of the business combination.
(3)
Pursuant to Rule 416, there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions.
(4)
No fee pursuant to Rule 457(g).
(5)
Calculated pursuant to Rule 457(g) under the Securities Act, based on the price of the warrants.
(6)
Previously paid.
RF Acquisition Corp. (the “Registrant”) hereby amends this registration statement (the “Registration Statement”) on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MARCH 15, 2022
PRELIMINARY PROSPECTUS
$100,000,000
RF Acquisition Corp.
10,000,000 Units
RF Acquisition Corp. is a blank check company whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to as our initial business combination. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination with us. We shall not undertake our initial business combination with any entity with its principal business operations in China (including Hong Kong and Macau).
This is an initial public offering of our securities. Each unit has an offering price of $10.00 and consists of one share of Class A common stock, one redeemable warrant, and one right to receive one-tenth of one Class A common stock upon the consummation of an initial business combination. Each whole warrant entitles the holder thereof to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment as described herein. Only whole warrants, shares, and rights are exercisable. No fractional warrants, nor shares, nor rights will be issued upon separation of the units and only whole warrants, shares, and rights will trade. The warrants will become exercisable 30 days after the completion of our initial business combination, and will expire five years after the completion of our initial business combination or earlier upon redemption or our liquidation, as described herein. The underwriter has a 45-day option from the date of this prospectus to purchase up to 1,500,000 additional units to cover over-allotments, if any. Accordingly, you must hold rights in multiples of 10 in order to receive shares for all of your rights upon closing of a 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 described below as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding shares of Class A common stock that were sold as part of the units in this offering, which we refer to collectively as our public shares, subject to the limitations and on the conditions described herein. If we are unable to complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months (the “Extension Option”), from the closing of this offering, we will redeem 100% of the public shares at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, subject to applicable law and certain conditions as further described herein. In the event the Company decides to exercise the Extension Option, investors will not have voting rights nor redemption rights in connection with such additional three-month extensions.
Holders of record of our Class A common stock and holders of record of our Class B common stock will vote together as a single class on all matters submitted to a vote of our stockholders except as required by law and as disclosed herein, with each share of common stock entitling the holder to one vote except as required by law and as disclosed herein. Prior to our initial business combination, only holders of our Class B common stock will have the right to vote on the appointment of directors. Holders of our public shares will not be entitled to vote on the appointment of directors during such time.
RF Dynamic LLC, a Delaware limited liability company, which we refer to throughout this prospectus as our “sponsor,” and EarlyBirdCapital, Inc., the representative of the underwriters in this offering, which we refer to throughout this prospectus as EarlyBirdCapital, have committed that they and/or their designees will purchase from us an aggregate of 4,550,000 warrants, or “private warrants,” at $1.00 per warrant (4,050,000 private warrants by our sponsor and 500,000 private warrants by EarlyBirdCapital) for a total purchase price of $4,550,000 in a private placement that will occur simultaneously with the consummation of this offering. Our sponsor and EarlyBirdCapital have also agreed that if the over-allotment option is exercised by the underwriter in full or in part, they will purchase from us additional private warrants on a pro rata basis (up to a maximum of 450,000 private warrants at a price of $1.00 per warrant) in an amount that is necessary to maintain in the trust account $10.10 per unit sold to the public in this offering. These additional private warrants will be purchased in a private placement that will occur simultaneously with the purchase of units resulting from the exercise of the over-allotment option. The private warrants are identical to the warrants sold in this offering, subject to certain limited exceptions as described in this prospectus.
Our initial stockholders currently own an aggregate of 2,875,000 shares of Class B common stock (up to 375,000 shares of which are subject to forfeiture depending on the extent to which the underwriter’s over-allotment option is exercised), which will automatically convert into shares of Class A common stock concurrently with or immediately following the consummation of our initial business combination on a one-for-one basis, subject to the adjustments described herein.
Currently, there is no public market for our units, Class A common stock, rights, or warrants. We expect that our units will be listed on The Nasdaq Global Market, or Nasdaq, under the symbol “RFACU” on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for listing on Nasdaq. We expect the shares of Class A common stock, rights, and warrants comprising the units to begin separate trading on the 90th day following the date of this prospectus unless EarlyBirdCapital, Inc. informs us of its decision to allow earlier separate trading, subject to our satisfaction of certain conditions. Once the securities comprising the units begin separate trading, we expect that the Class A common stock, rights, and warrants will be listed on Nasdaq under the symbols “RFAC,” “RFACR,” and “RFACW,” respectively.
We are an “emerging growth company” under applicable federal securities laws and will be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 32 for a discussion of information that should be considered in connection with an investment in our securities. Investors will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings.
Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
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Per Unit
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Total
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Public offering price
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$ |
10.00 |
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$ |
100,000,000 |
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Underwriting discounts and commissions(1)
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$ |
0.20 |
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$ |
2,000,000 |
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Proceeds, before expenses, to RF Acquisition Corp.
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$ |
9.80 |
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$ |
98,000,000 |
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(1)
$0.20 per unit, or $2,000,000 in the aggregate (or $2,300,000 if the underwriter’s over-allotment option is exercised in full), is payable upon the closing of this offering. The underwriter will receive compensation in addition to the underwriting discount, including 200,000 Class A common stock, which we refer here in as to “EBC founder shares”. Please see the section titled “Underwriting” for further information relating to the arrangements agreed to between us and the underwriter.
Of the proceeds we receive from this offering and the sale of the private placement warrants described in this prospectus, $101,000,000, or $116,150,000 if the underwriter’s over-allotment option is exercised in full ($10.10 per unit in either case), will be deposited into a trust account in the United States with Continental Stock Transfer & Trust Company acting as trustee.
The underwriter is offering the units for sale on a firm commitment basis. The underwriter expects to deliver the units to the purchasers on or about , 2022.
Book-Running Manager
EarlyBirdCapital, Inc.
, 2022
TABLE OF CONTENTS
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Page
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144 |
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F-1
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We are responsible for the information contained in this prospectus. We have not authorized anyone to provide you with different information, and we take no responsibility for any other information others may give to you. We are not, and the underwriter is not, making an offer to sell securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus.
SUMMARY
This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under “Risk Factors” and our financial statements and the related notes included elsewhere in this prospectus, before investing.
Unless otherwise stated in this prospectus or the context otherwise requires, references to:
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“amended and restated certificate of incorporation” refers to our second amended and restated certificate of incorporation to be adopted in connection with the closing of this offering;
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“common stock” are to our Class A common stock and our Class B common stock;
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“Company” refers to RF Acquisition Corp.;
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“DGCL” refers to the Delaware General Corporation Law as the same may be amended from time to time;
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“directors” are to our current directors and director nominees;
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“EarlyBirdCapital” is EarlyBirdCapital, Inc., the underwriter in this offering;
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“founder shares” are to shares of Class B common stock initially purchased by our sponsor in a private placement prior to this offering and the shares of Class A common stock that will be issued upon the automatic conversion of the shares of Class B common stock at the time of our initial business combination as described herein;
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“initial stockholders” are to holders of our founder shares prior to this offering;
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“insiders” are the officers, directors, advisors, and initial stockholders in the Company;
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“management” or our “management team” are to our executive officers and directors;
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“private placement warrants” are to the warrants issued to our sponsor, insiders, and EarlyBirdCapital each in a private placement simultaneously with the closing of this offering;
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“public shares” are to shares of Class A common stock sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market);
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“public stockholders” are to the holders of our public shares, including our initial stockholders and management team to the extent our initial stockholders and/or members of our management team purchase public shares, provided that each initial stockholder’s and member of our management team’s status as a “public stockholder” will only exist with respect to such public shares;
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“public warrants” are to our redeemable warrants sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market), to the private placement warrants if held by third parties other than our sponsor or the underwriter (or permitted transferees), in each case, following the consummation of our initial business combination;
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“EBC founder shares” are to shares of Class A common stock that were issued to EarlyBirdCapital prior to this offering at $0.0001 per share;
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“rights” are to the rights sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market), each to receive one-tenth (1/10) of one Class A common stock upon the consummation of an initial business combination;
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“RFAC” are to the Company;
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“sponsor” are to RF Dynamic LLC, a Delaware limited liability company, an affiliate of the Company;
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“units” are to units sold in this offering, each consisting of one Class A common stock, one redeemable warrant and one right; and
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“we,” “us,” “company” or “our company” are to RF Acquisition Corp., a Delaware corporation.
Unless we tell you otherwise, the information in this prospectus assumes that the underwriter will not exercise its over-allotment option.
GENERAL
We are a blank check company incorporated as a Delaware corporation whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination with us. We may pursue an initial business combination target in any industry or geographic region. We shall not undertake our initial business combination with any entity with its principal business operations in China (including Hong Kong and Macau).
OVERVIEW
While we may pursue an initial business combination target in any business, industry or geographic location, we intend to search globally for target companies within the Southeast Asian new economy sector or elsewhere. Our management team believes that in recent years, a wide range of technological breakthroughs have accelerated cycles of change, radically impacting industries and business models across the world. The transformative effects of innovation as diverse as cloud computing, artificial intelligence, machine learning, data analytics, cybersecurity, and ubiquitous mobile computing have upended industries both large and small.
We believe the current COVID-19 pandemic has accelerated the aforementioned trend and is a catalyst for digital migration at a speed and on a scale never seen before. Individuals as well as small and large institutions have been forced to adapt to a new normal of living in a world where physical contact has been hindered and technology has become essential for both personal and business activities on a daily basis. Amidst these changes, we believe legacy business models that fail to adapt will eventually cease to exist while innovators that take advantage of the current situation will be awarded outsized opportunities to lead the upcoming changes.
Our management team believes that this widespread change is occurring everywhere in our lives, but it has been particularly strong in the business world. Major shifts are happening in the financial services, media, technology, retail, interpersonal communication, transportation, and education sectors. We believe the market rewards those who see and understand its trajectory.
Capital markets have responded to this expanding opportunity. Global venture capital investments increased over 500% in the past decade, from $48 billion in 2010 to $295 billion in 2019, according to Crunchbase News. Those dollars are spread widely: more than 32,000 companies received venture funding in 2019 alone, according to Crunchbase News. These backings represent a significant commitment from investors — PWC/CB Insights recorded 219 private financings surpassing $100 million for private investments in 2019, representing over $50 billion deployed.
This confluence of enormous change and plentiful capital has created what we believe is a sizeable opportunity for wealth building, especially as private companies enter the public markets to fuel their next phase of growth. Our management team believes that there is demand from public market investors to locate and invest in a high growth financial services, media, technology, retail, interpersonal communication, transportation, or education sectors company, debut it in the public markets and partner with it, as stockholders, to help the company elevate itself into the next multi-billion-dollar market cap company.
Management Team
Our team possess a wide-ranging set of competencies, including public market experience, financial acumen and an extensive track record of growth and value creation.
Tse Meng Ng, our Chairman and Chief Executive Officer, is a highly regarded and successful financier and businessman. In February 2019, Mr. Ng co-founded Ruifeng Wealth Management Pte Ltd, a Singapore Capital Markets Services licensed financial institution regulated by the Monetary Authority of Singapore for which he serves as the chief executive officer. Ruifeng Wealth Management Pte Ltd is a subsidiary of listed 2345 Network Technological Co. Ltd (“2345 Network”). 2345 Network has a market capitalization of around $2 billion. Mr. Ng and his team provide fund management services to ultra high net worth individuals. From May 2014 to January 2019, Mr. Ng served as the Managing Director of Credit Agricole, an international full-service banking group. He was voted ‘Outstanding Young Private Banker’ in 2011 by Private Banker
International, the leading journal for the global wealth management industry. Prior to that, Mr. Ng was a Director at Credit Suisse where he helped form the team that covered the North Asia markets and where he helped contribute the most net new money between 2008-2009. He started his career in 1998 at Citibank N.A where he managed a team of banking staff at a very young age. Mr. Ng earned a B.S. in Business from Nanyang Technological University.
Han Hsiung Lim, our Chief Financial Officer and Chief Operating Officer, is an accomplished executive and leader. Mr. Lim has served on our board of directors since January 2021. Mr. Lim retired from an 18-year career in the banking and asset management industry in 2018 and has since managed his own investments in public equities and fixed-income securities. From January 2016 to December 2017, Mr. Lim was a Senior Vice President in the Risk & Performance Management Department at GIC (formerly known as the Government of Singapore Investment Corporation), which manages Singapore’s foreign reserves. From April 2009 to December 2014, he served as the Head of Credit Risk Management in the Risk & Performance Management Department at GIC where he was responsible for approving, managing and mitigating the firmwide credit exposure of GIC to its trading counterparties. From February 2000 to April 2009, Mr. Lim worked within the Financial Markets Credit Group at DBS Bank, where rose up the ranks to Vice President in 2005 and was responsible for approving, managing and mitigating the firmwide credit exposure of DBS Bank to a portfolio of banks and non-bank financial institutions. He also has experience in managing credit exposure, as he was tasked with avoiding and mitigating DBS Bank’s potential losses during the 2008 Global Financial Crisis. Mr. Lim has a bachelor of business degree (First Class Honors), with a major in banking and a minor in hospitality, from the Nanyang Technological University.
Our Board
Our officer’s skills are complemented by our directors and advisors, who bring significant operating experience and relationships throughout the global banking and finance industry. In addition to Tse Meng Ng, who is Chairman of our board, and Benjamin Waisbren, Simon Eng Hock Ong, and Vincent Yang Hui are our additional director nominees.
Benjamin Waisbren has served on our board of directors since January 2021. Since 2014, Mr. Waisbren has served as the President of Virtually There Holdings LLC d/b/a Ben Waisbren & Associates, which advises media companies and firms involved in distressed situations. From April 2019 through July 2020, Mr. Waisbren served as Chief Executive Officer and Chief Restructuring Officer of NanoMech Inc., a nanotechnology company that he led through a Chapter 11 case and its sale to a global company. He is also on the board of Vistas Media Acquisition Company, a Nasdaq listed blank check company, and previously served on the board of Wild Bunch AG, the German-listed, Paris-based award-winning film co-production and distribution company for ten years. Mr. Waisbren also held attorney positions at Lord Bissell & Brook LLP (now Locke Lord LLP) and Winston & Strawn LLP, during and after which he was engaged by the U.S. Department of Justice in the 1Malaysia Development Berhad money laundering matter. Mr. Waisbren’s impressive legal and business career make him an excellent candidate for our board of directors.
Simon Eng Hock Ong will serve on our board of directors following the completion of this offering. Mr. Ong currently serves as the Chief Financial Officer of Rich Capital Holdings Limited, a company listed on SGX Catalist. Prior thereto, Mr. Ong worked as the Executive Director of Asiaphos Limited from 2012 through June 2019, and remains as with Asiaphos as a Non-Executive Director and as a member of their audit committee. Previously, Mr. Ong also served as Group Finance Manager and as Chief Financial Officer of Hwa Hong Corporation Limited, a company listed on SGX-ST Main Board, and as a director of corporate and financial planning of the King George Development Corporation, a company listed on the TSX Venture Exchange (formerly known as the Vancouver Stock Exchange). Mr. Ong has a degree in accounting from North East London Polytechnic (now known as the University of East London) and is a Fellow of the Association of Chartered Certified Accountants and a Certified Practicing Accountant in Australia. Mr. Ong’s experience working with public companies and his strong background in finance and accounting make him a strong candidate to serve on our board of directors.
Vincent Yang Hui will serve on our board of directors following the completion of this offering. Mr. Hui currently serves as the Chief Executive Officer of abComo eCommerce Pte Ltd, a multinational influencer platform that he founded in 2020. He also co-founded Long-bridge, an overseas asset investment company, in 2019, and Alphabit Consulting Pte Ltd, a Singapore based technology consulting company. From 2014 to
2018, Mr. Hui served as a Business Development Director for the Alibaba Group and Ant Financial. Mr. Hui has a BSc in Information Management and Information Systems from the University of Electronic Science and Technology of China and a graduate diploma in systems analysis from the National University of Singpaore. Mr. Hui’s qualifications to serve on our board of directors includes his entrepreneurial experiences and educational background.
Our Advisors
In addition to the management team and board of directors, our team will include Chandra Tjan and Stephen Lee, who shall serve as advisors. None of these individuals have any contractual obligation to us or are otherwise required to commit any specified amount of time to our affairs; however, we expect that certain of these individuals will, on average, dedicate a significant amount of their professional time on our affairs.
Chandra Tjan is a heralded entrepreneur with a record of success as a venture capitalist in Southeast Asia. Mr. Tjan started his career as a banker at Citigroup and Credit Suisse in Singapore. After a decade in the banking industry, Mr. Tjan saw a huge opportunity in Indonesia’s technology sector, and in 2009 he co-founded East Ventures, an early stage capital venture firm. During his tenure in Indonesia, Mr. Tjan was responsible for dozens of investments in early-stage start-ups, including the online marketplace Tokopedia and all-in-one travel booking platform Traveloka. In 2015, Chandra co-founded Alpha JWC Ventures, an institutionalized and independent VC fund targeting early-stage tech startups across Southeast Asia, with a strong focus in Indonesia. The firm currently manages approximately $200 million across two funds, making it the largest early-stage fund in Indonesia, with 36 active portfolio companies. With over a decade of experience in tech investment, Mr. Tjan has invested in over 60 companies in Asia and the United States. He currently sits on the board of some of the leading tech companies in Asia, including FundingSocieties, Carro, GudangAda, Bobobox and OnlinePajak. Mr. Tjan graduated from The University of Sydney with a triple major in finance, economics, and management, currently attends the Owner-President Management (OPM) Program at Harvard Business School, a 3-year residential program for business owners and entrepreneurs, and is a member of YPO’s (Young President Organization) global leadership community.
Stephen Lee is an experienced and respected executive with experience across a wide variety of sectors and industries. In 1994, Mr. Lee joined AIF Capital and has been a Partner and Investment Committee Member since 2001. He has been actively involved in deal origination, transaction execution, investment management and portfolio monitoring and represents AIF Capital on the boards of various portfolio companies. His sector investment experience includes manufacturing, industrial, media, pharmaceutical and healthcare, aquaculture, consumer, new materials, telecommunication, logistics and transportation in multiple countries, including China, Hong Kong, Taiwan, Indonesia, South Korea and Singapore. Mr. Lee has been involved in multiple prominent deals in the Asia-Pacific region, including Aofeng Hi-Tech Company Limited (the largest carbon fiber composite company manufacturer in Asia), Oceanus Group Limited (the Singapore-listed leading aquatic company in Asia), CN Innovations Holdings Limited (the leading smartphone manufacturer in China and Asia), Shandong Buchang Pharmaceutical Co. Ltd. (China’s largest producer of traditional Chinese medicine), Charm Communications Inc. (a leading Chinese media company in China that was previously listed in the United States), Bharti Infratel Limited (India’s largest mobile operator in India), Bestime Pharma (Asia) Limited (leading antibiotics drug manufacturer in China), PT Excelcomindo Pratama (leading mobile operator in Indonesia) and PT Marga Mandalasakti (operators of the longest toll road in Indonesia).
Business Strategy
Our business strategy is to identify and consummate an initial business combination with a company with operations or prospects in the Southeast Asian new economy sector or elsewhere. We shall not undertake our initial business combinations with any entity with its principal business operations in China (including Hong Kong and Macau). We intend to focus on companies that complement the experience of our management team and that can benefit from the management team’s operational expertise. Our selection process will leverage our management team’s broad and deep network of relationships, industry expertise and proven deal-sourcing capabilities, providing us with a strong pipeline of potential targets. Our management and sponsor have experience in:
•
investing and building businesses in the financial services, media, technology, retail, interpersonal communication, transportation, and education sectors with unique market, policy and macroeconomic insights;
•
managing and operating companies, setting and changing strategies, and identifying, mentoring and recruiting top-notch talent;
•
developing and growing companies, both organically and inorganically, and expanding the product ranges and geographic footprints of portfolio businesses;
•
executing merger and acquisition strategies to accelerate growth and create integrated value chains;
•
sourcing, structuring, acquiring and selling businesses in various markets;
•
partnering with other industry-leading companies to increase sales and improve the competitive position of companies;
•
fostering relationships with users, sellers, capital providers and target management teams; and
•
accessing the capital markets, including capital sources in Asia and America, across various business cycles, including financing businesses and assisting companies with the transition to public ownership.
Business Combination Criteria
Consistent with our business strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will use these criteria and guidelines in evaluating acquisition opportunities, though we may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines:
•
Companies with operations or prospects in the Southeast Asian new economy sectors or elsewhere. Based upon our management team’s experience, we believe we will have increased access to investment opportunities and a competitive advantage in our ability to negotiate a business combination with potential targets in the Southeast Asian new economy. Our management team’s extensive experience and network of contacts provide them with an opportunity to source a target, evaluate a target, consummate a business combination with the target and help grow the target’s business.
•
Strong target management teams. We intend to acquire one or more businesses that have strong management teams with a proven track record of driving growth, building long-term competitive advantage and making sound strategic decisions.
•
Fundamentally sound companies that have the potential to further improve their performance under our ownership. We believe our management team’s experience in our target sectors as well as their network of industry contacts will create opportunities to enhance the revenue and operational efficiencies of the target business, and potentially generate higher returns for our investors.
•
Market leader. We intend to seek a target that has a leading presence across an industry or segment or has leading technology or product capabilities.
•
Appropriate valuations. We intend to be a disciplined and valuation-centric investor that will invest on terms that we believe are attractive relative to market comparables that provide significant upside potential.
These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. If we decide to enter into a business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our initial business combination, which, as discussed in this prospectus, would be in the form of proxy solicitation or tender offer materials, as applicable, that we would file with the SEC.
Our Business Combination 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, interviews of customers and suppliers, inspection of facilities, as well as reviewing financial and other information that will be made available to us. We will also utilize our operational and capital allocation experience.
Our acquisition criteria, due diligence processes and value creation methods 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. If we decide to enter into our initial business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our initial business combination, which, as discussed in this prospectus, would be in the form of tender offer documents or proxy solicitation materials that we would file with the SEC.
Our Business Strategy
Our business strategy is to identify and consummate an initial business combination with a company with operations or prospects in the Southeast Asian new economy sector or elsewhere. We intend to focus on companies that complement the experience of our management team and that can benefit from the management team’s operational expertise. Our selection process will leverage our management team’s and our sponsor’s broad and deep network of relationships, industry expertise and proven deal-sourcing capabilities, providing us with a strong pipeline of potential targets. Our management and sponsor have experience in:
•
investing and building businesses in the financial services, media, technology, retail, interpersonal communication, transportation, and education sectors with unique market, policy and macroeconomic insights;
•
managing and operating companies, setting and changing strategies, and identifying, mentoring and recruiting top-notch talent;
•
developing and growing companies, both organically and inorganically, and expanding the product ranges and geographic footprints of portfolio businesses;
•
executing merger and acquisition strategies to accelerate growth and create integrated value chains;
•
sourcing, structuring, acquiring and selling businesses in various markets;
•
partnering with other industry-leading companies to increase sales and improve the competitive position of companies;
•
fostering relationships with users, sellers, capital providers and target management teams; and
•
accessing the capital markets, including capital sources in Asia and America, across various business cycles, including financing businesses and assisting companies with the transition to public ownership.
Permission Required from the PRC Authorities for this Offering and a Business Combination
As a Delaware corporation with no operations in China, we are not required to obtain permission from any Chinese authorities to operate or to issue the securities being issued in this offering to any investors, including Chinese investors, if any, and we do not expect the permission will be required from the Chinese authorities in connection with our business combination since we will not undertake our initial business combination with any entity that conducts a majority of its business or is headquartered in China (including Hong Kong and Macau).
INITIAL BUSINESS COMBINATION
Nasdaq rules require, and our amended and restated certificate of incorporation will require, that we must complete one or more initial business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account (excluding taxes payable on interest earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. Our board of directors will make the determination as to the fair market value of 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 which is a member of FINRA or a valuation or appraisal firm with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market
value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of the target’s assets or prospects.
We anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act 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 initial business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the 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 that case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be taken into account for purposes of the 80% of net assets test described above. If the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses.
Prior to the date of this prospectus, we will file a Registration Statement on Form 8-A with the Securities and Exchange Commission (the “SEC”) to voluntarily register our securities under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
SOURCING OF POTENTIAL INITIAL BUSINESS COMBINATION TARGETS
We believe our management team’s significant operating and transaction experience and relationships will provide us with a substantial number of potential initial business combination targets. Over the course of their careers, the members of our management team have developed a broad network of contacts and corporate relationships around the world, which includes private equity firms, venture capitalists and entrepreneurs. This global network has grown through the activities of our management team sourcing, acquiring and financing businesses, the reputation of our management team for integrity and fair dealing with sellers, financing sources and target management teams and the experience of our management team in executing transactions under varying economic and financial market conditions. In addition, members of our management team and board of directors have developed contacts from serving on the boards of directors of public companies. However, we shall not undertake our initial business combination with any entity with its principal business operations in China (including Hong Kong and Macau).
This global network has provided our management team with a flow of referrals that has resulted in numerous transactions which were proprietary or where a limited group of investors were invited to participate in the sale process. We believe that the network of contacts and relationships of our management team will provide us important sources of investment opportunities. In addition, we anticipate that target business combination candidates will be brought to our attention from various unaffiliated sources, including investment market participants, private equity funds and large business enterprises seeking to divest non-core assets or divisions.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, executive officers or directors, or completing the business combination through a joint venture or other form of shared ownership with our sponsor, executive officers or directors. If we seek to complete an initial business combination with a target that is affiliated with our sponsor, executive officers or directors, we,
or a committee of independent directors, would obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm stating that such an initial business combination is fair to our company from a financial point of view.
Members of our management team and our independent directors will directly or indirectly own founder shares, common stock, rights, and/or private placement warrants following this offering and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination.
Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such other entity. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our initial business combination.
In addition, our sponsor and our officers and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue other business or investment ventures during the period in which we are seeking an initial business combination. Any such companies, businesses or investments may present additional conflicts of interest in pursuing an initial business combination. However, we do not believe that any such potential conflicts would materially affect our ability to complete our initial business combination.
CORPORATE INFORMATION
Our executive offices are located at 111 Somerset, #05-06, Singapore 23864, and our telephone number is +65 6904 0766.
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 of 2002 (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 this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A 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. References herein to “emerging growth company” will have the meaning associated with it in the JOBS Act.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non- affiliates exceeds $250 million as of the prior June 30th, or (2) our annual revenues exceed $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30th.
THE OFFERING
In making your decision on whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section below entitled “Risk Factors” in this prospectus.
10,000,000 units, at $10.00 per unit, each unit consisting of:
•
One share of Class A common stock;
•
One right (each right entitles the holder thereof to receive one-tenth (1/10) of one Class A common stock upon the consummation of a business combination); and
•
One redeemable warrant.
Units: “RFACU”
Class A common stock: “RFAC”
Warrants: “RFACW”
Rights: “RFACR”
Trading commencement and separation of shares of Class A common stock, rights, and warrants
The units are expected to begin trading on or promptly after the date of this prospectus. The shares of Class A common stock, rights, and warrants comprising the units will begin separate trading on the 90th day following the date of this prospectus unless EarlyBirdCapital informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Once the shares of Class A common stock, rights, and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component securities. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of Class A common stock, rights, and warrants. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. In addition, no fractional Class A common stock in connection with an exchange of rights will be issued. Accordingly, unless you hold rights in multiples of tens, you will not be able to receive or trade a whole share of common stock.
Separate trading of the Class A common stock, rights, and warrants is prohibited until we have filed a Current Report on Form 8-K
In no event will the Class A common stock, rights, and warrants be traded separately until we have filed with the SEC a Current Report on Form 8-K which includes an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. We will file the Current Report on Form 8-K promptly after the closing of this offering, which closing is anticipated to
take place three business days from the date of this prospectus. If the underwriter’s over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriter’s over-allotment option.
Units:
Number outstanding before this offering:
0
Number outstanding after this
offering
10,000,000(1)
Common stock:
Number outstanding before this offering.
3,075,000(2)(3)
Number outstanding after this
offering
12,700,000(1)(3)(4)
Warrants:
Number outstanding before this offering.
0
Number outstanding after this
offering
14,550,000(5)
Each whole warrant offered in this offering is exercisable to purchase one share of Class A common stock. Only whole warrants are exercisable. No fractional warrants will be issued upon separation of the units and only whole warrants will trade.
$11.50 per share, subject to adjustments as described herein. In addition, if (x) we issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by our board of directors and, in the case of any such issuance to the Sponsor, our initial stockholders or their affiliates, without taking into account any founder shares held by our Sponsor, initial stockholders or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date of the consummation of our initial business combination (net of redemptions), and (z) the volume weighted average trading price of our Class A common stock during the 20 trading day period starting on the trading day after the day on which we consummate our initial business combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per
(1)
Assumes no exercise of the underwriter’s over-allotment option and the forfeiture of 375,000 founder shares by our sponsor for no consideration.
(2)
Includes up to 375,000 founder shares that will be forfeited by our initial stockholders depending on the extent to which the underwriter’s over-allotment option is exercised.
(3)
Founder shares are currently classified as shares of Class B common stock, which shares will automatically convert into shares of Class A common stock concurrently with or immediately following the consummation of our initial business combination on a one-for-one basis, subject to adjustment as described below adjacent to the caption “Founder shares conversion and anti-dilution rights.”
(4)
Includes 10,000,000 public shares, 2,500,000 founder shares and 200,000 EBC founder shares.
(5)
Includes 10,000,000 public warrants and 4,550,000 private warrants.
share redemption trigger price described below under “Redemption of Warrants” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The warrants will become exercisable 30 days after the completion of our initial business combination; provided that we have an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder (or we permit holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement). 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.
We are registering the shares of Class A common stock issuable upon exercise of the warrants in the registration statement of which this prospectus forms a part because the warrants will become exercisable 30 days after the completion of our initial business combination, which may be within one year of this offering. However, because the warrants will be exercisable until their expiration date of up to five years after the completion of our initial business combination, in order to comply with the requirements of Section 10(a)(3) of the Securities Act following the consummation of our initial business combination, 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 post-effective amendment to the registration statement of which this prospectus forms a part or a new registration statement with the SEC and have an effective registration statement covering the shares of Class A common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of our initial business
combination, warrant holders may, until such time as there is an effective registration statement and during any period when we will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, 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 they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, and in the event we do not so elect, we will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
The warrants will expire at 5:00 p.m., New York City time, five years after the completion of our initial business combination or earlier upon redemption or liquidation. On the exercise of any warrant (except on a “cashless basis”), the warrant exercise price will be paid directly to us and not placed in the trust account.
Once the warrants become exercisable, we may redeem the outstanding warrants for cash (except as described herein with respect to the private placement warrants):
•
in whole and not in part;
•
at a price of $0.01 per warrant;
•
upon a minimum of 30 days’ prior written notice of redemption, which we refer to as the 30-day redemption period; and
•
if, and only if, the closing price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like and for certain issuances of Class A common stock and equity-linked securities for capital raising purposes in connection with the closing of our initial business combination as described elsewhere in this prospectus) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders.
We will not redeem the warrants for cash unless an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of Class A common stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. 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.
If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In determining whether to require all holders to exercise their warrants on a “cashless basis,” our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of Class A common stock issuable upon the exercise of our warrants. In such event, each holder would pay the exercise price by surrendering the warrants for 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 warrants, multiplied by the excess of the “fair market value” of our Class A common stock (defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” will mean the average reported closing price of the Class A common stock for the five trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Please see “Description of Securities — Warrants — Public Stockholders’ Warrants” for additional information.
Rights
Number outstanding before this offering
0
Number outstanding after this offering and private placement:
10,000,000
Each holder of a right will automatically receive one-tenth (1/10) of one Class A common stock upon consummation of our initial business combination. If we are unable to complete an initial business combination within the required time period and we liquidate the funds held in the trust account, holders of rights will not receive any of such funds for their rights and the rights will expire worthless. We will not issue fractional shares in connection with an exchange of rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the Delaware General Corporations Law, and any rounding down and extinguishment may be done with or without any in lieu cash payment or other compensation being made to the holder of the relevant rights. As a result, you must hold rights in multiples of 10 in order to receive shares for all of your rights upon closing of a business combination.
On January 21, 2021, our sponsor purchased an aggregate of 2,875,000 founder shares in exchange for a capital contribution of $25,000, or approximately $0.009 per share. Prior to the initial investment in the company of $25,000 by the sponsor, the company had no assets, tangible or intangible. The per share price of the founder shares was determined by dividing the amount of cash contributed to the company by the number of founder shares issued. The number of founder shares outstanding was determined based on the expectation that the total size of this offering would be a maximum of 11,500,000 units if the underwriter’s over-allotment option is exercised in full, and therefore that such founder shares would represent 20% of the outstanding shares after this offering (without giving effect to the private placements and the EBC founder shares). Up to 375,000 of the founder shares will be forfeited by our sponsor depending on the extent to which the underwriter’s over-allotment option is not exercised. If we increase or decrease the size of the offering pursuant to Rule 462(b) under the Securities Act, we will effect a stock dividend or share contribution back to capital or other appropriate mechanism, as applicable, with respect to our Class B common stock immediately prior to the consummation of the offering in such amount as to maintain the ownership of founder shares by our initial stockholders, on an as-converted basis, at 20% of our issued and outstanding common stock upon the consummation of this offering (without giving effect to the private placements and the EBC founder shares).
The founder shares are identical to the shares of Class A common stock included in the units being sold in this offering, except that:
•
the founder shares are subject to certain transfer restrictions, as described in more detail below;
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the founder shares are entitled to registration rights;
•
our initial stockholders, sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to (i) waive their redemption rights with respect to any founder shares and public shares they hold in connection with the completion of our initial business combination, (ii) waive their redemption rights with respect to any founder shares and public shares they hold in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we have not consummated an initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering or with respect to any other material provisions relating to stockholders’
rights or pre-initial business combination activity and (iii) waive their rights to liquidating distributions from the trust account with respect to any founder shares they hold if we fail to complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering or any extended period of time that we may have to consummate an initial business combination as a result of an amendment to our amended and restated certificate of incorporation (although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our initial business combination within the prescribed time frame). If we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination. As a result, in addition to our initial stockholders’ founder shares and EBC founder shares, we would need 475,001, or approximately 4.75%, of the 10,000,000 public shares sold in this offering to be voted in favor of an initial business combination in order to have our initial business combination approved (assuming that only a quorum is present at the meeting and the over-allotment option is not exercised and the EBC founder shares issued to EarlyBirdCapital (and/or its designees) are voted in favor of the initial business combination); and
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the founder shares are automatically convertible into our Class A common stock concurrently with or immediately following the consummation of our initial business combination on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described below adjacent to the caption “Founder shares conversion and anti-dilution rights.”
Transfer restrictions on founder
shares
Our initial stockholders have agreed not to transfer, assign or sell any of their founder shares until the earlier to occur of: (i) 12 months after the completion of our initial business combination and (ii) the date on which we complete a liquidation, merger, capital stock exchange or other similar transaction after our initial business combination that results in all of our stockholders having the right to exchange their Class A common stock for cash, securities or other property; except to certain permitted transferees and under certain circumstances as described herein under “Principal Stockholders — Transfers of Founder Shares and Private placement warrants.” Any permitted transferees will be subject to the same restrictions and other agreements of our initial stockholders with respect to any
founder shares. We refer to such transfer restrictions throughout this prospectus as the lock-up. Notwithstanding the foregoing, if (1) the closing price of our Class A common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination or (2) if we consummate a transaction after our initial business combination which results in our stockholders having the right to exchange their shares for cash, securities or other property, the founder shares will be released from the lockup.
Founder shares conversion and ant-dilution rights
The founder shares will automatically convert into shares of Class A common stock concurrently with or immediately following the consummation of our initial business combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. If additional shares of Class A common stock or equity-linked securities are issued or deemed issued in connection with our initial business combination, the number of shares of Class A common stock issuable upon conversion of all founder shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by public stockholders and without giving effect to the private placements and the EBC founder shares), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the company in connection with or in relation to the consummation of the initial business combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in the initial business combination.
Holders of record of our Class A common stock and holders of record of our Class B common stock will vote together as a single class on all matters submitted to a vote of our stockholders except as required by law and as disclosed herein, with each share of common stock entitling the holder to one vote except as required by law.
Stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Prior to our initial business combination, only holders of our Class B common stock will have the right to vote on the appointment of directors. Holders of our public shares will not be entitled to vote on the appointment of directors during such time.
Private placement warrants and underlying securities
Our sponsor, insiders and EarlyBirdCapital have agreed that they or, in the case of EarlyBirdCapital, their designees, will purchase an aggregate of 4,550,000 warrants (or 5,000,000 warrants if the over-allotment option is exercised in full) at a price of $1.00 per warrant, consisting of 4,050,000 warrants by our sponsor (or 4,450,500 warrants if the over-allotment option is exercised in full) and 500,000 warrants by EarlyBirdCapital (and/or its designees) (or 549,500 warrants if the over-allotment option is exercised in full). The private placement warrants are identical to the warrants sold in this offering. A portion of the purchase price of the private placement warrants will be added to the proceeds from this offering to be held in the trust account such that at the time of closing of this offering $101,000,000 (or $116,150,000 if the underwriter exercises its over-allotment option in full) will be held in the trust account. If we do not complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering, the proceeds from the sale of the private placement warrants held in the trust account will be used to fund the redemption of our public shares (subject to the requirements of applicable law) and the private placement warrants (and the underlying securities) and rights will expire worthless.
Transfer restrictions on private placement warrants and underlying securities
The private placement warrants and the underlying securities will not be transferable, assignable or salable until 30 days after the completion of our initial business combination, except as described herein under “Principal Stockholders — Transfers of Founder Shares and Private Placement Warrants.” Following such period, the private placement warrants and the shares of Class A common stock issuable upon exercise of the private placement warrants will be transferable, assignable or salable, except that the private placement warrants will not trade.
The private placement warrants and the underlying securities held by EarlyBirdCapital (and/or its designees) have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the date of the effectiveness of the registration statement of which this prospectus forms a part pursuant to FINRA Rule 5110(g)(1).
Proceeds to be held in trust account
The rules of Nasdaq provide that at least 90% of the gross proceeds from this offering and the private placements be deposited in a trust account. Of the proceeds we will receive from this offering and the private placements described in this prospectus, $101,000,000, or $116,150,000 if the underwriter’s over-allotment option is exercised in full ($10.10 per unit in either case), will be deposited into a segregated trust account located in the United States with Continental Stock Transfer & Trust Company acting as trustee, after deducting $2,000,000 in underwriting discounts and commissions payable upon the
closing of this offering (or $2,300,000 if the underwriter’s over-allotment option is exercised in full) and an aggregate of $1,550,020 to pay fees and expenses in connection with the closing of this offering and for working capital following the closing of this offering. Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our taxes, the proceeds from this offering and the private placements will not be released from the trust account until the earliest of (i) the completion of our initial business combination, (ii) the redemption of our public shares if we are unable to complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering, subject to applicable law, and (iii) the redemption of our public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we have not consummated an initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders.
Anticipated expenses and funding sources
Unless and until we complete our initial business combination, no proceeds held in the trust account will be available for our use, except the withdrawal of interest to pay our taxes and/or to redeem our public shares in connection with an amendment to our amended and restated certificate of incorporation, as described above. The proceeds held in the trust account will be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. We estimate the interest earned on the trust account will be approximately $101,000 per year, assuming an interest rate of 0.10% per year (assuming no exercise of the underwriter’s over-allotment option); however, we can provide no assurances regarding this amount. Unless and until we complete our initial business combination, we may pay our expenses only from such interest withdrawn from the trust account and:
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the net proceeds of this offering and the private placements not held in the trust account, which initially will be approximately $990,000 in working
capital after the payment of approximately $560,000 in expenses relating to this offering; and
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any loans or additional investments from our sponsor, members of our management team or their affiliates or other third parties, although they are under no obligation to advance funds or invest in us, and provided that any such loans will not have any claim on the proceeds held in the trust account unless such proceeds are released to us upon completion of our initial business combination.
Conditions to completing our initial business combination
Nasdaq rules require that we must complete one or more initial business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account (excluding taxes payable on interest earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. Our board of directors will make the determination as to the fair market value of 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 which is a member of FINRA or a valuation or appraisal firm. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of the target’s assets or prospects. We will complete our initial business combination only if the post-transaction company in which our public stockholders own shares will own or acquire 50% or more of the outstanding voting securities of the target or is otherwise not required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to our initial business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in 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 or shares of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our issued and outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be taken into account for purposes of the 80% of net assets test described above, provided that if the business combination involves more
than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses and we will treat the target businesses together as our initial business combination for purposes of seeking stockholder approval or conducting a tender offer, as applicable.
Permitted purchases of public shares and public warrants by our
affiliates
If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor, initial stockholders, directors, executive officers, advisors or their affiliates may purchase public shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. There is no limit on the number of shares our initial stockholders, directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds held in the trust account will be used to purchase shares or public warrants in such transactions. If they engage in such transactions, they will be restricted from making any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. 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. We expect 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. See “Proposed Business — Permitted Purchases of our Securities” for a description of how our sponsor, initial stockholders, directors, executive officers, advisors or any of their affiliates will select which stockholders to purchase securities from in any private transaction.
The purpose of any such purchases of shares could be to vote such shares in favor of the initial business combination and thereby increase the likelihood of obtaining stockholder approval of the initial business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination. Any such purchases of our securities may result in the completion of our
initial business combination that may not otherwise have been possible. In addition, if such purchases are made, the public “float” of our Class A common stock, rights, 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 listing or trading of our securities on a national securities exchange.
Redemption rights for public stockholders upon completion of our initial business combination
We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, subject to the limitations and on the conditions described herein. The amount in the trust account is initially anticipated to be $10.10 per public share. There will be no redemption rights upon the completion of our initial business combination with respect to our warrants or rights. Our initial stockholders, 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 they hold and any public shares they may acquire during or after this offering in connection with the completion of our initial business combination. In addition, EarlyBirdCapital has agreed to waive their redemption rights with respect to the EBC founder shares they hold.
Manner of conducting redemptions
We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the business combination or (ii) without a stockholder vote 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 share purchases would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding Class A common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. So long as we obtain and maintain a listing for our securities on Nasdaq we will be required to comply with Nasdaq’s stockholder approval rules.
The requirement that we provide our public stockholders with the opportunity to redeem their public shares by one of the two methods listed above will be contained in provisions of our amended and restated certificate of incorporation and will apply whether or not we maintain our registration under the Exchange Act or our listing on Nasdaq. Such provisions may be amended if approved by holders of 50.1% of our common stock entitled to vote thereon.
If we provide our public stockholders with the opportunity to redeem their public shares in connection with a stockholder meeting, we will:
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conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and
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file proxy materials with the SEC.
If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the 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 towards this quorum and, pursuant to the letter agreement, our sponsor, officers and directors have agreed to vote any founder shares they hold and any public shares purchased during or after this offering (including in open market and privately-negotiated transactions) in favor of our initial business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained. As a result, in addition to our initial stockholders’ founder shares and EBC founder shares, we would only need 475,001, or approximately 4.75%, of the 10,000,000 public shares sold in this offering to be voted in favor of an initial business combination in order to have our initial business combination approved (assuming that only a quorum is present at the meeting, the over-allotment option is not exercised and the EBC founder shares issued to EarlyBirdCapital are voted in favor of the initial business combination). These quorum and voting thresholds, and the voting agreements of our initial stockholders and EarlyBirdCapital, 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 they vote for or against the proposed transaction or whether they were a stockholder on the record date for the stockholder meeting held to approve the proposed transaction.
If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will:
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conduct the redemptions pursuant to Rule 13e-4 and
Regulation 14E of the Exchange Act, which regulate issuer tender offers, and
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file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about our initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
If 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 such initial business combination.
Upon the public announcement of our initial business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common stock in the open market, in order to comply with Rule 14e-5 under the Exchange Act.
We intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent or deliver their shares to our transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/ Withdrawal At Custodian) system, prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up to two business days prior to the vote on the proposal to approve the initial business combination. In addition, if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its public shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial owner of such shares is included.
The proxy materials or tender offer documents, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements. We believe that this will allow our transfer agent to efficiently process any redemptions without the need for further communication or action from the redeeming public stockholders, which could delay redemptions and result in additional administrative cost. If the proposed initial business combination is not approved and we continue to search for a target company, we will promptly return any
certificates or shares delivered by public stockholders who elected to redeem their shares.
Our amended and restated certificate of incorporation will provide 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. In addition, our proposed initial business combination may impose a minimum cash requirement for: (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. If 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 initial business combination exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem any shares in connection with such initial business combination, and all shares of Class A common stock submitted for redemption will be returned to the holders thereof. We may, however, raise funds through the issuance of equity-linked securities or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to forward purchase agreements or backstop arrangements we may enter into following consummation of this offering, in order to, among other reasons, satisfy such net tangible assets or minimum cash requirements.
Limitation on redemption rights of stockholders holding 15% or more of the shares in this offering if we hold stockholder vote
Notwithstanding the foregoing redemption rights, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in this offering, without our prior consent. We believe the restriction described above will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to redeem their shares as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in this offering could threaten to exercise its redemption rights against a business combination 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 to no more than
15% of the shares sold in this offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares (including all shares held by those stockholders that hold more than 15% of the shares sold in this offering) for or against our initial business combination.
Release of funds in trust account on closing of our initial business combination
On the completion of our initial business combination, the funds held in the trust account will be used to pay amounts due to any public stockholders who exercise their redemption rights as described above under “Redemption rights for public stockholders upon completion of our initial business combination.” We will use the remaining funds to pay all or a portion of the consideration payable to the target or owners of the target of our initial business combination and to pay other expenses associated with our initial business combination. If our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital.
Redemption of public shares and distribution and liquidation if no initial business combination
Our initial stockholders have entered into agreements with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering or any extended period of time that we may have to consummate an initial business combination as a result of an amendment to our amended and restated certificate of incorporation. However, if our initial stockholders or management team acquire public shares in or after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted 12-month (or up to 18 months as applicable) time frame.
Although we will seek to have all vendors, service providers (other than 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, 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.
EarlyBirdCapital, our initial stockholders, and our sponsor, executive officers, directors and director nominees have agreed that they will not propose any amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their 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 taxes, divided by the number of then outstanding public shares, subject to the limitations described above under “Limitations on redemptions.” For example, our board of directors may propose such an amendment if it determines that additional time is necessary to complete our initial business combination. In such event, we will conduct a proxy solicitation and distribute proxy materials pursuant to Regulation 14A of the Exchange Act seeking stockholder approval of such proposal, and in connection therewith, provide our public stockholders with the redemption rights described above upon stockholder approval of such amendment.
In the event the Company decides to exercise the Extension Option, investors will not have voting rights nor redemption rights in connection with such additional three-month extensions.
Limited payments to insiders
There will be no finder’s fees, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation paid by us to our sponsor, officers or directors, or any affiliate of our sponsor or officers prior to, or in connection with any services rendered in order to effectuate, the consummation of our initial business combination (regardless of the type of transaction that it is). However, the following payments will be made to our sponsor, officers or directors, or our or their affiliates, and, if made prior to our initial business combination will be made from funds held outside the trust account.
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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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Payment to our sponsor of $10,000 per month for office space, secretarial and administrative services provided to members of our management team;
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Payment of customary fees we may elect to make to members of our board of directors for director service;
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Reimbursement for any out-of-pocket expenses related to identifying, investigating, negotiating and completing an initial business combination; and
•
Repayment of loans which may be 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.
We will establish and maintain an audit committee. Among its responsibilities, the audit committee will review on a quarterly basis all payments that were made to our sponsor, officers or directors, or our or their affiliates and monitor compliance with the other terms relating to this offering. If any noncompliance is identified, then the audit committee will be charged with the responsibility to promptly take all action necessary to rectify such noncompliance or otherwise to cause compliance with the terms of this offering. For more information, see the section entitled “Management — Committees of the Board of Directors.”
Our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party 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 similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.10 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 $10.10 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company. Therefore, we believe it is unlikely that our sponsor would be able to satisfy those obligations. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
SUMMARY FINANCIAL DATA
The following table summarizes the relevant financial data for our business as of December 31, 2021, on an actual basis and as adjusted to give effect to the sale of the units in this offering, the sale of the private placement warrants and the other transactions described below as if they occurred on that date. The summary financial data should be read together with our financial statements, which are included in this prospectus. We have not had any significant operations to date, so only balance sheet data is presented.
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December 31, 2021
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Actual
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As Adjusted
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Balance Sheet Data:
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Working capital (deficiency)(1)
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$ |
(612,821) |
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$ |
898,070 |
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Total assets(2)
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$ |
606,059 |
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$ |
101,983,258 |
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Total liabilities(3)
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$ |
612,821 |
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$ |
85,188 |
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Value of Class A common stock subject to possible redemption(4)
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$ |
— |
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$ |
101,000,000 |
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Stockholders’ equity (deficit)(5)
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|
|
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$ |
(6,762) |
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|
|
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$ |
898,070 |
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(1)
The “as adjusted” calculation includes $990,000 of cash held outside the trust account, which includes $300,000 to be used to pay for director and officer liability insurance premiums, less $6,762 of actual stockholders’ deficit, less $85,188 of over-allotment liability at December 31, 2021, and plus proceeds in the amount of $20 for the 200,000 EBC founder shares issued on April 12, 2021 by the Company to EBC and/or its designees.
(2)
The “as adjusted” calculation equals $101,000,000 cash held in trust from the proceeds of this offering and the sale of the private placement warrants, plus $990,000 in cash held outside the trust account, less $6,762 of actual stockholders’ deficit at December 31, 2021, and plus proceeds in the amount of $20 for the 200,000 EBC founder shares issued on April 12, 2021 by the Company to EBC and/or its designees.
(3)
The “as adjusted” calculation equals $85,188 over-allotment liability. The over-allotment liability is for 1,500,000 additional Units that the underwriters can purchase within 45 days from the date of the final prospectus and is calculated based on Black Scholes model.
(4)
The “as adjusted” calculation equals the “as adjusted” total assets, less the “as adjusted” total liabilities, less the “as adjusted” Stockholders’ equity.
(5)
Excludes Class A common stock purchased in the public market which are subject to redemption in connection with our initial business combination. The “as adjusted” calculation equals the “as adjusted” total assets, less the “as adjusted” total liabilities, less the value of the Class A common stock that may be converted in connection with our initial business combination ($10.10 per share).
The “as adjusted” information gives effect to the sale of the units we are offering, including the application of the related gross proceeds and the payment of the estimated remaining costs from such sale and the repayment of the accrued and other liabilities required to be repaid.
The “as adjusted” working capital and total assets amounts include the $101,000,000 to be held in the trust account, which, except for limited situations described in this prospectus, will be available to us only upon the consummation of a business combination within the time period described in this prospectus.
RISKS
We are a blank check company that has conducted no operations and has generated no revenues to date. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see “Proposed Business — Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419.” You should carefully consider these and the other risks set forth in the section entitled “Risk Factors” in this prospectus.
Summary of Risk Factors
An investment in our securities involves a high degree of risk. The occurrence of one or more of the events or circumstances described in the section titled “Risk Factors,” alone or in combination with other events or circumstances may materially adversely affect our business, financial condition and operating results. In that event, the trading price of our securities could decline, and you could lose all or part of your investment. Such risks include, but are not limited to:
•
Our stockholders may not be afforded an opportunity to vote on our proposed initial business combination, and even if we hold a vote, holders of our founder shares will participate in such vote, which means we may complete our initial business combination even though a majority of our public stockholders do not support such a combination.
•
Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.”
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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.
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If we seek stockholder approval of our initial business combination, our initial stockholders, management team have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote.
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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.
•
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 shares.
•
The requirement that we complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, after the closing of this offering may give potential target businesses leverage over us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for our stockholders.
•
Our amended and restated certificate of incorporation will require, to the fullest extent permitted by law, that (i) derivative actions brought on our behalf, (ii) actions asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) actions asserting a claim against us, our directors, officers or employees arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or bylaws or (iv) actions asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine may be brought only in the Court of Chancery in the State of Delaware, which may have the effect of discouraging lawsuits against our directors, officers or other employees.
•
We may not be able to complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, after the closing of this 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.
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If we seek stockholder approval of our initial business combination, our sponsor, initial stockholders, directors, executive officers, advisors and their affiliates may elect to purchase shares, rights, or public warrants from public stockholders, which may influence a vote on a proposed business combination and reduce the public “float” of our Class A common stock.
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If a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
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Unanticipated changes in our effective tax rate or challenges by tax authorities could harm our future results.
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You will not be entitled to protections normally afforded to investors of many other blank check companies.
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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 15% of our Class A common stock, you will lose the ability to redeem all such shares in excess of 15% of our Class A common stock.
•
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 rights and warrants will expire worthless.
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If the net proceeds of this offering not being held in the trust account are insufficient to allow us to operate for at least the 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, the 18 months, following the closing of the offering, it could limit the amount available to fund our search for a target business or businesses and complete our initial business combination, and we will depend on loans from our sponsor or management team to fund our search and to complete our initial business combination.
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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 $10.10 per share.
•
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.
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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.
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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.
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You may only be able to exercise your public warrants on a “cashless basis” under certain circumstances, and if you do so, you will receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for cash.
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 prospectus, before making a decision to invest in our units. 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.
Risks Relating to our Search for, and Consummation of or Inability to Consummate,
a Business Combination
Our stockholders may not be afforded an opportunity to vote on our proposed initial business combination, and even if we hold a vote, holders of our founder shares will participate in such vote, which means we may complete our initial business combination even 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 requirement. Except for 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. Even if we seek stockholder approval, the holders of our founder shares will participate in the vote on such approval. Accordingly, we may complete our initial business combination even if a majority of our public stockholders do not approve of the business combination we complete. Please see the section entitled “Proposed Business — Stockholders May Not Have the Ability to Approve Our Initial Business Combination” for additional information.
In the event the Company decides to extend the period of time to consummate the initial business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, for a maximum total of 18 months, investors will have no voting rights and no redemption rights in connection with such extensions.
Pursuant to the terms of the Amended and Restated Certificate of Incorporation and this Registration Statement/prospectus, the Company will be granted 12 months (or up to 18 months, as applicable) to complete an initial business combination with a target company. In the event the Company is unable to complete its initial business combination within 12 months, the Company will have the ability to extend the period of time to consummate the initial business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, for a maximum total of 18 months. If the Company exercises this Extension Option (as defined herein) (i) the Company shall redeem 100% of 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 the Company to pay its taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, subject to applicable law and certain conditions as further described herein; and (ii) investors will have no voting rights and no redemption rights in connection with the additional three-month extensions.
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.
At the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of our initial business combination. Since our board of directors may complete a business combination without seeking stockholder approval, public stockholders may not have the right or opportunity to vote on the business combination, unless we seek such stockholder vote. Accordingly, your only opportunity to affect the investment decision regarding our initial 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 will own 20% of our outstanding common stock immediately following the completion of this offering. Our initial stockholders and management team also may from time to time purchase Class A common stock prior to our initial business combination. Our amended and restated certificate of incorporation will provide 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. As a result, in addition to our initial stockholders’ founder shares, and EBC founder shares, we would need 475,001, or approximately 4.75%, of the 10,000,000 public shares sold in this offering to be voted in favor of an initial business combination in order to have our initial business combination approved (assuming that only a quorum is present at the meeting, the over-allotment option is not exercised and the EBC founder shares issued to EarlyBirdCapital are voted in favor of the initial business combination). 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 minimum cash requirements for (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. 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. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or make us unable to satisfy a minimum cash 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 initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such requirements, or arrange for third party financing. In addition, if a larger number of shares is submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange for third party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. Furthermore, this dilution would to the extent that the anti-dilution provision of the Class B common stock results in the issuance of shares of Class A common stock on a greater than one-to-one basis upon conversion of the shares of Class B common stock at the time of our initial business combination. The above considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital structure.
The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, the probability that our
initial business combination would be unsuccessful 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 shares in the open market; however, at such time our shares 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 your exercise of redemption rights until we liquidate or you are able to sell your shares in the open market.
The requirement that we complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, after the closing of this offering may give potential target businesses leverage over us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for our stockholders.
Any potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this 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.
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 and the status of debt and equity markets.
The COVID-19 pandemic has resulted in a widespread health crisis that has resulted in numerous deaths, adversely impacted global commercial activity and contributed to significant volatility in equity and debt markets. The business of any potential target business with which we consummate a business combination could be materially and adversely affected by the COVID-19 pandemic.
Many countries and states in the United States have issued orders requiring the closure of, or certain restrictions on the operation of, nonessential businesses and/or requiring residents to stay at home. The COVID-19 pandemic and preventative measures taken to contain or mitigate its spread have caused, and are continuing to cause, business shutdowns or the re-introduction of business shutdowns, cancellations of events and restrictions on travel, significant reductions in demand for certain goods and services, reductions in business activity and financial transactions, supply chain interruptions and overall economic and financial market instability both globally and in the United States. While several countries, as well as certain states in the United States, have relaxed the public health restrictions with a view to partially or fully reopening their economies, recurring COVID-19 outbreaks could lead to the re-introduction of such restrictions. 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.
In addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and other events, including as a result of increased market volatility and decreased market liquidity in third-party financing being unavailable on terms acceptable to us or at all.
Finally, the outbreak of COVID-19 may also have the effect of heightening many of the other risks described in this “Risk Factors” section, such as those related to the market for our securities and cross-border transactions.
We may not be able to complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, after the closing of this 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 12 months, or if we decide to exercise the Extension Option up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, after the closing of this 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. For example, the outbreak of COVID-19 continues to grow both in the U.S. and globally and, while the extent of the impact of the outbreak on us will depend on future developments, it could limit our ability to complete our initial business combination, including as a result of increased market volatility, decreased market liquidity, and third-party financing being unavailable on terms acceptable to us or at all. Additionally, the outbreak of COVID-19 may negatively impact businesses we seek to acquire. 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 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), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case, to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In the event the Company decides to exercise the Extension Option, investors will not have voting rights nor redemption rights in connection with such additional three-month extensions.
If we seek stockholder approval of our initial business combination, our sponsor, initial stockholders, directors, executive officers, advisors and their affiliates may elect to purchase shares, rights, or public warrants from public stockholders, 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 initial business combination pursuant to the tender offer rules, our sponsor, initial stockholders, directors, executive officers, advisors or their affiliates may purchase shares, rights, or public warrants 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. There is no limit on the number of shares our initial stockholders, directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. Additionally, at any time or prior to our initial business combination subject to applicable securities laws (including with respect to material non-public information), our initial stockholders, directors, officers, advisors or their affiliates may enter into transactions with investors and others to provide them with incentives to acquire public shares, vote their public shares in favor of our initial business combination, or not redeem their public shares at all. 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, rights, or public warrants in such transactions. Such purchases may include a contractual acknowledgment that such stockholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights.
If our sponsor, initial stockholders, directors, executive 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 initial business combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination. Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible. We expect 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. See “Proposed Business — Permitted Purchases of our Securities” for a description of how our sponsor, directors, executive 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, rights, or public warrants and the number of beneficial holders of our securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of our securities on a national securities exchange.
If a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We will comply with the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our compliance with these rules, if a stockholder fails to receive our proxy materials or tender offer documents, as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures that must be complied with in order to validly tender or submit public shares for redemption. For example, we intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent, or to deliver their shares to our transfer agent electronically prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up to two business days prior to the vote on the proposal to approve the initial business combination. In addition, if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its public shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial owner of such shares is included. If a stockholder fails to comply with these or any other procedures disclosed in the proxy or tender offer materials, as applicable, its shares may not be redeemed. See the section of this prospectus entitled “Proposed Business — Submitting Stock Certificates in Connection with Redemption Rights.”
The securities in which we invest the proceeds held in the trust account could bear a negative rate of interest, which could reduce the interest income available for payment of taxes or reduce the value of the assets held in trust such that the per-share redemption amount received by stockholders may be less than $10.10 per share.
The proceeds held in the trust account will be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. While short-term U.S. treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States. In the event of very low or negative yields, the amount of interest income (which we may use to pay our taxes, if any) would be reduced. In the event that we are unable to complete our initial business combination, our public stockholders are entitled to receive their pro-rata share
of the proceeds then held in the trust account, plus any interest income (less up to $100,000 of interest to pay dissolution expenses). If the balance of the trust account is reduced below $101,000,000 as a result of negative interest rates, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.10 per share.
An investment in this offering may result in uncertain or adverse United States federal income tax consequences.
An investment in this offering may result in uncertain United States federal income tax consequences. For instance, it is unclear whether the redemption rights with respect to our shares of Class A common stock suspend the running of a United States holder’s holding period for purposes of determining whether any gain or loss realized by such holder on the sale or exchange of shares of Class A common stock is long-term capital gain or loss and for determining whether any dividend we pay would be considered “qualified dividends” for United States federal income tax purposes. Prospective investors are urged to consult their tax advisors with respect to these and other tax consequences when purchasing, holding or disposing of our securities.
Unanticipated changes in our effective tax rate or challenges by tax authorities could harm our future results.
We are subject to income taxes in the United States and may become subject to various non-U.S. jurisdictions as well. Our effective tax rate could be adversely affected by changes in the allocation of our pre-tax earnings and losses among countries with differing statutory tax rates, in certain non-deductible expenses as a result of acquisitions, in the valuation of our deferred tax assets and liabilities, or in federal, state, local or non-U.S. tax laws and accounting principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents. Increases in our effective tax rate would adversely affect our operating results. In addition, we may be subject to income tax audits by various tax jurisdictions throughout the world. The application of tax laws in such jurisdictions may be subject to diverging and sometimes conflicting interpretations by tax authorities in these jurisdictions. Although we believe our income tax liabilities are reasonably estimated and accounted for in accordance with applicable laws and principles, an adverse resolution of one or more uncertain tax positions in any period could have a material impact on the results of operations for that period.
You will not be entitled to protections normally afforded to investors of many other blank check companies.
Since the net proceeds of this offering and the sale of the private placement warrants are intended to be used to complete an initial business combination with a target business that has not been selected, we may be deemed to be a “blank check” company under the United States securities laws. However, because we will have net tangible assets in excess of $5,000,000 upon the completion of this offering and the sale of the private placement warrants and will file a Current Report on Form 8-K, 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. Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means our units will be immediately tradable and we will have a longer period of time to complete our initial business combination than do companies subject to Rule 419. Moreover, if this offering were subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust account to us unless and until the funds in the trust account were released to us in connection with our completion of an initial business combination. For a more detailed comparison of our offering to offerings that comply with Rule 419, please see “Proposed Business — Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419.”
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 15% of our Class A common stock, you will lose the ability to redeem all such shares in excess of 15% of our Class A common stock.
If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more
than an aggregate of 15% of the shares sold in this offering without our prior consent (“Excess Shares”). However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. And as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your shares 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 and rights will expire worthless.
We expect to encounter 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 similar or greater technical, human and other resources to ours 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 this 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 companies 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 and rights will expire worthless.
If the net proceeds of this offering not being held in the trust account are insufficient to allow us to operate for at least the 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, the 18 months, following the closing of the offering, it could limit the amount available to fund our search for a target business or businesses and complete our initial business combination, and we will depend on loans from our sponsor or management team to fund our search and to complete our initial business combination.
Of the net proceeds of this offering, only $990,000 will be available to us initially outside the trust account to fund our working capital requirements. We believe that, upon closing of this offering, the funds available to us outside of the trust account will be sufficient to allow us to operate for at least the 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, the 18 months, following such closing; however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent or merger agreements designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into a letter of intent or merger agreement where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.
If our offering expenses exceed our estimate of $560,000 we may fund such excess with funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, if the offering expenses are less than our estimate of $560,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount. The amount held in the trust account will not be impacted as a result of such increase or decrease. If we are required to seek additional capital, we would need to borrow funds from our sponsor, management team or other third parties to operate or may be forced to liquidate. Neither our sponsor, members of our management team nor any of their affiliates is under any obligation to advance funds to us in such circumstances. Any such advances would be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial business combination. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. Consequently, our public stockholders may only receive an estimated $10.10 per share, or possibly less, on our redemption of our public shares, and our warrants and rights will expire worthless.
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 $10.10 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 (other than 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 consider whether competitive alternatives are reasonably available to us and will only enter into an agreement with such third party if management believes that such third party’s engagement would be in the best interests of the company under the circumstances. The underwriter of this offering as well as our registered independent public accounting firm will not execute agreements with us waiving such claims to the monies held in the trust account.
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 initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the ten years following redemption. Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.10 per public share initially held in the trust account, due to claims of such creditors. Pursuant to the letter agreement the form of which is filed as an exhibit to the registration statement of which this prospectus forms a part, our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party 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) $10.10 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 $10.10 per public share due to reductions in the value of the trust assets, less taxes payable, 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 underwriter of this 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 and we believe that our sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. 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 $10.10 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.
If the proceeds in the trust account are reduced below the lesser of (i) $10.10 per share and 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 $10.10 per public share due to reductions in the value of the trust assets, in each case less taxes payable, 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 $10.10 per share.
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, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages.
If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, by paying public stockholders from the trust account prior to addressing the claims of creditors, thereby exposing itself and us to claims of punitive damages.
If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial business combination. In addition, we may have imposed upon us burdensome requirements, including:
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registration as an investment company with the SEC;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are not subject to.
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, 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. This offering is not intended for persons who are seeking a return on investments in government securities or investment securities. The trust account is intended as a holding place for funds pending the earliest to occur of either: (i) the completion of our initial business combination; (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering; and (iii) absent an initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, our return of the funds held in the trust account to our public stockholders as part of our redemption of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to 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 and rights 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 will be 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 if we do not complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this 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 12th month (or up to 18th month, as applicable) from the closing of this offering If we do not complete our initial 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 ten 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 If we do not complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
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 Nasdaq’s corporate governance requirements, we are not required to hold an annual meeting until no later than one year after our first fiscal year end following our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election is made by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to
the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
The grant of registration rights to our initial stockholders and holders of our private placement warrants 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 shares of Class A common stock.
Pursuant to an agreement to be entered into concurrently with the issuance and sale of the securities in this offering, our initial stockholders, EarlyBirdCapital and their permitted transferees can demand that we register the private placement warrants and the shares of Class A common stock issuable upon conversion of the founder shares and the exercise of the representative warrants and the private placement warrants held, or to be held, by them. 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, EarlyBirdCapital or their respective permitted transferees are registered.
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 and rights will expire worthless.
We are not required to obtain an opinion from an independent investment banking firm or from a valuation or appraisal firm, and consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our stockholders from a financial point of view.
Unless we complete our initial business combination with an affiliated entity or our board of directors cannot independently determine the fair market value of the target business or businesses (including with the assistance of financial advisors), we are not required to obtain an opinion from an independent investment banking firm which is a member of FINRA or from a valuation or appraisal firm that the price we are paying is fair to our stockholders from a financial point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed in our proxy materials or tender offer documents, as applicable, related to our initial business combination.
We may issue additional shares of Class A common stock or shares of 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 founder shares 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.
Our amended and restated certificate of incorporation will authorize the issuance of up to 380,000,000 shares of Class A common stock, par value $0.0001 per share, 20,000,000 shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share. Immediately after this offering, there will be 369,800,000 and 17,500,000 (assuming in each case that the underwriter has not exercised their over-allotment option and the forfeiture of 375,000 shares of Class B common stock) authorized but unissued shares of Class A common stock and Class B common stock, respectively, available for issuance which amount does not take into account shares reserved for issuance upon exercise of outstanding warrants, rights, or shares issuable upon conversion of the Class B common stock. The Class B common stock is automatically convertible into Class A common stock concurrently with or immediately following the consummation of our initial business combination, initially at a one-for-one ratio but subject to adjustment as set forth herein and in our amended and restated certificate of incorporation. Immediately after this offering, there will be no shares of preferred stock issued and outstanding.
We may issue a substantial number of additional shares of Class A common stock or shares of 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 as set forth therein. However, our amended and restated certificate of incorporation will provide, among other things, that prior to our initial business combination, we may not issue additional shares that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote as a class with our public shares (a) on any initial business combination or (b) to approve an amendment to our amended and restated certificate of incorporation to (x) extend the time we have to consummate a business combination beyond 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, beyond 18 months, from the closing of this offering or (y) amend the foregoing provisions. 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. The issuance of additional shares of common stock or shares of preferred stock:
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may significantly dilute the equity interest of investors in this offering;
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may subordinate the rights of holders of Class A common stock if shares of preferred stock are issued with rights senior to those afforded our Class A common stock;
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could cause a change in control if a substantial number of shares of Class A common stock is 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, rights and/or warrants.
Because we are neither limited to evaluating a target business in a particular industry sector nor have we selected 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.
Our efforts to identify a prospective initial business combination target will not be limited to a particular industry, sector or geographic region. While we may pursue an initial business combination opportunity in any industry or sector, we intend to capitalize on the ability of our management team to identify, acquire and operate a business or businesses that can benefit from our management team’s established global relationships and operating experience. Our management team has extensive experience in identifying and executing strategic investments globally and has done so successfully in a number of sectors. Our amended and restated certificate of incorporation will prohibit us from effectuating a business combination with another blank
check company or similar company with nominal operations. Because we have not yet selected or approached any specific target business with respect to a business combination, there is no basis to evaluate the possible merits or risks of any particular target business’s operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete our initial business combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our units 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, right holders, or warrant holders who choose to remain stockholders, right holders, or warrant holders following the business combination could suffer a reduction in the value of their securities. Such stockholders, right holders, or warrant holders 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 materials or tender offer documents, as applicable, relating to the business combination contained an actionable material misstatement or material omission.
Unlike some other similarly structured special purpose acquisition companies, our initial stockholders will receive additional shares of Class A common stock if we issue certain shares to consummate an initial business combination.
The founder shares will automatically convert into shares of Class A common stock concurrently with or immediately following the consummation of our initial business combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. If additional shares of Class A common stock or equity-linked securities are issued or deemed issued in connection with our initial business combination, the number of shares of Class A common stock issuable upon conversion of all founder shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by public stockholders and without giving effect to the private placements and the EBC founder shares), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the company in connection with or in relation to the consummation of the initial business combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in the initial business combination, provided that such conversion of founder shares will never occur on a less than one-for-one basis. This is different than some other similarly structured special purpose acquisition companies in which the initial stockholders will only be issued an aggregate of 20% of the total number of shares to be outstanding prior to our initial business combination.
Our initial stockholders and the holders of the EBC founder shares paid a nominal price for the founder shares and EBC founder shares and, accordingly, you will experience immediate and substantial dilution from the purchase of our shares of common stock.
The difference between the public offering price per share (allocating all of the unit purchase price to the share of Class A common stock and none to the warrant and right included in the unit) and the pro forma net tangible book value per share of our Class A common stock after this offering constitutes the dilution to you and the other investors in this offering. Our initial stockholders and the holders of representatives shares acquired the founder shares and the EBC founder shares, respectively, at a nominal price, significantly contributing to this dilution. Upon closing of this offering, and assuming no value is ascribed to the rights and warrants included in the units, you and the other public stockholders will incur an immediate and substantial dilution of approximately 97.4% or $8.85 per share (assuming no exercise of the underwriter’s over-allotment option), the difference between the pro forma net tangible book value per share after this offering of $0.24 and
the initial offering price of $9.09 per unit. This dilution would increase to the extent that the anti-dilution provisions of the founder shares result in the issuance of shares of Class A common stock on a greater than one- to-one basis upon conversion of the founder shares at the time of our initial business combination and would become exacerbated to the extent that public stockholders seek redemptions from the trust for their public shares. In addition, because of the anti-dilution protection in the founder shares, any equity or equity-linked securities issued in connection with our initial business combination would be disproportionately dilutive to our Class A common stock.
Our warrant agreement designates the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement will provide that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding the foregoing, these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
This choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like and for certain issuances of Class A common stock and equity-linked securities for capital raising purposes in connection with the closing of our initial business combination as described elsewhere in this prospectus) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to date on which we give proper notice of redemption to the warrant holders and provided certain other conditions are met. We will not redeem the warrants unless an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of Class A common stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. 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 to (i) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or 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 (except as described under “Description of Securities — Warrants — Public Stockholders’ Warrants-Redemption of warrants for Class A common stock”) so long as they are held by their initial purchasers or their permitted transferees.
Our rights and warrants may have an adverse effect on the market price of our shares of Class A common stock and make it more difficult to effectuate our initial business combination.
We will be issuing rights to purchase 1,000,000 shares of our Class A common stock (or up to 1,150,000 shares of our Class A common stock if the underwriter’s over-allotment option is exercised in full) as part of the units offered by this prospectus. We will also be issuing warrants to purchase 10,000,000 shares of our Class A common stock (or up to 11,500,000 shares of Class A common stock if the underwriter’s over-allotment option is exercised in full) as part of the units offered by this prospectus and, simultaneously with the closing of this offering, we will be issuing 4,550,000 private placement warrants (or up to 5,000,000 private placement warrants if the underwriter’s over-allotment option is exercised in full), each exercisable to purchase one share of Class A common stock at $11.50 per share. To the extent we issue common stock to effectuate a business transaction, the potential for the issuance of a substantial number of additional shares of Class A common stock upon exercise of these warrants or rights could make us a less attractive acquisition vehicle to a target business. Such warrants or rights, when exercised, will increase the number of issued and outstanding shares of Class A common stock and reduce the value of the Class A common stock issued to complete the business transaction. Therefore, our warrants and rights may make it more difficult to effectuate a business transaction or increase the cost of acquiring the target business.
Because each unit contains one warrant and one right to receive one-tenth of one Class A common stock, and only a whole warrant or share of common stock may be exercised, the units may be worth less than units of other special purpose acquisition companies.
Each unit contains one warrant and one right to receive one-tenth of one Class A common stock. Pursuant to the warrant agreement, no fractional warrants, rights, nor shares will be issued upon separation of the units, and only whole units will trade. If, upon exercise of the rights, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number the number of shares of Class A common stock to be issued to the right holder. This is different from other offerings similar to ours whose units include one common share, one warrant to purchase one whole share, and one right to receive one whole share. We have established the components of the units in this way in order to reduce the dilutive effect of the rights upon completion of a business combination since the rights will be exercisable in the aggregate for one-tenth of the number of shares 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 it included a right to purchase one whole share.
There is currently no market for our securities and a market for our securities may not develop, which would adversely affect the liquidity and price of our securities.
There is currently no market for our securities. Stockholders therefore have no access to information about prior market history on which to base their investment decision. Following this offering, the price of our securities may vary significantly due to one or more potential business combinations and general market or economic conditions, including as a result of the COVID-19 outbreak and other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases). Following this offering, the price of our securities may vary significantly due to one or more potential business combinations and general market or economic conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market can be established and sustained.
As the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there may be more competition for attractive targets. This could increase the cost of our initial business combination and could even result in our inability to find a target or to consummate an initial business combination.
In recent years, the number of special purpose acquisition companies that have been formed has increased substantially. Many potential targets for special purpose acquisition companies have already entered into an initial business combination, and there are still many special purpose acquisition companies seeking targets for their initial business combination, as well as many such companies currently in registration. As a result, and because our pool is limited to companies that conduct principal of their business outside of China (including Hong Kong and Macau), fewer attractive targets may be available, and it may require more time, more effort, and more resources to identify a suitable target and to consummate an initial business combination.
In addition, because there are more special purpose acquisition companies seeking to enter into an initial business combination with available targets, the competition for available targets with attractive fundamentals or business models may increase, which could cause targets companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical tensions, or increases in the cost of additional capital needed to close business combinations or operate targets post-business combination. This could increase the cost of, delay or otherwise complicate or frustrate our ability to find and consummate an initial business combination, and may result in our inability to consummate an initial business combination on terms favorable to our investors altogether.
General Risk Factors
We are a blank check company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a blank check company incorporated under the laws of the State of Delaware that has conducted no operations and has generated no revenues to date. Until we complete our initial business combination, we will have no operations and will generate no operating revenues. 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. We have no plans, arrangements or understandings with any prospective target business concerning a business combination and may be unable to complete our initial business combination. If we fail to complete our initial business combination, we will never generate any operating revenues.
Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability continue as a “going concern.”
As of December 31, 2021, we had zero in cash and a working capital deficit of $612,821. Further, we have incurred and expect to continue to incur significant costs in pursuit of our finance and acquisition plans. Our plans to address this need for capital through this offering are discussed in the section of this prospectus titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We cannot assure you that our plans to raise capital or to consummate an initial business combination will be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements contained elsewhere in this prospectus do not include any adjustments that might result from our inability to consummate this offering or our inability to continue as a going concern.
We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting 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 internal controls attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our 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 accounting standards used.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds $250,000,000 as of the prior June 30th, or (2) our annual revenues exceed $100,000,000 during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700,000,000 as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
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 shares of Class A common stock and could entrench management.
Our amended and restated certificate of incorporation will contain 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 more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
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.
Our amended and restated certificate of incorporation will require, to the fullest extent permitted by law, that (i) derivative actions brought on our behalf, (ii) actions asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) actions asserting a claim against us, our directors, officers or employees arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or bylaws or (iv) actions asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine may be brought only in the Court of Chancery in the State of Delaware, which may have the effect of discouraging lawsuits against our directors, officers or other employees.
Our amended and restated certificate of incorporation will require, unless we consent in writing to the selection of an alternative forum, that (i) any derivative action or proceeding brought on our behalf, (ii) any action
asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee to us or our stockholders, (iii) any action asserting a claim against us, our directors, officers or employees arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or bylaws, or (iv) any action asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine may be brought only in the Court of Chancery in the State of Delaware, except any action (A) as to which the Court of Chancery of the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction, or (D) arising under the Securities Act, as to which the Court of Chancery and the federal district court for the District of Delaware shall concurrently be the sole and exclusive forums. Notwithstanding the foregoing, the provisions of this paragraph will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America have exclusive jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Our amended and restated certificate of incorporation will provide that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder, and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
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.
We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although we have no commitments as of the date of this prospectus to issue any notes or other debt securities, or to otherwise incur outstanding debt following this offering, we may choose to incur substantial debt to complete our initial business combination. We and our officers have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust account. As such, no issuance of debt will affect the per share amount available for redemption from the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
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default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
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our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;
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our inability to pay dividends on our Class A 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 Class A common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
We may only be able to complete one business combination with the proceeds of this offering and the private placements, 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.
Of the net proceeds from this offering and the private placements, $101,000,000 (or $116,150,000 if the underwriter’s over-allotment option is exercised in full) will be available to complete our initial business combination and pay related fees and expenses.
We may effectuate our initial business combination with a single target business or multiple target businesses simultaneously or within a short period of time. However, we may not be able to effectuate our initial business combination with more than one target business because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By completing our initial business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory 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. 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.
This lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of
the other business combinations, which may make it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.
We may seek acquisition opportunities with an early stage company, a financially unstable business or an entity lacking an established record of revenue or earnings.
To the extent we complete our initial business combination with an early stage company, a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include investing in a business without a proven business model and with limited historical financial data, volatile revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We 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.
We may seek business combination opportunities with a high degree of complexity that require significant operational improvements, which could delay or prevent us from achieving our desired results.
We may seek business combination opportunities with large, highly complex companies that we believe would benefit from operational improvements. While we intend to implement such improvements, to the extent that our efforts are delayed or we are unable to achieve the desired improvements, the business combination may not be as successful as we anticipate. To the extent we complete our initial business combination with a large complex business or entity with a complex operating structure, we may also be affected by numerous risks inherent in the operations of the business with which we combine, which could delay or prevent us from implementing our strategy. Although our management team will endeavor to evaluate the risks inherent in a particular target business and its operations, we may not be able to properly ascertain or assess all of the significant risk factors until we complete our business combination. If we are not able to achieve our desired operational improvements, or the improvements take longer to implement than anticipated, we may not achieve the gains that we anticipate. Furthermore, some of these risks and complexities may be outside of our control and leave us with no ability to control or reduce the chances that those risks and complexities will adversely impact a target business. Such combination may not be as successful as a combination with a smaller, less complex organization.
We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete our initial business combination with which a substantial majority of our stockholders, right holders, or warrant holders do not agree.
Our amended and restated certificate of incorporation will 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. In addition, our proposed initial business combination may impose a minimum cash requirement for: (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions.
As a result, we may be able to complete our initial 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 initial business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our sponsor, officers, directors, advisors or any of their affiliates. If 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 in connection with such initial business combination, 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 an initial business combination, special purpose acquisition companies have, in the recent past, amended various provisions of their charters and other governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our initial business combination that our stockholders may not support.
In order to effectuate a business combination, special purpose acquisition companies have, in the recent past, amended various provisions of their charters and governing instruments, including their warrant agreements. For example, special purpose acquisition companies have amended the definition of business combination, increased redemption thresholds and extended the time to consummate an initial business combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. Amending our amended and restated certificate of incorporation will require the approval of holders of at least 50.1% of our common stock, and amending our warrant agreement will require a vote of holders of at least 50.1% of the public warrants and, solely with respect to any amendment to the terms of the private placement warrants or any provision of the warrant agreement with respect to the private placement warrants, 50.1% of the number of the then outstanding private placement warrants. In addition, our amended and restated certificate of incorporation will require us to provide our public stockholders with the opportunity to redeem their public shares for cash if we propose an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete an initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, of the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity. To the extent any of such amendments would be deemed to fundamentally change the nature of the securities offered through this registration statement, we would register, or seek an exemption from registration for, the affected securities. We cannot assure you that we will not seek to amend our charter or governing instruments or extend the time to consummate an initial business combination in order to effectuate our initial business combination.
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 our trust account) may be amended with the approval of holders of 50.1% of our common stock, which is a lower amendment threshold than that of some other special purpose acquisition companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation to facilitate the completion of an initial business combination that some of our stockholders may not support.
Our amended and restated certificate of incorporation will provide that any of its provisions related to pre- business combination activity (including the requirement to deposit proceeds of this offering and the private placement of units, rights, and warrants into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of 50.1% 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 50.1% 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 will collectively beneficially own 20% of our common stock upon the closing of this offering (assuming they do not purchase any units in this offering), may participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation which govern our pre-business combination behavior more easily than some other special purpose acquisition 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.
EarlyBirdCapital, our initial stockholders, and our sponsor, executive officers, directors and director nominees have agreed, pursuant to written agreements with us, that they will not propose any amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their 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 taxes, divided by the number of then outstanding public shares. In the event the Company decides to exercise the Extension Option, investors will not have voting rights nor redemption rights in connection with such additional three-month extensions. 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, executive officers, directors or director nominees for any breach of these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action, subject to applicable law.
Certain agreements related to this offering may be amended without stockholder approval.
Each of the agreements related to this offering to which we are a party, other than the warrant agreement and the investment management trust agreement, may be amended without stockholder approval. Such agreements are: the underwriting agreement; the letter agreement among us and our initial stockholders, sponsor, officers and directors; the registration rights agreement among us, our initial stockholders and EarlyBirdCapital; the private placement warrant purchase agreements between us, our sponsor and EarlyBirdCapital; and the administrative services agreement among us, our sponsor and an affiliate of our sponsor. These agreements contain various provisions that our public stockholders might deem to be material. For example, our letter agreement, the private placement warrants purchase agreement and the underwriting agreement contain certain lock-up provisions with respect to the founder shares, private placement warrants and other securities held by EarlyBirdCapital, our initial stockholders, sponsor, officers and directors. Amendments to such agreements would require the consent of the applicable parties thereto and would need to be approved by our board of directors, which may do so for a variety of reasons, including to facilitate our initial business combination. While we do not expect our board of directors to approve any amendment to any of these agreements prior to our initial business combination, it may be possible that our board of directors, in exercising its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments to any such agreement. Any amendment entered into in connection with the consummation of our initial business combination will be disclosed in our proxy materials or tender offer documents, as applicable, related to such initial business combination, and any other material amendment to any of our material agreements will be disclosed in a filing with the SEC. Any such amendments would not require approval from our stockholders, may result in the completion of our initial business combination that may not otherwise have been possible, and may have an adverse effect on the value of an investment in our securities. For example, amendments to the lock-up provision discussed above may result in our initial stockholders and EarlyBirdCapital selling their securities earlier than they would otherwise be permitted, which may have an adverse effect on the price of our securities.
We may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination.
We have not selected any specific business combination target but intend to target businesses with enterprise values that are greater than we could acquire with the net proceeds of this offering and the private placements.
As a result, if the cash portion of the purchase price exceeds the amount available from the trust account, net of amounts needed to satisfy any redemption by public stockholders, we may be required to seek additional financing to complete such proposed initial 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. Further, we may be required to obtain additional financing in connection with the closing of our initial business combination for general corporate purposes, including for maintenance or expansion of operations of the post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, or to fund the purchase of other companies. 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 and rights will expire worthless. In addition, even if we do not need additional financing to complete our initial business combination, we may require such financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or stockholders is required to provide any financing to us in connection with or after our initial business combination.
Our initial stockholders control a substantial interest in us and thus may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
Upon closing of this offering, our initial stockholders will own 20% of our issued and outstanding common stock (assuming they do not purchase any units in this offering). Accordingly, they 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. If our initial stockholders purchase any units in this offering or if our initial stockholders purchase any additional Class A common stock in the aftermarket or in privately negotiated transactions, this would increase their control. Neither our initial stockholders nor, to our knowledge, any of our officers or directors, have any current intention to purchase additional securities, other than as disclosed in this prospectus. Factors that would be considered in making such additional purchases would include consideration of the current trading price of our Class A common stock. In addition, our board of directors, whose members were elected by our sponsor, is and will be divided into three classes, each of which will generally serve for a term of three years (except for those directors appointed prior to our first annual meeting of stockholders) 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 initial 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. In addition, prior to the completion of an initial business combination, holders of a majority of our founder shares may remove a member of the board of directors for any reason. Accordingly, our initial stockholders will continue to exert control at least until the completion of our initial business combination.
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 the proxy statement with respect to the vote on an initial business combination include historical and pro forma financial statement disclosure. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America (“GAAP”), or international financial reporting standards as issued by the International Accounting Standards Board (“IFRS”), depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“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 statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.
Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources, and increase the time and costs of completing an initial business combination.
Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending December 31, 2022. Only if we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. Further, for as long as we remain an emerging growth company, we will not be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target business with which we seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination.
Risk Relating to the Post-Business Combination Company
Subsequent to our completion of our initial business combination, we may be required to take write- downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and the price of our securities, which could cause you to lose some or all of your investment.
Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will identify all material issues that may be present with a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. 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 debt financing to partially finance the initial business combination or thereafter. Accordingly, any stockholders, right holders, or warrant holders who choose to remain stockholders, right holders, or warrant holders following the business combination could suffer a reduction in the value of their securities. Such stockholders, right holders, or warrant holders 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 materials or tender offer documents, as applicable, relating to the business combination contained an actionable material misstatement or material omission.
Our ability to successfully effect our initial business combination and to be successful thereafter will be dependent upon the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
Our ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management or advisory positions following our initial business combination, 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.
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 initial 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 initial business combination only if they are able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination. Such negotiations also could make such key personnel’s retention or resignation a condition to any such agreement. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business, subject to their fiduciary duties under Delaware law.
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.
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, right holders, or warrant holders who choose to remain stockholders, right holders, or warrant holders following the business combination could suffer a reduction in the value of their securities. Such stockholders, right holders, or warrant holders 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.
Risks Relating to our Management Team
We may not have sufficient funds to satisfy indemnification claims of our directors and executive 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 and to not seek recourse against the trust account for any reason whatsoever. 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.
Past performance by our management team and their affiliates may not be indicative of future performance of an investment in us.
Information regarding performance by, or businesses associated with, our management team or businesses associated with them is presented for informational purposes only. Past performance by 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 the performance of our management team’s or businesses associated with them as indicative of our future performance of an investment in us or the returns we will, or is likely to, generate going forward.
We may seek business combination opportunities in industries or sectors that may be outside of our management’s areas of expertise.
We will consider a business combination outside of our management’s areas of expertise if a business combination candidate is presented to us and we determine that such candidate offers an attractive business combination opportunity for our company. 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 units will not ultimately prove to be less favorable to investors in this offering than a direct investment, if an opportunity were available, in a business combination candidate. If we elect to pursue a business combination outside of the areas of our management’s expertise, our management’s expertise may not be directly applicable to its evaluation or operation, and the information contained in this prospectus regarding the areas of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire. As a result, our management may not be able to ascertain or assess adequately all of the relevant risk factors. Accordingly, any stockholders who choose to remain stockholders following our initial 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.
We are dependent upon our executive 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 executive 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 executive 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 executive officers. The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental effect on us.
Our executive officers and directors will 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 executive officers and directors are not required to, and 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 their other businesses. We do not intend to have any full-time employees prior to the completion of our initial business combination. Each of our executive officers is engaged in several other business endeavors for which he may be entitled to substantial compensation, and our executive officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors also serve as officers and board members for other entities. If our executive 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. For a complete discussion of our executive officers’ and directors’ other business affairs, please see “Management — Officers, Directors and Director Nominees.”
Our officers and directors presently have, and any of them in the future may have additional, fiduciary or contractual obligations to other entities and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
Following the completion of this offering and until we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses. Each of our officers and directors presently has, and any of them in the future may have, additional fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. 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 will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation. In addition, our sponsor and our officers and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue other business or investment ventures during the period in which we are seeking an initial business combination. Any such companies, businesses or ventures may present additional conflicts of interest in pursuing an initial business combination. However, we do not believe that any such potential conflicts would materially affect our ability to complete our initial business combination.
For a complete discussion of our executive officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware of, please see “Management — Officers, Directors and Director Nominees,” “Management — Conflicts of Interest” and “Certain Relationships and Related Party Transactions.”
Our executive 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, executive 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 executive officers, although we do not intend to do so. Nor do we 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.
The personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and completing a business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in our stockholders’ best interest. If this were the case, it would be a breach of their fiduciary duties to us as a matter of Delaware law and we or our stockholders might have a claim against such individuals for infringing on our stockholders’ rights. However, we might not ultimately be successful in any claim we may make against them for such reason.
Changes in the market for directors’ and officers’ liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination.
In recent months, the market for directors’ and officers’ liability insurance for special purpose acquisition companies has changed. Fewer insurance companies are offering quotes for directors and officers liability coverage, the premiums charged for such policies have generally increased and the terms of such policies have generally become less favorable. There can be no assurance that these trends will not continue.
The increased cost and decreased availability of directors’ and officers’ liability insurance could make it more difficult and more expensive for us to negotiate an initial business combination. In order to obtain directors and officers liability insurance or modify its coverage as a result of becoming a public company, the post-business combination entity might need to incur greater expense, accept less favorable terms or both. However, any failure to obtain adequate directors and officers liability insurance could have an adverse impact on the post-business combination’s ability to attract and retain qualified officers and directors.
In addition, even after we were to complete an initial business combination, our directors and officers could still be subject to potential liability from claims arising from conduct alleged to have occurred prior to the initial business combination. As a result, in order to protect our directors and officers, the post-business combination entity may need to purchase additional insurance with respect to any such claims (“run-off insurance”). The need for run-off insurance would be an added expense for the post-business combination entity, and could interfere with or frustrate our ability to consummate an initial business combination on terms favorable to our investors.
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, executive officers, directors or existing holders which may raise potential conflicts of interest.
In light of the involvement of our sponsor, executive officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our sponsor, executive officers, directors or existing holders. Our directors also serve as officers and board members for other entities, including, without limitation, those described under “Management — Conflicts of Interest.” Such entities may compete with us for business combination opportunities. Our sponsor, officers and directors are not currently aware of any specific opportunities for us to complete our initial business combination with any entities with which they are affiliated, and there have been no substantive discussions concerning a business combination with any such entity or entities. 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 as set forth in “Proposed Business — Business Combination Criteria” and such transaction was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm regarding the fairness to our company from a financial point of view of a business combination with one or more domestic or international businesses affiliated with our sponsor, executive officers, directors or existing holders, potential conflicts of interest still may exist and, as a result, the terms of the business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Since our sponsor, executive officers and directors will lose their entire investment in us if our initial business combination is not completed (other than with respect to public shares they may acquire during or after this offering), a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination.
On January 21, 2021 our sponsor purchased an aggregate of 2,875,000 founder shares in exchange for a capital contribution of $25,000, or approximately $0.009 per share. Prior to the initial investment in the company of $25,000 by the sponsor, the company had no assets, tangible or intangible. The purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the number of founder shares issued.
The number of founder shares outstanding was determined based on the expectation that the total size of this offering would be a maximum of 11,500,000 units if the underwriter’s over-allotment option is exercised in full, and therefore that such founder shares would represent 20% of the outstanding shares after this offering (without giving effect to the private placements and the EBC founder shares). Up to 375,000 of the founder shares will be forfeited by our sponsor depending on the extent to which the underwriter’s over-allotment is exercised. The founder shares will be worthless if we do not complete an initial business combination. In addition, our sponsor and EarlyBirdCapital have committed to purchase an aggregate of 4,550,000 private placement warrants (or 5,000,000 warrants if the over-allotment option is exercised in full), at a price of $1.00 per private placement warrant for an aggregate purchase price of $4,550,000 (or $5,000,000 if the underwriter’s
over-allotment option is exercised in full). The personal and financial interests of our executive officers and directors may influence their motivation in identifying and selecting a target business combination, completing an initial business combination and influencing the operation of the business following the initial business combination. This risk may become more acute as the 12-month anniversary (or 18-month anniversary, as applicable) of the closing of this offering nears, which is the deadline for our completion of an initial business combination.
Our management may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure our initial business combination so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities of the target, our stockholders prior to 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. For example, we could pursue a transaction in which we issue a substantial number of new shares of Class A common stock in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of Class A common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding Class A 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 shares 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.
Risks Relating to our Securities
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, rights, or warrants, potentially at a loss.
Our public stockholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) our completion of an initial business combination, and then only in connection with those shares of Class A common stock that such stockholder properly elected to redeem, subject to the limitations described herein, (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, and (iii) the redemption of our public shares if we are unable to complete an initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering, subject to applicable law and as further described herein. In addition, if our plan to redeem our public shares if we are unable to complete an initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering is not completed for any reason, compliance with Delaware law may require that we submit a plan of dissolution to our then-existing stockholders for approval prior to the distribution of the proceeds held in our trust account. In that case, public stockholders may be forced to wait beyond 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, beyond
18 months, from the closing of this offering before they receive funds from our trust account. In no other circumstances will a public stockholder have any right or interest of any kind in the trust account. In the event the Company decides to exercise the Extension Option, investors will not have voting rights nor redemption rights in connection with such additional three-month extensions. Holders of warrants and rights will not have any right to the proceeds held in the trust account with respect to the warrants or rights. Accordingly, to liquidate your investment, you may be forced to sell your public shares, rights, or warrants, potentially at a loss.
EarlyBirdCapital may have a conflict of interest in connection with our initial business combination.
We have engaged EarlyBirdCapital to assist us in connection with our initial business combination. We will pay EarlyBirdCapital a cash fee for such services in an aggregate amount equal to up to 3.5% of the total gross proceeds raised in the offering only if we consummate our initial business combination. The private placement warrants purchased by EarlyBirdCapital and/or its designees and the EBC founder shares issued to EarlyBirdCapital and/or its designees will also be worthless if we do not consummate an initial business combination. These financial interests may result in EarlyBirdCapital having a conflict of interest when providing the services to us in connection with an initial business combination.
Once initially listed, Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
We expect that our units will be listed on Nasdaq on or promptly after the date of this prospectus and our Class A common stock, rights, and warrants on or promptly after their date of separation. We cannot guarantee that our securities will be approved for listing on Nasdaq. Although after giving effect to this offering we expect to meet, on a pro forma basis, the minimum initial listing standards set forth in Nasdaq’s listing standards, we cannot assure you that our securities will be, or will continue to be, listed on Nasdaq in the future or prior to our initial business combination. In order to continue listing our securities on Nasdaq prior to our initial business combination, we must maintain certain financial, distribution and share price levels. Generally, we must maintain a minimum amount in stockholders’ equity (generally, $2,500,000) and a minimum number of holders of our securities (generally 300 public holders). Additionally, in connection with our initial business combination, we will be required to demonstrate compliance with Nasdaq’s initial listing requirements, which are more rigorous than Nasdaq’s continued listing requirements, in order to continue to maintain the listing of our securities on Nasdaq. For instance, our share price would generally be required to be at least $4.00 per share, our stockholders’ equity would generally be required to be at least $5,000,000 and we would be required to have a minimum of 300 round lot holders of our securities (with at least 50% of such round lot holders holding securities with a market value of at least $2,500). We cannot assure you that we will be able to meet those initial listing requirements at that time.
If Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
•
a limited availability of market quotations for our securities;
•
reduced liquidity for our securities;
•
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;
•
a limited amount of news and analyst coverage; and
•
a decreased ability to issue additional securities or obtain additional financing in the future.
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 we expect that our units and eventually our Class A common stock, rights, and warrants will be listed on Nasdaq, our units, Class A common stock, rights, and warrants will qualify as covered securities under the statute. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent
activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not qualify as covered securities under the statute and we would be subject to regulation in each state in which we offer our securities.
Holders of our Class A common stock will not be entitled to vote on any appointment of directors prior to our initial business combination.
Prior to our initial business combination, only holders of our Class B common stock will have the right to vote on the appointment of directors. Holders of our public shares will not be entitled to vote on the appointment of directors during such time. In addition, prior to the completion of an initial business combination, holders of a majority of our founder shares may remove a member of the board of directors for any reason. Accordingly, you may not have any say in the management of our company prior to the completion of an initial business combination.
You will not be permitted to exercise your warrants or rights unless we register and qualify the underlying Class A common stock or certain exemptions are available.
If the issuance of the Class A common stock upon exercise of the warrants or rights is not registered, qualified or exempt from registration or qualification under the Securities Act and applicable state securities laws, holders of warrants or rights will not be entitled to exercise such warrants or rights and such warrants or rights may have no value and expire worthless. In such event, holders who acquired their warrants or rights as part of a purchase of units will have paid the full unit purchase price solely for the Class A common stock included in the units.
We are registering the shares of Class A common stock issuable upon exercise of the warrants and rights in the registration statement of which this prospectus forms a part because the warrants and rights will become exercisable 30 days after the completion of our initial business combination, which may be within one year of this offering. However, because the warrants and rights will be exercisable until their expiration date of up to five years after the completion of our initial business combination, in order to comply with the requirements of Section 10(a)(3) of the Securities Act following the consummation of our initial business combination, under the terms of the warrant agreement (as applicable), 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 with the SEC a post-effective amendment to the registration statement of which this prospectus forms a part or a new registration statement covering the registration under the Securities Act of the Class A common stock issuable upon exercise of the warrants or rights and thereafter will use our best efforts to cause the same to become effective within 60 business days following our initial business combination and to maintain a current prospectus relating to the Class A common stock issuable upon exercise of the warrants or rights until the expiration of the rights or the warrants in accordance with the provisions of the warrant agreement and the terms of this Offering. 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 of Class A common stock issuable upon exercise of the warrants and rights are not registered under the Securities Act, under the terms of the warrant agreement or this Offering, holders of warrants and rights who seek to exercise their warrants or rights will not be permitted to do so for cash and, instead, will be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption.
In no event will warrants or rights 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 or rights, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration or qualification is available.
If our shares of Class A common stock are at the time of any exercise of a warrant or right not listed on a national securities exchange such that they satisfy the definition of “covered securities” under Section 18(b)(1) of the Securities Act, we may, at our option, not permit holders of warrants or rights who seek to exercise their warrants or rights to do so for cash and, instead, require them to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act; in the event we so elect, we will not be required to file or maintain in effect a registration statement or register or qualify the shares underlying the warrants or rights under applicable state securities laws, and in the event we do not so elect, we will use our best efforts to register or qualify the shares underlying the warrants or rights under applicable state securities laws to the extent an exemption is not available.
In no event will we be required to net cash settle any warrant or rights, or issue securities (other than upon a cashless exercise as described above) or other compensation in exchange for the warrants or rights in the event that we are unable to register or qualify the shares underlying the warrants or rights under the Securities Act or applicable state securities laws.
You may only be able to exercise your warrants on a “cashless basis” under certain circumstances, and if you do so, you will receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for cash.
The warrant agreement provides that in the following circumstances holders of warrants who seek to exercise their warrants will not be permitted to do for cash and will, instead, be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act: (i) if the shares of Class A common stock issuable upon exercise of the warrants are not registered under the Securities Act in accordance with the terms of the warrant agreement; (ii) if we have so elected and the shares of Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of “covered securities” under Section 18(b)(1) of the Securities Act; and (iii) if we have so elected and we call the public warrants for redemption. If you exercise your public warrants on a cashless basis, you would pay the warrant exercise price by surrendering the warrants for 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 warrants, multiplied by the excess of the “fair market value” of our shares of Class A common stock (as defined in the next sentence) over the exercise price of the warrants by (y) the fair market value. The “fair market value” is the average reported closing price of the shares of Class A common stock for the five trading days ending on the third trading day prior to the date on which the notice of exercise is received by the warrant agent or on which the notice of redemption is sent to the holders of warrants, as applicable. As a result, you would receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for cash.
The registration rights will be exercisable with respect to the founder shares and the private placement warrants and the Class A common stock issuable upon exercise of such private placement 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 shares of common stock owned by our initial stockholders, holders of our private placement warrants or holders of our working capital loans or their respective permitted transferees are registered.
The grant of registration rights to our initial stockholders and holders of our private placement warrants 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 shares of Class A common stock.
Pursuant to an agreement to be entered into concurrently with the issuance and sale of the securities in this 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 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 such warrants or the Class A common stock issuable upon conversion of such warrants.
We may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 50% of the then outstanding public warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and the number of shares of Class A common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants will be 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 public warrants to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 50% of the then outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least 50% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash or stock (at a ratio different than initially provided), shorten the exercise period or decrease the number of shares of Class A common stock purchasable upon exercise of a warrant.
The determination of the offering price of our units, the size of this offering and terms of the units is more arbitrary than the pricing of securities and size of an offering of an operating company in a particular industry. You may have less assurance, therefore, that the offering price of our units properly reflects the value of such units than you would have in a typical offering of an operating company.
Prior to this offering there has been no public market for any of our securities. The public offering price of the units and the terms of the warrants and rights were negotiated between us and the underwriter. In determining the size of this offering, management held customary organizational meetings with representatives of the underwriter, both prior to our inception and thereafter, with respect to the state of capital markets, generally, and the amount the underwriter believed it reasonably could raise on our behalf. Factors considered in determining the size of this offering, prices and terms of the units, including the Class A common stock, rights, and warrants underlying the units, include:
•
the history and prospects of companies whose principal business is the acquisition of other companies;
•
prior offerings of those companies;
•
our prospects for acquiring an operating business at attractive values;
•
a review of debt to equity ratios in leveraged transactions;
•
our capital structure;
•
an assessment of our management and their experience in identifying operating companies;
•
general conditions of the securities markets at the time of this offering; and
•
other factors as were deemed relevant.
Although these factors were considered, the determination of our offering size, price and terms of the units is more arbitrary than the pricing of securities of an operating company in a particular industry since we have no historical operations or financial results.
If we effect our initial business combination with a company located outside of the United States, we would be subject to a variety of additional risks that may adversely affect us.
If we pursue a target company with operations or opportunities outside of the United States for our initial business combination, we may face additional burdens in connection with investigating, agreeing to and completing such initial business combination, and if we effect such initial business combination, we would be subject to a variety of additional risks that may negatively impact our operations.
If we pursue a target a company with operations or opportunities outside of the United States (although we will not effect our initial business combination with any entity with its principal business operations in China,
including Hong Kong and Macau) for our initial business combination, we would be subject to risks associated with cross-border business combinations, including in connection with investigating, agreeing to and completing our initial business combination, conducting due diligence in a foreign jurisdiction, having such transaction approved by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If we effect our initial business combination with such a company, we would be subject to any special considerations or risks associated with companies operating in an international setting, including any of the following:
•
costs and difficulties inherent in managing cross-border business operations;
•
rules and regulations regarding currency redemption;
•
complex corporate withholding taxes on individuals;
•
laws governing the manner in which future business combinations may be effected;
•
exchange listing and/or delisting requirements;
•
tariffs and trade barriers;
•
regulations related to customs and import/export matters;
•
local or regional economic policies and market conditions;
•
unexpected changes in regulatory requirements;
•
challenges in managing and staffing international operations;
•
longer payment cycles;
•
tax issues, such as tax law changes and variations in tax laws as compared to the United States;
•
currency fluctuations and exchange controls;
•
rates of inflation;
•
challenges in collecting accounts receivable;
•
cultural and language differences;
•
employment regulations;
•
underdeveloped or unpredictable legal or regulatory systems;
•
corruption;
•
protection of intellectual property;
•
social unrest, crime, strikes, riots and civil disturbances;
•
regime changes and political upheaval;
•
terrorist attacks and wars; and
•
deterioration of political relations with the United States.
We may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such initial business combination, or, if we complete such initial business combination, our operations might suffer, either of which may adversely impact our business, financial condition and results of operations.
If we effect a business combination with a company located outside of the United States, the laws applicable to such company will likely govern all of our material agreements and we may not be able to enforce our legal rights.
If we effect a business combination with a company located outside of the United States (although we will not effect our initial business combination with any entity with its principal business operations in China, including Hong Kong and Macau), the laws of the country in which such company operates will govern almost all of the material agreements relating to its operations. We cannot assure you that the target business will be able to
enforce any of its material agreements or that remedies will be available in this new jurisdiction. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital. Additionally, if we acquire a company located outside of the United States, it is likely that substantially all of our assets would be located outside of the United States and some of our officers and directors might reside outside of the United States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under Federal securities laws.
Many industries in Asia are subject to government regulations that limit or prohibit foreign investments in such industries, which may limit the potential number of acquisition candidates.
Governments in many Asian countries have imposed regulations that limit foreign investors’ equity ownership or prohibit foreign investments altogether in companies that operate in certain industries. As a result, the number of potential acquisition candidates available to us (excluding China) may be limited or our ability to grow and sustain the business, which we ultimately acquire will be limited.
If a country in Asia (excluding China) enacts regulations in industry segments that forbid or restrict foreign investment, our ability to consummate our initial business combination could be severely impaired.
Many of the rules and regulations that companies face concerning foreign ownership are not explicitly communicated. If new laws or regulations forbid or limit foreign investment in industries in which we want to complete our initial business combination, they could severely impair our candidate pool of potential target businesses. Additionally, if the relevant central and local authorities find us or the target business with which we ultimately complete our initial business combination to be in violation of any existing or future laws or regulations, they would have broad discretion in dealing with such a violation, including, without limitation:
•
levying fines;
•
revoking our business and other licenses;
•
requiring that we restructure our ownership or operations; and
•
requiring that we discontinue any portion or all of our business.
Any of the above could have an adverse effect on our company post-business combination and could materially reduce the value of your investment.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward- looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this prospectus may include, for example, statements about:
•
our ability to select an appropriate target business or businesses;
•
our ability to complete our initial business combination, including with respect to the impact of the COVID-19 pandemic;
•
our expectations around the performance of the prospective target business or businesses;
•
our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;
•
our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination;
•
our potential ability to obtain additional financing to complete our initial business combination;
•
our pool of prospective target businesses;
•
the ability of our officers and directors to generate a number of potential business combination opportunities;
•
our public securities’ potential liquidity and trading;
•
the lack of a market for our securities;
•
the use of proceeds not held in the trust account or available to us from interest income on the trust account balance;
•
the trust account not being subject to claims of third parties; or
•
our financial performance following this offering.
The forward-looking statements contained in this prospectus are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward- looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
USE OF PROCEEDS
We are offering 10,000,000 units at an offering price of $10.00 per unit. We estimate that the net proceeds of this offering together with the funds we will receive from the sale of the private placement warrants will be used as set forth in the following table.
| |
|
|
Without
Over-allotment
Option
|
|
|
Over-allotment
Option
Exercised
|
|
|
Gross proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross proceeds from units offered to public(1)
|
|
|
|
$ |
100,000,000 |
|
|
|
|
$ |
115,000,000 |
|
|
|
Gross proceeds from private placement warrants offered in the private placement to the sponsor
|
|
|
|
$
|
4,550,000
|
|
|
|
|
$ |
5,000,000 |
|
|
|
Total gross proceeds
|
|
|
|
$ |
104,550,000 |
|
|
|
|
$ |
120,000,000 |
|
|
|
Estimated offering expenses(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting commissions (2.0% of gross proceeds from units offered to
public)
|
|
|
|
$ |
2,000,000 |
|
|
|
|
$ |
2,300,000 |
|
|
|
Legal fees and expenses
|
|
|
|
|
300,000 |
|
|
|
|
|
300,000 |
|
|
|
Printing and engraving expenses
|
|
|
|
|
25,000 |
|
|
|
|
|
25,000 |
|
|
|
Accounting fees and expenses
|
|
|
|
|
40,000 |
|
|
|
|
|
40,000 |
|
|
|
SEC/FINRA Expenses
|
|
|
|
|
60,093 |
|
|
|
|
|
60,093 |
|
|
|
Miscellaneous
|
|
|
|
|
134,907 |
|
|
|
|
|
134,907 |
|
|
|
Total offering expenses (other than underwriting commissions)
|
|
|
|
$ |
560,000 |
|
|
|
|
$ |
560,000 |
|
|
|
Proceeds after estimated offering expenses
|
|
|
|
$ |
101,990,000 |
|
|
|
|
$ |
117,140,000 |
|
|
|
Held in trust account
|
|
|
|
$ |
101,000,000 |
|
|
|
|
$ |
116,150,000 |
|
|
|
% of public offering size
|
|
|
|
|
101% |
|
|
|
|
|
101% |
|
|
|
Not held in trust account
|
|
|
|
$ |
990,000 |
|
|
|
|
$ |
990,000 |
|
|
The following table shows the use of the approximately $990,000 of net proceeds not held in the trust account(3):
| |
|
|
Amount
|
|
|
% of Total
|
|
|
Legal, accounting, due diligence, travel, and other expenses in connection with any business combination(4)
|
|
|
|
$ |
250,000 |
|
|
|
|
|
25.3% |
|
|
|
Legal and accounting fees related to regulatory reporting obligations
|
|
|
|
|
75,000 |
|
|
|
|
|
7.6% |
|
|
|
Nasdaq and other regulatory fees
|
|
|
|
|
75,000 |
|
|
|
|
|
7.6% |
|
|
|
Payment for office space, secretarial and administrative services
|
|
|
|
|
120,000 |
|
|
|
|
|
12.1% |
|
|
|
Directors and Officers insurance premiums
|
|
|
|
|
300,000 |
|
|
|
|
|
30.3% |
|
|
|
Consulting, travel and miscellaneous expenses incurred during search for initial business combination target
|
|
|
|
|
45,000 |
|
|
|
|
|
4.5% |
|
|
|
Working capital to cover miscellaneous expenses(5)
|
|
|
|
|
125,000 |
|
|
|
|
|
12.6% |
|
|
|
Total
|
|
|
|
$ |
990,000 |
|
|
|
|
|
100.0% |
|
|
(1)
Includes amounts payable to public stockholders who properly redeem their shares in connection with our successful completion of our initial business combination.
(2)
A portion of the offering expenses have been paid from the proceeds of loans from our sponsor of up to $300,000 as described in this prospectus. As of December 31, 2021, we have not drawn on the promissory note with our sponsor. These loans will be repaid upon completion of this offering out of the $560,000 of offering proceeds that has been allocated for the payment of offering expenses other than underwriting commissions. If the offering expenses are less than set forth in this table, any such amounts will be used for post-closing working capital expenses.
(3)
These expenses are estimates only. Our actual expenditures for some or all of these items may differ from the estimates set forth herein. For example, we may incur greater legal and accounting expenses than our current estimates in connection with negotiating and structuring our initial business combination based upon the level of complexity of such business combination.
If we identify a business combination target in a specific industry subject to specific regulations, we may incur additional expenses associated with legal due diligence and the engagement of special legal counsel. In addition, our staffing needs may vary and as a result, we may engage a number of consultants to assist with legal and financial due diligence. We do not anticipate any change in our intended use of proceeds, other than fluctuations among the current categories of allocated expenses, which fluctuations, to the extent they exceed current estimates for any specific category of expenses, would not be available for our expenses. The amount in the table above does not include interest available to us from the trust account. The proceeds held in the trust account will be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. We estimate the interest earned on the trust account will be approximately $101,000 per year, assuming an interest rate of 0.10% per year (assuming no exercise of the underwriter’s over-allotment option); however, we can provide no assurances regarding this amount.
(4)
Includes estimated amounts that may also be used in connection with our initial business combination to fund a “no shop” provision and commitment fees for financing.
(5)
Includes the estimated Delaware franchise tax amount of $30,773.29.
The rules of Nasdaq provide that at least 90% of the gross proceeds from this offering and the private placements be deposited in a trust account. Of the proceeds we will receive from this offering and the private placements described in this prospectus, $101,000,000, or $116,150,000 if the underwriter’s over-allotment option is exercised in full ($10.10 per unit in either case), will be deposited into a segregated trust account located in the United States with Continental Stock Transfer & Trust Company acting as trustee, after deducting $2,000,000 in underwriting discounts and commissions payable upon the closing of this offering (or $2,300,000 if the underwriter’s over-allotment option is exercised in full) and an aggregate of $1,550,020 to pay fees and expenses in connection with the closing of this offering and for working capital following the closing of this offering. The proceeds held in the trust account will be invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. We estimate the interest earned on the trust account will be approximately $101,000 per year, assuming an interest rate of 0.10% per year (assuming no exercise of the underwriter’s over-allotment option); however, we can provide no assurances regarding this amount.
We expect that the interest earned on the trust account will be sufficient to pay income taxes. We will not be permitted to withdraw any of the principal or interest held in the trust account, except for the withdrawal of interest to pay our taxes, until the earliest of (i) the completion of our initial business combination, (ii) the redemption of our public shares if we are unable to complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering, subject to applicable law, and (iii) the redemption of our public shares properly submitted in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we have not consummated our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity. In the event the Company decides to exercise the Extension Option, investors will not have voting rights nor redemption rights in connection with such additional three-month extensions.
The net proceeds held in the trust account may be used as consideration to pay the sellers of a target business with which we ultimately complete our initial business combination. If our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment
of the consideration in connection with our initial business combination, we may apply the balance of the cash released 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. There is no limitation on our ability to raise funds through the issuance of equity-linked securities or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to forward purchase agreements or backstop arrangements we may enter into following consummation of this offering. However, our amended and restated certificate of incorporation will provide that, following this offering and prior to the consummation of our initial business combination, we will be prohibited from issuing additional securities that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote as a class with our public shares (a) on any initial business combination or (b) to approve an amendment to our amended and restated certificate of incorporation to (x) extend the time we have to consummate a business combination beyond 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, beyond 18 months, from the closing of this offering or (y) amend the foregoing provisions.
We believe that amounts not held in trust will be sufficient to pay the costs and expenses to which such proceeds are allocated. This belief is based on the fact that while we may begin preliminary due diligence of a target business in connection with an indication of interest, we intend to undertake in-depth due diligence, depending on the circumstances of the relevant prospective business combination, only after we have negotiated and signed a letter of intent or other preliminary agreement that addresses the terms of a business combination. However, if our estimate of the costs of undertaking in-depth due diligence and negotiating a business combination is less than the actual amount necessary to do so, we may be required to raise additional capital, the amount, availability and cost of which is currently unascertainable. If we are required to seek additional capital, we could seek such additional capital through loans or additional investments from our sponsor, members of our management team or any of their affiliates, but such persons are not under any obligation to advance funds to, or invest in, us.
Subsequent to the closing of this offering, we will pay our sponsor $10,000 per month for office space, secretarial and administrative services provided to members of our management team. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
Prior to the closing of this offering, our sponsor has agreed to loan us up to $300,000 to be used for a portion of the expenses of this offering. These loans are non-interest bearing, unsecured and are due at the earlier of September 30, 2022 or the closing of this offering. The loan will be repaid upon the closing of this offering out of the $560,000 of offering proceeds that has been allocated to the payment of offering expenses.
In addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts. If our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used to repay such loaned amounts. The terms of such working capital loans by our sponsor or its affiliates, or our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans.
Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
DIVIDEND POLICY
We have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial business combination. The payment of any cash dividends subsequent to our initial business combination will be within the discretion of our board of directors at such time. If we increase or decrease the size of this offering pursuant to Rule 462(b) under the Securities Act, we will effect a stock dividend or share contribution back to capital or other appropriate mechanism immediately prior to the consummation of this offering in such amount as to maintain the number of founder shares at 20% of our issued and outstanding common stock upon the consummation of this offering (without giving effect to the private placements and the EBC founder shares). Further, if we incur any indebtedness in connection with our initial business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
DILUTION
The difference between the public offering price per share of Class A common stock, assuming no value is attributed to the warrants or rights included in the units we are offering pursuant to this prospectus or the private placement warrants and underlying securities, and the pro forma net tangible book value per share of our Class A common stock after this offering constitutes the dilution to investors in this offering. Such calculation does not reflect any dilution associated with the sale and exercise of rights or warrants, including the private placement warrants which would cause the actual dilution to the public stockholders to be higher, particularly where a cashless exercise is utilized. Net tangible book value per share is determined by dividing our net tangible book value, which is our total tangible assets less total liabilities (including the value of shares of Class A common stock which may be redeemed for cash), by the number of shares of outstanding Class A common stock.
At December 31, 2021, our net tangible book deficit was $612,821, or approximately $(0.21) per share of common stock. After giving effect to the sale of 10,000,000 shares of Class A common stock included in the units we are offering by this prospectus (or 11,500,000 shares of Class A common stock if the underwriter’s over-allotment option is exercised in full), the sale of the private placement warrants and sale of EBC founder shares and the deduction of underwriting commissions and estimated expenses of this offering, our pro forma net tangible book value at December 31, 2021 would have been $898,070 or $0.24 per share (or $983,258 or $0.23 per share if the underwriter’s over-allotment option is exercised in full), representing an immediate increase in net tangible book value (as decreased by the value of the 10,000,000 shares of Class A common stock that may be redeemed for cash, or 11,500,000 shares of Class A common stock if the underwriter’s over-allotment option is exercised in full) of $0.45 per share (or $0.44 per share if the underwriter’s over-allotment option is exercised in full) to our initial stockholders as of the date of this prospectus and an immediate dilution to public stockholders from this offering of $8.85 per share or 97.4% (or $8.86 per share or 97.5% if the underwriter’s over-allotment option is exercised in full).
The following table illustrates the dilution to the public stockholders on a per-share basis, assuming no value is attributed to the warrants or rights included in the units or the securities included in the private placement warrants:
| |
|
|
Without
Over-allotment
|
|
|
With
Over-allotment
|
|
|
Public offering price(1)
|
|
|
|
$ |
9.09 |
|
|
|
|
$ |
9.09 |
|
|
|
Net tangible book deficit before this offering
|
|
|
|
|
(0.21) |
|
|
|
|
|
(0.21) |
|
|
|
Increase attributable to public shares
|
|
|
|
$ |
0.45 |
|
|
|
|
$ |
0.44 |
|
|
|
Pro forma net tangible book value after this offering and the private placements
|
|
|
|
$ |
0.24 |
|
|
|
|
$ |
0.23 |
|
|
|
Dilution to public stockholders
|
|
|
|
$ |
8.85 |
|
|
|
|
$ |
8.86 |
|
|
|
Percentage of dilution to public stockholders
|
|
|
|
|
97.4% |
|
|
|
|
|
97.5% |
|
|
(1)
Each public unit offered in this offering consists of one share of Class A common stock, one redeemable warrant and one right to receive one-tenth (1/10) of one share of Class A common stock upon the consummation of an initial business combination. So the purchase price per share was divided $10.00 by one and one-tenth (1/10) shares, which is $9.09.
For purposes of presentation, we have reduced our pro forma net tangible book value after this offering (assuming no exercise of the underwriter’s over-allotment option) by $101,000,000 because holders of our public shares may redeem their shares for a pro rata share of the aggregate amount then on deposit in the trust account at a per share redemption price equal to the amount in the trust account as set forth in our tender offer or proxy materials (initially anticipated to be the aggregate amount held in trust two business days prior to the commencement of our tender offer or stockholders meeting, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes), divided by the number of shares of Class A common stock sold in this offering.
The following table sets forth information with respect to our initial stockholders and the public stockholders:
| |
|
|
Shares Purchased
|
|
|
Total Consideration
|
|
|
Average
Price per
Share
|
|
| |
|
|
Number
|
|
|
Percentage
|
|
|
Amount
|
|
|
Percentage
|
|
|
Class B common stock
|
|
|
|
|
2,500,000(1) |
|
|
|
|
|
18.2% |
|
|
|
|
$ |
25,000 |
|
|
|
|
|
0.02% |
|
|
|
|
$ |
0.01 |
|
|
|
EBC founder shares
|
|
|
|
|
200,000 |
|
|
|
|
|
1.5% |
|
|
|
|
$ |
20 |
|
|
|
|
|
0.00% |
|
|
|
|
$ |
0.0001 |
|
|
|
Public stockholders units
|
|
|
|
|
11,000,000(2) |
|
|
|
|
|
80.3% |
|
|
|
|
$ |
100,000,000 |
|
|
|
|
|
99.98% |
|
|
|
|
$ |
9.09 |
|
|
|
Total
|
|
|
|
|
13,700,000 |
|
|
|
|
|
100% |
|
|
|
|
$ |
100,025,020 |
|
|
|
|
|
100% |
|
|
|
|
|
|
|
|
(1)
Assumes that 375,000 founder shares are forfeited after the closing of this offering if the underwriter does not exercise their over-allotment option.
(2)
Assumes the over-allotment option of 1,500,000 has not been exercised. Includes the additional 1,000,000 shares underlying the rights included in the public units.
The pro forma net tangible book value per share after the offering is calculated as follows:
| |
|
|
Without
Over-allotment
|
|
|
With
Over-allotment
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net tangible book deficit before this offering
|
|
|
|
$ |
(612,821) |
|
|
|
|
$ |
(612,821) |
|
|
|
Net proceeds from this offering and the private placements, net of expenses(1)
|
|
|
|
$ |
101,990,000 |
|
|
|
|
$ |
117,140,000 |
|
|
|
Net proceeds from EBC founder shares
|
|
|
|
$ |
20 |
|
|
|
|
$ |
20 |
|
|
|
Plus: Offering costs paid in advanced, excluded from tangible book value before this offering
|
|
|
|
$ |
606,059 |
|
|
|
|
$ |
606,059 |
|
|
|
Less: Over-allotment liability(2)
|
|
|
|
$ |
85,188 |
|
|
|
|
|
|
|
|
|
Less: Proceeds held in trust subject to redemption(3)
|
|
|
|
$ |
(101,000,000) |
|
|
|
|
$ |
(116,150,000) |
|
|
| |
|
|
|
$ |
898,070 |
|
|
|
|
$ |
983,258 |
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B common stock outstanding prior to this offering (founders shares)
|
|
|
|
|
2,875,000 |
|
|
|
|
|
2,875,000 |
|
|
|
Class B common stock forfeited if over-allotment is not exercised
|
|
|
|
|
(375,000) |
|
|
|
|
|
— |
|
|
|
Class A common stock included in the units offered
|
|
|
|
|
10,000,000 |
|
|
|
|
|
11,500,000 |
|
|
|
Class A common stock underlying the rights to be included in the public units
|
|
|
|
|
1,000,000 |
|
|
|
|
|
1,150,000 |
|
|
|
Class A EBC founder shares
|
|
|
|
|
200,000 |
|
|
|
|
|
200,000 |
|
|
|
Less: Shares subject to redemption
|
|
|
|
|
(10,000,000) |
|
|
|
|
|
(11,500,000) |
|
|
| |
|
|
|
|
3,700,000 |
|
|
|
|
|
4,225,000 |
|
|
(1)
Expenses applied against gross proceeds include offering expenses of $560,000 and underwriting commissions of $2,000,000 (or $2,300,000 if the underwriter’s over-allotment option is exercised in full). See “Use of Proceeds.”
(2)
The over-allotment liability is for 1,500,000 additional Units that the underwriters can purchase within 45 days from the date of the final prospectus, and is calculated based on Black Scholes model.
(3)
If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor, initial stockholders, directors, executive officers, advisors or their affiliates may purchase public shares or public warrants in privately negotiated transactions or in the open market either prior to or following the
completion of our initial business combination. In the event of any such purchases of our shares prior to the completion of our initial business combination, the number of shares of Class A common stock subject to redemption will be reduced by the amount of any such purchases, increasing the pro forma net tangible book value per share. See “Proposed Business — Effecting Our Initial Business Combination — Permitted Purchases of Our Securities.”
CAPITALIZATION
The following table sets forth our capitalization at December 31, 2021, and as adjusted to give effect to the filing of our amended and restated certificate of incorporation, the sale of our units in this offering, the private placements and the application of the estimated net proceeds derived from the sale of such securities, assuming no exercise by the underwriter of its over-allotment option:
| |
|
|
December 31, 2021
|
|
|
| |
|
|
Actual
|
|
|
As Adjusted (1)
|
|
|
|
Notes payable to related party(2)
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
Over-allotment liability(5)
|
|
|
|
|
|
|
|
|
|
|
85,188 |
|
|
|
|
Class A common stock subject to possible redemption: 0 and 10,000,000 shares, actual and as adjusted, respectively(4)
|
|
|
|
|
—
|
|
|
|
|
|
101,000,000 |
|
|
|
|
Stockholders’ Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding,
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
Class A common stock, $0.0001 par value, 380,000,000 shares authorized;
200,000 shares issued and outstanding (excluding 10,000,000 shares subject
to possible redemption), actual and as adjusted, respectively(4)(3)
|
|
|
|
|
20 |
|
|
|
|
|
20 |
|
|
|
|
Class B common stock, $0.0001 par value, 20,000,000 shares authorized; 2,875,000 and 2,500,000 shares issued and outstanding, actual and as adjusted, respectively(1)
|
|
|
|
|
288 |
|
|
|
|
|
250 |
|
|
|
|
Additional paid-in capital
|
|
|
|
|
24,712 |
|
|
|
|
|
929,582 |
|
|
|
|
Accumulated deficit
|
|
|
|
|
(31,782) |
|
|
|
|
|
(31,782) |
|
|
|
|
Total Stockholders’ equity (deficit)
|
|
|
|
$ |
(6,762) |
|
|
|
|
$ |
898,070 |
|
|
|
|
Total capitalization
|
|
|
|
$ |
(6,762) |
|
|
|
|
$ |
101,983,258 |
|
|
|
(1)
Assumes the over-allotment option has not been exercised and the resulting forfeiture of 375,000 founder shares held by our sponsor has occurred.
(2)
Our sponsor may loan us up to $300,000 under an unsecured promissory note to be used for a portion of the expenses of this offering. The “as adjusted” information gives effect to the repayment of any loans made under this note out of the proceeds from this offering and the private placements. As of December 31, 2021, there was $0 outstanding under the promissory note.
(3)
The Company accounts for the fair value of the EBC Founder shares (EarlyBirdCapital Founder shares) over consideration paid as offering cost of the Proposed Public Offering, with a corresponding credit to stockholder’s equity.
(4)
Upon the completion of our initial business combination, we will provide our public stockholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business combination, including interest (which interest shall be net of taxes payable). The value of Class A common stock that may be redeemed is equal to $10.10 per share (which is the assumed redemption price) multiplied by 10,000,000 Class A common stock which is the maximum number of Class A common stock that may be redeemed.
(5)
The over-allotment liability is for 1,500,000 additional Units that the underwriters can purchase within 45 days from the date of the final prospectus, and is calculated based on Black Scholes model.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
We are a blank check company incorporated on January 11, 2021 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 not selected any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions directly or indirectly, with any business combination target with respect to an initial business combination with us. However, we shall not undertake our initial business combination with any entity with its principal business operations in China (including Hong Kong and Macau). We intend to focus our search for an initial business combination on target companies within the financial services, media, technology, retail, interpersonal communication, transportation, and education sectors. We intend to effectuate our initial business combination using cash from the proceeds of this offering and the private placement warrants, the proceeds of the sale of equity or equity-linked securities or through loans, advances or other indebtedness in connection with our initial business combination (pursuant to forward purchase agreements or backstop agreements we may enter into following the consummation of this offering or otherwise), shares issued to the owners of the target, debt issued to banks or other lenders or the owners of the target, or a combination of the foregoing.
The issuance of additional equity or equity-linked securities in connection with a business combination to the owners of the target or other investors:
•
may significantly dilute the equity interest of investors in this offering, which dilution would increase if the anti-dilution provisions in the Class B common stock resulted in the issuance of Class A common stock on a greater than one-to-one basis upon conversion of the Class B common stock;
•
may subordinate the rights of holders of Class A common stock if shares of preferred stock are issued with rights senior to those afforded our Class A common stock;
•
could cause a change in control if a substantial number of shares of our Class A 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;
•
may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and
•
may adversely affect prevailing market prices for our Class A common stock, rights, and/or warrants.
Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in:
•
default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
•
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;
•
our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
•
our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;
•
our inability to pay dividends on our Class A common stock;
•
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 Class A common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
•
limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
•
increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
•
limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
We expect to incur significant costs in the pursuit of our initial business combination. As indicated in the accompanying financial statements, as of December 31, 2021, we had no cash, and deferred offering costs of $606,059. Further, we expect to incur significant costs in the pursuit of our initial business combination. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful.
Results of Operations and Known Trends or Future Events
We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities and those necessary to prepare for this offering. Following this offering, we will not generate any operating revenues until after completion of our initial business combination. We will generate non-operating income in the form of interest income on cash and cash equivalents after this offering. There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements. After this offering, we expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. We expect our expenses to increase substantially after the closing of this offering.
Liquidity and Capital Resources
Our liquidity needs have been satisfied prior to the completion of this offering through the receipt of a $25,000 capital contribution from our sponsor in exchange for the issuance of the founder shares to our sponsor and up to $300,000 in loans available from our sponsor.
We estimate that the net proceeds from (i) the sale of the units in this offering, after deducting offering expenses of approximately $560,000, underwriting commissions of $2,000,000 or $2,300,000 if the underwriters’ over-allotment option is exercised in full, and (ii) the sale of the private placement warrants for a purchase price of $4,550,000 (or $5,000,000 if the over-allotment option is exercised in full) will be $101,990,000 (or $117,140,000 if the underwriters’ over-allotment option is exercised in full). Of this amount, $101,000,000 (or $116,150,000 if the underwriters’ over-allotment option is exercised in full) will be held in the trust account. The proceeds held in the trust account will be held in cash or invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. The remaining approximately $990,000 will not be held in the trust account. If our offering expenses exceed our estimate of $560,000, we may fund such excess with funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, if the offering expenses are less than our estimate of $560,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount.
We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account to complete our initial business combination. We may withdraw interest to pay our taxes. We estimate our annual franchise tax obligations, based on the number of shares of our common stock authorized and outstanding after the completion of this offering, to be $200,000, which is the maximum amount of annual franchise taxes payable by us as a Delaware corporation per annum, which we may pay from funds from this offering held outside of the trust account or from interest earned on the funds held in the trust account and released to us for this purpose. Our annual income tax obligations will depend on the amount of interest and other income earned on the amount held in the trust account. We expect the interest earned on the amount in the trust account will be sufficient to pay our income taxes. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
Prior to the completion of our initial business combination, we will have available to us the approximately $990,000 of proceeds held outside the trust account. We will use these funds to primarily identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination.
We do not believe we will need to raise additional funds following this offering in order to meet the expenditures required for operating our business prior to our initial business combination. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts. If our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment.
Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
We expect our primary liquidity requirements during that period to include approximately $250,000 for legal, accounting, due diligence, travel and other expenses associated with structuring, negotiating and documenting successful business combinations; $75,000 for legal and accounting fees related to regulatory reporting requirements; $300,000 for prepaid D&O insurance premiums, $85,000 for listing and regulatory fees, $45,000 for consulting, travel and miscellaneous expenses, and approximately $55,000 for general working capital that will be used for miscellaneous expenses and reserves. We will also pay our sponsor $10,000 per month for office space, secretarial and administrative services provided to members of our management team subsequent to the closing of this offering.
These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a “no-shop” provision (a provision designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a “no-shop” provision would be determined based on the terms of the specific business combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.
Moreover, we may need to obtain additional financing to complete our initial business combination, either because the transaction requires more cash than is available from the proceeds held in our trust account to pay our expenses relating thereto, including a fee payable to EarlyBirdCapital, upon consummation of our initial business combination for assisting us in connection with our initial business combination (as described under the section titled “Underwriting — Business Combination Marketing Agreement”), or because we become obligated to redeem a significant number of our public shares upon completion of the business combination, in which case we may issue additional securities or incur debt in connection with such business combination. In addition, we intend to target businesses with enterprise values that are greater than we could acquire with the net proceeds of this offering and the sale of the private placement warrants, and, as a result, if the cash portion of the purchase price exceeds the amount available from the trust account, net of amounts needed to satisfy any redemptions by public stockholders, we may be required to seek additional financing to complete such proposed initial business combination. We may also obtain financing prior to the closing of our initial business combination to fund our working capital needs and transaction costs in connection with our search for and completion of our initial business combination. There is no limitation on our ability to raise funds
through the issuance of equity or equity-linked securities or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to forward purchase agreements or backstop agreements we may enter into following consummation of this offering.
Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Controls and Procedures
We are not currently required to maintain an effective system of internal controls as defined by Section 404 of the Sarbanes-Oxley Act. We will be required to comply with the internal control requirements of the Sarbanes-Oxley Act for the fiscal year ending December 31, 2022. Only if we are deemed to be a large accelerated filer or an accelerated filer and no longer an emerging growth company would we be required to comply with the independent registered public accounting firm attestation requirement on internal control over financial reporting. Further, for as long as we remain an emerging growth company as defined in the JOBS Act, we intend 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 independent registered public accounting firm attestation requirement.
Prior to the closing of this offering, we have not completed an assessment, nor have our auditors tested our systems, of internal controls. We expect to assess the internal controls of our target business or businesses prior to the completion of our initial business combination and, if necessary, to implement and test additional controls as we may determine are necessary in order to state that we maintain an effective system of internal controls. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of internal controls. Many small and mid-sized target businesses we may consider for our initial business combination may have internal controls that need improvement in areas such as:
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staffing for financial, accounting and external reporting areas, including segregation of duties;
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reconciliation of accounts;
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proper recording of expenses and liabilities in the period to which they relate;
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evidence of internal review and approval of accounting transactions;
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documentation of processes, assumptions and conclusions underlying significant estimates; and
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documentation of accounting policies and procedures.
Because it will take time, management involvement and perhaps outside resources to determine what internal control improvements are necessary for us to meet regulatory requirements and market expectations for our operation of a target business, we may incur significant expenses in meeting our public reporting responsibilities, particularly in the areas of designing, enhancing, or remediating internal and disclosure controls. Doing so effectively may also take longer than we expect, thus increasing our exposure to financial fraud or erroneous financing reporting.
Once our management’s report on internal controls is complete, we will retain our independent registered public accounting firm to audit and render an opinion on such report when required by Section 404 of the Sarbanes-Oxley Act. The independent registered public accounting firm may identify additional issues concerning a target business’s internal controls while performing their audit of internal control over financial reporting.
Quantitative and Qualitative Disclosures about Market Risk
The net proceeds of this offering and the sale of the private placement warrants held in the trust account will be invested in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe
there will be no associated material exposure to interest rate risk. However, if the interest rates of U.S. Treasury obligations become negative, we may have less interest income available to us for payment of taxes, and a decline in the value of the assets held in the trust account could reduce the principal below the amount initially deposited in the trust account.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results
As of December 31, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations. No unaudited quarterly operating data is included in this prospectus as we have not conducted any operations to date.
JOBS Act
The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” under the JOBS Act and are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an independent registered public accounting firm’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the independent registered public accounting firm’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of this offering or until we are no longer an “emerging growth company,” whichever is earlier.
PROPOSED BUSINESS
General
We are a blank check company incorporated as a Delaware corporation whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination with us. We may pursue an initial business combination target in any industry or geographic region.
While we may pursue an initial business combination target in any business, industry or geographic location, we intend to search globally for target companies within the Southeast Asian new economy sector or elsewhere. We shall not undertake our initial business combination with any entity with its principal business operations in China (including Hong Kong and Macau). Our management team believes that in recent years, a wide range of technological breakthroughs have accelerated cycles of change, radically impacting industries and business models across the world. The transformative effects of innovation as diverse as cloud computing, artificial intelligence, machine learning, data analytics, cybersecurity, and ubiquitous mobile computing have upended industries both large and small.
We believe the current COVID-19 pandemic has accelerated the aforementioned trend and is a catalyst for digital migration at a speed and on a scale never seen before. Individuals as well as small and large institutions have been forced to adapt to a new normal of living in a world where physical contact has been hindered and technology has become essential for both personal and business activities on a daily basis. Amidst these changes, we believe legacy business models that fail to adapt will eventually cease to exist while innovators that take advantage of the current situation will be awarded outsized opportunities to lead the upcoming changes.
Our management team believes that this widespread change is occurring everywhere in our lives, but it has been particularly strong in the business world. Major shifts are happening in the financial services, media, technology, retail, interpersonal communication, transportation, and education sectors. We believe the market rewards those who see and understand its trajectory.
Capital markets have responded to this expanding opportunity. Global venture capital investments increased over 500% in the past decade, from $48 billion in 2010 to $295 billion in 2019, according to Crunchbase News. Those dollars are spread widely: more than 32,000 companies received venture funding in 2019 alone, according to Crunchbase News. These backings represent a significant commitment from investors — PWC/CB Insights recorded 219 private financings surpassing $100 million for private investments in 2019, representing over $50 billion deployed.
This confluence of enormous change and plentiful capital has created what we believe is a sizeable opportunity for wealth building, especially as private companies enter the public markets to fuel their next phase of growth. Our management team believes that there is demand from public market investors to locate and invest in a high growth financial services, media, technology, retail, interpersonal communication, transportation, or education sectors company, debut it in the public markets and partner with it, as stockholders, to help the company elevate itself into the next multi-billion-dollar market cap company.
Management Team
Our team possess a wide-ranging set of competencies, including public market experience, financial acumen and an extensive track record of growth and value creation.
Tse Meng Ng, our Chairman and Chief Executive Officer, is a highly regarded and successful financier and businessman. In February 2019, Mr. Ng co-found Ruifeng Wealth Management Pte Ltd, a Singapore Capital Markets Services licensed financial institution regulated by the Monetary Authority of Singapore, for which he serves as the chief executive officer. Ruifeng Wealth Management Pte Ltd is a subsidiary of listed 2345 Network. 2345 Network has a market capitalization of around $2 billion. Mr. Ng and his team provide fund management services to ultra high net worth individuals. From May 2014 to January 2019, Mr. Ng served as the Managing Director of Credit Agricole, an international full-service banking group. He was voted ‘Outstanding Young Private Banker’ in 2011 by Private Banker International, the leading journal for the global
wealth management industry. Prior to that, Mr. Ng was a Director at Credit Suisse where he helped form the team that covered the North Asia markets and where he helped contribute the most net new money between 2008-2009. He started his career in 1998 at Citibank N.A where he managed a team of banking staff at a very young age. Mr. Ng earned a B.S. in Business from Nanyang Technological University. Mr. Ng is well qualified to serve on our board of directors due to his leadership skills and business acumen.
Han Hsiung Lim, our Chief Financial Officer and Chief Operating Officer, is an accomplished executive and leader. Mr. Lim has served on our board of directors since January 2021. Mr. Lim retired from an 18-year career in the banking and asset management industry in 2018 and has since managed his own investments in public equities and fixed-income securities. From January 2016 to December 2017, Mr. Lim was a Senior Vice President in the Risk & Performance Management Department at GIC (formerly known as the Government of Singapore Investment Corporation), which manages Singapore’s foreign reserves. From April 2009 to December 2014, he served as the Head of Credit Risk Management in the Risk & Performance Management Department at GIC where he was responsible for approving, managing and mitigating the firmwide credit exposure of GIC to its trading counterparties. From February 2000 to April 2009, Mr. Lim worked within the Financial Markets Credit Group at DBS Bank, where he rose up the ranks to Vice President in 2005 and was responsible for approving, managing and mitigating the firmwide credit exposure of DBS Bank to a portfolio of banks and non-bank financial institutions. He also has experience in managing credit exposure, as he was tasked with avoiding and mitigating DBS Bank’s potential losses during the 2008 Global Financial Crisis. Mr. Lim has a bachelor of business degree (First Class Honors), with a major in banking and a minor in hospitality, from the Nanyang Technological University.
Our Board
Our officer’s skills are complemented by our directors and advisors, who bring significant operating experience and relationships throughout the global banking and finance industry. In addition to Tse Meng Ng, who is Chairman of our board, and Benjamin Waisbren, Simon Eng Hock Ong, and Vincent Yang Hui are our additional director nominees.
Benjamin Waisbren has served on our board of directors since January 2021. Since 2014, Mr. Waisbren has served as the President of Virtually There Holdings LLC d/b/a Ben Waisbren & Associates, which advises media companies and firms involved in distressed situations. From April 2019 through July 2020, Mr. Waisbren served as Chief Executive Officer and Chief Restructuring Officer of NanoMech Inc., a nanotechnology company that he led through a Chapter 11 case and its sale to a global company. He is also on the board of Vistas Media Acquisition Company, a Nasdaq listed blank check company, and previously served on the board of Wild Bunch AG, the German-listed, Paris-based award-winning film co-production and distribution companies for ten years. Mr. Waisbren also held attorney positions at Lord Bissell & Brook LLP (now Locke Lord LLP) and Winston & Strawn LLP, during and after which he was engaged by the U.S. Department of Justice in the 1Malaysia Development Berhad money laundering matter.
Simon Eng Hock Ong will serve on our board of directors following the completion of this offering. Mr. Ong currently serves as the Chief Financial Officer of Rich Capital Holdings Limited, a company listed on SGX Catalist. Prior thereto, Mr. Ong worked as the Executive Director of Asiaphos Limited from 2012 through June 2019, and remains as with Asiaphos as a Non-Executive Director and as a member of their audit committee. Previously, Mr. Ong also served as Group Finance Manager and as Chief Financial Officer of Hwa Hong Corporation Limited, a company listed on SGX-ST Main Board, and as a director of corporate and financial planning of the King George Development Corporation, a company listed on the TSX Venture Exchange (formerly known as the Vancouver Stock Exchange). Mr. Ong has a degree in accounting from North East London Polytechnic (now known as the University of East London) and is a Fellow of the Association of Chartered Certified Accountants and a Certified Practicing Accountant in Australia.
Vincent Yang Hui will serve on our board of directors following the completion of this offering. Mr. Hui currently serves as the Chief Executive Officer of abComo eCommerce Pte Ltd, a multinational influencer platform that he founded in 2020. He also co-founded Long-bridge, an overseas asset investment company, in 2019, and Alphabit Consulting Pte Ltd, a Singapore based technology consulting company. From 2014 to 2018, Mr. Hui served as a Business Development Director for the Alibaba Group and Ant Financial. Mr. Hui
has a BSc in Information Management and Information Systems from the University of Electronic Science and Technology of China and a graduate diploma in systems analysis from the National University of Singpaore.
Our Advisors
In addition to our management team and board of directors, our team will include Chandra Tjan and Stephen Lee, who shall serve as advisors. None of these individuals have any contractual obligation to us or are otherwise required to commit any specified amount of time to our affairs; however, we expect that certain of these individuals will, on average, dedicate a significant amount of their professional time on our affairs.
Chandra Tjan is a heralded entrepreneur with a record of success as a venture capitalist in Southeast Asia. Mr. Tjan started his career as a banker at Citigroup and Credit Suisse in Singapore. After a decade in the banking industry, Mr. Tjan saw a huge opportunity in Indonesia’s technology sector, and in 2009 he co-founded East Ventures, an early stage capital venture firm. During his tenure in Indonesia, Mr. Tjan was responsible for dozens of investments in early-stage start-ups, including the online marketplace Tokopedia and all-in-one travel booking platform Traveloka. In 2015, Chandra co-founded Alpha JWC Ventures, an institutionalized and independent VC fund targeting early-stage tech startups across Southeast Asia, with a strong focus in Indonesia. The firm currently manages approximately $200 million across two funds, making it the largest early-stage fund in Indonesia, with 36 active portfolio companies. With over a decade of experience in tech investment, Mr. Tjan has invested in over 60 companies in Asia and the United States. He currently sits on the board of some of the leading tech companies in Asia, including Funding Societies, Carro, GudangAda, Bobobox and OnlinePajak. Mr. Tjan graduated from The University of Sydney with a triple major in finance, economics, and management, currently attends the Owner-President Management (OPM) Program at Harvard Business School, a 3-year residential program for business owners and entrepreneurs, and is a member of YPO’s (Young President Organization) global leadership community.
Stephen Lee is an experienced and respected executive with experience across a wide variety of sectors and industries. In 1994, Mr. Lee joined AIF Capital and has been a Partner and Investment Committee Member since 2001. He has been actively involved in deal origination, transaction execution, investment management and portfolio monitoring and represents AIF Capital on the boards of various portfolio companies. His sector investment experience includes manufacturing, industrial, media, pharmaceutical and healthcare, aquaculture, consumer, new materials, telecommunication, logistics and transportation in multiple countries, including China, Hong Kong, Taiwan, Indonesia, South Korea and Singapore. Mr. Lee has been involved in multiple prominent deals in the Asia-Pacific region, including Aofeng Hi-Tech Company Limited (the largest carbon fiber composite company manufacturer in Asia), Oceanus Group Limited (the Singapore-listed leading aquatic company in Asia), CN Innovations Holdings Limited (the leading smartphone manufacturer in China and Asia), Shandong Buchang Pharmaceutical Co. Ltd. (China’s largest producer of traditional Chinese medicine), Charm Communications Inc. (a leading Chinese media company in China that was previously listed in the United States), Bharti Infratel Limited (India’s largest mobile operator in India), Bestime Pharma (Asia) Limited (leading antibiotics drug manufacturer in China), PT Excelcomindo Pratama (leading mobile operator in Indonesia) and PT Marga Mandalasakti (operators of the longest toll road in Indonesia).
Business Strategy
Our business strategy is to identify and consummate an initial business combination with a company with operations or prospects in the Southeast Asian new economy sector or elsewhere. We shall not undertake our initial business combination with any entity with its principal business operations in China (including Hong Kong and Macau). We intend to focus on companies that complement the experience of our management team and that can benefit from the management team’s operational expertise. Our selection process will leverage our management team’s broad and deep network of relationships, industry expertise and proven deal-sourcing capabilities, providing us with a strong pipeline of potential targets. Our management and sponsor have experience in:
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investing and building businesses in the financial services, media, technology, retail, interpersonal communication, transportation, and education sectors with unique market, policy and macroeconomic insights;
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managing and operating companies, setting and changing strategies, and identifying, mentoring and recruiting top-notch talent;
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developing and growing companies, both organically and inorganically, and expanding the product ranges and geographic footprints of portfolio businesses;
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executing merger and acquisition strategies to accelerate growth and create integrated value chains;
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sourcing, structuring, acquiring and selling businesses in various markets;
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partnering with other industry-leading companies to increase sales and improve the competitive position of companies;
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fostering relationships with users, sellers, capital providers and target management teams; and
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accessing the capital markets, including capital sources in Asia and America, across various business cycles, including financing businesses and assisting companies with the transition to public ownership.
Business Combination Criteria
Consistent with our business strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will use these criteria and guidelines in evaluating acquisition opportunities, though we may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines:
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Companies with operations or prospects in the Southeast Asian new economy sectors or elsewhere. Based upon our management team’s experience, we believe we will have increased access to investment opportunities and a competitive advantage in our ability to negotiate a business combination with potential targets in the Southeast Asian new economy. Our management team’s extensive experience and network of contacts provide them with an opportunity to source a target, evaluate a target, consummate a business combination with the target and help grow the target’s business.
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Strong target management teams. We intend to acquire one or more businesses that have strong management teams with a proven track record of driving growth, building long-term competitive advantage and making sound strategic decisions.
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Fundamentally sound companies that have the potential to further improve their performance under our ownership. We believe our management team’s experience in our target sectors as well as their network of industry contacts will create opportunities to enhance the revenue and operational efficiencies of the target business, and potentially generate higher returns for our investors.
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Market leader. We intend to seek a target that has a leading presence across an industry or segment or has leading technology or product capabilities.
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Appropriate valuations. We intend to be a disciplined and valuation-centric investor that will invest on terms that we believe are attractive relative to market comparables that provide significant upside potential.
These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. If we decide to enter into a business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our initial business combination, which, as discussed in this prospectus, would be in the form of proxy solicitation or tender offer materials, as applicable, that we would file with the SEC.
Our Business Combination 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, interviews of customers and suppliers, inspection of facilities, as well as reviewing financial and other information that will be made available to us. We will also utilize our operational and capital allocation experience.
Our acquisition criteria, due diligence processes and value creation methods 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. If we decide to enter into our initial business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our initial business combination, which, as discussed in this prospectus, would be in the form of tender offer documents or proxy solicitation materials that we would file with the SEC.
Our Business Strategy
Our business strategy is to identify and consummate an initial business combination with a company with operations or prospects in the Southeast Asian new economy sector or elsewhere. We intend to focus on companies that complement the experience of our management team and that can benefit from the management team’s operational expertise. Our selection process will leverage our management team’s and our sponsor’s broad and deep network of relationships, industry expertise and proven deal-sourcing capabilities, providing us with a strong pipeline of potential targets. Our management and sponsor have experience in:
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investing and building businesses in the financial services, media, technology, retail, interpersonal communication, transportation, and education sectors with unique market, policy and macroeconomic insights;
•
managing and operating companies, setting and changing strategies, and identifying, mentoring and recruiting top-notch talent;
•
developing and growing companies, both organically and inorganically, and expanding the product ranges and geographic footprints of portfolio businesses;
•
executing merger and acquisition strategies to accelerate growth and create integrated value chains;
•
sourcing, structuring, acquiring and selling businesses in various markets;
•
partnering with other industry-leading companies to increase sales and improve the competitive position of companies;
•
fostering relationships with users, sellers, capital providers and target management teams; and
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accessing the capital markets, including capital sources in Asia and America, across various business cycles, including financing businesses and assisting companies with the transition to public ownership.
Initial Business Combination
Nasdaq rules require, and our amended and restated certificate of incorporation will require, that we must complete one or more initial business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account (excluding taxes payable on interest earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. Our board of directors will make the determination as to the fair market value of 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 which is a member of FINRA or a valuation or appraisal firm with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of the target’s assets or prospects.
We anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the
outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act 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 initial business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the 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 that case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be taken into account for purposes of the 80% of net assets test described above. If the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses.
We are not presently engaged in, and we will not engage in, any operations for an indefinite period of time following this offering. We intend to effectuate our initial business combination using cash from the proceeds of this offering and the private placements, the proceeds of the sale of equity or equity-linked securities in connection with our initial business combination (pursuant to forward purchase agreements or backstop agreements we may enter into following the consummation of this offering or otherwise), shares issued to the owners of the target, debt issued to banks or other lenders or the owners of the target, 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 initial business combination or used for redemptions of our Class A common stock, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital.
We have not selected any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination with us. However, we shall not undertake our initial business combination with any entity with its principal business operations in China (including Hong Kong and Macau). Accordingly, there is no current basis for investors in this offering to evaluate the possible merits or risks of the target business with which we may ultimately complete our initial business combination. Although our management will assess the risks inherent in a particular target business with which we may combine, we cannot assure you that this assessment will result in our identifying all risks that a target business may encounter. Furthermore, some of those risks may be outside of our control, meaning that we can do nothing to control or reduce the chances that those risks will adversely affect a target business.
We may need to obtain additional financing to complete our initial business combination, either because the transaction requires more cash than is available from the proceeds held in our trust account or because we become obligated to redeem a significant number of our public shares upon completion of the business combination, in which case we may issue additional securities or incur debt in connection with such business combination. There are no prohibitions on our ability to issue securities or incur debt in connection with our initial business combination. We are not currently a party to any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities, the incurrence of debt or otherwise.
Prior to the date of this prospectus, we will file a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15
to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
Sourcing of Potential Initial Business Combination Targets
We believe our management team’s significant operating and transaction experience and relationships will provide us with a substantial number of potential initial business combination targets. Over the course of their careers, the members of our management team have developed a broad network of contacts and corporate relationships around the world, which includes private equity firms, venture capitalists and entrepreneurs. This global network has grown through the activities of our management team sourcing, acquiring and financing businesses, the reputation of our management team for integrity and fair dealing with sellers, financing sources and target management teams and the experience of our management team in executing transactions under varying economic and financial market conditions. In addition, members of our management team and board of directors have developed contacts from serving on the boards of directors of public companies. However, we shall not undertake our initial business combination with any entity with its principal business operations in China (including Hong Kong and Macau).
This global network has provided our management team with a flow of referrals that has resulted in numerous transactions which were proprietary or where a limited group of investors were invited to participate in the sale process. We believe that the network of contacts and relationships of our management team will provide us important sources of investment opportunities. In addition, we anticipate that target business combination candidates will be brought to our attention from various unaffiliated sources, including investment market participants, private equity funds and large business enterprises seeking to divest non-core assets or divisions.
While we do not presently anticipate engaging the services of professional firms or other individuals that specialize in business acquisitions on any formal basis, we may engage these firms or other individuals in the future, in which event we may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction. We will engage a finder only to the extent our management determines that the use of a finder may bring opportunities to us that may not otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction that our management determines is in our best interest to pursue. Payment of a finder’s fee is customarily tied to completion of a transaction, in which case any such fee will be paid out of the funds held in the trust account. In no event, however, will our sponsor or any of our existing officers or directors, or any entity with which they are affiliated, be paid any finder’s fee, consulting fee or other compensation by the company prior to, or for any services they render in order to effectuate, the completion of our initial business combination (regardless of the type of transaction that it is). In addition, commencing on the date of this prospectus, we will pay our sponsor $10,000 per month for office space, secretarial and administrative services provided to members of our management team. Any such payments prior to our initial business combination will be made from funds held outside the trust account. Other than the foregoing, and any customary fees we may elect to make to our directors for director service, there will be no finder’s fees, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation paid by us to our sponsor, officers or directors, or any affiliate of our sponsor or officers prior to, or in connection with any services rendered in order to effectuate, the consummation of our initial business combination (regardless of the type of transaction that it is).
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, executive officers or directors, or completing the business combination through a joint venture or other form of shared ownership with our sponsor, executive officers or directors. If we seek to complete an initial business combination with a target that is affiliated with our sponsor, executive officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm stating that such an initial business combination is fair to our company from a financial point of view.
Members of our management team and our independent directors will directly or indirectly own founder shares and/or private placement warrants (and underlying securities) following this offering and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation
of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination.
Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such other entity. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our initial business combination.
In addition, our sponsor and our officers and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue other business or investment ventures during the period in which we are seeking an initial business combination. Any such companies, businesses or investments may present additional conflicts of interest in pursuing an initial business combination. However, we do not believe that any such potential conflicts would materially affect our ability to complete our initial business combination.
Financial Position
With funds available for an initial business combination initially in the amount of $101,000,000 (or $116,150,000 if the underwriters’ over-allotment option is exercised in full), before fees and expenses associated with our initial business combination, we offer a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt or leverage ratio. Because we are able to complete our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we have not taken any steps to secure third party financing and there can be no assurance it will be available to us.
Permission Required from the PRC Authorities for this Offering and a Business Combination
As a Delaware corporation with no operations in China, we are not required to obtain permission from any Chinese authorities to operate or to issue the securities being issued in this offering to any investors, including Chinese investors, if any, and we do not expect that permission will be required from the Chinese authorities in connection our business combination since we will not undertake our initial business combination with any entity that conducts a majority of its business or is headquartered in China (including Hong Kong and Macau).
Lack of Business Diversification
For an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business. By completing our initial business combination with only a single entity, our lack of diversification may:
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subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination, and
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cause us to depend on the marketing and sale of a single product or limited number of products or services.
Limited Ability to Evaluate the Target’s Management Team
Although we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial business combination with that business, our assessment of the target business’ management may not prove to be correct. In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of our management team, if any, in the target business cannot presently be stated with any certainty. The determination as to whether any of the members of our management team will remain with the combined company will be made at the time of our initial business combination. While it is possible that one or more of our directors will remain associated in some capacity with us following our initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial business combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge relating to the operations of the particular target business.
We cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders May Not Have the Ability to Approve Our Initial Business Combination
We may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC subject to the provisions of our 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.
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TYPE OF TRANSACTION
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WHETHER
STOCKHOLDER
APPROVAL IS
REQUIRED
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Purchase of assets
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No |
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Purchase of stock of target not involving a merger with the company
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No |
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Merger of target into a subsidiary of the company
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No |
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Merger of the company with a target
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Yes |
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Under Nasdaq’s listing rules, stockholder approval would be required for our initial business combination if, for example:
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We issue (other than in a public offering for cash) shares of common stock that will either (a) be equal to or in excess of 20% of the number of our shares of common stock then outstanding or (b) have voting power equal to or in excess of 20% of the voting power then outstanding;
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Any of our directors, officers or substantial stockholders (as defined by Nasdaq rules) has a 5% or greater interest, 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 in 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 and officers and (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 stockholder; or
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The issuance or potential issuance of common stock will result in our undergoing a change of control.
Permitted Purchases of Our Securities
If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor, initial stockholders, directors, executive officers, advisors or their affiliates may purchase shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. There is no limit on the number of shares our initial stockholders, directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase shares or public warrants in such transactions. If they engage in such transactions, they will be restricted from making any such purchases when they are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act.
If our sponsor, initial stockholders, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules.
The purpose of any such purchases of shares could be to (i) vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of the business combination or (ii) to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination. Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible.
In addition, if such purchases are made, the public “float” of our Class A common stock or public warrants may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the listing or trading of our securities on a national securities exchange.
Our sponsor, initial stockholders, officers, directors and/or their affiliates anticipate that they may identify the stockholders with whom our initial stockholders, 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 Class A common stock) following our mailing of proxy materials in connection with our initial business combination. To the extent that our sponsor, officers, directors, advisors or their affiliates enter into a private purchase, they would identify and contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share of the trust account or vote against our initial business combination, whether or not such stockholder has already submitted a proxy with respect to our initial business combination but only if such shares have not already been voted at the stockholder meeting related to our initial business combination. Our sponsor, executive officers, directors, advisors or any of their affiliates will select which stockholders to purchase shares from based on a 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. Our sponsor, officers, directors and/or their affiliates will be restricted from making purchases of shares if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act. We expect any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchases 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 taxes, divided by the number of then outstanding public shares, subject to the limitations and on the conditions described herein. The amount in the trust account is initially anticipated to be $10.10 per public share. Our initial stockholders, 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 public shares they may hold in connection with the completion of our initial business combination.
Limitations on Redemptions
Our amended and restated certificate of incorporation will provide 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. In addition, our proposed initial business combination may impose a minimum cash requirement for: (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. If 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 initial business combination exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem any shares in connection with such initial business combination, and all shares of Class A common stock submitted for redemption will be returned to the holders thereof. We may, however, raise funds through the issuance of equity-linked securities or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to forward purchase agreements or backstop arrangements we may enter into following consummation of this offering, in order to, among other reasons, satisfy such net tangible assets or minimum cash requirements.
Manner of Conducting Redemptions
We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the initial business combination or (ii) without a stockholder vote by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed initial 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 requirements. Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. So long as we obtain and maintain a listing for our securities on Nasdaq, we will be required to comply with Nasdaq’s stockholder approval rules.
The requirement that we provide our public stockholders with the opportunity to redeem their public shares by one of the two methods listed above will be contained in provisions of our amended and restated certificate of incorporation and will apply whether or not we maintain our registration under the Exchange Act or our listing on Nasdaq. Such provisions may be amended if approved by holders of 50.1% of our common stock entitled to vote thereon.
If we provide our public stockholders with the opportunity to redeem their public shares in connection with a stockholder meeting, we will:
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conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and
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file proxy materials with the SEC.
If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the 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 towards this quorum and, pursuant to the letter agreement, our sponsor, officers and directors have agreed to vote any founder shares they hold and any public shares purchased during or after this offering (including in open market and privately-negotiated transactions) in favor of our initial business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained. As a result, in addition to our initial stockholder’s founder shares and EBC founder shares, we would need 475,001, or approximately 4.75%, of the 10,000,000 public shares sold in this offering to be voted in favor of an initial business combination in order to have our initial business combination approved (assuming that only a quorum is present at the meeting, the over-allotment option is not exercised and the EBC founder shares issued to EarlyBirdCapital are voted in favor of the 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 they vote for or against the proposed transaction or whether they were a stockholder on the record date for the stockholder meeting held to approve the proposed transaction.
If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and
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file tender offer documents with the SEC prior to completing our initial business combination, which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
If we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public shares, which number will be based on the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001. 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.
Upon the public announcement of our initial business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common stock in the open market, in order to comply with Rule 14e-5 under the Exchange Act.
We intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent or deliver their shares to our transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) system, prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up to two business days prior to the vote on the proposal to approve the initial business combination. In addition, if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its public shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial owner of such shares is included. The proxy materials or tender offer documents, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements. We believe that this will allow our transfer agent to efficiently process any redemptions without the need for further communication or action from the redeeming public stockholders, which could delay redemptions and result in additional administrative cost. If the proposed initial business combination is not approved and we continue to search for a target company, we will promptly return any certificates or shares delivered by public stockholders who elected to redeem their shares.
Our amended and restated certificate of incorporation will provide 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. In addition, our proposed initial business combination may impose a minimum cash requirement for: (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. If 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 initial business combination exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem any shares in connection with such initial business combination, and all shares of Class A common stock submitted for redemption will be returned to the holders thereof. We may, however, raise funds through the issuance of equity-linked securities or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to forward purchase agreements or backstop arrangements we may enter into following consummation of this offering, in order to, among other reasons, satisfy such net tangible assets or minimum cash requirements.
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 initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to Excess Shares, without our prior consent. We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed business combination as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in this offering could threaten to exercise its redemption rights if such holder’s shares are not purchased by us, our sponsor or our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem no more than 15% of the shares sold in this offering without our prior consent, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash.
However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Delivering Stock Certificates in Connection with the Exercise of Redemption Rights
As described above, we intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent or deliver their shares to our transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) system, prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up to two business days prior to the vote on the proposal to approve the initial business combination. In addition, if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its public shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial owner of such shares is included. The proxy materials or tender offer documents, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have up to two business days prior to the vote on the initial business combination if we distribute proxy materials, or from the time we send out our tender offer materials until the close of the tender offer period, as applicable, to submit or tender its shares if it wishes to seek to exercise its redemption rights. If a stockholder fails to comply with
these or any other procedures disclosed in the proxy or tender offer materials, as applicable, its shares may not be redeemed. Given the relatively short exercise period, it is advisable for stockholders to use electronic delivery of their public shares.
There is a nominal cost associated with the above-referenced process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the broker submitting or tendering shares a fee of approximately $80.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to submit or tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
Any request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the proxy materials or tender offer documents, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of our initial business combination.
If our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If our initial proposed initial business combination is not completed, we may continue to try to complete an initial business combination with a different target until 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, until 18 months, from the closing of this offering. In the event the Company decides to exercise the Extension Option, investors will not have voting rights nor redemption rights in connection with such additional three-month extensions.
Redemption of Public Shares and Liquidation if No Initial Business Combination
Our amended and restated certificate of incorporation will provide that we will have only 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, only 18 months, from the closing of this offering to complete our initial business combination. In the event the Company decides to exercise the Extension Option, investors will not have voting rights nor redemption rights in connection with such additional three-month extensions. If we are unable to complete our initial business combination within such 12-month period (or 18-month period, as applicable), we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants and rights, which will expire worthless if we fail to complete our initial business combination within the 12-month time period (or 18-month period, as applicable).
EarlyBirdCapital, our initial stockholders, and our sponsor, executive officers, directors and director nominees have entered into written agreements with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to any founder shares and EBC founder shares they hold if we fail to complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at
$0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering or any extended period of time that we may have to consummate an initial business combination as a result of an amendment to our amended and restated certificate of incorporation. However, if our initial stockholders, sponsor or management team acquire public shares in or after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted 12-month time period (or 18-month time period, as applicable).
EarlyBirdCapital, our initial stockholders, and our sponsor, executive officers, directors and director nominees have agreed, pursuant to written agreements with us, that they will not propose any amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their public shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares. In the event the Company decides to exercise the Extension Option, investors will not have voting rights nor redemption rights in connection with such additional three-month extensions. 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. 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.
We expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the approximately $990,000 of proceeds held outside the trust account, although we cannot assure you that there will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not required to pay taxes, we may request the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds of this offering and the private placements, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account and any tax payments or expenses for the dissolution of the trust, the per-share redemption amount received by stockholders upon our dissolution would be approximately $10.10. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders. We cannot assure you that the actual per-share redemption amount received by stockholders will not be substantially less than $10.10. Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although we will seek to have all vendors, service providers (other than 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, 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 consider whether competitive alternatives are reasonably available to us and will only enter into an agreement with such third party if management believes that such third party’s engagement would be in the best interests of the company under the circumstances. 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. The underwriter of this offering and our independent registered public accounting firm will not execute agreements with us waiving such claims to the monies held in the trust account. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. In order to protect the amounts held in the trust account, our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party 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) $10.10 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 $10.10 per public share due to reductions in the value of the trust assets, less taxes payable, 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 underwriter of this 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 and we believe that our sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. 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 $10.10 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.
If the proceeds in the trust account are reduced below the lesser of (i) $10.10 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 $10.10 per share due to reductions in the value of the trust assets, in each case less taxes payable, and our sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be less than $10.10 per share.
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 (other than our independent registered public accounting firm), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any claims under our indemnity of the underwriter of this offering against certain liabilities, including liabilities under the Securities Act. We will have access to up to approximately $990,000 from the proceeds of this offering with which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately $100,000). If we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims made by creditors. If our offering expenses exceed our estimate of $560,000, we may fund such excess with funds from the funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, if the offering expenses are less than our estimate of $560,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount.
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 if we do not complete our initial business
combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this 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 our trust account distributed to our public stockholders upon the redemption of our public shares if we do not complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering, is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution. If we are unable to complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this 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 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) 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 12th month (or 18th month, as applicable) 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 (other than our independent registered public accounting firm), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account. As a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim that would result in any liability extending to the trust account is remote. Further, our sponsor may be liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.10 per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes and will not be liable as to any claims under our indemnity of the underwriter of this offering against certain liabilities, including liabilities under the Securities Act. If an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third-party claims.
If we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return $10.10 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our public stockholders will be entitled to receive funds from the trust account only (i) in the event of the redemption of our public shares if we do not complete our initial business combination within 12, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering, (ii) in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity or (iii) if they redeem their respective shares for cash upon the completion of our initial business combination. In the event the Company decides to exercise the Extension Option, investors will not have voting rights nor redemption rights in connection with such additional three-month extensions. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account. If 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.
Comparison of Redemption or Purchase Prices in Connection with Our Initial Business Combination and if We Fail to Complete Our Initial Business Combination.
The following table compares the redemptions and other permitted purchases of public shares that may take place in connection with the completion of our initial business combination and if we are unable to complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering.
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Redemptions in Connection
with our Initial Business
Combination
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Other Permitted Purchases of
Public Shares by our
Affiliates
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Redemptions if we fail to
Complete an Initial
Business Combination
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Calculation of redemption price
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Redemptions at the time of our initial business combination may be made pursuant to a tender offer or in connection with a stockholder vote. The redemption price will be the same whether we conduct redemptions pursuant to a tender offer or in connection with a stockholder vote. In either case, our public stockholders may redeem their public shares for 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 (which is initially anticipated to be $10.10 per share), including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, subject to the limitation that no redemptions will take place if all of the redemptions would cause our net tangible assets to be less than $5,000,001.
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If we seek stockholder approval of our initial business combination, our initial stockholders, directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following completion of our initial business combination. There is no limit to the prices that our initial stockholders, directors, officers, advisors or their affiliates may pay in these transactions. If they engage in such transactions, they will be restricted from making any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. 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.
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If we are unable to complete our initial business combination within 12 months , or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering, we will redeem all public shares at a per-share price, payable in cash, equal to the aggregate amount, then on deposit in the trust account (which is initially anticipated to be $10.10 per share), including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses) divided by the number of then outstanding public shares. In the event the Company decides to exercise the Extension Option, investors will not have voting rights nor redemption rights in connection with such additional three-month extensions.
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Redemptions in Connection
with our Initial Business
Combination
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Other Permitted Purchases of
Public Shares by our
Affiliates
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Redemptions if we fail to
Complete an Initial
Business Combination
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Impact to remaining stockholders
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The redemptions in connection with our initial business combination will reduce the book value per share for our remaining stockholders, who will bear the burden of interest withdrawn in order to pay our taxes (to the extent not paid from amounts accrued as interest on the funds held in the trust account).
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If the permitted purchases described above are made, there would be no impact to our remaining stockholders because the purchase price would not be paid by us.
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The redemption of our public shares if we fail to complete our initial business combination will reduce the book value per share for the shares held by our initial stockholders, who will be our only remaining stockholders after such redemptions.
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Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419
The following table compares the terms of this offering to the terms of an offering by a blank check company subject to the provisions of Rule 419. This comparison assumes that the gross proceeds, underwriting commissions and underwriting expenses of our offering would be identical to those of an offering undertaken by a company subject to Rule 419, and that the underwriter will not exercise their over-allotment option. None of the provisions of Rule 419 apply to our offering.
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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Escrow of offering proceeds
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$101,000,000 of the net proceeds of this offering and private placements will be deposited into a trust account located in the United States with Continental Stock Transfer & Trust Company acting as trustee.
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Approximately $88,200,000 of the offering proceeds, representing the gross proceeds of this offering, would be required to be deposited into either an escrow account with an insured depositary institution or in a separate bank account established by a broker-dealer in which the broker-dealer acts as trustee for persons having the beneficial interests in the account.
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Investment of net proceeds
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$101,000,000 of the net proceeds of this offering and the private placements held in trust will be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations.
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Proceeds could be invested only in specified securities such as a money market fund meeting conditions of the Investment Company Act or in securities that are direct obligations of, or obligations guaranteed as to principal or interest by, the United States.
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Receipt of interest on escrowed funds
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Interest on proceeds from the trust account to be paid to stockholders is reduced by (i) any taxes paid or payable and (ii) in the event of our liquidation for failure to complete our initial business combination within the allotted time, up to $100,000 of net interest that may be released to us should we have no or insufficient working capital to fund the costs and expenses of our dissolution and
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Interest on funds in escrow account would be held for the sole benefit of investors, unless and only after the funds held in escrow were released to us in connection with our completion of a business combination.
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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liquidation.
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Limitation on fair value or net assets of target business
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We must complete one or more initial business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account at the time of our signing a definitive agreement in connection with our initial business combination.
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The fair value or net assets of a target business must represent at least 80% of the maximum offering proceeds.
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Trading of securities issued
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The units are expected to begin trading on or promptly after the date of this prospectus. The Class A common stock, rights, and warrants comprising the units will begin separate trading on the 90th day following the date of this prospectus unless EarlyBirdCapital informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. We will file the Current Report on Form 8-K promptly after the closing of this offering, which closing is anticipated to take place three business days from the date of this prospectus. If the over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the over- allotment option.
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No trading of the units or the underlying Class A common stock, rights, and warrants would be permitted until the completion of a business combination. During this period, the securities would be held in the escrow or trust account.
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Exercise of the warrants
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The warrants cannot be exercised until the 30 days after the completion of our initial business combination.
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The warrants could be exercised prior to the completion of a business combination, but securities received and cash paid in connection with the exercise would be deposited in the escrow or trust account.
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Election to remain an investor
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We will provide our public stockholders with the opportunity to redeem their public shares for cash at a per share price equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, upon the completion of our initial business combination, subject to the limitations described herein. We may not be required
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A prospectus containing information pertaining to the business combination required by the SEC would be sent to each investor. Each investor would be given the opportunity to notify the company in writing, within a period of no less than 20 business days and no more than 45 business days from the effective date of a post-effective amendment to the company’s registration statement, to decide if he, she or it elects to remain a stockholder of the company or require the return of his, her or its investment. If the company has not received the notification by the end of the 45th business day, funds
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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by law to hold a stockholder vote. If we are not required by law and do not otherwise decide to hold a stockholder vote, we will, pursuant to our amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under the SEC’s proxy rules. If, however, we hold a stockholder vote, we will, like many blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If we seek stockholder approval, we will complete our initial business combination only if a majority of the shares of common stock voted are voted in favor of the business combination. Additionally, each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction.
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and interest or dividends, if any, held in the trust or escrow account are automatically returned to the stockholder. Unless a sufficient number of investors elect to remain investors, all funds on deposit in the escrow account must be returned to all of the investors and none of the securities are issued.
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Business combination deadline
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If we are unable to complete an initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering, we will 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 100% of the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (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
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If an acquisition has not been completed within 18 months after the effective date of the company’s registration statement, funds held in the trust or escrow account are returned to investors.
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and in all cases subject to the requirements of other applicable law.
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Release of funds
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Except for the withdrawal of interest to pay our taxes, none of the funds held in trust will be released from the trust account until the earliest of (i) the completion of our initial business combination, (ii) the redemption of our public shares if we are unable to complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering, subject to applicable law, and (iii) the redemption of our public shares properly submitted in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we have not consummated an initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity.
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The proceeds held in the escrow account are not released until the earlier of the completion of a business combination or the failure to effect a business combination within the allotted time.
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Delivering stock certificates in connection with the exercise of redemption rights
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We intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent or deliver their shares to our transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian)
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Many blank check companies provide that a stockholder can vote against a proposed business combination and check a box on the proxy card indicating that such stockholder is seeking to exercise its redemption rights. After the business combination is approved, the company would contact such stockholder to arrange for delivery of its share certificates to verify ownership.
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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system, prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up to two business days prior to the vote on the proposal to approve the initial business combination. In addition, if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its public shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial owner of such shares is included. The proxy materials or tender offer documents, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have up to two business days prior to the vote on the initial business combination if we distribute proxy materials, or from the time we send out our tender offer materials until the close of the tender offer period, as applicable, to submit or tender its shares if it wishes to seek to exercise its redemption rights.
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Limitation on redemption rights of stockholders holding more than 20% of the shares sold in this offering if we hold a stockholder vote
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If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to Excess Shares, without our prior consent. However, we would not restrict our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
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Many blank check companies provide no restrictions on the ability of stockholders to redeem shares based on the number of shares held by such stockholders in connection with an initial business combination.
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Competition
In identifying, evaluating and selecting a target business for our initial business combination, we may encounter competition from other entities having a business objective similar to ours, including other special purpose acquisition companies, private equity groups and leveraged buyout funds, public companies and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than us. Our ability to acquire larger target businesses 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 rights and 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.
Facilities
We currently utilize office space at 111 Somerset, #05-06, Singapore 238164 from our sponsor. We consider our current office space adequate for our current operations.
Employees
We currently have two executive officers. Neither of our executive officers are 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 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. We do not intend to have any full-time employees prior to the completion of our initial business combination.
Periodic Reporting and Financial Information
We will register our units, Class A common stock, rights, 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 materials or tender offer documents sent to stockholders to assist them in assessing the target business. In all likelihood, these financial statements will need to be prepared in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical financial statements may be required to be audited in accordance with the standards of the PCAOB. These financial statement requirements may limit the pool of potential target businesses we may conduct an initial business combination with 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 business combination candidate will have financial statements prepared in accordance with the requirements outlined above, or that the potential target business will be able to prepare its financial statements in accordance with the requirements outlined above. To the extent that these requirements cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential business combination candidates, we do not believe that this limitation will be material.
We will be required to evaluate our internal control procedures for the fiscal year ending December 31, 2022 as required by the Sarbanes-Oxley Act. Only if we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to have our internal control procedures audited. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination.
Prior to the date of this prospectus, we will file a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our shares of common stock that are held by non-affiliates equals or exceeds $700,000,000 as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
Legal Proceedings
There is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such.
MANAGEMENT
Officers, Directors and Director Nominees
Our officers, directors and director nominees are as follows:
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Name
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Age
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Position
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Tse Meng Ng
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47
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Chairman and Chief Executive Officer
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Han Hsiung Lim
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46
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Chief Financial Officer, Chief Operating Officer and Director
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Benjamin Waisbren
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63
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Independent Director
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Simon Eng Hock Ong
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55
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Independent Director Nominee
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Vincent Yang Hui
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33
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Independent Director Nominee
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Tse Meng Ng, our Chairman and Chief Executive Officer, is a highly regarded and successful financier and businessman. In February 2019, Mr. Ng co-founded Ruifeng Wealth Management Pte Ltd, a Singapore Capital Markets Services licensed financial institution regulated by the Monetary Authority of Singapore with a market capitalization of approximately $2 billion, for which he serves as the chief executive officer. There, Mr. Ng and his team provide fund management services to ultra-high net worth individuals. From May 2014 to January 2019, Mr. Ng served as the Managing Director of Credit Agricole, an international full-service banking group. He was voted ‘Outstanding Young Private Banker’ in 2011 by Private Banker International, the leading journal for the global wealth management industry. Prior to that, Mr. Ng was a Director at Credit Suisse where he helped form the team that covered the North Asia markets and where he helped contribute the most net new money between 2008-2009. He started his career in 1998 at Citibank N.A where he managed a team of banking staff at a very young age. Mr. Ng earned a B.S. in Business from Nanyang Technological University. Mr. Ng is well qualified to serve on our board of directors due to his leadership skills and business acumen.
Han Hsiung Lim, our Chief Financial Officer and Chief Operating Officer, is an accomplished executive and leader. Mr. Lim has served on our board of directors since January 2021. Mr. Lim retired from an 18-year career in the banking and asset management industry in 2018 and has since managed his own investments in public equities and fixed-income securities. From January 2016 to December 2017, Mr. Lim was a Senior Vice President in the Risk & Performance Management Department at GIC (formerly known as the Government of Singapore Investment Corporation), which manages Singapore’s foreign reserves. From April 2009 to December 2014, he served as the Head of Credit Risk Management in the Risk & Performance Management Department at GIC where he was responsible for approving, managing and mitigating the firmwide credit exposure of GIC to its trading counterparties. From February 2000 to April 2009, Mr. Lim worked within the Financial Markets Credit Group at DBS Bank, where he rose up the ranks to Vice President in 2005 and was responsible for approving, managing and mitigating the firmwide credit exposure of DBS Bank to a portfolio of banks and non-bank financial institutions. He also has experience in managing credit exposure, as he was tasked with avoiding and mitigating DBS Bank’s potential losses during the 2008 Global Financial Crisis. Mr. Lim has a bachelor of business degree (First Class Honors), with a major in banking and a minor in hospitality, from the Nanyang Technological University.
Benjamin Waisbren has served on our board of directors since January 2021. Since 2014, Mr. Waisbren has served as the President of Virtually There Holdings LLC d/b/a Ben Waisbren & Associates, which advises media companies and firms involved in distressed situations. From April 2019 through July 2020, Mr. Waisbren served as Chief Executive Officer and Chief Restructuring Officer of NanoMech Inc., a nanotechnology company that he led through a Chapter 11 case and its sale to a global company. He is also on the board of Vistas Media Acquisition Company, a Nasdaq listed blank check company, and previously served on the board of Wild Bunch AG, the German-listed, Paris-based award-winning film co-production and distribution company for ten years. Mr. Waisbren also held attorney positions at Lord Bissell & Brook LLP (now Locke Lord LLP) and Winston & Strawn LLP, during and after which he was engaged by the U.S. Department of Justice in the 1Malaysia Development Berhad money laundering matter. Mr. Waisbren’s impressive legal and business career make him an excellent candidate for our board of directors.
Simon Eng Hock Ong will serve on our board of directors following the completion of this offering. Mr. Ong currently serves as the Chief Financial Officer of Rich Capital Holdings Limited, a company listed on SGX
Catalist. Prior thereto, Mr. Ong worked as the Executive Director of Asiaphos Limited from 2012 through June, 2019, and remains as with Asiaphos as a Non-Executive Director and as a member of their audit committee. Previously, Mr. Ong also served as Group Finance Manager and as Chief Financial Officer of Hwa Hong Corporation Limited, a company listed on SGX-ST Main Board, and as a director of corporate and financial planning of the King George Development Corporation, a company listed on the TSX Venture Exchange (formerly known as the Vancouver Stock Exchange). Mr. Ong has a degree in accounting from North East London Polytechnic (now known as the University of East London) and is a Fellow of the Association of Chartered Certified Accountants and a Certified Practicing Accountant in Australia. Mr. Ong’s experience working with public companies and his strong background in finance and accounting make him a strong candidate to serve on our board of directors.
Vincent Yang Hui will serve on our board of directors following the completion of this offering. Mr. Hui currently serves as the Chief Executive Officer of abComo eCommerce Pte Ltd, a multinational influencer platform that he founded in 2020. He also co-founded Long-bridge, an overseas asset investment company, in 2019, and Alphabit Consulting Pte Ltd, a Singapore based technology consulting company. From 2014 to 2018, Mr. Hui served as a Business Development Director for the Alibaba Group and Ant Financial. Mr. Hui has a BSc in Information Management and Information Systems from the University of Electronic Science and Technology of China and a graduate diploma in systems analysis from the National University of Singapore. Mr. Hui’s qualifications to serve on our board of directors includes his entrepreneurial experiences and educational background.
Our Advisors
In addition to our management team and board of directors, our team will include Chandra Tjan and Stephen Lee, who shall serve as advisors. None of these individuals have any contractual obligation to us or are otherwise required to commit any specified amount of time to our affairs; however, we expect that certain of these individuals will, on average, dedicate a significant amount of their professional time on our affairs.
Chandra Tjan is a heralded entrepreneur with a record of success as a venture capitalist in Southeast Asia. Mr. Tjan started his career as a banker at Citigroup and Credit Suisse in Singapore. After a decade in the banking industry, Mr. Tjan saw a huge opportunity in Indonesia’s technology sector, and in 2009 he co-founded East Ventures, an early stage capital venture firm. During his tenure in Indonesia, Mr. Tjan was responsible for dozens of investments in early-stage start-ups, including the online marketplace Tokopedia and all-in-one travel booking platform Traveloka. In 2015, Chandra co-founded Alpha JWC Ventures, an institutionalised and independent VC fund targeting early-stage tech startups across Southeast Asia, with a strong focus in Indonesia. The firm currently manages approximately $200 million across two funds, making it the largest early-stage fund in Indonesia, with 36 active portfolio companies. With over a decade of experience in tech investment, Mr. Tjan has invested in over 60 companies in Asia and the United States. He currently sits on the board of some of the leading tech companies in Asia, including FundingSocieties, Carro, GudangAda, Bobobox and OnlinePajak. Mr. Tjan graduated from The University of Sydney with a triple major in finance, economics, and management, currently attends the Owner-President Management (OPM) Program at Harvard Business School, a 3-year residential program for business owners and entrepreneurs, and is a member of YPO’s (Young President Organization) global leadership community.
Stephen Lee is an experienced and respected executive with experience across a wide variety of sectors and industries. In 1994, Mr. Lee joined AIF Capital and has been a Partner and Investment Committee Member since 2001. He has been actively involved in deal origination, transaction execution, investment management and portfolio monitoring and represents AIF Capital on the boards of various portfolio companies. His sector investment experience includes manufacturing, industrial, media, pharmaceutical and healthcare, aquaculture, consumer, new materials, telecommunication, logistics and transportation in multiple countries, including China, Hong Kong, Taiwan, Indonesia, South Korea and Singapore. Mr. Lee has been involved in multiple prominent deals in the Asia-Pacific region, including Aofeng Hi-Tech Company Limited (the largest carbon fiber composite company manufacturer in Asia), Oceanus Group Limited (the Singapore-listed leading aquatic company in Asia), CN Innovations Holdings Limited (the leading smartphone manufacturer in China and Asia), Shandong Buchang Pharmaceutical Co. Ltd. (China’s largest producer of traditional Chinese medicine), Charm Communications Inc. (a leading Chinese media company in China that was previously listed in the United States), Bharti Infratel Limited (India’s largest mobile operator in India), Bestime Pharma (Asia)
Limited (leading antibiotics drug manufacturer in China), PT Excelcomindo Pratama (leading mobile operator in Indonesia) and PT Marga Mandalasakti (operators of the longest toll road in Indonesia).
Number and Terms of Office of Officers and Directors
We will have four directors upon completion of this offering. Our board of directors will be divided into three classes with only one class of directors being elected in each year, and with each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a three-year term. In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until one year after our first fiscal year end following our listing on Nasdaq. The term of office of the first class of directors, consisting of Mr. Hui, will expire at our first annual meeting of stockholders. The term of office of the second class of directors, consisting of Mr. Waisbren, will expire at the second annual meeting of stockholders. The term of office of the third class of directors, consisting of Mr. Ong and Mr. Ng, will expire at the third annual meeting of stockholders.
Our officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint officers as it deems appropriate pursuant to our amended and restated certificate of incorporation.
Director Independence
The rules of Nasdaq require that a majority of our board of directors be independent within one year of our initial public offering. Our board of directors has determined that Messrs. Benjamin Waisbren, Simon Eng Hock Ong, and Vincent Yang Hui are “independent directors” as defined in Nasdaq rules and applicable SEC rules. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Executive Officer and Director Compensation
None of our executive officers or directors have received any cash compensation for services rendered to us. Commencing on the date that our securities are first listed on Nasdaq through the earlier of consummation of our initial business combination and our liquidation, we will pay our sponsor $10,000 per month for office space, secretarial and administrative services provided to members of our management team. In addition, we may elect to pay customary fees to our directors for director service and our sponsor, executive officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, executive officers or directors, or our or their affiliates. Any such payments prior to an initial business combination will be made from funds held outside the trust account. Other than quarterly audit committee review of such reimbursements, we do not expect to have any additional controls in place governing our reimbursement payments to our directors and executive officers for their out-of-pocket expenses incurred in connection with our activities on our behalf in connection with identifying and consummating an initial business combination. Other than these payments and reimbursements, no compensation of any kind, including finder’s and consulting fees, will be paid by the company to our sponsor, executive officers and directors, or any of their respective affiliates, prior to completion of our initial business combination.
After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting or management fees from the combined company. All of these fees will be fully disclosed to stockholders, to the extent then known, in the proxy solicitation materials or tender offer materials furnished to our stockholders in connection with a proposed business combination. We have not established any limit on the amount of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such compensation will be known at the time of the proposed business combination, because the directors of the post-combination business will be responsible for determining executive officer and director compensation. Any compensation to be paid to our executive officers will be determined, or recommended to the board of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on our board of directors.
We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial business combination, although it is possible that some or all of our executive officers and directors may negotiate employment or consulting arrangements to remain with us after our initial business combination. The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the consummation of our initial business combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to any agreements with our executive officers and directors that provide for benefits upon termination of employment.
Committees of the Board of Directors
Upon the effectiveness of the registration statement of which this prospectus forms a part, our board of directors will have two standing committees: an audit committee and a compensation committee. Subject to phase-in rules and a limited exception, the rules of Nasdaq and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors. Subject to phase-in rules and a limited exception, the rules of Nasdaq require that the compensation committee of a listed company be comprised solely of independent directors.
Audit Committee
Upon the effectiveness of the registration statement of which this prospectus forms a part, we will establish an audit committee of the board of directors. Benjamin Waisbren, Simon Eng Hock Ong and Vincent Yang Hui will serve as members of our audit committee, and Simon Eng Hock Ong will chair the audit committee. All members of our audit committee are independent of and unaffiliated with our sponsor and our underwriter.
Each member of the audit committee is financially literate and our board of directors has determined that Vincent Yang Hui qualifies as an “audit committee financial expert” as defined in applicable SEC rules.
The audit committee is responsible for:
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meeting with our independent registered accounting firm regarding, among other issues, audits, and adequacy of our accounting and control systems;
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monitoring the independence of the independent registered public accounting firm;
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verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law;
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inquiring and discussing with management our compliance with applicable laws and regulations;
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pre-approving all audit services and permitted non-audit services to be performed by our independent registered public accounting firm, including the fees and terms of the services to be performed;
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appointing or replacing the independent registered public accounting firm;
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determine the compensation and oversight of the work of the independent registered public accounting firm (including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting) for the purpose of preparing or issuing an audit report or related work;
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establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies;
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monitoring compliance on a quarterly basis with the terms of this offering and, if any noncompliance is identified, immediately taking all action necessary to rectify such noncompliance or otherwise causing compliance with the terms of this offering; and
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reviewing and approving all payments made to our existing stockholders, executive officers or directors and their respective affiliates. Any payments to members of our audit committee will be reviewed and approved by our board of directors, with the interested director or directors abstaining from such review and approval.
Compensation Committee
Upon the effectiveness of the registration statement of which this prospectus forms a part, we will establish a compensation committee of the board of directors. Benjamin Waisbren, Simon Eng Hock Ong, and Vincent Yang Hui will serve as members of our compensation committee. Benjamin Waisbren will chair the compensation committee.
We will adopt a compensation committee charter, which will detail the principal functions of the compensation committee, including:
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reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;
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reviewing and approving the compensation of all of our other Section 16 executive officers;
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reviewing our executive compensation policies and plans;
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implementing and administering our incentive compensation equity-based remuneration plans;
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assisting management in complying with our proxy statement and annual report disclosure requirements;
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approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;
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producing a report on executive compensation to be included in our annual proxy statement; and
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reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
The charter will also provide that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, independent legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.
Director Nominations
We do not have a standing nominating committee though we intend to form a corporate governance and nominating committee as and when required to so by law or Nasdaq rules. In accordance with Rule 5605(e)(2) of the Nasdaq rules, a majority of the independent directors may recommend a director nominee for selection by our board of directors. Our board of directors believes that the independent directors can satisfactorily carry out the responsibility of properly selecting or approving director nominees without the formation of a standing nominating committee. The directors who will participate in the consideration and recommendation of director nominees are Simon Eng Hock Ong and Vincent Yang Hui. In accordance with Rule 5605(e)(1)(A) of the Nasdaq rules, all such directors are independent. As there is no standing nominating committee, we do not have a nominating committee charter in place.
The board of directors will also consider director candidates recommended for nomination by our stockholders during such times as they are seeking proposed nominees to stand for election at the next annual meeting of stockholders (or, if applicable, a special meeting of stockholders). Our stockholders that wish to nominate a director for election to our board of directors should follow the procedures set forth in our bylaws.
We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating nominees for director, our board of directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders.
Compensation Committee Interlocks and Insider Participation
None of our executive officers currently serves, and in the past year has not served, as a member of the compensation committee of any entity that has one or more executive officers serving on our board of directors.
Code of Ethics
Prior to the consummation of this offering, we will adopt a code of ethics applicable to our directors, officers and employees (“Code of Ethics”). A copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K.
Conflicts of Interest
In general, officers and directors of a corporation incorporated under the laws of the State of Delaware are required to present business opportunities to a corporation if:
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the corporation could financially undertake the opportunity;
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the opportunity is within the corporation’s line of business; and
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it would not be fair to our company and its stockholders for the opportunity not to be brought to the attention of the corporation.
Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such entity. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our initial business combination.
Below is a table summarizing the entities to which our executive officers and directors currently have fiduciary duties or contractual obligations:
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Individual
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Entity
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Entity’s Business
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Affiliation
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Tse Meng Ng
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Ruifeng Wealth Management Pte Ltd
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Finance and Investing
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CEO and Co-Founder
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Benjamin Waisbren
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Vistas Media Acquisition Corp.
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Media
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Independent director
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Virtually There Holdings LLC d/b/a Ben Waisbren & Associates
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Consulting
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Principal
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Han Hsiung Lim
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Simon Eng Hock Ong
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Rich Capital Holdings Limited
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Finance and Investing
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Chief Financial Officer
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Asiaphos Limited
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Mining
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Director
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Vincent Yang Hui
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abComo eCommerce Pte Ltd
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Online Shopping
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Founder and Chief Executive Officer
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Potential investors should also be aware of the following other potential conflicts of interest:
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Our executive officers and directors are not required to, and 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 their other businesses. We do not intend to have any full-time employees prior to the completion of our initial business combination. Each of our executive officers is engaged in several other business endeavors for which he may be entitled to substantial compensation, and our executive officers are not obligated to contribute any specific number of hours per week to our affairs.
•
Our initial stockholders have agreed to waive their redemption rights with respect to any founder shares and any public shares held by them in connection with the consummation of our initial business combination. Additionally, our initial stockholders have agreed to waive their redemption rights with respect to any founder shares held by them if we fail to consummate our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, after the closing of this offering. If we do not complete our initial business combination within such applicable time period, the proceeds of the sale of the private placement warrants held in the trust account will be used to fund the redemption of our public shares, and the private placement warrants (and the underlying securities) will expire worthless. With certain limited exceptions, the founder shares will not be transferable, assignable until the earlier of: (A) one year after the completion of our initial business combination or (B) subsequent to our initial business combination, (x) if the last sale price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 60 days after our initial business combination, or (y) the date on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property. With certain limited exceptions, the private placement warrants (and private placement-equivalent warrants) and the Class A common stock underlying such warrants and rights, will not be transferable, assignable or saleable by our initial stockholders or their permitted transferees until 30 days after the completion of our initial business combination. Since our sponsor and officers and directors may directly or indirectly own common stock, rights, and warrants following this offering, our officers and directors 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.
•
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.
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 completing the business combination through a joint venture or other form of shared ownership with our sponsor, officers or directors. If we seek to complete our initial business combination with a business combination target that is affiliated with our sponsor, executive officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking which is a member of FINRA or a valuation or appraisal firm, that such initial business combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context. Furthermore, other than the payment of customary fees we may elect to make to members of our board of directors for director service, in no event will our sponsor or any of our existing officers or directors, or any of their respective affiliates, be paid by the company any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the completion of our initial business combination. Further, commencing on the date our securities are first listed on Nasdaq, we will also pay our sponsor $10,000 per month for office space, secretarial and administrative services provided to members of our management team.
We cannot assure you that any of the above mentioned conflicts will be resolved in our favor.
If we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed to vote their founder shares, and they and the other members of our management team have agreed to vote any founder shares they hold and any shares purchased during or after the offering, in favor of our initial business combination.
Limitation on Liability and Indemnification of Officers and Directors
Our amended and restated certificate of incorporation will provide that our officers and directors will be indemnified by us to the fullest extent authorized by Delaware law, as it now exists or may in the future be amended. In addition, our amended and restated certificate of incorporation will provide that our directors will not be personally liable for monetary damages to us or our stockholders for breaches of their fiduciary duty as directors, unless they violated their duty of loyalty to us or our stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived an improper personal benefit from their actions as directors.
We will enter into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification to be provided for in our amended and restated certificate of incorporation. Our bylaws also will permit us to secure insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would permit such indemnification. We will purchase a policy of directors’ and officers’ liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our officers and directors. Except with respect to any public shares they may acquire in this offering or thereafter (if we do not consummate an initial business combination), our officers and directors have agreed to waive (and any other persons who may become an officer or director prior to the initial business combination will also be required to waive) any right, title, interest or claim of any kind in or to any monies in the trust account, and not to seek recourse against the trust account for any reason whatsoever, including with respect to such indemnification.
These provisions may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against 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 officers and directors pursuant to these indemnification provisions.
We believe that these provisions, the directors’ and officers’ liability insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial ownership of our common stock as of the date of this prospectus, and as adjusted to reflect the sale of our Class A common stock included in the units offered by this prospectus, and assuming no purchase of units in this offering, by:
•
each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;
•
each of our executive officers, directors and director nominees; and
•
all our executive officers, directors and director nominees as a group.
Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all of our common stock beneficially owned by them. The following table does not reflect record or beneficial ownership of the private placement warrants as these warrants are not exercisable within 60 days of the date of this prospectus.
On January 21, 2021 our sponsor purchased an aggregate of 2,875,000 founder shares in exchange for a capital contribution of $25,000, or approximately $0.009 per share. We have issued to EarlyBirdCapital and/or designees an aggregate of 200,000 representatives shares at $0.0001 per share. Please see the section entitled “Certain Relationships and Related Party Transactions.” Prior to the initial investment in the company of $25,000 by the sponsor, the company had no assets, tangible or intangible. The purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the number of founder shares issued. The number of founder shares outstanding was determined based on the expectation that the total size of this offering would be a maximum of 11,500,000 units if the underwriter’s over-allotment option is exercised in full, and therefore that such founder shares would represent 20% of the outstanding shares after this offering (without giving effect to the private placements and the EBC founder shares). Up to 375,000 of the founder shares will be forfeited depending on the extent to which the underwriter’s over-allotment is exercised. The post-offering percentages in the following table assume that the underwriter does not exercise their over-allotment option, that our sponsor has forfeited 375,000 founder shares, and that there are 12,700,000 shares of common stock issued and outstanding after this offering.
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BEFORE OFFERING
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AFTER OFFERING
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NAME AND ADDRESS OF
BENEFICIAL OWNER(1)
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NUMBER OF
SHARES
BENEFICIALLY
OWNED(2)(4)
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APPROXIMATE
PERCENTAGE
OF
OUTSTANDING
COMMON
STOCK
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|
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NUMBER
OF SHARES
BENEFICIALLY
OWNED(2)
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|
|
APPROXIMATE
PERCENTAGE
OF
OUTSTANDING
COMMON
STOCK
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RF Dynamic LLC (our sponsor)(4)(3)
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2,875,000 |
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93.5% |
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2,500,000 |
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19.7% |
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Tse Meng Ng(4)
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2,875,000 |
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|
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93.5% |
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2,500,000 |
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19.7% |
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Benjamin Waisbren
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— |
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— |
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— |
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— |
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Han Hsiung Han
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— |
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|
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— |
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— |
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— |
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Simon Eng Hock Ong
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Vincent Yang Hui
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|
|
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All executive officers and directors as a group
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|
|
|
|
2,875,000 |
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|
|
|
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93.5% |
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|
|
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2,500,000 |
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|
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19.7% |
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EarlyBirdCapital, Inc.(5)
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200,000 |
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6.5% |
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200,000 |
|
|
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1.6% |
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*
Less than 1%
(1)
Unless otherwise noted, the business address of each of the following entities or individuals is c/o 111 Somerset, #05-06, Singapore 238164, Telephone number+65 6904 0766.
(2)
Interests shown consist solely of founder shares, classified as shares of Class B common stock. Such shares are convertible into shares of Class A common stock on a one-for-one basis, subject to adjustment, as described in the section of this prospectus entitled “Description of Securities.”
(3)
Includes up to 375,000 founder shares that will be surrendered for no consideration depending on the extent to which the underwriter’s over-allotment option is exercised.
(4)
RF Dynamic LLC is the record holder of the shares reported herein. Tse Meng Ng is the sole member and manager of RF Dynamic LLC and has voting and investment discretion with respect to the common stock held of record by the sponsor. Tse Meng Ng disclaims any beneficial ownership of any shares held by the sponsor except to the extent of his respective pecuniary interest therein.
(5)
The address of EarlyBirdCapital, Inc. is 366 Madison Avenue, 8th Floor, New York, NY 10017
Immediately after this offering, our initial stockholders will beneficially own 20% of the then-issued and outstanding shares of our common stock (without giving effect to the private placements and the EBC founder shares). Neither our sponsor nor any of our officers or directors have expressed an intention to purchase any units in this offering. If we increase or decrease the size of the offering, we will effect a stock dividend or a share contribution back to capital, or other appropriate mechanism, as applicable, with respect to our Class B common stock immediately prior to the consummation of the offering in such amount as to maintain the ownership of our initial stockholders at 20% of the issued and outstanding shares of our common stock upon the consummation of this offering (without giving effect to the private placements and the EBC founder shares). Because of this ownership block, our initial stockholders may be able to effectively influence the outcome of all matters requiring approval by our stockholders, including the election of directors, amendments to our amended and restated certificate of incorporation and approval of significant corporate transactions, including approval of our initial business combination.
The holders of the founder shares have agreed (A) to vote any shares owned by them in favor of any proposed initial business combination and (B) not to redeem any shares in connection with a stockholder vote to approve a proposed initial business combination or in connection with a tender offer.
Our sponsor and EarlyBirdCapital have agreed that they or, in the case of EarlyBirdCapital, their designees, will purchase an aggregate of 4,550,000 warrants (or 5,000,000 warrants if the over-allotment option is exercised in full) at a price of $1.00 per warrant, consisting of 4,050,000 warrants by our sponsor (or 4,450,500 warrants if the over-allotment option is exercised in full) and 500,000 warrants by EarlyBirdCapital (and/or its designees) (or 549,500 warrants if the over-allotment option is exercised in full).
Our sponsor, and our executive officers and directors are deemed to be our “promoters” as such term is defined under the federal securities laws.
Restrictions on Transfers of Founder Shares and Private Placement Warrants
The founder shares and private placement warrants (and any shares of Class A common stock underlying such securities or issued upon conversion or exercise thereof) are each subject to transfer restrictions pursuant to lock-up provisions in a letter agreement with us to be entered into by our sponsor, officers and directors and the warrant purchase agreements to be entered into by us, our sponsor and EarlyBirdCapital. Those lock-up provisions provide that such securities are not transferable or salable (i) in the case of the founder shares, until the earlier of (A) 12 months after the completion of our initial business combination or (B) subsequent to our initial business combination, (x) if the last sale price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (y) the date on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property, and (ii) in the case of the private placement warrants (and underlying securities), until after the completion of our initial business combination, except in each case (a) to our officers or directors, any affiliates or family members of any of our officers or directors, any members of our sponsor, or any affiliates of our sponsor; (b) in the case of an individual, by gift to a member of one of the members of the individual’s immediate family or to a trust, the beneficiary of which is a member of one of the individual’s immediate family, an affiliate of such person or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) by private sales or transfers made in connection with the consummation of an initial business combination at prices no greater than the price at which the securities were originally purchased; (f) in the event of our liquidation prior to the
completion of our initial business combination; (g) by virtue of the laws of Delaware or our sponsor’s limited liability company agreement upon dissolution of our sponsor; or (h) in the event of our liquidation, merger, capital stock exchange, reorganization or other similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property subsequent to our completion of our initial business combination; provided, however, that in the case of clauses (a) through (e) or (g) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions and the other restrictions contained in the letter agreements and by the same agreements entered into by our sponsor with respect to such securities (including provisions relating to voting, the trust account and liquidation distributions described elsewhere in this prospectus).
Registration Rights
The holders of the founder shares, private placement warrants (and underlying securities) and EBC founder shares will have registration rights to require us to register a sale of any of our securities held by them pursuant to a registration rights agreement to be signed prior to or on the effective date of this offering. These holders will be entitled to make up to three demands, excluding short form registration demands, that we register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include their securities in other registration statements filed by us. Notwithstanding the foregoing, these holders may not exercise their demand and “piggyback” registration rights after five and seven years, respectively, after the effective date of the registration statement of which this prospectus forms a part and may not exercise their demand rights on more than one occasion.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
We currently utilize office space at 111 Somerset, #05-06, Singapore 238164 from our sponsor. Subsequent to the closing of this offering, we will pay our sponsor $10,000 per month for office space, secretarial and administrative services provided to members of our management team. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
Other than the payment of customary fees we may elect to make to members of our board of directors for director service, no compensation of any kind, including finder’s and consulting fees, will be paid by the company to our sponsor, executive officers and directors, or any of their respective affiliates, for services rendered prior to or in connection with the completion of an initial business combination. However, these individuals will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates. Prior to the closing of this offering, our sponsor may loan us funds of up to $300,000 to be used for a portion of the expenses of this offering. These loans would be non-interest bearing, unsecured and are due at the earlier of September 30, 2022 or the closing of this offering.
In addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required on a non-interest basis. If we complete an initial business combination, we would repay such loaned amounts. If the initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. The terms of such working capital loans by our sponsor or its affiliates, or our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
Any of the foregoing payments to our sponsor, repayments of loans from our sponsor or repayments of working capital loans prior to our initial business combination will be made using funds held outside the trust account.
After our initial business combination, members of our management team who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to our stockholders, to the extent then known, in the proxy solicitation or tender offer materials, as applicable, furnished to our stockholders. It is unlikely the amount of such compensation will be known at the time of distribution of such tender offer materials or at the time of a stockholder meeting held to consider our initial business combination, as applicable, as it will be up to the directors of the post-combination business to determine executive and director compensation.
We have entered into a registration rights agreement with respect to the founder shares and private placement securities, which is described under the heading “Principal Stockholders — Registration Rights.”
Policy for Approval of Related Party Transactions
The audit committee of our board of directors will adopt a policy setting forth the policies and procedures for its review and approval or ratification of “related party transactions.” A “related party transaction” is any consummated or proposed transaction or series of transactions: (i) in which the company was or is to be a participant; (ii) the amount of which exceeds (or is reasonably expected to exceed) the lesser of 120,000 or 1% of the average of the company’s total assets at year end for the prior two completed fiscal years in the aggregate over the duration of the transaction (without regard to profit or loss); and (iii) in which a “related party” had, has or will have a direct or indirect material interest. “Related parties” under this policy will include: (i) our directors, nominees for director or executive officers; (ii) any record or beneficial owner of more than 5% of any class of our voting securities; (iii) any immediate family member of any of the foregoing if the foregoing person is a natural person; and (iv) any other person who maybe a “related person” pursuant to Item 404 of Regulation S-K under the Exchange Act. Pursuant to the policy, the audit committee will consider (i) the
relevant facts and circumstances of each related party transaction, including if the transaction is on terms comparable to those that could be obtained in arm’s-length dealings with an unrelated third party, (ii) the extent of the related party’s interest in the transaction, (iii) whether the transaction contravenes our code of ethics or other policies, (iv) whether the audit committee believes the relationship underlying the transaction to be in the best interests of the company and its stockholders and (v) the effect that the transaction may have on a director’s status as an independent member of the board and on his or her eligibility to serve on the board’s committees. Management will present to the audit committee each proposed related party transaction, including all relevant facts and circumstances relating thereto. Under the policy, we may consummate related party transactions only if our audit committee approves or ratifies the transaction in accordance with the guidelines set forth in the policy. The policy will not permit any director or executive officer to participate in the discussion of, or decision concerning, a related person transaction in which he or she is the related party.
DESCRIPTION OF SECURITIES
We are a Delaware corporation and our affairs will be governed by our amended and restated certificate of incorporation and the DGCL. Pursuant to our amended and restated certificate of incorporation which will be adopted prior to the consummation of this offering, we will be authorized to issue 400,000,000 shares of common stock, $0.0001 par value each, including 380,000,000 shares of Class A common stock and 20,000,000 shares of Class B common stock, as well as 1,000,000 shares of preferred stock, $0.0001 par value each. The following description summarizes certain terms of our capital stock as set out more particularly in our amended and restated certificate of incorporation. Because it is only a summary, it may not contain all the information that is important to you.
Public Units
Each unit has an offering price of $10.00 and consists of one share of Class A common stock, one redeemable warrant, and one right. Each right entitles the holder to receive one-tenth (1/10) of a share of Class A common stock. Pursuant to this Offering, a rights holder may exercise its rights only for a whole number of shares of the Company's Class A common stock. As a result, you must have 10 rights to receive one share of common stock. Each whole warrant entitles the holder thereof to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment as described in this prospectus. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of the shares of Company’s Class A common stock. This means only a whole warrant may be exercised at any given time by a warrant holder. The Class A common stock, warrants, and rights comprising the units are expected to begin separate trading on the 90th day following the date of this prospectus unless EarlyBirdCapital informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Once the shares of Class A common stock, warrants, and rights commence separate trading, holders will have the option to continue to hold units or separate their units into the component securities. Holders will need to have their brokers contact our transfer agent in order to separate the units into Class A common stock, warrants, and rights. No fractional warrants, shares, nor rights will be issued upon separation of the units and only whole warrants, shares, and rights will trade.
In no event will the Class A common stock, warrants, and rights be traded separately until we have filed with the SEC a Current Report on Form 8-K which includes an audited balance sheet reflecting our receipt of the gross proceeds at closing of this offering. We will file a Current Report on Form 8-K which includes this audited balance sheet promptly after the completion of this offering, which closing is anticipated to take place three business days after the date of this prospectus. If the underwriter’s over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriter’s over-allotment option.
Common Stock
Prior to the date of this prospectus, there were 2,875,000 shares of Class B common stock outstanding, all of which were held of record by our initial stockholders, and 200,000 Class A common stock outstanding, all of which were held by EarlyBirdCapital. Up to 375,000 of the founder shares will be forfeited by our sponsor depending on the extent to which the underwriter’s over-allotment is exercised so that our initial stockholders will own 20% of our issued and outstanding shares after this offering (excluding the EBC founder shares and assuming our initial stockholders does not purchase any units in this offering). Upon the closing of this offering, 12,700,000 of our shares of common stock will be outstanding (assuming no exercise of the underwriter’s over-allotment option and the corresponding forfeiture of 375,000 founder shares by our sponsor) including:
•
10,000,000 shares of Class A common stock underlying units issued as part of this offering;
•
2,500,000 shares of Class B common stock held by our initial stockholders;
•
200,000 shares of Class A common stock issued to EarlyBirdCapital, which we refer to as the EBC founder shares.
If we increase or decrease the size of this offering, we will effect a stock dividend or share contribution back to capital or other appropriate mechanism, as applicable, with respect to our Class B common stock immediately prior to the consummation of the offering in such amount as to maintain the ownership of our initial stockholders at 20% of our issued and outstanding common stock upon the consummation of this offering (without giving effect to the private placements and the EBC founder shares).
Stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Prior to our initial business combination, only holders of our Class B common stock will have the right to vote on the appointment of directors. Holders of our public shares will not be entitled to vote on the appointment of directors during such time. In addition, prior to the completion of an initial business combination, holders of a majority of our founder shares may remove a member of the board of directors for any reason. Accordingly, you may not have any say in the management of our company prior to the completion of an initial business combination.
Holders of Class A common stock and holders of Class B common stock will vote together as a single class on all other matters submitted to a vote of our stockholders except as required by law. Unless specified in our amended and restated certificate of incorporation, or as required by applicable provisions of the DGCL or applicable stock exchange rules, the affirmative vote of a majority of our shares of common stock that are voted is required to approve any such matter voted on by our stockholders. Our board of directors is 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. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors. Our stockholders are entitled to receive ratable dividends when, as and if declared by the board of directors out of funds legally available therefor.
Because our amended and restated certificate of incorporation authorizes the issuance of up to 380,000,000 shares of Class A common stock, if we were to enter into a business combination, we may (depending on the terms of such a business combination) be required to increase the number of shares of Class A common stock which we are authorized to issue at the same time as our stockholders vote on the business combination to the extent we seek stockholder approval in connection with our initial business combination. Our board of directors is divided into three classes with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a three-year term.
In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until no later than one year after our first fiscal year end following our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws, unless such election is made by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.10 per public share. EarlyBirdCapital, our initial stockholders, sponsor, officers and directors have entered into written agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares and public shares they hold in connection with the completion of our initial business combination. Unlike many special purpose acquisition companies that hold stockholder votes and conduct proxy solicitations in conjunction with their initial business combinations and provide for related redemptions of public shares for cash upon completion of such initial business combinations even when a vote is not required by law, if a stockholder vote is not required by law and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate
of incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC, and file tender offer documents with the SEC prior to completing our initial business combination. Our amended and restated certificate of incorporation requires these tender offer documents to contain substantially the same financial and other information about our initial business combination and the redemption rights as is required under the SEC’s proxy rules. If, however, a stockholder approval of the transaction is required by law, or we decide to obtain stockholder approval for business or other legal reasons, we will, like many special purpose acquisition companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If we seek stockholder approval, we will complete our initial business combination only if a majority of the shares of common stock voted are voted in favor of our initial business combination. However, the participation of our sponsor, officers, directors, advisors or their affiliates in privately-negotiated transactions (as described in this prospectus), if any, could result in the approval of our initial business combination even if a majority of our public stockholders vote, or indicate their intention to vote, against such initial business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained.
If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to Excess Shares, without our prior consent. However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination. Our stockholders’ inability to redeem the Excess Shares will reduce their influence over our ability to complete our initial business combination, and such stockholders could suffer a material loss in their investment if they sell such Excess Shares on the open market. Additionally, such stockholders will not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. And, as a result, such stockholders will continue to hold that number of shares exceeding and, in order to dispose of such shares would be required to sell their shares in open market transactions, potentially at a loss.
If we seek stockholder approval in connection with our initial business combination, our sponsor, our initial stockholders, sponsor, officers and directors have agreed to vote any founder shares, EBC founder shares they hold and any public shares purchased during or after this offering in favor of our initial business combination. As a result, we would need 475,001, or approximately 4.75%, of the 10,000,000 public shares sold in this offering to be voted in favor of an initial business combination in order to have our initial business combination approved (assuming that only a quorum is present at the meeting, the over-allotment option is not exercised and the EBC founder shares issued to EarlyBirdCapital (and/or its designees) are voted in favor of the initial business combination). Additionally, each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction.
Pursuant to our amended and restated certificate of incorporation, if we are unable to complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In the event the Company decides to exercise the Extension Option, investors will not have voting rights nor redemption rights in connection with such additional three-month extensions. Our sponsor and our initial stockholders have entered into agreements with us, pursuant to which they have agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares and EBC founder shares
if we fail to complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering or any extended period of time that we may have to consummate an initial business combination as a result of an amendment to our amended and restated certificate of incorporation. However, if our sponsor or our initial stockholders or management team acquire public shares in or after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the prescribed time period.
In the event of a liquidation, dissolution or winding up of the company after a business combination, our stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of shares, if any, having preference over the common stock. Our stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock, except that we will provide our public stockholders with the opportunity to redeem their public shares for cash at a per share price equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, upon the completion of our initial business combination, subject to the limitations described herein.
Founder Shares
The founder shares are designated as Class B common stock and, except as described below, are identical to the shares of Class A common stock included in the units being sold in this offering, and holders of founder shares have the same stockholder rights as public stockholders, except that (i) the founder shares are subject to certain transfer restrictions, as described in more detail below, (ii) our initial stockholders, sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed (A) to waive their redemption rights with respect to any founder shares and public shares they hold in connection with the completion of our initial business combination, (B) to waive their redemption rights with respect to any founder shares and public shares they hold in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we have not consummated an initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity and (C) to waive their rights to liquidating distributions from the trust account with respect to any founder shares they hold if we fail to complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering or any extended period of time that we may have to consummate an initial business combination as a result of an amendment to our amended and restated certificate of incorporation, although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our initial business combination within such time period, and (iii) the founder shares are automatically convertible into shares of Class A common stock concurrently with or immediately following the consummation of our initial business combination on a one-for-one basis, subject to adjustment as described herein and in our amended and restated certificate of incorporation. If we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed to vote their founder shares and any public shares purchased during or after this offering in favor of our initial business combination.
The founder shares will automatically convert into shares of Class A common stock concurrently with or immediately following the consummation of our initial business combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock or equity-linked securities are issued or deemed issued in connection with our initial business combination, the number of shares of Class A common stock issuable upon conversion of all founder shares will equal, in the aggregate, on an as- converted basis, 20% of the total number of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by public stockholders
and without giving effect to the private placements and the EBC founder shares), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the company in connection with or in relation to the consummation of the initial business combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in the initial business combination and any private placement warrants issued to our sponsor, officers or directors.
With certain limited exceptions, the founder shares are not transferable, assignable or salable (except to our officers and directors and other persons or entities affiliated with our sponsor, each of whom will be subject to the same transfer restrictions) until the earlier of (A) one year after the completion of our initial business combination or (B) subsequent to our initial business combination, (x) if the last sale price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 60 days after our initial business combination, or (y) the date on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property. Up to 375,000 founder shares will be forfeited by our sponsor depending on the exercise of the underwriter’s over-allotment option.
Preferred Stock
Our amended and restated certificate of incorporation will provide that shares of preferred stock may be issued from time to time in one or more series. Our board of directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. Our board of directors will be able to, without stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects. The ability of our board of directors to issue preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control of us or the removal of existing management. We have no preferred stock outstanding at the date hereof. Although we do not currently intend to issue any shares of preferred stock, we cannot assure you that we will not do so in the future. No shares of preferred stock are being issued or registered in this offering.
Warrants
Each whole warrant entitles the registered holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing 30 days after the completion of our initial business combination; provided that we have an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating to them is available (or we permit holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement) and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares of Class A common stock. This means only a whole warrant may be exercised at a given time by a warrant holder. The warrants will expire five years after the completion of our initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
We will not be obligated to deliver any Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to our satisfying our obligations described below with respect to registration. No warrant will be exercisable and we will not be obligated to issue a share of Class A common stock upon exercise of a warrant unless the share of Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and
such warrant may have no value and expire worthless. In no event will we be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the share of Class A common stock underlying such unit.
We are registering the shares of Class A common stock issuable upon exercise of the warrants in the registration statement of which this prospectus forms a part because the warrants will become exercisable 30 days after the completion of its initial business combination, which may be within one year of this offering. However, because the warrants will be exercisable until their expiration date of up to five years after the completion of our initial business combination, in order to comply with the requirements of Section 10(a)(3) of the Securities Act following the consummation of our initial business combination, under the terms of the warrant agreement, we have agreed that, as soon as practicable, but in no event later than 15 business days, after the closing of its initial business combination, we will use our best efforts to file with the SEC a post-effective amendment to the registration statement of which this prospectus forms a part or a new registration statement covering the registration under the Securities Act of the Class A common stock issuable upon exercise of the warrants and thereafter will use our best efforts to cause the same to become effective within 60 business days following our initial business combination and to maintain a current prospectus relating to the Class A common stock issuable upon exercise of the warrants until the expiration of the warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the sixtieth (60th) business day after the closing of our initial business combination, warrant holders may, until such time as there is an effective registration statement and during any period when we will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if our Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, and in the event we do not so elect, we will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption
Once the warrants become exercisable, we may call the warrants for redemption for cash:
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in whole and not in part;
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at a price of $.01 per warrant;
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upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and
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if, and only if, the closing price of the common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like and for certain issuances of Class A common stock and equity-linked securities for capital raising purposes in connection with the closing of our initial business combination as described elsewhere in this prospectus) for any 20 trading days within a 30-trading day period ending three business days before we send to the notice of redemption to the warrant holders.
If and when the warrants become redeemable by us for cash, 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.
We have established the last of the redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and we issue a notice of redemption of the warrants, each warrant holder will be entitled to exercise his, her or its warrant prior to the scheduled redemption date. However, the price of the Class A common stock may fall below the $18.00 redemption trigger price (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like and for certain issuances of Class A common stock and equity-linked securities for capital raising purposes in connection with the closing of our initial
business combination as described elsewhere in this prospectus) as well as the $11.50 warrant exercise price after the redemption notice is issued.
Redemption procedures
If we call the warrants for redemption as described above, our management will have the option to require any holder that wishes to exercise his, her or its warrant to do so on a “cashless basis.” In determining whether to require all holders to exercise their warrants on a “cashless basis,” our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of Class A common stock issuable upon the exercise of our warrants. If our management takes advantage of this option, all holders of warrants would pay the exercise price by surrendering their warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of Class A common stock underlying the warrants, multiplied by the excess of the “fair market value” of our Class A common stock (defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” will mean the average closing price of the Class A common stock for the five trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. If our management takes advantage of this option, the notice of redemption will contain the information necessary to calculate the number of shares of Class A common stock to be received upon exercise of the warrants, including the “fair market value” in such case. Requiring a cashless exercise in this manner will reduce the number of shares to be issued and thereby lessen the dilutive effect of a warrant redemption. We believe this feature is an attractive option to us if we do not need the cash from the exercise of the warrants after our initial business combination. If we call our warrants for redemption and our management does not take advantage of this option, the holders of the private placement warrants and their permitted transferees would still be entitled to exercise their private placement warrants for cash or on a cashless basis using the same formula described above that other warrant holders would have been required to use had all warrant holders been required to exercise their warrants on a cashless basis.
A holder of a warrant may notify us in writing if it elects to be subject to a requirement that such holder will not have the right to exercise such warrant, to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the warrant agent’s actual knowledge, would beneficially own in excess of 4.9% or 9.8% (as specified by the holder) of the Class A common stock outstanding immediately after giving effect to such exercise.
If the number of outstanding shares of Class A common stock is increased by a share capitalization payable in shares of Class A common stock, or by a split-up of common stock or other similar event, then, on the effective date of such share capitalization, split-up or similar event, the number of shares of Class A common stock issuable on exercise of each warrant will be increased in proportion to such increase in the outstanding shares of common stock. A rights offering to holders of common stock entitling holders to purchase Class A common stock at a price less than the fair market value will be deemed a share capitalization of a number of shares of Class A common stock equal to the product of (i) the number of shares of Class A common stock actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for Class A common stock) and (ii) the quotient of (x) the price per share of Class A common stock paid in such rights offering and (y) the fair market value. For these purposes (i) if the rights offering is for securities convertible into or exercisable for shares of Class A common stock, in determining the price payable for Class A common stock, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) fair market value means the volume weighted average price of shares of Class A common stock as reported during the five trading day period ending on the trading day prior to the first date on which the Class A common stock trades on the applicable exchange or in the applicable market, regular way, without the right to receive such rights.
In addition, if we, at any time while the warrants are outstanding and unexpired, pay a dividend or make a distribution in cash, securities or other assets to the holders of Class A common stock on account of such Class A common stock (or other securities into which the warrants are convertible), other than (a) as described above, (b) certain ordinary cash dividends, (c) to satisfy the redemption rights of the holders of Class A common stock in connection with a proposed initial business combination, or (d) in connection with the
redemption of our public shares upon our failure to complete our initial business combination, then the warrant exercise price will be decreased, effective immediately after the effective date of such event, by the amount of cash and/or the fair market value of any securities or other assets paid on each share of Class A common stock in respect of such event.
If the number of outstanding shares of Class A common stock is decreased by a consolidation, combination, reverse share split or reclassification of Class A common stock or other similar event, then, on the effective date of such consolidation, combination, reverse share split, reclassification or similar event, the number of shares of Class A common stock issuable on exercise of each warrant will be decreased in proportion to such decrease in the outstanding shares of Class A common stock.
Whenever the number of shares of Class A common stock purchasable upon the exercise of the warrants is adjusted, as described above, the warrant exercise price will be adjusted by multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number of shares of Class A common stock purchasable upon the exercise of the warrants immediately prior to such adjustment, and (y) the denominator of which will be the number of shares of Class A common stock so purchasable immediately thereafter.
In addition, if (x) we issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by our board of directors and, in the case of any such issuance to our Sponsor, initial stockholders or their affiliates, without taking into account any founder shares held by our Sponsor, initial stockholders or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date of the consummation of our initial business combination (net of redemptions), and (z) the volume weighted average trading price of our Class A common stock during the 20 trading day period starting on the trading day after the day on which we consummate our initial business combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price described below under “Redemption of Warrants” will be adjusted (to the nearest cent) to be equal to 118% of the higher of the Market Value and the Newly Issued Price.
The warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. You should review a copy of the warrant agreement, which will be filed as an exhibit to the registration statement of which this prospectus is a part, for a complete description of the terms and conditions applicable to the warrants. 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 a majority of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants.
The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price (or on a cashless basis, if applicable), by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of common stock and any voting rights until they exercise their warrants and receive Class A common stock. After the issuance of Class A common stock upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.
Private Placement Warrants
The private placement warrants (including the Class A common stock issuable upon exercise of the private placement warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination (except, among other limited exceptions as described under the section of this prospectus entitled “Principal Stockholders — Restrictions on Transfers of Founder Shares and Private Placement Warrants,” to our officers and directors and other persons or entities affiliated with our sponsor).
The private placement warrants have terms and provisions that are identical to those of the warrants being sold as part of the units in this offering, including as to exercise price, exercisability and exercise period.
If holders of warrants (and private placement-equivalent warrants) elect to exercise them on a cashless basis, they would pay the exercise price by surrendering their warrants for 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 warrants, multiplied by the excess of the “fair market value” (defined below) of the Class A common stock over the exercise price of the warrants 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 five trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent. We expect to have policies in place that prohibit insiders from selling our securities except during specific periods of time. Even during such periods of time when insiders will be permitted to sell our securities, an insider cannot trade in our securities if he or she is in possession of material non-public information. Accordingly, unlike public stockholders who could sell the shares of Class A common stock issuable upon exercise of the warrants freely in the open market, the insiders could be significantly restricted from doing so. As a result, we believe that allowing the holders to exercise such warrants on a cashless basis is appropriate.
In order to finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. The terms of such working capital loans by our sponsor or its affiliates, or our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans.
In addition, holders of our private placement warrants are entitled to certain registration rights.
Our sponsor and EarlyBirdCapital (and/or its designees) have agreed not to transfer, assign or sell any of the private placement warrants until the date that is 180 days after the date we complete our initial business combination, except that, among other limited exceptions as described under the section of this prospectus entitled “Principal Stockholders — Restrictions on Transfers of Founder Shares and Private Placement Warrants” made to our officers and directors and other persons or entities affiliated with our sponsor.
Rights
Each holder of a right will automatically receive one-tenth (1/10) of one Class A common stock upon consummation of our initial business combination, even if the holder of a public right converted all Class A common stock held by him, her, or it in connection with the initial business combination or an amendment to our amended and restated certificate of incorporation with respect to our pre-initial business combination activities. No additional consideration will be required to be paid by a holder of rights in order to receive his, her, or its additional Class A common stock upon consummation of an initial business combination. The Class A common stock issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of ours).
If we are unable to complete an initial business combination within the required time period, and we liquidate the funds held in the trust account, holders of rights will not receive any of such funds for their rights, nor will they receive any distribution from our assets held outside of the trust account with respect to such rights, and the rights will expire worthless.
We will not issue fractional shares in connection with an exchange of rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the Delaware General Corporations Law, and any rounding down and extinguishment may be done with or without any in lieu cash payment or other compensation being made to the holder of the relevant rights. As a result, you must hold rights in multiples of 10 in order to receive shares for all of your rights upon closing of a business combination.
Dividends
We have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition
subsequent to completion of our initial business combination. The payment of any cash dividends subsequent to our initial business combination will be within the discretion of our board of directors at such time. If we increase or decrease the size of this offering, then we will effect a stock dividend or share contribution back to capital or other appropriate mechanism, as applicable, with respect to our founder shares immediately prior to the consummation of the offering in such amount as to maintain the number of founder shares at 20% of our issued and outstanding common stock upon the consummation of this offering (without giving effect to the private placements and the EBC founder shares). Further, if we incur any indebtedness, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
Our Transfer Agent, Rights Agent, and Warrant Agent
The transfer agent for our common stock, rights agent for our rights, and warrant agent for our warrants is Continental Stock Transfer & Trust Company. We have agreed to indemnify Continental Stock Transfer & Trust Company in its roles as transfer agent, rights agent, and warrant agent, its agents and each of its stockholders, directors, officers and employees against all claims and losses that may arise out of acts performed or omitted for its activities in that capacity, except for any liability due to any gross negligence or intentional misconduct of the indemnified person or entity. Continental Stock Transfer & Trust Company has agreed that it has no right of set-off or any right, title, interest or claim of any kind to, or to any monies in, the trust account, and has irrevocably waived any right, title, interest or claim of any kind to, or to any monies in, the trust account that it may have now or in the future. Accordingly, any indemnification provided will only be able to be satisfied, or a claim will only be able to be pursued, solely against us and our assets outside the trust account and not against the any monies in the trust account or interest earned thereon.
Amended and Restated Certificate of Incorporation
Our amended and restated certificate of incorporation will contain certain requirements and restrictions relating to this offering that will apply to us until the completion of our initial business combination. These provisions cannot be amended without the approval of the holders of 50.1% of our common stock. Our initial stockholders, who will collectively beneficially own 20% of our common stock upon the closing of this offering (assuming they do not purchase any units in this offering), may participate in any vote to amend our amended and restated certificate of incorporation and will have the discretion to vote in any manner they choose. Specifically, our amended and restated certificate of incorporation will provide, among other things, that:
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If we are unable to complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and in all cases subject to the requirements of other applicable law. In the event the Company decides to exercise the Extension Option, investors will not have voting rights nor redemption rights in connection with such additional three-month extensions.;
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Prior to our initial business combination, we may not issue additional securities that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote as a class with our public shares (a) on our initial business combination or (b) to approve an amendment to our amended and restated certificate of incorporation to (x) extend the time we have to consummate a business combination beyond 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, beyond 18 months, from the closing of this offering or (y) amend the foregoing provisions;
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Although we do not intend to enter into a business combination with a target business that is affiliated with our sponsor, our directors or our executive officers, we are not prohibited from doing so. If we enter into such a transaction, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm that such a business combination is fair to our company from a financial point of view;
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If a stockholder vote on our initial business combination is not required by law and we do not decide to hold a stockholder vote for business or other legal reasons, we will offer to redeem our public shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, and will file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about our initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act. Whether or not we maintain our registration under the Exchange Act or our listing on Nasdaq, we will provide our public stockholders with the opportunity to redeem their public shares by one of the two methods listed above;
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So long as we obtain and maintain a listing for our securities on Nasdaq, Nasdaq rules require that we must complete one or more initial business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account (excluding taxes payable on interest earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination;
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If our stockholders approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering, or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, we will provide our public stockholders with the opportunity to redeem all or a portion of their Class A common stock upon such approval at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, subject to the limitations described herein; and
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We will not effectuate our initial business combination with another blank check company or a similar company with nominal operations.
In addition, our amended and restated certificate of incorporation will provide that under no circumstances will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001.
Certain Anti-Takeover Provisions of Delaware Law and our Amended and Restated Certificate of Incorporation and Bylaws
We will be subject to the provisions of Section 203 of the DGCL regulating corporate takeovers upon completion of this offering. This statute prevents certain Delaware corporations, under certain circumstances, from engaging in a “business combination” with:
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a stockholder who owns 15% or more of our outstanding voting stock (otherwise known as an “interested stockholder”);
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an affiliate of an interested stockholder; or
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an associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder.
A “business combination” includes a merger or sale of more than 10% of our assets. However, the above provisions of Section 203 do not apply if:
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our board of directors approves the transaction that made the stockholder an “interested stockholder;”
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prior to the date of the transaction;
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after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common stock; or
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on or subsequent to the date of the transaction, the initial business combination is approved by our board of directors and authorized at a meeting of our stockholders, and not by written consent, by an affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.
Our amended and restated certificate of incorporation will provide that our board of directors will be classified into three classes of directors. As a result, in most circumstances, a person can gain control of our board only by successfully engaging in a proxy contest at two or more annual meetings.
Our authorized but unissued common stock and preferred stock are available for future issuances without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
Exclusive forum for certain lawsuits
Our amended and restated certificate of incorporation will require, unless we consent in writing to the selection of an alternative forum, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee to us or our stockholders, (iii) any action asserting a claim against us, our directors, officers or employees arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or bylaws, or (iv) any action asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine may be brought only in the Court of Chancery in the State of Delaware, except any action (A) as to which the Court of Chancery of the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction, or (D) arising under the Securities Act, as to which the Court of Chancery and the federal district court for the District of Delaware shall concurrently be the sole and exclusive forums. Notwithstanding the foregoing, the provisions of this paragraph will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America have exclusive jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Our amended and restated certificate of incorporation will provide that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder, and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
Special meeting of stockholders
Our bylaws provide that special meetings of our stockholders may be called only by a majority vote of our board of directors, by our Chief Executive Officer or by our Chairman.
Advance notice requirements for stockholder proposals and director nominations
Our bylaws provide that stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual meeting of stockholders, must provide timely notice of their intent in writing. To be timely, a stockholder’s notice will need to be received by the company secretary at our principal executive offices not later than the close of business on the 90th day nor earlier than the opening of business on the 120th day prior to the anniversary date of the immediately preceding annual meeting of stockholders. Pursuant to Rule 14a-8 of the Exchange Act, proposals seeking inclusion in our annual proxy statement must comply with the notice periods contained therein. Our bylaws also specify certain requirements as to the form and content of a stockholders’ meeting. These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders.
Action by written consent
Subsequent to the consummation of the offering, any action required or permitted to be taken by our common stockholders must be effected by a duly called annual or special meeting of such stockholders and may not be effected by written consent of the stockholders other than with respect to our Class B common stock.
Classified Board of Directors
Our board of directors will initially be divided into three classes, Class I, Class II and Class III, with members of each class serving staggered three-year terms (except for those directors appointed prior to our first annual meeting of stockholders). Our amended and restated certificate of incorporation will provide that the authorized number of directors may be changed only by resolution of the board of directors. Subject to the terms of any preferred stock, any or all of the directors may be removed from office at any time, but only for cause and only by the affirmative vote of holders of a majority of the voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors, voting together as a single class. Any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office.
Class B Common Stock Consent Right
For so long as any shares of Class B common stock remain outstanding, we may not, without the prior vote or written consent of the holders of a majority of the shares of Class B common stock then outstanding, voting separately as a single class, amend, alter or repeal any provision of our certificate of incorporation, whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences or relative, participating, optional or other or special rights of the Class B common stock. Any action required or permitted to be taken at any meeting of the holders of Class B common stock may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of the outstanding Class B common stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of Class B common stock were present and voted.
Securities Eligible for Future Sale
Immediately after this offering we will have 12,700,000 (or 14,575,000 if the underwriter’s over-allotment option is exercised in full) shares of common stock outstanding. Of these shares, the shares of Class A common stock sold in this offering (10,000,000 Class A common stock if the underwriter’s over-allotment option is not exercised and 11,500,000 shares if the underwriter’s over-allotment option is exercised in full) will be freely tradable without restriction or further registration under the Securities Act, except for any Class A common stock purchased by one of our affiliates within the meaning of Rule 144 under the Securities Act. All of the outstanding (i) founder shares (2,875,000 founder shares if the underwriter’s over-allotment option is exercised in full and 2,500,000 founder shares if the underwriter’s over-allotment option is not exercised), (ii) private placement warrants (4,550,000 private placement warrants if the underwriter’s over-allotment option is not exercised and 5,000,000 private placement warrants if the underwriter’s over-allotment option is
exercised in full) and the securities underlying the private placement warrants, and (iii) 200,000 EBC founder shares, will be restricted securities under Rule 144, in that they were issued in private transactions not involving a public offering.
Rule 144
Pursuant to Rule 144, a person who has beneficially owned restricted shares, rights, or warrants for at least six months would be entitled to sell their securities provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale and (ii) we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale and have filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as we were required to file reports) preceding the sale.
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Persons who have beneficially owned restricted shares, rights, or warrants for at least six months but who are our affiliates at the time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three- month period only a number of securities that does not exceed the greater of:
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1% of the total number of shares of common stock then outstanding, which will equal 127,000 shares immediately after this offering (or 145,750 if the underwriter exercises in full its over-allotment option); or
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the average weekly reported trading volume of the Class A common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.
Sales by our affiliates under Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information about us.
Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies
Rule 144 is not available for the resale of securities initially issued by shell companies (other than business combination related shell companies) or issuers that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the following conditions are met:
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the issuer of the securities that was formerly a shell company has ceased to be a shell company;
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the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
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the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and
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at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
As a result, our initial stockholders will be able to sell their founder shares, private placement warrants, and the securities underlying the foregoing, as applicable, pursuant to Rule 144 without registration one year after we have completed our initial business combination.
Registration Rights
The holders of the founder shares (and any shares of Class A common stock issuable upon conversion of the founder shares), private placement warrants (and any shares of Class A common stock issuable upon the exercise of the private placement warrants) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of this offering, requiring us to register such securities for resale (in the case of the founder shares, only after conversion to our Class A common stock). The holders of the majority of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our initial business combination
and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period, which occurs (i) in the case of the founder shares, on the earlier of (A) one year after the completion of our initial business combination or (B) subsequent to our initial business combination, (x) if the last sale price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 60 days after our initial business combination, or (y) the date on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property and (ii) in the case of the private placement warrants and the respective Class A common stock underlying such warrants, 30 days after the completion of our initial business combination. We will bear the expenses incurred in connection with the filing of any such registration statements. Notwithstanding the foregoing, our initial stockholders may not exercise its demand and “piggyback” registration rights after five and seven years after the effective date of the registration statement of which this prospectus forms a part and may not exercise its demand rights on more than one occasion. We will bear the expenses incurred in connection with the filing of any such registration statements.
Listing of Securities
We expect that our units will be listed on Nasdaq under the symbol “RFACU” commencing on or promptly after the date of this prospectus. We cannot guarantee that our securities will be approved for listing on Nasdaq. Once the securities comprising the units begin separate trading, we expect that the Class A common stock, warrants, and rights will be listed on Nasdaq under the symbols “RFAC,” “RFACW,” and “RFACR,” respectively.
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of certain material U.S. federal income tax consequences of the acquisition, ownership and disposition of our units, shares of Class A common stock, rights, and warrants, which we refer to collectively as our securities. Because the components of a unit are separable at the option of the holder, the holder of a unit generally should be treated, for U.S. federal income tax purposes, as the owner of the underlying Class A common stock, one right to receive one-tenth of one Class A common stock, and one redeemable warrant components of the unit, as the case may be. As a result, the discussion below with respect to actual holders of Class A common stock, rights, and warrants should also apply to holders of units (as the deemed owners of the underlying Class A common stock, rights, and warrants that comprise the units). This discussion applies only to securities that are held as capital assets for U.S. federal income tax purposes and is applicable only to holders who purchased units in this offering.
This discussion is a summary only and does not describe all of the tax consequences that may be relevant to you in light of your particular circumstances, including but not limited to the alternative minimum tax, the Medicare tax on certain investment income and the different consequences that may apply if you are subject to special rules that apply to certain types of investors, including but not limited to:
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financial institutions or financial services entities;
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broker-dealers;
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governments or agencies or instrumentalities thereof;
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regulated investment companies;
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real estate investment trusts;
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expatriates or former long-term residents of the U.S.;
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persons that actually or constructively own five percent or more of our voting shares;
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insurance companies;
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dealers or traders subject to a mark-to-market method of accounting with respect to the securities;
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persons holding the securities as part of a “straddle,” hedge, integrated transaction or similar transaction;
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U.S. holders (as defined below) whose functional currency is not the U.S. dollar;
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partnerships or other pass-through entities for U.S. federal income tax purposes and any beneficial owners of such entities; and
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tax-exempt entities.
If you are a partnership for U.S. federal income tax purposes, the U.S. federal income tax treatment of your partners will generally depend on the status of the partners and your activities.
This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), and administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations as of the date hereof, which are subject to change, possibly on a retroactive basis, and changes to any of which subsequent to the date of this prospectus may affect the tax consequences described herein. This discussion does not address any aspect of state, local or non-U.S. taxation, or any U.S. federal taxes other than income taxes (such as gift and estate taxes).
We have not sought, and will not seek, a ruling from the Internal Revenue Service (“IRS”) as to any U.S. federal income tax consequence described herein. The IRS may disagree with the discussion herein, and its determination may be upheld by a court. Moreover, there can be no assurance that future legislation, regulations, administrative rulings or court decisions will not adversely affect the accuracy of the statements in this discussion. You are urged to consult your tax advisor with respect to the application of U.S. federal tax laws to your particular situation, as well as any tax consequences arising under the laws of any state, local or foreign jurisdiction.
Personal Holding Company Status
We could be subject to a second level of U.S. federal income tax on a portion of our income if we are determined to be a personal holding company, or PHC, for U.S. federal income tax purposes. A U.S. corporation generally will be classified as a PHC for U.S. federal income tax purposes in a given taxable year if:
(i) at any time during the last half of such taxable year, five or fewer individuals (without regard to their citizenship or residency and including as individuals for this purpose certain entities such as certain tax-exempt organizations, pension funds and charitable trusts) own or are deemed to own (pursuant to certain constructive ownership rules) more than 50% of the stock of the corporation by value and (ii) at least 60% of the corporation’s adjusted ordinary gross income, as determined for U.S. federal income tax purposes, for such taxable year consists of PHC income (which includes, among other things, dividends, interest, certain royalties, annuities and, under certain circumstances, rents).
At least 60% of our adjusted ordinary gross income may consist of PHC income, depending on the date and size of our initial business combination. In addition, depending on the concentration of our stock in the hands of individuals, including the members of our sponsor and certain tax-exempt organizations, pension funds and charitable trusts, more than 50% of our stock may be owned or deemed owned (pursuant to the constructive ownership rules) by such persons during the last half of a taxable year. Thus, no assurance can be given that we will not be a PHC following this offering or in the future. If we are or were to become a PHC in a given taxable year, we would be subject to an additional PHC tax, currently 20%, on our undistributed PHC income, which generally includes our taxable income, subject to certain adjustments.
Allocation of Purchase Price and Characterization of a Unit
No statutory, administrative or judicial authority directly addresses the treatment of a unit or instruments similar to a unit for U.S. federal income tax purposes and, therefore, that treatment is not entirely clear. The acquisition of a unit should be treated for U.S. federal income tax purposes as the acquisition of one share of our Class A common stock, one right to receive one-tenth of one Class A common stock, and one warrant to acquire one share of our Class A common stock. For U.S. federal income tax purposes, each holder of a unit must allocate the purchase price paid by such holder for such unit between the one share of Class A common stock, one right to receive one-tenth of one Class A common stock, and the one warrant based on the relative fair market value of each at the time of issuance. Under U.S. federal income tax law, each investor must make his or her own determination of such value based on all the relevant facts and circumstances. Therefore, we strongly urge each investor to consult his or her tax adviser regarding the determination of value for these purposes. The price allocated to each share of Class A common stock, one right to receive one-tenth of one Class A common stock, and the one warrant should be the stockholder’s tax basis in such share, right, or warrant, as the case may be. Any disposition of a unit should be treated for U.S. federal income tax purposes as a disposition of the share of Class A common stock, one right to receive one-tenth of one Class A common stock, and one warrant comprising the unit, and the amount realized on the disposition should be allocated between the Class A common stock, one right to receive one-tenth of one Class A common stock, and the one warrant based on their respective relative fair market values (as determined by each such unit holder on all the relevant facts and circumstances) at the time of disposition. The separation of shares of Class A common stock, rights, and warrants comprising units should not be a taxable event for U.S. federal income tax purposes.
The foregoing treatment of the shares of Class A common stock, rights, and warrants and a holder’s purchase price allocation are not binding on the IRS or the courts. Because there are no authorities that directly address instruments that are similar to the units, no assurance can be given that the IRS or the courts will agree with the characterization described above or the discussion below. Accordingly, each prospective investor is urged to consult its own tax advisors regarding the tax consequences of an investment in a unit (including alternative characterizations of a unit). The balance of this discussion assumes that the characterization of the units described above is respected for U.S. federal income tax purposes.
U.S. Holders
This section applies to you if you are a “U.S. holder.” A U.S. holder is a beneficial owner of our units, shares of Class A common stock, rights, or warrants who or that is, for U.S. federal income tax purposes:
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an individual who is a citizen or resident of the United States;
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a corporation (or other entity taxable as a corporation) organized in or under the laws of the United States, any state thereof or the District of Columbia; or
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an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or
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a trust, if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons (as defined in the Code) have authority to control all substantial decisions of the trust or (ii) it has a valid election in effect under Treasury Regulations to be treated as a U.S. person.
Taxation of Distributions. If we pay distributions in cash or other property (other than certain distributions of our stock or rights to acquire our stock) to U.S. holders of shares of our Class A common stock, such distributions generally will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not below zero) the U.S. holder’s adjusted tax basis in our Class A common stock. Any remaining excess will be treated as gain realized on the sale or other disposition of the Class A common stock and will be treated as described under “U.S. Holders — Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock, Rights, and Warrants” below.
Dividends we pay to a U.S. holder that is a taxable corporation generally will qualify for the dividends received deduction if the requisite holding period is satisfied. With certain exceptions (including, but not limited to, dividends treated as investment income for purposes of investment interest deduction limitations), and provided certain holding period requirements are met, dividends we pay to a non-corporate U.S. holder may constitute “qualified dividends” that will be subject to tax at the maximum tax rate accorded to long-term capital gains. It is unclear whether the redemption rights with respect to the Class A common stock described in this prospectus may prevent a U.S. holder from satisfying the applicable holding period requirements with respect to the dividends received deduction or the preferential tax rate on qualified dividend income, as the case may be. If the holding period requirements are not satisfied, then a corporation may not be able to qualify for the dividends received deduction and would have taxable income equal to the entire dividend amount, and non- corporate holders may be subject to tax on such dividend at regular ordinary income tax rates instead of the preferential rate that applies to qualified dividend income.
Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock, Rights, and Warrants. Upon a sale or other taxable disposition of our Class A common stock, rights, or warrants which, in general, would include a redemption of Class A common stock, rights, or warrants that is treated as a sale of such securities as described below, and including as a result of a dissolution and liquidation If we do not consummate an initial business combination within the required time period, a U.S. holder generally will recognize capital gain or loss in an amount equal to the difference between the amount realized and the U.S. holder’s adjusted tax basis in the Class A common stock, rights, or warrants. Any such capital gain or loss generally will be long-term capital gain or loss if the U.S. holder’s holding period for the Class A common stock, rights, or warrants so disposed of exceeds one year. It is unclear, however, whether the redemption rights with respect to the Class A common stock described in this prospectus may suspend the running of the applicable holding period for this purpose. If the running of the holding period for the Class A common stock is suspended, then non-corporate U.S. holders may not be able to satisfy the one-year holding period requirement for long-term capital gain treatment, in which case any gain on a sale or taxable disposition of the shares, rights, or warrants would be subject to short-term capital gain treatment and would be taxed at regular ordinary income tax rates. Long-term capital gains recognized by non-corporate U.S. holders will be eligible to be taxed at reduced rates. The deductibility of capital losses is subject to limitations.
Generally, the amount of gain or loss recognized by a U.S. holder is an amount equal to the difference between the sum of the amount of cash and the fair market value of any property received in such disposition (or, if the Class A common stock, rights, or warrants are held as part of units at the time of the disposition, the portion of the amount realized on such disposition that is allocated to the Class A common stock, rights, or the warrants based upon the then fair market values of the Class A common stock, the rights, and the warrants
included in the units) and the U.S. holder’s adjusted tax basis in its Class A common stock, rights, or warrants so disposed of. A U.S. holder’s adjusted tax basis in its Class A common stock, rights, or warrants generally will equal the U.S. holder’s acquisition cost (that is, as discussed above, the portion of the purchase price of a unit allocated to a share of Class A common stock, one right to receive one-tenth of one Class A common stock, or one warrant or, as discussed below, the U.S. holder’s initial basis for Class A common stock received upon exercise of warrants) less, in the case of a share of Class A common stock, any prior distributions treated as a return of capital.
Redemption of Class A Common Stock. If a U.S. holder’s Class A common stock is redeemed pursuant to the redemption provisions described in this prospectus under the section of this prospectus entitled “Description of Securities — Common Stock” or if we purchase a U.S. holder’s Class A common stock in an open market transaction, the treatment of the transaction for U.S. federal income tax purposes will depend on whether the redemption or purchase by us qualifies as a sale of the Class A common stock under Section 302 of the Code. If the redemption or purchase by us qualifies as a sale of common stock, the U.S. holder will be treated as described under “U.S. Holders — Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock, Rights, and Warrants” above. If the redemption or purchase by us does not qualify as a sale of common stock, the U.S. holder will be treated as receiving a corporate distribution with the tax consequences described above under “U.S. Holders — Taxation of Distributions”. Whether a redemption or purchase by us qualifies for sale treatment will depend largely on the total number of shares of our stock treated as held by the U.S. holder (including any stock constructively owned by the U.S. holder as a result of owning warrants) relative to all of our shares outstanding both before and after the redemption or purchase by us. The redemption or purchase by us of Class A common stock generally will be treated as a sale of the Class A common stock (rather than as a corporate distribution) if the redemption or purchase by us (i) is “substantially disproportionate” with respect to the U.S. holder, (ii) results in a “complete termination” of the U.S. holder’s interest in us or (iii) is “not essentially equivalent to a dividend” with respect to the U.S. holder. These tests are explained more fully below.
In determining whether any of the foregoing tests are satisfied, a U.S. holder takes into account not only stock actually owned by the U.S. holder, but also shares of our stock that are constructively owned by it. A U.S. holder may constructively own, in addition to stock owned directly, stock owned by certain related individuals and entities in which the U.S. holder has an interest or that have an interest in such U.S. holder, as well as any stock the U.S. holder has a right to acquire by exercise of an option, which would generally include Class A common stock which could be acquired pursuant to the exercise of the warrants. In order to meet the substantially disproportionate test, the percentage of our outstanding voting stock actually and constructively owned by the U.S. holder immediately following the redemption of Class A common stock must, among other requirements, be less than 80% of the percentage of our outstanding voting stock actually and constructively owned by the U.S. holder immediately before the redemption. There will be a complete termination of a U.S. holder’s interest if either (i) all of the shares of our stock actually and constructively owned by the U.S. holder are redeemed or (ii) all of the shares of our stock actually owned by the U.S. holder are redeemed and the U.S. holder is eligible to waive, and effectively waives in accordance with specific rules, the attribution of stock owned by certain family members and the U.S. holder does not constructively own any other shares of our stock. The redemption of the Class A common stock will not be essentially equivalent to a dividend if a U.S. holder’s conversion results in a “meaningful reduction” of the U.S. holder’s proportionate interest in us. Whether the redemption will result in a meaningful reduction in a U.S. holder’s proportionate interest in us will depend on the particular facts and circumstances. However, the IRS has indicated in a published ruling that even a small reduction in the proportionate interest of a small minority stockholder in a publicly held corporation who exercises no control over corporate affairs may constitute such a “meaningful reduction.” A U.S. holder should consult with its own tax advisors as to the tax consequences of a redemption.
If none of the foregoing tests is satisfied, then the redemption will be treated as a corporate distribution and the tax effects will be as described under “U.S. Holders — Taxation of Distributions,” above. After the application of those rules, any remaining tax basis of the U.S. holder in the redeemed Class A common stock will be added to the U.S. holder’s adjusted tax basis in its remaining stock, or, if it has none, to the U.S. holder’s adjusted tax basis in its warrants or possibly in other stock constructively owned by it.
Exercise, Lapse or Redemption of a Warrant. Except as discussed below with respect to the cashless exercise of a warrant, a U.S. holder generally will not recognize taxable gain or loss on the acquisition of common
stock upon exercise of a warrant for cash. The U.S. holder’s tax basis in the share of our Class A common stock received upon exercise of the warrant generally will be an amount equal to the sum of the U.S. holder’s initial investment in the warrant (i.e., the portion of the U.S. holder’s purchase price for units that is allocated to the warrant, as described above under “— Allocation of Purchase Price and Characterization of a Unit”) and the exercise price. It is unclear whether the U.S. holder’s holding period for the Class A common stock received upon exercise of the warrants will begin on the date following the date of exercise or on the date of exercise of the warrants; in either case, the holding period will not include the period during which the U.S. holder held the warrants. If a warrant is allowed to lapse unexercised, a U.S. holder generally will recognize a capital loss equal to such holder’s tax basis in the warrant.
The tax consequences of a cashless exercise of a warrant are not clear under current tax law. A cashless exercise may be tax-free, either because the exercise is not a realization event or because the exercise is treated as a recapitalization for U.S. federal income tax purposes. In either tax-free situation, a U.S. holder’s basis in the Class A common stock received would equal the holder’s basis in the warrants exercised therefor. If the cashless exercise were treated as not being a realization event, it is unclear whether a U.S. holder’s holding period in the Class A common stock would be treated as commencing on the date following the date of exercise or on the date of exercise of the warrant; in either case, the holding period would not include the period during which the U.S. holder held the warrants. If the cashless exercise were treated as a recapitalization, the holding period of the Class A common stock would include the holding period of the warrants exercised therefor.
It is also possible that a cashless exercise could be treated in part as a taxable exchange in which gain or loss would be recognized. In such event, a U.S. holder could be deemed to have surrendered warrants equal to the number of shares of Class A common stock having a value equal to the exercise price for the total number of warrants to be exercised. The U.S. holder would recognize capital gain or loss in an amount equal to the difference between the fair market value of the Class A common stock received in respect of the warrants deemed surrendered and the U.S. holder’s tax basis in the warrants deemed surrendered. In this case, a U.S. holder’s tax basis in the Class A common stock received would equal the sum of the fair market value of the Class A common stock received in respect of the warrants deemed surrendered and the U.S. holder’s tax basis in the warrants exercised. It is unclear whether a U.S. holder’s holding period for the Class A common stock would commence on the date following the date of exercise or on the date of exercise of the warrant; in either case, the holding period would not include the period during which the U.S. holder held the warrant.
Due to the absence of authority on the U.S. federal income tax treatment of a cashless exercise, including when a U.S. holder’s holding period would commence with respect to the Class A common stock received, there can be no assurance which, if any, of the alternative tax consequences and holding periods described above would be adopted by the IRS or a court of law. Accordingly, U.S. holders should consult their tax advisors regarding the tax consequences of a cashless exercise.
A redemption of warrants for Class A common stock described in the section of this prospectus entitled “Description of Securities — Warrants — Public Stockholders’ Warrants — Redemption of warrants for Class A common stock” should be treated as a “recapitalization” for U.S. federal income tax purposes. Accordingly, a U.S. holder should not recognize any gain or loss on the redemption of warrants for shares of Class A common stock. A U.S. holder’s aggregate tax basis in the shares of Class A common stock received in the redemption should equal the U.S. holder’s aggregate tax basis in the warrants redeemed and the holding period for the shares of Class A common stock received in redemption of the warrants should include the U.S. holder’s holding period for the surrendered warrants.
If we redeem warrants for cash pursuant to the redemption provisions described in the section of this prospectus entitled “Description of Securities — Redeemable Warrants — Public Stockholders’ Warrants — Redemption of warrants for cash” or if we purchase warrants in an open market transaction, such redemption or purchase generally will be treated as a taxable disposition to the U.S. holder, taxed as described above under “— Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants.”
Possible Constructive Distributions. The terms of each warrant provide for an adjustment to the number of shares of common stock for which the warrant may be exercised or to the exercise price of the warrant in certain events, as discussed in the section of this prospectus entitled “Description of Securities — Redeemable
Warrants — Public Stockholders’ Warrants.” An adjustment which has the effect of preventing dilution generally is not taxable. The U.S. holders of the warrants would, however, be treated as receiving a constructive distribution from us if, for example, the adjustment to the number of such shares or to such exercise price increases the warrant holders’ proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of shares of common stock that would be obtained upon exercise or through a decrease in the exercise price of the warrant) as a result of a distribution of cash or other property, such as other securities, to the holders of shares of our common stock, or as a result of the issuance of a stock dividend to holders of shares of our common stock, in each case which is taxable to the holders of such shares as a distribution. Such constructive distribution would be subject to tax as described under that section in the same manner as if the U.S. holders of the warrants received a cash distribution from us equal to the fair market value of such increased interest.
Information Reporting and Backup Withholding. In general, information reporting requirements may apply to dividends paid to a U.S. holder and to the proceeds of the sale or other disposition of our units, shares of Class A common stock and warrants, unless the U.S. holder is an exempt recipient. Backup withholding may apply to such payments if the U.S. holder fails to provide a taxpayer identification number, a certification of exempt status or has been notified by the IRS that it is subject to backup withholding (and such notification has not been withdrawn).
Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a U.S. holder’s U.S. federal income tax liability provided the required information is timely furnished to the IRS.
Non-U.S. Holders
This section applies to you if you are a “Non-U.S. holder.” As used herein, the term “Non-U.S. holder” means a beneficial owner of our units, Class A common stock, rights, or warrants who or that is for U.S. federal income tax purposes:
•
a non-resident alien individual (other than certain former citizens and residents of the U.S. subject to U.S. tax as expatriates);
•
a foreign corporation or
•
an estate or trust that is not a U.S. holder;
but generally does not include an individual who is present in the U.S. for 183 days or more in the taxable year of disposition. If you are such an individual, you should consult your tax advisor regarding the U.S. federal income tax consequences of the acquisition, ownership or sale or other disposition of our securities.
Taxation of Distributions. In general, any distributions we make to a Non-U.S. holder of shares of our Class A common stock, to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles), will constitute dividends for U.S. federal income tax purposes and, provided such dividends are not effectively connected with the Non-U.S. holder’s conduct of a trade or business within the United States, we will be required to withhold tax from the gross amount of the dividend at a rate of 30%, unless such Non-U.S. holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification of its eligibility for such reduced rate (usually on an IRS Form W- 8BEN or W-8BEN-E). Any distribution not constituting a dividend will be treated first as reducing (but not below zero) the Non-U.S. holder’s adjusted tax basis in its shares of our Class A common stock and, to the extent such distribution exceeds the Non-U.S. holder’s adjusted tax basis, as gain realized from the sale or other disposition of the Class A common stock, which will be treated as described under “Non-U.S. Holders — Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock, Rights, and Warrants” below. In addition, if we determine that we are likely to be classified as a “U.S. real property holding corporation” (see “Non-U.S. Holders — Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants” below), we will withhold 15% of any distribution that exceeds our current and accumulated earnings and profits.
The withholding tax does not apply to dividends paid to a Non-U.S. holder who provides a Form W-8ECI, certifying that the dividends are effectively connected with the Non-U.S. holder’s conduct of a trade or business within the United States. Instead, the effectively connected dividends will be subject to regular U.S. income tax
as if the Non-U.S. holder were a U.S. resident, subject to an applicable income tax treaty providing otherwise. A Non-U.S. corporation receiving effectively connected dividends may also be subject to an additional “branch profits tax” imposed at a rate of 30% (or a lower treaty rate).
Exercise, Lapse or Redemption of a Warrant. The U.S. federal income tax treatment of a Non-U.S. holder’s exercise of a warrant, or the lapse of a warrant held by a Non-U.S. holder, generally will correspond to the U.S. federal income tax treatment of the exercise or lapse of a warrant by a U.S. holder, as described under “U.S. Holders — Exercise, Lapse or Redemption of a Warrant” above, although to the extent a cashless exercise results in a taxable exchange, the consequences would be similar to those described below in “Non-U.S. Holders — Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants.” The U.S. federal income tax treatment for a Non-U.S. holder of a redemption of warrants for Class A common stock described in the section of this prospectus entitled “Description of Securities — Warrants — Public Stockholders’ Warrants — Redemption of warrants for Class A common stock” will correspond to the U.S. federal income tax treatment for a U.S. holder of a redemption of warrants for Class A common stock, as U.S. described above in “U.S. Holders — Exercise, Lapse or Redemption of a Warrant.” The U.S. federal income tax treatment for a Non-U.S. holder of a redemption of warrants for cash described in the section of this prospectus entitled “Description of Securities — Warrants — Public Stockholders’ Warrants — Redemption of warrants for cash” (or if we purchase warrants in an open market transaction) would be similar to that described below in Non-U.S. Holders — Gain or Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants.”
Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock, Rights, and Warrants. A Non-U.S. holder generally will not be subject to U.S. federal income or withholding tax in respect of gain recognized on a sale, taxable exchange or other taxable disposition of our Class A common stock, which would include a dissolution and liquidation If we do not complete an initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering, rights, or warrants (including an expiration or redemption of our rights or warrants), in each case without regard to whether those securities were held as part of a unit, unless:
•
the gain is effectively connected with the conduct of a trade or business by the Non-U.S. holder within the United States (and, under certain income tax treaties, is attributable to a United States permanent establishment or fixed base maintained by the Non-U.S. holder); or
•
we are or have been a “U.S. real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the Non-U.S. holder held our Class A common stock, and, in the case where shares of our Class A common stock are regularly traded on an established securities market, the Non-U.S. holder has owned, directly or constructively, more than 5% of our Class A common stock at any time within the shorter of the five-year period preceding the disposition or such Non-U.S. holder’s holding period for the shares of our Class A common stock. There can be no assurance that our Class A common stock will be treated as regularly traded on an established securities market for this purpose.
Unless an applicable treaty provides otherwise, gain described in the first bullet point above will be subject to tax at generally applicable U.S. federal income tax rates as if the Non-U.S. holder were a U.S. resident. Any gains described in the first bullet point above of a Non-U.S. holder that is a foreign corporation may also be subject to an additional “branch profits tax” at a 30% rate (or lower treaty rate).
If the second bullet point above applies to a Non-U.S. holder, gain recognized by such holder on the sale, exchange or other disposition of our Class A common stock, rights, or warrants will be subject to tax at generally applicable U.S. federal income tax rates. In addition, a buyer of our Class A common stock, rights, or warrants from such holder may be required to withhold U.S. federal income tax at a rate of 15% of the amount realized upon such disposition. We cannot determine whether we will be a “United States real property holding corporation” in the future until we complete an initial business combination. We will be classified as a U.S. real property holding corporation if the fair market value of our “United States real property interests” equals or exceeds 50 percent of the sum of the fair market value of our worldwide real property interests plus our other assets used or held for use in a trade or business, as determined for U.S. federal income tax purposes.
Redemption of Class A Common Stock. The characterization for U.S. federal income tax purposes of the redemption of a Non-U.S. holder’s Class A common stock pursuant to the redemption provisions described in the section of this prospectus entitled “Description of Securities — Common Stock” generally will correspond to the U.S. federal income tax characterization of such a redemption of a U.S. holder’s Class A common stock, as described under “U.S. Holders — Redemption of Class A Common Stock” above, and the consequences of the redemption to the Non-U.S. holder will be as described above under “Non-U.S. holders — Taxation of Distributions” and “Non-U.S. Holders — Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock, Rights, and Warrants,” as applicable.
Possible Constructive Distributions. The terms of each warrant provide for an adjustment to the number of shares of Class A common stock for which the warrant may be exercised or to the exercise price of the warrant in certain events, as discussed in the section of this prospectus captioned “Description of Securities — Redeemable Warrants — Public Stockholders’ Warrants.” An adjustment which has the effect of preventing dilution is generally not a taxable event. Nevertheless, a Non-U.S. holder of warrants would be treated as receiving a constructive distribution from us if, for example, the adjustment increases the holder’s proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of shares of Class A common stock that would be obtained upon exercise) as a result of a distribution of cash or other property, such as other securities, to the holders of shares of our Class A common stock which is taxable to such holders as a distribution. Any constructive distribution received by a Non-U.S. holder would be subject to U.S. federal income tax (including any applicable withholding) in the same manner as if such Non-U.S. holder received a cash distribution from us equal to the fair market value of such increased interest without any corresponding receipt of cash.
Information Reporting and Backup Withholding. Information returns will be filed with the IRS in connection with payments of dividends and the proceeds from a sale or other disposition of our units, shares of Class A common stock, rights, and warrants. A Non-U.S. holder may have to comply with certification procedures to establish that it is not a United States person in order to avoid information reporting and backup withholding requirements. The certification procedures required to claim a reduced rate of withholding under a treaty will satisfy the certification requirements necessary to avoid the backup withholding as well. The amount of any backup withholding from a payment to a Non-U.S. holder will be allowed as a credit against such holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is timely furnished to the IRS.
FATCA Withholding Taxes. Provisions commonly referred to as “FATCA” impose withholding of 30% on payments of dividends (including constructive dividends) on our Class A common stock to “foreign financial institutions” (which is broadly defined for this purpose and in general includes investment vehicles) and certain other Non-U.S. entities unless various U.S. information reporting and due diligence requirements (generally relating to ownership by U.S. persons of interests in or accounts with those entities) have been satisfied by, or an exemption applies to, the payee (typically certified as to by the delivery of a properly completed IRS Form W-8BEN-E). Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules. Under certain circumstances, a Non-U.S. holder might be eligible for refunds or credits of such withholding taxes, and a Non-U.S. holder might be required to file a U.S. federal income tax return to claim such refunds or credits. Prospective investors should consult their tax advisers regarding the effects of FATCA on their investment in our securities.
UNDERWRITING
We intend to offer our securities described in this prospectus through the underwriter named below. EarlyBirdCapital, Inc. is acting as the sole book-running manager of the offering and as the representative of the underwriter named below. We will enter into an underwriting agreement with the Representative. Subject to the terms and conditions of the underwriting agreement, the underwriter, through the Representative, has agreed to purchase from us, on a firm commitment basis, the number of units listed next to its name in the following table at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus:
|
Underwriter
|
|
|
Number of Units
|
|
|
EarlyBirdCapital, Inc.
|
|
|
|
|
10,000,000 |
|
|
|
Total
|
|
|
|
|
10,000,000 |
|
|
A copy of the form of underwriting agreement has been filed as an exhibit to the registration statement of which this prospectus forms a part.
Listing of Our Securities
We expect that our units will be listed on Nasdaq under the symbol “RFACU.” Following the date the Class A common stock, rights, and warrants are eligible to trade separately, we anticipate that the Class A common stock, rights, and warrants will be listed on Nasdaq under the symbols “RFAC,” “RFACR,” and “RFACW,” respectively. We cannot guarantee that our securities will be approved for listing or continue to be listed on Nasdaq after this offering.
Pricing of This Offering
We have been advised by the Representative that the underwriter proposes to offer the units to the public at the offering price set forth on the cover page of this prospectus. They may allow some dealers concessions not in excess of $[ ] per unit and the dealers may also allow a concession not in excess of $[ ] per unit to other dealers.
Prior to this offering there has been no public market for our securities. The public offering price of the units was negotiated between us and the representative of the underwriter. Factors considered in determining the prices and terms of the units include:
•
the history of other similarly structured blank check companies;
•
prior offerings of those companies;
•
our prospects for consummating our initial business combination with an operating business at attractive values;
•
our capital structure;
•
securities exchange listing requirements;
•
market demand;
•
expected liquidity of our securities; and
•
general conditions of the securities markets at the time of the offering.
However, although these factors were considered, the determination of our offering price is more arbitrary than the pricing of securities for an operating company in a particular industry since the underwriter is unable to compare our financial results and prospects with those of public companies operating in the same industry.
Over-Allotment Option
We have granted the underwriter an option to purchase up to 1,500,000 additional units at the initial public offering price, less underwriting discounts and commissions. The underwriter may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with this offering. The underwriter has 45 days from the effective date of the registration statement of which this prospectus forms a part. If the
underwriter exercises this option, they will each purchase additional units approximately in proportion to the amounts specified in the table above.
Commissions and Discounts
The following table shows the public offering price, underwriting discount to be paid by us to the underwriter and the proceeds, before expenses, to us. This information assumes either no exercise or full exercise by the representative of the underwriter of its over-allotment option.
| |
|
|
Per Unit
|
|
|
Without
Over-allotment
|
|
|
With
Over-allotment
|
|
|
Public offering price
|
|
|
|
$ |
10.00 |
|
|
|
|
$ |
100,000,000 |
|
|
|
|
$ |
115,000,000 |
|
|
|
Discount
|
|
|
|
$ |
0.20 |
|
|
|
|
$ |
2,000,000 |
|
|
|
|
$ |
2,300,000 |
|
|
|
Proceeds before expenses(1)
|
|
|
|
$ |
9.80 |
|
|
|
|
$ |
98,000,000 |
|
|
|
|
$ |
112,700,000 |
|
|
(1)
The offering expenses are estimated at approximately $560,000.
In addition to the underwriting discount, we may be required to reimburse EarlyBirdCapital for expenses of the underwriter’s legal counsel and certain diligence and other fees, which such fees and expenses are capped at an aggregate of $100,000.
No discounts or commissions will be paid on the sale of the private placement warrants.
Business Combination Marketing Agreement
We have engaged EarlyBirdCapital as an advisor in connection with our business combination to assist us in holding meetings with our shareholders to discuss the potential business combination and the target business’ attributes, introduce us to potential investors that are interested in purchasing our securities in connection with our initial business combination, assist us with our press releases and public filings in connection with the business combination. We will pay EarlyBirdCapital a cash fee for such services upon the consummation of our initial business combination in an amount equal to 3.5% of the gross proceeds of this offering (exclusive of any applicable finders’ fees which might become payable).
Additionally, we will pay EarlyBirdCapital a cash fee equal to 1.0% of the total consideration payable in the proposed business combination if it introduces us to the target business with which we complete a business combination; provided that the foregoing fee will not be paid prior to the date that is 90 days from the effective date of the registration statement of which this prospectus forms a part, unless FINRA determines that such payment would not be deemed underwriters’ compensation in connection with this offering pursuant to FINRA Rule 5110.
Private Placement Warrants
EarlyBirdCapital (and/or its designees) has committed to purchase 500,000 private placement warrants (or 549,500 private placement warrants if the over-allotment option is exercised in full) for an aggregate purchase price of $500,000 (or $549,500 if the over-allotment option is exercised in full), or $1.00 per warrant. Such warrants are exercisable for 500,000 shares (549,500 shares if the over-allotment option is exercised in full). All of these purchases will take place on a private placement basis simultaneously with the consummation of this offering and the over-allotment option, as applicable. The private placement warrants are identical to the warrants being sold in this offering. However, EarlyBirdCapital has agreed (A) to vote its founder shares, if any, and any public shares acquired in or after this offering in favor of any proposed business combination, not to propose any amendment to our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering or (ii) with respect to any other provision relating to stockholders’ rights or pre- initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their public shares upon approval of any such
amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable), divided by the number of then outstanding public shares, (C) not to convert any shares (including any founder shares) into the right to receive cash from the trust account in connection with a stockholder vote to approve our proposed initial business combination (or sell any shares they hold to us in a tender offer in connection with a proposed initial business combination) or a vote to amend the provisions of our amended and restated certificate of incorporation relating to the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, and (D) that the founder shares shall not be entitled to be redeemed for a pro rata portion of the funds held in the trust account if a business combination is not consummated. In addition, these warrants will not be exercisable or convertible for more than five years from the commencement of sales in this offering pursuant to FINRA Rules 5110(g)(8)(A) and 5110.05. The private placement warrants and the shares of Class A common stock that are issuable pursuant to the warrants, have been deemed compensation by FINRA and are therefore subject to a 180-day lock-up pursuant to FINRA Rule 5110(g)(1) commencing on the effective date of the registration statement of which this prospectus forms a part or the commencement of sales in this offering. Pursuant to FINRA Rule 5110(g)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the registration statement of which this prospectus forms a part.
Additionally, the private placement warrants purchased by EarlyBirdCapital may not be sold, transferred, assigned, pledged or hypothecated or be the subject of and hedging during the 180-day lock-up period commencing on the effective date of the registration statement of which this prospectus forms a part or the commencement of sales in this offering, except to any selected dealer participating in the offering and the bona fide officers or partners of the underwriter and any such participating selected dealer. EarlyBirdCapital has agreed that the private placement warrants it purchases will not be sold or transferred by it (except to certain permitted transferees) until after we have completed an initial business combination. We have granted the holders of private placement warrants, including EarlyBirdCapital, registration rights as described under the section “Description of Securities — Registration Rights” which will at all times be in compliance with FINRA Rule 5110(f)(2)(G)(iii)-(v).
EBC founder shares
We have issued to EarlyBirdCapital and its designees 200,000 EBC founder shares at $0.0001 per share. EarlyBirdCapital (and/or its designees) has agreed not to transfer, assign or sell any such shares without our prior written consent until the completion of our initial business combination. In addition, EarlyBirdCapital (and/or its designees) has agreed (i) to waive its redemption rights with respect to such shares in connection with the completion of our initial business combination and (ii) to waive its rights to liquidating distributions from the trust account with respect to such shares if we fail to complete our initial business combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of this offering.
The shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the date of the effectiveness of the registration statement of which this prospectus forms a part pursuant to FINRA Rule 5110(g)(1). Pursuant to FINRA Rule 5110(g)(1), these securities may not be sold, transferred, assigned, pledged or hypothecated or the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the registration statement of which this prospectus forms a part except to any underwriter and selected dealer participating in the offering and their bona fide officers or partners.
We have granted the holders of these shares the registration rights as described under the section “Shares Eligible for Future Sale—Registration Rights.” In compliance with FINRA Rule 5110(f)(2)(G), the EarlyBirdCapital registration rights are limited to demand and “piggy back” rights for periods of five and seven years, respectively, from the effective date of this prospectus and EarlyBirdCapital may only exercise its demand rights on one occasion.
Right of First Refusal
We have granted EarlyBirdCapital a right of first refusal for a period commencing from the consummation of this offering until the consummation of our initial business combination (or the liquidation of the trust account in the event that we fail to consummate our initial business combination within the prescribed time period) to act as book running manager, placement agent and/or arranger for all financings where we seek to raise equity, equity-linked, debt or mezzanine financings relating to or in connection with a business combination.
Regulatory Restrictions on Purchase of Securities
Rules of the SEC may limit the ability of the underwriter to bid for or purchase our units before the distribution of the units is completed. However, the underwriter may engage in the following activities in accordance with the rules:
•
Stabilizing Transactions. The underwriter may make bids or purchases solely for the purpose of preventing or retarding a decline in the price of our units, as long as stabilizing bids do not exceed the offering price of $10.00 and the underwriter complies with all other applicable rules.
•
Over-Allotments and Syndicate Coverage Transactions. The underwriter may create a short position in our units by selling more of our units than are set forth on the cover page of this prospectus up to the amount of the over-allotment option. This is known as a covered short position. The underwriter may also create a short position in our units by selling more of our units than are set forth on the cover page of this prospectus and the units allowed by the over-allotment option. This is known as a naked short position. If the underwriter creates a short position during the offering, the representative may engage in syndicate covering transactions by purchasing our units in the open market. The representative may also elect to reduce any short position by exercising all or part of the over-allotment option. Determining what method to use in reducing the short position depends on how the units trade in the aftermarket following the offering. If the unit price drops following the offering, the short position is usually covered with shares purchased by the underwriter in the aftermarket. However, the underwriter may cover a short position by exercising the over-allotment option even if the unit price drops following the offering. If the unit price rises after the offering, then the over-allotment option is used to cover the short position. If the short position is more than the over-allotment option, the naked short must be covered by purchases in the aftermarket, which could be at prices above the offering price.
•
Penalty Bids. The representative may reclaim a selling concession from a syndicate member when the units originally sold by the syndicate member are purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.
Stabilization and syndicate covering transactions may cause the price of our securities to be higher than they would be in the absence of these transactions. The imposition of a penalty bid might also have an effect on the prices of our securities if it discourages resales of our securities.
Neither we nor the underwriter make any representation or prediction as to the effect that the transactions described above may have on the price of our securities. These transactions may occur on Nasdaq, in the over- the-counter market or on any trading market. If any of these transactions are commenced, they may be discontinued without notice at any time.
Other Terms
Except as set forth above, we are not under any contractual obligation to engage the underwriter to provide any services for us after this offering, and have no present intent to do so. However, the underwriter may, among other things, introduce us to potential target businesses or assist us in raising additional capital, as needs may arise in the future. If the underwriter provides services to us after this offering, we may pay the underwriter fair and reasonable fees that would be determined at that time in an arm’s length negotiation; provided that no agreement will be entered into with the underwriter and no fees for such services will be paid to the underwriter prior to the date which is 90 days after the date of this prospectus, unless FINRA determines that such payment would not be deemed underwriter’s compensation in connection with this offering.
Indemnification
We have agreed to indemnify the underwriter against some liabilities, including civil liabilities under the Securities Act, or to contribute to payments the underwriter may be required to make in this respect.
Selling Restrictions
Canada
Resale Restrictions
We intend to distribute our securities in the Province of Ontario, Canada (the “Canadian Offering Jurisdiction”) by way of a private placement and exempt from the requirement that we prepare and file a prospectus with the securities regulatory authorities in such Canadian Offering Jurisdiction. Any resale of our securities in Canada must be made under applicable securities laws that will vary depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Canadian resale restrictions in some circumstances may apply to resales of interests made outside of Canada. Canadian purchasers are advised to seek legal advice prior to any resale of our securities. We may never be a “reporting issuer”, as such term is defined under applicable Canadian securities legislation, in any province or territory of Canada in which our securities will be offered and there currently is no public market for any of the securities in Canada, and one may never develop. Canadian investors are advised that we have no intention to file a prospectus or similar document with any securities regulatory authority in Canada qualifying the resale of the securities to the public in any province or territory in Canada.
Representations of Purchasers
A Canadian purchaser will be required to represent to us and the dealer from whom the purchase confirmation is received that:
•
the purchaser is entitled under applicable provincial securities laws to purchase our securities without the benefit of a prospectus qualified under those securities laws;
•
where required by law, that the purchaser is purchasing as principal and not as agent;
•
the purchaser has reviewed the text above under Resale Restrictions; and
•
the purchaser acknowledges and consents to the provision of specified information concerning its purchase of our securities to the regulatory authority that by law is entitled to collect the information.
Rights of Action — Ontario Purchasers Only
Under Ontario securities legislation, certain purchasers who purchase a security offered by this prospectus during the period of distribution will have a statutory right of action for damages, or while still the owner of our securities, for rescission against us if this prospectus contains a misrepresentation without regard to whether the purchaser relied on the misrepresentation. The right of action for damages is exercisable not later than the earlier of 180 days from the date the purchaser first had knowledge of the facts giving rise to the cause of action and three years from the date on which payment is made for our securities. The right of action for rescission is exercisable not later than 180 days from the date on which payment is made for our securities. If a purchaser elects to exercise the right of action for rescission, the purchaser will have no right of action for damages against us. In no case will the amount recoverable in any action exceed the price at which our securities were offered to the purchaser and if the purchaser is shown to have purchased the securities with knowledge of the misrepresentation, we will have no liability. In the case of an action for damages, we will not be liable for all or any portion of the damages that are proven to not represent the depreciation in value of our securities as a result of the misrepresentation relied upon. These rights are in addition to, and without derogation from, any other rights or remedies available at law to an Ontario purchaser. The foregoing is a summary of the rights available to an Ontario purchaser. Ontario purchasers should refer to the complete text of the relevant statutory provisions.
Enforcement of Legal Rights
All of our directors and officers as well as the experts named herein are located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process within Canada upon us or those persons. All of our assets and the assets of those persons are located outside of Canada and, as a result, it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or those persons outside of Canada.
Collection of Personal Information
If a Canadian purchaser is resident in or otherwise subject to the securities laws of the Province of Ontario, the Purchaser authorizes the indirect collection of personal information pertaining to the Canadian purchaser by the Ontario Securities Commission (the “OSC”) and each Canadian purchaser will be required to acknowledge and agree that the Canadian purchaser has been notified by us (i) of the delivery to the OSC of personal information pertaining to the Canadian purchaser, including, without limitation, the full name, residential address and telephone number of the Canadian purchaser, the number and type of securities purchased and the total purchase price paid in respect of the securities, (ii) that this information is being collected indirectly by the OSC under the authority granted to it in securities legislation, (iii) that this information is being collected for the purposes of the administration and enforcement of the securities legislation of Ontario, and (iv) that the title, business address and business telephone number of the public official in Ontario who can answer questions about the OSC’s indirect collection of the information is the Administrative Assistant to the Director of Corporate Finance, the Ontario Securities Commission, Suite 1903, Box 5520, Queen Street West, Toronto, Ontario, M5H 3S8, Telephone: (416) 593-8086, Facsimile: (416) 593-8252.
British Virgin Islands
No offer or invitation to subscribe for units may be made to the public in the British Virgin Islands.
Switzerland
The units may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility in Switzerland. This prospectus has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this prospectus nor any other offering or marketing material relating to the units or the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither this prospectus nor any other offering or marketing material relating to the offering, the company or the securities have been or will be filed with or approved by any Swiss regulatory authority. In particular, this prospectus will not be filed with, and the offer of securities will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, or FINMA, and the offer of securities has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of units.
Italy
This prospectus has not been submitted to the Commissione Nazionale per le Società e la Borsa, the Italian Securities Exchange Commission (“CONSOB”), for clearance and will not be subject to formal review or clearance by CONSOB.
Accordingly, the units may not be offered, and copies of this prospectus or any other document relating to the units may not be distributed in Italy except:
(a)
to “qualified investors” (investitori qualificati), as defined pursuant to Article 34-ter, first paragraph, letter b), of CONSOB regulation No. 11971 of May 14, 1999, as amended, concerning issuers (“Regulation No. 11971”), but excluding (i) small and medium enterprises and natural persons
indicated in Regulation No. 11971 that have not been included in the register of qualified investors, (ii) management companies and financial intermediaries authorized to manage individual portfolios on behalf of third parties and (iii) fiduciary companies managing portfolio investments regulated by Article 60, paragraph 4 of Legislative Decree No. 415 of July 23, 1996; or
(b)
in other circumstances that are exempt from the rules on public offers pursuant to Article 100 of the Legislative Decree No. 58 of February 24, 1998, as amended (the “Italian Financial Act”), and its implementing CONSOB regulations, including Regulation No. 11971.
Any such offer, sale or delivery of the units offered hereby or distribution of copies of this Prospectus, or any other document relating to the offering in the Republic of Italy must be in compliance with the selling restrictions under
(i)
made by soggetti abilitati (including investment firms (imprese di investimento), banks or financial intermediaries, as defined by Article 1, first paragraph, letter r), of the Italian Financial Act, to the extent duly authorized to engage in the offering and/or underwriting and/or purchase of financial instruments in the Republic of Italy in accordance with the relevant provisions of the Italian Financial Act, CONSOB Regulation 16190 of October 29, 2007, as amended, Legislative Decree No. 385 of September 1, 1993, as amended (the “Italian Banking Act”) and any other applicable laws and regulations; and
(ii)
in compliance with any other applicable requirements or limitations which may be imposed by CONSOB, the Bank of Italy or any other Italian regulatory authority.
Any investor purchasing the units offered hereby is solely responsible for ensuring that any offer or resale of the units it purchased occurs in compliance with applicable laws and regulations.
In accordance with Article 100-bis of the Italian Financial Act, the subsequent resale on the secondary market in the Republic of Italy of the units offered hereby (which were part of an offer made pursuant to an exemption from the obligation to publish a prospectus) constitutes a distinct and autonomous offer that must be made in compliance with the public offer and prospectus requirement rules provided under the Italian Financial Act and the Regulation No. 11971 unless an exemption applies. Failure to comply with such rules may result in the subsequent resale of such units being declared null and void and the intermediary transferring the units may be liable for any damage suffered by the investors.
LEGAL MATTERS
Winston & Strawn LLP is acting as counsel in connection with the registration of our securities under the Securities Act, and as such, will pass upon the validity of the securities offered in this prospectus. Loeb & Loeb is acting as counsel to the underwriter in connection with the offering of the securities.
EXPERTS
The financial statements of RF Acquisition Corp. as of December 31, 2021 and for the period from January 11, 2021 (inception) through December 31, 2021 included in this prospectus have been audited by Marcum LLP, independent registered public accounting firm, as set forth in their report, thereon (which contains an explanatory paragraph relating to substantial doubt about the ability of RF Acquisition Corp. to continue as a going concern as described in Note 1 to the financial statements), appearing elsewhere in this prospectus, and are included in reliance on such report given upon the authority of such firm as experts in auditing and accounting.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the securities we are offering by this prospectus. This prospectus does not contain all of the information included in the registration statement. For further information about us and our securities, you should refer to the registration statement and the exhibits and schedules filed with the registration statement. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents, the references are materially complete but may not include a description of all aspects of such contracts, agreements or other documents, and you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement or other document.
Upon completion of this offering, we will be subject to the information requirements of the Exchange Act and will file annual, quarterly and current event reports, proxy statements and other information with the SEC. You can read our SEC filings, including the registration statement, over the Internet at the SEC’s website at www.sec.gov.
INDEX TO FINANCIAL STATEMENTS
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PAGE
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Financial Statements of RF Acquisition Corp.:
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F-2 |
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F-3 |
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F-4 |
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F-5 |
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F-6 |
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F-7
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
RF Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of RF Acquisition Corp. (the “Company”) as of December 31, 2021, and the related statements of operations, changes in stockholders’ equity and cash flows for the period from January 11, 2021 (inception) through December 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the period from January 11, 2021 (inception) through December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph — Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1 to the financial statements, the Company’s ability to execute its business plan is dependent upon its completion of the proposed initial public offering described in Note 3 to the financial statements. The Company has a significant working capital deficiency as of December 31, 2021 and lacks the financial resources it needs to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regard to these matters are also described in Notes 1 and 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2021
Boston, MA
March 7, 2022
RF Acquisition Corp.
Balance Sheet
December 31, 2021
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ASSETS
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Deferred offering costs
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$ |
606,059 |
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Total Assets
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|
$ |
606,059 |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT
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Current Liabilities
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Accrued offering expenses
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|
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$ |
226,514 |
|
|
| |
Franchise tax payable
|
|
|
|
|
31,123 |
|
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Due to Sponsor
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|
|
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355,184 |
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Total Current Liabilities
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$ |
612,821 |
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Commitment and Contingencies (Note 6)
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Stockholders’ Deficit
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Preferred Stock – $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
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—
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Class A Common Stock; $0.0001 par value; 380,000,000 shares authorized; 200,000 issued and outstanding
|
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20 |
|
|
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Class B Common Stock; $0.0001 par value; 20,000,000 shares authorized; 2,875,000 issued and outstanding (1)
|
|
|
|
|
288 |
|
|
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Additional paid-in capital
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|
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|
24,712 |
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|
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Accumulated Deficit
|
|
|
|
|
(31,782) |
|
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Total Stockholders’ Deficit
|
|
|
|
|
(6,762) |
|
|
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Total Liabilities and Stockholders’ Deficit
|
|
|
|
$ |
606,059 |
|
|
(1)
Includes an aggregate of 375,000 shares of common stock that are subject to forfeiture to the extent that the underwriter’s over-allotment is not exercised in full (Note 5).
The accompanying notes are an integral part of the financial statements.
RF Acquisition Corp.
Statement of Operations
For the period from January 11, 2021 (inception) through December 31, 2021
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Formation costs and other operating expenses
|
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|
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$ |
659 |
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| |
Franchise tax expenses
|
|
|
|
|
31,123 |
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Net Loss
|
|
|
|
|
(31,782) |
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|
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Weighted average number of common shares outstanding (1)
|
|
|
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2,700,000 |
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Basic and diluted net loss per share
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$ |
(0.01) |
|
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(1)
Excludes an aggregate of 375,000 shares of common stock that are subject to forfeiture to the extent that the underwriter’s over-allotment is not exercised in full (Note 5).
The accompanying notes are an integral part of the financial statements.
RF Acquisition Corp.
Statement of Changes in Stockholders’ Deficit
For the Period from January 11, 2021 (inception) through December 31, 2021
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Class A
Common Stock
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Class B
Common Stock
|
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Additional
Paid-in
Capital
|
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Accumulated
Deficit
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Total
Stockholders’
Deficit
|
|
| |
|
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Shares
|
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Amount
|
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Shares
|
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Amount
|
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Balances at January 11, 2021 (inception)
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— |
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$ |
— |
|
|
|
|
|
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
Issuance of Class B common stock to Sponsor (1)
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
2,875,000 |
|
|
|
|
|
288 |
|
|
|
|
|
24,712 |
|
|
|
|
|
— |
|
|
|
|
|
25,000 |
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|
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Issuance of Class A common stock to underwriter
|
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|
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|
200,000 |
|
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|
|
20 |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
20 |
|
|
|
Net loss for the period
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
(31,782) |
|
|
|
|
|
(31,782) |
|
|
|
Balances at December 31, 2021
|
|
|
|
|
200,000 |
|
|
|
|
$ |
20 |
|
|
|
|
|
2,875,000 |
|
|
|
|
$ |
288 |
|
|
|
|
$ |
24,712 |
|
|
|
|
$ |
(31,782) |
|
|
|
|
$ |
(6,762) |
|
|
(1)
Includes an aggregate of 375,000 shares of common stock that are subject to forfeiture to the extent that the underwriter’s over-allotment is not exercised in full (Note 5).
The accompanying notes are an integral part of the financial statements.
RF Acquisition Corp.
Statement of Cash Flows
For the period from January 11, 2021 (inception) through
December 31, 2021
| |
Operating Activities
|
|
|
|
|
|
|
|
| |
Net loss
|
|
|
|
$ |
(31,782) |
|
|
| |
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
|
| |
Franchise tax payable
|
|
|
|
$ |
31,123 |
|
|
| |
Accrued offering expenses
|
|
|
|
|
659 |
|
|
| |
Net Cash used in Operating Activities
|
|
|
|
|
— |
|
|
| |
Net change in cash
|
|
|
|
|
— |
|
|
| |
Cash, beginning of period
|
|
|
|
|
— |
|
|
| |
Cash, end of period
|
|
|
|
$ |
— |
|
|
| |
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
| |
Deferred offering costs included in accrued expenses
|
|
|
|
$ |
225,855 |
|
|
| |
Deferred offering costs paid by Sponsor in exchange for issuance of Class B common stock
|
|
|
|
$ |
25,000 |
|
|
| |
Deferred offering costs paid by Underwriter in exchange for issuance of Class A common stock
|
|
|
|
$ |
20 |
|
|
| |
Deferred offering costs paid by Sponsor
|
|
|
|
$ |
355,184 |
|
|
The accompanying notes are an integral part of the financial statements.
RF ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
For the Period from January 11, 2021
(inception) through December 31, 2021
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
RF Acquisition Corp. (the “Company”) was incorporated in Delaware on January 11, 2021. The Company was 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 (the “Business Combination”). Although the Company is not limited to a particular industry or sector for purposes of consummating a Business Combination, the Company intends to focus its search for an initial business combination on companies that are within the financial services, media, technology, retail, interpersonal communication, transportation, and education sectors. The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
As of December 31, 2021, the Company had not yet commenced any operations. All activity for the period January 11, 2021 (inception) through December 31, 2021 relates to the Company’s formation and the proposed initial public offering which is described below. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Proposed Public Offering. The Company has selected December 31 as its fiscal year end.
The Company’s sponsor is RF Dynamic LLC, a Delaware limited liability company (the “Sponsor”).The Company’s ability to commence operations is contingent upon obtaining adequate financial resources through a proposed public offering (the “Proposed Public Offering”) of 10,000,000 units of the Company (each, a “Unit” and collectively, the “Units”) at $10.00 per Unit (or 11,500,000 units if the underwriter’s over-allotment option is exercised in full), which is discussed in Note 3, and the sale of 4,550,000 warrants of the Company (or 5,000,000 warrants if the underwriter’s over-allotment option is exercised in full) (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to the Sponsor, the insiders, and EarlyBirdCapital that will close simultaneously with the Proposed Public Offering.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Proposed Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (as defined below) (net of amounts disbursed to management for working capital purposes and excluding the amount of certain advisory fees payable to EarlyBirdCapital) at the time of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the 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 1940, as amended (the “Investment Company Act”). Upon the closing of the Proposed Public Offering, management has agreed that an amount equal to at least $10.00 per Unit sold in the Proposed Public Offering, including the proceeds from the sale of the Private Placement Warrants to the Sponsor and EarlyBirdCapital, will be held in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. “government securities”, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or in money market funds meeting the certain conditions under Rule 2a-7 of the Investment Company Act, which invest only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
The Company will provide the holders (the “Public Stockholders”) of the Company’s outstanding shares of Class A common stock, par value $0.0001 per share, sold in the Proposed Public Offering (the “Public Shares”) with the opportunity to redeem all or a portion of their Public Shares (as defined below) upon the completion
of a 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 the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust Account (initially anticipated to be $10.10 per Public Share). These Public Shares will be recorded at a redemption value and classified as temporary equity upon the completion of the Proposed Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” If the Company seeks stockholder approval, the Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination. The Company will not redeem the Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the initial stockholders (as defined below) have agreed to vote their Founder Shares (as defined below in Note 4) and any Public Shares purchased during or after the Proposed Public Offering in favor of a Business Combination. In addition, the initial stockholders have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.
The Certificate of Incorporation will provide that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.
The holders of the Founder Shares (as defined below) prior to the Proposed Public Offering (the “initial stockholders”) have agreed not to propose an amendment to the Certificate of Incorporation to modify the substance or timing of the Company’s obligation to allow redemption in connection with a Business Combination or to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or with respect to any other material provisions relating to stockholders’ rights or pre-initial Business Combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
If the Company is unable to complete a Business Combination within 12 months, or if we decide to extend the period of time to consummate our business combination up to two times by an additional three months each time, at $0.10 per extension, for a total of $0.20 aggregate in trust, within 18 months, from the closing of the Proposed Public Offering (the “Combination Period”), the Company 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 the Company to pay its 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 the Company’s remaining stockholders and its board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
The initial stockholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination within the
Combination Period. However, if the initial stockholders acquire Public Shares in or after the Proposed Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.10. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (except for the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a letter of intent, confidentiality or other similar agreement or business combination agreement (a “Target”), reduce the amount of funds in the Trust Account to below the lesser of (i) $10.10 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 $10.10 per Public Share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or Target that 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 the Company’s indemnity of the underwriter of the Proposed Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
COVID-19
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 the Company consummates a business combination could be materially and adversely affected. Furthermore, the Company 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 the Company’s 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, the Company’s ability to consummate a business combination, or the operations of a target business with which the Company ultimately consummates a business combination, may be materially adversely affected.
Risks and Uncertainties
Management is currently evaluating the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Going Concern Consideration
At December 31, 2021, the Company had no cash and a working capital deficit of $612,821, respectively. The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. These conditions raise substantial doubt about the Company’s ability to continue as a going
concern one year from the issuance date of the financial statements. Management plans to address this uncertainty through the Proposed Public Offering as discussed in Note 3. However, there is no assurance that the Company’s plans to raise capital or to consummate a Business Combination will be successful or successful within the Combination Period. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Management has determined that the Company will require additional funding from the Sponsor sufficient to fund the working capital needs of the Company until the earlier of the consummation of the Proposed Public Offering or one year from the issuance of these financial statements.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are presented in U.S. dollars and in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC.
The Company has neither engaged in any operations nor generated any revenues to date. The Company’s only activities since inception have been organizational activities and those necessary to prepare for the Proposed Public Offering. Following the Proposed Public Offering, the Company will not generate any operating revenues until after completion of a Business Combination.
The Company will generate non-operating income in the form of interest income on cash and cash equivalents after the Proposed Public Offering. After the Proposed Public Offering, the Company expects to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. The Company expects its expenses to increase substantially after the closing of the Proposed Public Offering.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and it 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 independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
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 an emerging growth 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. The Company has 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, the Company, 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 the Company’s financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Concentration of Credit Risk
Financial instalments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage
limit of $250,000. At December 31, 2021, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurements and Disclosures,” equal or approximate the carrying amounts represented in the balance sheet.
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. US GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers consist of:
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Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
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Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
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Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash or cash equivalents as of December 31, 2021.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Deferred Offering Costs Associated with the Proposed Public Offering
Deferred offering costs consist of legal, accounting, underwriting fees and other expenses incurred through the balance sheet date that are directly related to the Proposed Public Offering and that will be charged to stockholders’ equity upon the completion of the Proposed Public Offering. Should the Proposed Public Offering prove to be unsuccessful, these deferred costs, as well as additional expenses incurred, will be charged to operations.
Net Loss Per Share of Common Stock
Net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period, excluding shares of common stock subject to forfeiture by the Sponsor.
Weighted average shares were reduced for the effect of an aggregate of 375,000 shares of Class B common stock that are subject to forfeiture if the over-allotment option is not exercised by the underwriter (see Note 7). At December 31, 2021, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the period presented.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Deferred tax assets were deemed immaterial as of December 31, 2021.
FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of December 31, 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The provision for income taxes was deemed to be immaterial for the period from January 11, 2021 (inception) through December 31, 2021.
Class A Common Stock Subject to Possible Redemption
The Company will account for its Class A common stock subject to possible redemption in accordance with the guidance in FASB ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Class A common stock are classified as stockholders’ equity. The Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, the Class A common stock will be subject to possible redemption and will be presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet. The Company will recognize changes in redemption value immediately as they occur and adjust the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Immediately upon the closing of the Initial Public Offering, the Company will recognize the remeasurement adjustment from carrying value to redemption value. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital (to the extent available) and accumulated deficit.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not
net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
Warrants and Rights
The Company accounts for warrants and rights as either equity-classified or liability-classified instruments based on an assessment of the warrants and rights specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants and rights are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants and rights meet all of the requirements for equity classification under ASC 815, including whether the warrants and rights are indexed to the Company’s own common shares and whether the warrant and rights holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant and rights issuance and as of each subsequent quarterly period end date while the warrants and rights are outstanding.
For issued or modified warrants and rights that meet all of the criteria for equity classification, the warrants and rights are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants and rights that do not meet all the criteria for equity classification, the warrants and rights are required to be treated as liabilities, and recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants and rights are recognized as a non-cash gain or loss on the statements of operations.
The equity-linked warrants, both Public and Private warrants, and rights are considered freestanding and outside the scope of ASC 480 as they are not mandatorily redeemable, are exchanged on a fixed 1:1 ratio and do not obligate the Company to repurchase equity shares. The Company concluded that the warrants and rights are equity classified under ASC 815 as the warrants and rights are indexed in the Company’s Class A common stock.
Recent Accounting Pronouncements
Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
NOTE 3. PROPOSED PUBLIC OFFERING
Pursuant to the Proposed Public Offering, the Company intends to offer for sale 10,000,000 Units at a price of $10.00 per Unit. Each Unit consists of one share of Class A common stock, one right to receive one-tenth (1/10) of one share of Class A common stock, and one redeemable warrant (each, a “Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 6).
The Company will grant the underwriter a 45-day option from the date of the final prospectus relating to the Proposed Public Offering to purchase up to 1,500,000 additional Units to cover over-allotments, if any, at the Proposed Public Offering price, less underwriting discounts and commissions.
NOTE 4. PRIVATE PLACEMENT
The Sponsor, insiders and EarlyBirdCapital have agreed to purchase an aggregate of 4,550,000 Private Placement Warrants (or 5,000,000 Private Placement Warrants if the underwriter’s over-allotment option is exercised in full) consisting of 4,050,000 warrants by the Sponsor (or 4,450,500 warrants if the over-allotment option is exercised in full) and 500,000 warrants by EarlyBirdCapital (and/or its designees) (or 549,500 warrants if the over-allotment option is exercised in full), for an aggregate purchase price of $4,550,000, or $5,000,000 if the over-allotment option is exercised in full, in a private placement that will occur simultaneously with the closing of the Proposed Public Offering.
Each Private Placement Warrant is identical to the warrants offered in the Proposed Public Offering, except that (i) there will be no redemption rights with respect to Private Placement Warrants, which will expire worthless if we do not consummate a Business Combination within the Combination Period, (ii) Private Placement Warrants (including the Class A common stock issuable upon exercise of such warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the Sponsor until 30 days after the completion of our initial Business Combination, (iii) Private Placement Warrants may be exercised by the holders on a cashless basis and (iv) the holders of Private Placement Warrants (including with respect to shares of Class A common stock issuable upon exercise of such warrants) are entitled to registration rights.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On January 21, 2021, the Company issued an aggregate of 2,875,000 shares of Class B common stock (the “Founder Shares”) to the Sponsor in exchange for cash of $25,000. The Founder Shares include an aggregate of up to 375,000 shares subject to forfeiture by the Sponsor to the extent that the underwriter’s overallotment is not exercised in full or in part, so that the Sponsor will own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the Proposed Public Offering (assuming the Sponsor does not purchase any Public Shares in the Proposed Public Offering).
The Sponsor has agreed not to, except to permitted transferees, transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination or (B) the date on which the Company completes a liquidation, merger, capital stock exchange or similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property. Notwithstanding the foregoing, if the last sale price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 120 days after the Business Combination, the Founder Shares will be released from the lock-up.
Administrative Services Agreement
Commencing on the date of the Proposed Public Offering and until completion of the Company’s initial business combination or liquidation, the Company will make a payment of a monthly fee of $10,000 to the Sponsor for office space, utilities and secretarial and administrative support provided to the Company.
Related Party Loans and Reimbursements
Other than the payment of customary fees the Company may elect to make to members of its board of directors for director service, no compensation of any kind, including finder’s and consulting fees, will be paid by the Company to the Sponsor or the Company’s executive officers and directors, or any of their respective affiliates, for services rendered prior to or in connection with the completion of a Business Combination. However, these individuals will be reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. The Company’s audit committee will review on a quarterly basis all payments that were made to the Sponsor or the Company’s officers, directors or their affiliates.
In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required on a non-interest basis (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay such loaned amounts. If a Business Combination does not close, the Company may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from its Trust account would be used for such repayment. The terms of such Working Capital Loans by the Sponsor or its affiliates, or the Company’s officers and directors, if any, have not been determined and no written agreements exist with respect to such loans.
Due to Sponsor
The Sponsor has paid expenses on behalf of the Company prior to the Company’s Proposed Public Offering. This amount is not interest bearing and due on demand by the Sponsor. As of December 31, 2021, there was $355,184 due to Sponsor.
Promissory Note – Related Party
The sponsor has agreed to loan the Company up to $300,000 in the aggregate, to be used for a portion of the expenses of the Proposed Public Offering. The loans will be non-interest bearing, unsecured and due at the earlier of September 30, 2022 or the closing of the Proposed Public Offering. At December 31, 2021, the Company has not drawn down on the promissory note.
NOTE 6. COMMITMENTS & CONTINGENCIES
Registration and Stockholder Rights
The holders of the Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion of the Working Capital Loans (and in each case holders of their component securities, as applicable) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of the Proposed Public Offering, requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to our Class A common stock). The holders of the majority of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company will grant the underwriter a 45-day option from the date of Proposed Public Offering to purchase up to 1,500,000 additional Units to cover over-allotments, if any, at the Proposed Public Offering price less the underwriting discounts and commissions. The underwriter will be entitled to an underwriting discount of $0.20 per Unit, or $2,000,000 in the aggregate (or $2,300,000 in the aggregate if the underwriters’ over-allotment option is exercised in full), payable upon the closing of the Proposed Public Offering.
Business Combination Marketing Agreement
The Company will engage EBC as an advisor in connection with a Business Combination to assist the Company in holding meetings with its shareholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities in connection with a Business Combination, assist the Company with its press releases and public filings in connection with the Business Combination. The Company will pay EBC a cash fee for such services upon the consummation of a Business Combination in an amount equal to 3.5% of the gross proceeds of Proposed Public Offering.
Additionally, the Company will pay EBC a cash fee equal to 1.0% of the total consideration payable in the proposed Business Combination if it introduces the Company to the target business with which the Company completes a Business Combination; provided that the foregoing fee will not be paid prior to the date that is 90 days from the effective date of the Proposed Public Offering, unless FINRA determines that such payment would not be deemed underwriters’ compensation in connection with the Proposed Public Offering pursuant to FINRA Rule 5110.
EarlyBirdCapital founder shares
On April 12, 2021 the Company issued to EarlyBirdCapital (“EBC”) and or designees an aggregate of 200,000 shares of Class A common stock at a price of $0.0001 per share for a total consideration of $20. The
Company accounts for the fair value of the EBC Founder shares (EarlyBirdCapital Founder shares) over consideration paid as offering cost of the Proposed Public Offering, with a corresponding credit to stockholder’s equity.
The Company estimated the fair value of the EBC founder shares to be $519,415 and will be recorded as a offering cost at the time of Initial Public Offering with a corresponding increase in stockholder’s equity. The Company established the initial fair value of the EBC Founder Shares on December 31, 2021, using a probability weighted model for the EBC Founder Shares. The EBC Founder Shares are classified as Level 3 at the measurement date due to the use of unobservable inputs including the probability of a business combination, the probability of the initial public offering, and other risk factors.
EarlyBirdCapital (and/or its designees) has agreed not to transfer, assign or sell any such shares without the Company’s prior written consent until the completion of the Business Combination. In addition, EarlyBirdCapital (and/or its designees) has agreed (i) to waive its redemption rights with respect to such shares in connection with the completion of the Business Combination and (ii) to waive its rights to liquidating distributions from the trust account with respect to such shares if the Company fails to complete the Business Combination within the Combination Period.
The shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the date of the effectiveness of the registration statement of which this prospectus forms a part pursuant to FINRA Rule 5110(g)(1). Pursuant to FINRA Rule 5110(g)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the registration statement of which this prospectus forms a part, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days immediately following the effective date of the registration statement of which this prospectus forms a part except to any underwriter and selected dealer participating in the offering and their bona fide officers or partners.
NOTE 7. STOCKHOLDERS’ EQUITY
Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of December 31, 2021, there were no shares of preferred stock issued or outstanding.
Class A Common Stock - The Company is authorized to issue 380,000,000 shares of Class A common stock with a par value of $0.0001 per share. On April 12, 2021, the Company issued to EBC and/or its designees an aggregate of 200,000 shares of Class A common stock with a par value of $0.0001 per share. As of December 31, 2021, there were 200,000 shares of Class A common stock issued and outstanding.
Class B Common Stock — The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of the Company’s common stock are entitled to one vote for each share, except that, prior to the completion of a Business Combination, only holders of the Company’s Class B common stock have the right to vote on the election of directors. On January 21, 2021, the Company issued 2,875,000 shares of Class B common stock, including an aggregate of up to 375,000 shares of Class B common stock that are subject to forfeiture, to the Company by the initial stockholders for no consideration to the extent that the underwriter’s over-allotment option is not exercised in full or in part, so that the initial stockholders will collectively own 20% of the Company’s issued and outstanding common stock after the Proposed Public Offering (excluding the private placement warrants and the EBC founder shares). As of December 31, 2021, there were 2,875,000 Class B common stock issued and outstanding.
The Class B common stock will automatically convert into Class A common stock at the time of the initial Business Combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock or equity-linked securities are issued or deemed issued in connection with the initial Business Combination, the number of shares of Class A common stock issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A common stock outstanding after such conversion (after giving effect to any
redemptions of shares of Class A common stock by Public Stockholders and excluding the private placement warrants and the EBC founder shares), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial Business Combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in the initial Business Combination and any private placement warrants issued to the Sponsor, officers or directors.
NOTE 8. Warrants
Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable 30 days after the consummation of a Business Combination. The Public Warrants will expire five years from the consummation of a Business Combination or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any Class A common stock pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A common stock issuable upon exercise of the Public Warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.
Once the warrants become exercisable, the Company may redeem the Public Warrants:
•
in whole and not in part;
•
at a price of $0.01 per warrant;
•
at any time after the warrants become exercisable,
•
upon not less than 30 days’ prior written notice of redemption to each warrant holder;
•
if, and only if, the reported last sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, and recapitalizations) for any 20 trading days within a 30-trading day period commencing at any time after the warrants become exercisable and ending on the third trading day prior to the notice of redemption to warrant holders; and
•
if, and only if, there is a current registration statement in effect with respect to the shares of Class A common stock underlying such warrants.
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, except as described below, the warrants will not be adjusted for issuance of Class A common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities, for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and, in the case of any such issuance to the Sponsor, our initial stockholders or such affiliates, without taking into account any founder shares held by the Sponsor, initial stockholders or such affiliates, as applicable, prior to such issuance) (the
“Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the completion of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s Class A common stock during the 20 trading day period starting on the trading day after the day on which the Company completes a Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of the Market Value or the Newly Issued Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the greater of the Market Value or the Newly Issued Price.
NOTE 9. RIGHTS
Each holder of a right will automatically receive one-tenth (1/10) of one Class A common stock upon consummation of our initial business combination, even if the holder of a Public Right redeemed all Class A common stock held by him, her or it in connection with the initial business combination. No additional consideration will be required to be paid by a holder of rights in order to receive his, her or its additional Class A common stock upon consummation of an initial business combination. The Class A common stock issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of ours).
We will not issue fractional shares in connection with an exchange of Public Rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the Delaware General Corporations Law, and any rounding down and extinguishment may be done with or without any in lieu cash payment or other compensation being made to the holder of the relevant Public Rights. As a result, you must hold rights in multiples of 10 in order to receive shares for all of your rights upon closing of a business combination.
If we are unable to complete an initial business combination within the Combination Period and we liquidate the funds held in the trust account, holders of Public Rights will not receive any of such funds for their Public Rights and the Public Rights will expire worthless.
NOTE 10. SUBSEQUENT EVENTS
The Company evaluated events that have occurred after the balance sheet date through March 15, 2022, which is the date on which these financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
10,000,000 Units
RF Acquisition Corp.
PROSPECTUS
EarlyBirdCapital Inc.
Until , 2022 (25 days after the date of this prospectus), all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriter and with respect to their unsold allotments or subscriptions.
You should rely only on the information contained in this prospectus. We have not, and the underwriter has not, authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriter is not, making an offer to sell securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus.
No dealer, salesperson or any other person is authorized to give any information or make any representations in connection with this offering other than those contained in this prospectus and, if given or made, the information or representations must not be relied upon as having been authorized by us. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any security other than the securities offered by this prospectus, or an offer to sell or a solicitation of an offer to buy any securities by anyone in any jurisdiction in which the offer or solicitation is not authorized or is unlawful.
, 2022
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The estimated expenses payable by us in connection with the offering described in this registration statement (other than the underwriting discount and commissions) will be as follows:
| |
SEC/FINRA expenses
|
|
|
|
$ |
60,093 |
|
|
| |
Accounting fees and expenses
|
|
|
|
$ |
40,000 |
|
|
| |
Printing and engraving expenses
|
|
|
|
$ |
25,000 |
|
|
| |
Legal fees and expenses
|
|
|
|
$ |
300,000 |
|
|
| |
Miscellaneous
|
|
|
|
$ |
134,907 |
|
|
| |
Total
|
|
|
|
$ |
560,000 |
|
|
(1)
This amount represents the approximate amount of annual director and officer liability insurance premiums the registrant anticipates paying following the completion of its initial public offering and until it completes an initial business combination.
Item 14. Indemnification of Directors and Officers.
Our amended and restated certificate of incorporation will provide that all of our directors, officers, employees and agents shall be entitled to be indemnified by us to the fullest extent permitted by Section 145 of the Delaware General Corporation Law (“DGCL”). Section 145 of the Delaware General Corporation Law concerning indemnification of officers, directors, employees and agents is set forth below.
Section 145. Indemnification of officers, directors, employees and agents; insurance.
(a)
A corporation shall have power to indemnity any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful.
(b)
A corporation shall have power to indemnity any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
(c)
To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.
(d)
Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders.
(e)
Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys’ fees) incurred by former officers and directors or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate.
(f)
The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office. A right to indemnification or to advancement of expenses arising under a provision of the certificate of incorporation or a bylaw shall not be eliminated or impaired by an amendment to such provision after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.
(g)
A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnity such person against such liability under this section.
(h)
For purposes of this section, references to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnity its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.
(i)
For purposes of this section, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the corporation” shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this section.
(j)
The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
(k)
The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under any by law, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a corporation’s obligation to advance expenses (including attorneys’ fees).
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. If a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid by a director, officer or controlling person in a successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
In accordance with Section 102(b)(7) of the DGCL, our amended and restated certificate of incorporation, will provide that no director shall be personally liable to us or any of our stockholders for monetary damages resulting from breaches of their fiduciary duty as directors, except to the extent such limitation on or exemption from liability is not permitted under the DGCL. The effect of this provision of our amended and restated certificate of incorporation is to eliminate our rights and those of our stockholders (through stockholders’ derivative suits on our behalf) to recover monetary damages against a director for breach of the fiduciary duty of care as a director, including breaches resulting from negligent or grossly negligent behavior, except, as restricted by Section 102(b)(7) of the DGCL. However, this provision does not limit or eliminate our rights or the rights of any stockholder to seek non-monetary relief, such as an injunction or rescission, in the event of a breach of a director’s duty of care.
If the DGCL is amended to authorize corporate action further eliminating or limiting the liability of directors, then, in accordance with our amended and restated certificate of incorporation, the liability of our directors to us or our stockholders will be eliminated or limited to the fullest extent authorized by the DGCL, as so amended. Any repeal or amendment of provisions of our amended and restated certificate of incorporation limiting or eliminating the liability of directors, whether by our stockholders or by changes in law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise required by law) be prospective only, except to the extent such amendment or change in law permits us to further limit or eliminate the liability of directors on a retroactive basis.
Our amended and restated certificate of incorporation will also provide that we will, to the fullest extent authorized or permitted by applicable law, indemnify our current and former officers and directors, as well as those persons who, while directors or officers of our corporation, are or were serving as directors, officers, employees or agents of another entity, bust or other enterprise, including service with respect to an employee benefit plan, in connection with any threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative, against all expense, liability and loss (including, without limitation, attorney’s
fees, judgments, fines, ERISA excise taxes and penalties and amounts paid in settlement) reasonably incurred or suffered by any such person in connection with any such proceeding.
Notwithstanding the foregoing, a person eligible for indemnification pursuant to our amended and restated certificate of incorporation will be indemnified by us in connection with a proceeding initiated by such person only if such proceeding was authorized by our board of directors, except for proceedings to enforce rights to indemnification.
The right to indemnification which will be conferred by our amended and restated certificate of incorporation is a contract right that includes the right to be paid by us the expenses incurred in defending or otherwise participating in any proceeding referenced above in advance of its final disposition, provided, however, that if the DGCL requires, an advancement of expenses incurred by our officer or director (solely in the capacity as an officer or director of our corporation) will be made only upon delivery to us of an undertaking, by or on behalf of such officer or director, to repay all amounts so advanced if it is ultimately determined that such person is not entitled to be indemnified for such expenses under our amended and restated certificate of incorporation or otherwise.
The rights to indemnification and advancement of expenses will not be deemed exclusive of any other rights which any person covered by our amended and restated certificate of incorporation may have or hereafter acquire under law, our amended and restated certificate of incorporation, our bylaws, an agreement, vote of stockholders or disinterested directors, or otherwise.
Any repeal or amendment of provisions of our amended and restated certificate of incorporation affecting indemnification rights, whether by our stockholders or by changes in law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise required by law) be prospective only, except to the extent such amendment or change in law permits us to provide broader indemnification rights on a retroactive basis, and will not in any way diminish or adversely affect any right or protection existing at the time of such repeal or amendment or adoption of such inconsistent provision with respect to any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision. Our amended and restated certificate of incorporation will also permit us, to the extent and in the manner authorized or permitted by law, to indemnity and to advance expenses to persons other that those specifically covered by our amended and restated certificate of incorporation.
Our bylaws, which we intend to adopt immediately prior to the closing of this offering, include the provisions relating to advancement of expenses and indemnification rights consistent with those which will be set forth in our amended and restated certificate of incorporation. In addition, our bylaws provide for a right of indemnity to bring a suit if a claim for indemnification or advancement of expenses is not paid in full by us within a specified period of time. Our bylaws also permit us to purchase and maintain insurance, at our expense, to protect us and/or any director, officer, employee or agent of our corporation or another entity, trust or other enterprise against any expense, liability or loss, whether or not we would have the power to indemnify such person against such expense, liability or loss under the DGCL.
Any repeal or amendment of provisions of our bylaws affecting indemnification rights, whether by our board of directors, stockholders or by changes in applicable law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise required by law) be prospective only, except to the extent such amendment or change in law permits us to provide broader indemnification rights on a retroactive basis, and will not in any way diminish or adversely affect any right or protection existing thereunder with respect to any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision.
We will enter into indemnification agreements with each of our officers and directors a form of which is to be filed as an exhibit to this Registration Statement. These agreements will require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.
Pursuant to the Underwriting Agreement to be filed as Exhibit 1.1 to this Registration Statement, we have agreed to indemnity the underwriter and the underwriter has agreed to indemnify us against certain civil liabilities that may be incurred in connection with this offering, including certain liabilities under the Securities Act.
Item 15. Recent Sales of Unregistered Securities.
On January 21, 2021, our sponsor purchased an aggregate of 2,875,000 founder shares in exchange for a capital contribution of $25,000, or approximately $0.009 per share. Such securities were issued in connection with our organization pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. The number of founder shares outstanding was determined based on the expectation that the total size of this offering would be a maximum of 11,500,000 units if the underwriter’s over-allotment option is exercised in full and therefore that such founder shares would represent 20% of the outstanding shares after this offering (without giving effect to the private placements and the EBC founder shares). Up to 375,000 of these shares will be forfeited depending on the extent to which the underwriter’s over-allotment is exercised.
Tse Meng Ng is the manager of our sponsor. Our sponsor is an accredited investor for purposes of Rule 501 of Regulation D. Each of the equity holders in our sponsor is an accredited investor under Rule 501 of Regulation D. The sole business of our sponsor is to act as the company’s sponsor in connection with this offering. The limited liability company agreement of our sponsor provides that its membership interests may only be transferred to our officers or directors or other persons affiliated with our sponsor, or in connection with estate planning transfers.
In addition, our sponsor and EarlyBirdCapital have agreed to purchase an aggregate of 4,550,000 private placement warrants (or 5,000,000 private placement warrants if the over-allotment option is exercised in full) at a price of $1.00 per private placement warrant, for an aggregate purchase price of $4,550,000 (or $5,000,000 if the overallotment option is exercised in full). This purchase will take place on a private placement basis simultaneously with the completion of our initial public offering. The issuance will be made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
No underwriting discounts or commissions were paid with respect to such sales.
Item 16. Exhibits and Financial Statement Schedules.
(a)
Exhibits. The following exhibits are being filed herewith:
EXHIBIT INDEX
| |
Exhibit
No.
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|
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Description
|
|
| |
1.1
|
|
|
|
|
| |
3.1*
|
|
|
|
|
| |
3.2*
|
|
|
|
|
| |
3.3*
|
|
|
|
|
| |
4.1
|
|
|
|
|
| |
4.2*
|
|
|
|
|
| |
4.3*
|
|
|
|
|
| |
4.4*
|
|
|
|
|
| |
4.5
|
|
|
|
|
| |
4.6
|
|
|
|
|
| |
5.1
|
|
|
|
|
| |
10.1
|
|
|
|
|
| |
10.2*
|
|
|
|
|
| |
10.3
|
|
|
|
|
| |
10.4*
|
|
|
|
|
| |
10.5
|
|
|
|
|
| |
10.6*
|
|
|
|
|
| |
10.7
|
|
|
|
|
| |
10.8
|
|
|
|
|
| |
10.9*
|
|
|
|
|
| |
10.10*
|
|
|
|
|
| |
10.11*
|
|
|
|
|
| |
14*
|
|
|
|
|
| |
23.1
|
|
|
|
|
| |
23.2
|
|
|
|
|
| |
24*
|
|
|
|
|
| |
99.1*
|
|
|
|
|
| |
99.2*
|
|
|
|
|
| |
99.3*
|
|
|
|
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99.4*
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107
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*
Previously filed
(b)
Financial Statements. See page F-1 for an index to the financial statements and schedules included in the registration statement.
Item 17. Undertakings.
(a)
The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
(b)
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. If a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
(c)
The undersigned registrant hereby undertakes that:
(1)
For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2)
For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Newark, Delaware, on the 15th day of March, 2022.
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RF ACQUISITION CORP.
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By:
/s/ Tse Meng Ng
Tse Meng Ng
Chairman and Chief Executive Officer
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Tse Meng Ng or his true and lawful attorney-in-fact, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all amendments including post-effective amendments to this registration statement and any and all registration statements filed pursuant to Rule 462 under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC, hereby ratifying and confirming all that said attorney-in-fact or his substitute, acting alone, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
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Name
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Position
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Date
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/s/ Tse Meng Ng
Tse Meng Ng
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Chairman and Chief Executive Officer
(Principal Executive Officer)
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March 15, 2022
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/s/ Han Hsiung Lim
Han Hsiung Lim
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Chief Financial Officer, Chief
Operating Officer, and Director
(Principal Financial Officer and
Principal Accounting
Officer)
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March 15, 2022
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/s/ Benjamin Waisbren
Benjamin Waisbren
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Director
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March 15, 2022
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AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, the undersigned has signed this registration statement, solely in its capacity as the duly authorized representative of RF Acquisition Corp., in the City of Newark, Delaware, on the 15th day of March, 2022.
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By:
/s/ Donald J. Puglisi
Name: Donald J. Puglisi
Title: Managing Director, Puglisi & Associates
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Exhibit 1.1
10,000,000 Units
RF ACQUISITION CORP.
UNDERWRITING AGREEMENT
New York, New York
[*], 2022
EarlyBirdCapital, Inc.
366 Madison Avenue
New York, New York 10017
As Representative of the Underwriters
named on Schedule A hereto
Ladies and Gentlemen:
RF Acquisition Corp., a Delaware corporation (the
“Company”), hereby confirms its agreement with EarlyBirdCapital, Inc. (the “Representative”)
and with the other underwriters named on Schedule A hereto (if any), for which the Representative is acting as representative (the Representative
and such other underwriters being collectively referred to herein as the “Underwriters” or, each underwriter individually,
an “Underwriter”) as follows:
1. Purchase
and Sale of Securities.
1.1 Units.
1.1.1 Purchase
of Units. On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to issue and sell to the several Underwriters, severally and not jointly, an aggregate of 10,000,000 units of
the Company (the “Firm Units”) at a purchase price (net of discounts and commissions) of $9.80 per Firm Unit. Each
Firm Unit consists of one share of Class A common stock of the Company, par value $0.0001 per share (the “Common Stock”),
one redeemable warrant (“Warrant”), with each whole Warrant entitling the holder to purchase one share of Common Stock
for $11.50 per share, and one right to receive one-tenth of one share of Class A common stock upon the consummation of an initial
business combination (“Right”). The Common Stock, Rights and Warrants included in the Firm Units will not be separately
tradable until 90 days after the date hereof unless the Representative informs the Company of its decision to allow earlier separate trading,
subject to the Company filing a Current Report on Form 8-K with the Securities and Exchange Commission (the “Commission”)
containing an audited balance sheet reflecting the Company’s receipt of the gross proceeds of the Offering (defined below) and the
sale of the Private Warrants (defined in Section 1.4.3) and issuing a press release announcing when such separate trading
will begin. The Underwriters, severally and not jointly, agree to purchase from the Company the number of Firm Units set forth opposite
their respective names on Schedule A. The Underwriters shall offer the Firm Units to the public (the “Offering”) at
the offering price of $10.00 per Firm Unit.
1.1.2 Payment
and Delivery. Delivery and payment for the Firm Units shall be made at 10:00 A.M., New York time, on the second (2nd) Business Day
(as defined below) following the commencement of trading of the Firm Units at the offices of the Representative, or at such earlier time
and/or such other place as agreed upon by the Representative and the Company. The closing of the Offering is referred to herein as the
“Closing” and the hour and date of delivery and payment for the Firm Units is referred to herein as the “Closing
Date.” Payment for the Firm Units shall be made on the Closing Date through the facilities of Depository Trust Company (“DTC”)
by wire transfer in Federal (same day) funds. On the Closing Date, an aggregate of $101,000,000 ($116,150,000 if the Over-Allotment Option
is exercised in full) of the net proceeds from the sale of the Firm Units and Private Warrants shall be deposited into the trust account
(the “Trust Account”) established by the Company for the benefit of the Public Stockholders (as defined below), as
described in the Registration Statement (as defined in Section 2.1.1 below) and pursuant to the terms of an Investment Management
Trust Agreement (the “Trust Agreement”) between the Company and Continental Stock Transfer & Trust Company
(“CST&T”) substantially in the form annexed as an exhibit to the Registration Statement. The remaining proceeds
(less actual expenses and fees payable pursuant to this Agreement) shall be paid to the order of the Company on the Closing Date upon
delivery of certificates representing the Firm Units (in form and substance reasonably satisfactory to the Representative) or through
the facilities of DTC for the account of the Representative. The Firm Units shall be registered in such name or names and in such authorized
denominations as the Representative may request in writing at least two (2) Business Days prior to the Closing Date. The Company
will permit the Representative to examine and package the Firm Units for delivery at least one (1) full Business Day prior to the
Closing Date. The Company shall not be obligated to sell or deliver the Firm Units except upon tender of payment by the Representative
for all the Firm Units. As used herein, the term “Business Day” means any day other than a Saturday, Sunday, or any
day on which national banks in New York, New York are not open for business, and the term “Public Stockholders” means
the holders of Common Stock sold in the Offering or acquired in the aftermarket, including any of the Respondents (as defined in Section 2.14
below) to the extent they acquire such Common Stock in the Offering or in the aftermarket (and solely with respect to such shares).
EarlyBirdCapital, Inc.
[*] 2022
Page 2 of 36
1.2 Over-Allotment
Option
1.2.1 Grant
of Option. The Representative shall have the option (the “Over-Allotment Option”) to purchase all or less
than all of an additional 1,500,000 units of the Company (the “Option Units”) solely for the purposes of covering
any over-allotments in connection with the distribution and sale of the Firm Units. Such Option Units shall, at the
Representative’s election, be purchased for each account of the several Underwriters in the same proportion as the number of
Firm Units set forth opposite such Underwriter’s name on Schedule A hereto (subject to adjustment by the Representative to
eliminate fractions). Such Option Units shall be identical in all respects to the Firm Units. The Firm Units and the Option Units
are hereinafter collectively referred to as the “Public Securities.” No Option Units shall be sold or delivered
unless the Firm Units previously have been, or simultaneously are, sold and delivered. The right to purchase the Option Units, or
any portion thereof, may be exercised from time to time and to the extent not previously exercised may be surrendered and terminated
at any time upon notice by the Representative to the Company. The purchase price to be paid for each Option Unit (net of discounts
and commissions) will be $9.80 per Option Unit. The Option Units will be offered initially to the public at an offering price of
$10.00 per Option Unit.
1.2.2 Exercise
of Option. The Over-Allotment Option may be exercised by the Representative as to all or any part of the Option Units at any time
and from time to time within forty-five (45) days after the Effective Date (as defined in Section 2.1.1 below). The Representative
will not be under any obligation to purchase any Option Units prior to the exercise of the Over-Allotment Option. The Over-Allotment Option
may be exercised by oral notice from the Representative to the Company, which must be confirmed in accordance with the notice provisions
of Section 10.1 herein, setting forth the number of Option Units to be purchased and the date and time for delivery of and
payment for the Option Units, if other than the Closing Date, which date shall not be earlier than the Closing Date or later than ten
(10) full Business Days after the date of the notice (the “Option Closing Date”), at the offices of the Representative,
or at such other time and place as shall be agreed upon by the Company and the Representative. Upon exercise of the Over-Allotment Option,
the Company will become obligated to convey to the Representative, and, subject to the terms and conditions set forth herein, the Representative
will become obligated to purchase, the number of Option Units specified in such notice.
1.2.3 Payment
and Delivery. Payment for the Option Units shall be made on the Option Closing Date at the Representative’s election by wire
transfer in Federal (same day) funds or by certified or bank cashier’s check(s) in New York Clearing House funds, payable as
follows: $9.80 per Option Unit shall be deposited in the Trust Fund pursuant to the Trust Agreement upon delivery of certificates representing
the Option Units (in form and substance satisfactory to the Representative), or through the facilities of DTC for the account of the Representative.
The Option Units shall be registered in such names and in such authorized denominations as the Representative may request in writing at
least two (2) Business Days prior to the Closing Date or the Option Closing Date, as the case may be. The Company will permit the
Representative to examine and package the Option Units for delivery at least one (1) full Business Day prior to the Closing Date
or the Option Closing Date, as the case may be.
EarlyBirdCapital, Inc.
[*] 2022
Page 3 of 36
1.3 (Intentionally
Omitted)
1.4 Private
Placements.
1.4.1 Prior
to the date hereof, the Company issued to its initial stockholders (the “Initial Stockholders”) for an aggregate consideration
of $25,000, an aggregate of 2,875,000 shares of Class B Common Stock (the “Insider Shares”) in a private placement
intended to be exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Act”).
No underwriting discounts, commissions, or placement fees have been or will be payable in connection with the sale of the Insider Shares.
The Insider Shares shall be held in escrow and subject to restrictions on transfer as set forth in the Escrow Agreement (as defined in
Section 2.24.3 below). The Initial Stockholders shall have no right to any liquidation distributions with respect to any portion
of the Insider Shares in the event the Company fails to consummate any proposed initial merger, share exchange, asset acquisition, share
purchase, recapitalization, reorganization, or other similar business combination, or entering into contractual arrangements with one
or more businesses or entities (“Business Combination”) within the required time period. The Initial Stockholders shall
not have conversion rights with respect to the Insider Shares nor shall the Initial Stockholders be entitled to sell such Insider Shares
to the Company in any tender offer in connection with a proposed Business Combination. If the Over-Allotment Option is not exercised by
the Underwriters in full or in part, the Initial Stockholders shall forfeit such number of Insider Shares, up to a maximum of 375,000
Insider Shares, as is necessary to maintain the Sponsor’s 20% beneficial ownership in the Company’s Common Stock after giving
effect to the Offering and the exercise, if any, of the Underwriters’ Over-Allotment Option but excluding the issuance of the Representative’s
Shares (as defined below) and the purchase of any shares in the Offering.
1.4.2 Prior
to completion of the public offering, the Company issued to the Representative and/or its designees for an aggregate consideration of
$20.00, an aggregate of 200,000 shares of Class A Common Stock ( as part of the Insider Shares) (the “EBC Founder’s
Shares”) in a private placement intended to be exempt from registration under Section 4(a)(2) of the Act. The Representative’s
Shares are identical to the shares of Class A Common Stock included in the Firm Units except the holders (i) shall not be entitled
to exercise any conversion or redemption rights with respect to such Representative’s Shares and shall not be entitled to sell any
such shares to the Company in any tender offer in connection with a proposed Business Combination and (ii) will have no right to
any liquidation distributions with respect to any portion of the Representative’s Shares in the event the Company fails to consummate
a Business Combination within the required time period. Additionally, the registered holders of the Representative’s Shares will
have registration rights with respect to the Representative’s Shares as set forth in the Registration Rights Agreement (as defined
in Section 2.24.6 below). The registered holders of the Representative’s Shares will not sell during the offering, or sell,
transfer, assign, pledge or hypothecate any of the Representative’s Shares for a period of 180 days pursuant to FINRA Conduct Rule 5110(e)(1) following
the effective date of the Registration Statement to anyone other than (i) the Representative or an Underwriter or selected dealer
in connection with the Offering, or (ii) a bona fide officer or partner of the Representative or of any such Underwriter or selected
dealer. Additionally, pursuant to FINRA Conduct Rule 5110(e), the Representative’s Shares will not be the subject of any hedging,
short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period
of 180 days immediately following the effective date of the Registration Statement. The certificates for the Representative’s Shares
contain legends to reflect the above FINRA and contractual transfer restrictions.
1.4.3 Simultaneously
with the Closing Date, the Initial Stockholders and the Representative (and/or its designees) will purchase from the Company
pursuant to the Subscription Agreements (as defined in Section 2.24.2 below), 4,050,000 and 500,000 private placement warrants,
respectively (collectively, the “Private Warrants”), at a purchase price of $1.00 per Private Warrant, in a
private placement (the “Private Placement”) intended to be exempt from registration under the Act. No
underwriting discounts, commissions or placement fees have been or will be payable in connection with the Private Placement. The
Initial Stockholders and the Representative have also agreed that, in the event the Representative has exercised the Over-allotment
Option, they will purchase up to 400,500 and 49,500 additional Private Warrants, respectively, and the Company shall cause to be
deposited an amount of additional proceeds from the sale of such additional Private Warrants into the Trust Fund such that the
amount of funds in the Trust Fund shall be $10.10 per unit sold in the Offering. The purchase price for the Private Warrants shall
have been delivered to CST&T or counsel for the Company or the Representative to hold in a separate escrow account at least 24
hours prior to the date hereof so that such funds are readily available to be delivered to the Trust Account on the Closing Date or
the Option Closing Date, as the case may be.
EarlyBirdCapital, Inc.
[*] 2022
Page 4 of 36
1.5 Working
Capital; Trust Account Proceeds.
1.5.1 Working
Capital. Upon consummation of the Offering, approximately $990,000 of the net proceeds from the sale of the Firm Units and Private
Warrants shall be released to the Company to fund the working capital requirements of the Company.
1.5.2 Trust
Account Proceeds. Interest income on the funds held in the Trust Account may be released to the Company from the Trust Account in
accordance with the terms of the Trust Agreement to pay any taxes incurred by the Company, all as more fully described in the Prospectus.
2. Representations
and Warranties of the Company. The Company represents and warrants to the Underwriters as follows:
2.1 Filing
of Registration Statement.
2.1.1 Pursuant
to the Act. The Company has filed with the Commission a registration statement and any amendments thereto, on Form S-1 (File
No. 333- 261765), including any related preliminary prospectus (the “Preliminary Prospectus”, including any prospectus
that is included in the registration statement immediately prior to the effectiveness of the registration statement), for the registration
of the Public Securities under the Act, which registration statement and amendment or amendments have been prepared by the Company in
conformity with the requirements of the Act, and the rules and regulations (the “Regulations”) of the Commission
under the Act. Except as the context may otherwise require, such registration statement, as amended, on file with the Commission at the
time the registration statement became effective (“Effective Date”), including the prospectus, financial statements,
schedules, exhibits, and all other documents filed as a part thereof or incorporated therein and all information deemed to be a part thereof
as of such time pursuant to Rule 430A of the Regulations, together with the registration statement filed by the Company, if applicable,
pursuant to Rule 462(b) under the Act registering additional Public Securities (the “Rule 462(b) Registration
Statement”), is hereinafter called the “Registration Statement,” and the form of the final prospectus dated
the Effective Date included in the Registration Statement (or, if applicable, the form of final prospectus containing information permitted
to be omitted at the time of effectiveness by Rule 430A of the Regulations filed with the Commission pursuant to Rule 424 of
the Regulations), is hereinafter called the “Prospectus.” For purposes of this Agreement, “Time of Sale”,
as used in the Act, means 5:00 p.m., New York City time, on the date of this Agreement. Prior to the Time of Sale, the Company prepared
a preliminary prospectus, dated [*], 2022, for distribution by the Underwriters (the “Statutory Prospectus”). Other
than the Registration Statement, together with any correspondence letters between the Company and/or counsel for the Company and the Commission,
no other document with respect to the Registration Statement has been filed under the Act with the Commission. All of the Public Securities
have been or will be registered under the Act pursuant to the Registration Statement. The Registration Statement has been declared effective
by the Commission on the date hereof. If, subsequent to the date of this Agreement, the Company or the Representative determines that
at the Time of Sale the Statutory Prospectus included an untrue statement of a material fact or omitted a statement of material fact necessary
to make the statements therein, in the light of the circumstances under which they were made, not misleading and agrees to provide an
opportunity to purchasers of the Firm Units to terminate their old purchase contracts and enter into new purchase contracts, then the
Statutory Prospectus will be deemed to include any additional information available to purchasers at the time of entry into the first
such new purchase contract.
2.1.2 Pursuant
to the Exchange Act. The Company has filed with the Commission a Registration Statement on Form 8-A (File Number 001-[*]) providing
for the registration under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of the Units, Common
Stock, Rights and Warrants. The registration of the Units, Common Stock, Rights and Warrants under the Exchange Act has been declared
effective by the Commission on the date hereof.
EarlyBirdCapital, Inc.
[*] 2022
Page 5 of 36
2.2 No
Stop Orders, etc. Neither the Commission nor, to the Company’s knowledge, any foreign or state regulatory authority has
issued any order or threatened to issue any order preventing or suspending the use of any Statutory Prospectus or Prospectus or has instituted
or, to the best of the Company’s knowledge, threatened to institute any proceedings with respect to such an order.
2.3 Disclosures
in Registration Statement.
2.3.1 10b-5
Representation. At the time of effectiveness of the Registration Statement (or at the effective time of any post-effective
amendment to the Registration Statement) and at all times subsequent thereto up to the Closing Date, the Registration Statement, the
Statutory Prospectus, and the Prospectus contained or will contain all material statements that are required to be stated therein in
accordance with the Act and the Regulations, and did or will, in all material respects, conform to the requirements of the Act and
the Regulations. On the Effective Date and at the Time of Sale, the Registration Statement did not, and on the Closing Date it will
not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading; on the date of any filing pursuant to Rule 424(b) and on the Closing
Date, the Prospectus (together with any supplement thereto) will not include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading; and at the Time of Sale, the Statutory Prospectus does not include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the representation and warranty made in this Section 2.3.1
does not apply to statements made or statements omitted in reliance upon and in conformity with written information furnished to the
Company with respect to the Underwriters by the Underwriters expressly for use in the Registration Statement, the Statutory
Prospectus, or Prospectus, or any amendment thereof or supplement thereto, which information, it is agreed, shall consist solely of
the names of the Underwriters and the subsections titled “Price Stabilization, Short Positions,” “Determination of
Offering Price,” “Electronic Distribution” and “Selling Restrictions” included in the section
captioned “Underwriting.”
2.3.2 Disclosure
of Agreements. The agreements and documents described in the Registration Statement, the Statutory Prospectus, and the Prospectus
conform to the descriptions thereof contained therein and there are no agreements or other documents required to be described in the Registration
Statement, the Statutory Prospectus, or the Prospectus, or to be filed with the Commission as exhibits to the Registration Statement,
that have not been so described or filed. Each agreement or other instrument (however characterized or described) to which the Company
is a party, or by which its property or business is or may be bound or affected, and that is referred to in the Registration Statement
or attached as an exhibit thereto or that is material to the Company’s business, has been duly and validly executed by the Company,
is in full force and effect in all material respects, and is enforceable against the Company and, to the Company’s knowledge, the
other parties thereto, in all material respects in accordance with its terms, except (a) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, (b) as enforceability of any
indemnification or contribution provision may be limited under the foreign, federal, and state securities laws, and (c) that the
remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought, and none of such agreements or instruments has been assigned
by the Company, and neither the Company nor, to the Company’s knowledge, any other party is in breach or default thereunder and,
to the Company’s knowledge, no event has occurred that, with the lapse of time or the giving of notice, or both, would constitute
a breach or default thereunder. To the Company’s knowledge, performance by the Company of the material provisions of such agreements
or instruments will not result in a violation of any existing applicable law, rule, regulation, judgment, order, or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company or any of its assets or businesses, including, without limitation,
those relating to environmental laws and regulations.
2.3.3 Prior
Securities Transactions. No securities of the Company have been sold by the Company or by or on behalf of, or for the benefit of,
any person or persons controlling, controlled by, or under common control with the Company since the date of the Company’s formation,
except as disclosed in the Registration Statement.
EarlyBirdCapital, Inc.
[*] 2022
Page 6 of 36
2.3.4 Regulations.
The disclosures in the Registration Statement, the Statutory Prospectus, and the Prospectus concerning the effects of foreign, federal,
state and local regulation on the Company’s business as currently contemplated are correct in all material respects and do not omit
to state a material fact necessary to make the statements therein, in light of the circumstances in which they were made, not misleading.
2.4 Changes
after Dates in Registration Statement.
2.4.1 No
Material Adverse Change. Since the respective dates as of which information is given in the Registration Statement, the Statutory
Prospectus, and the Prospectus, except as otherwise specifically stated therein: (i) there has been no material adverse change in
the condition, financial or otherwise, or business prospects of the Company; (ii) there have been no material transactions entered
into by the Company, other than as contemplated pursuant to this Agreement; (iii) no member of the Company’s board of directors
or management has resigned from any position with the Company; and (iv) no event or occurrence has taken place which materially impairs,
or would likely materially impair, with the passage of time, the ability of the members of the Company’s board of directors or management
to act in their capacities with the Company as described in the Registration Statement, the Statutory Prospectus, and the Prospectus.
2.4.2 Recent
Securities Transactions, etc. Subsequent to the respective dates as of which information is given in the Registration Statement,
the Statutory Prospectus, and the Prospectus, and except as may otherwise be indicated or contemplated herein or therein, the Company
has not: (i) issued any securities or incurred any liability or obligation, direct or contingent, for borrowed money; or (ii) declared
or paid any dividend or made any other distribution on or in respect to its capital stock.
2.5 Independent
Accountants. Marcum LLP (“Marcum”), whose report is filed with the Commission as part of the Registration Statement
and included in the Registration Statement, the Statutory Prospectus, and the Prospectus, are independent registered public accountants
as required by the Act, the Regulations, and the Public Company Accounting Oversight Board (the “PCAOB”), including
the rules and regulations promulgated by such entity. To the Company’s knowledge, Marcum is duly registered and in good standing
with the PCAOB. Marcum has not, during the periods covered by the financial statements included in the Registration Statement, the Statutory
Prospectus, and the Prospectus, provided to the Company any non-audit services, as such term is used in Section 10A(g) of the
Exchange Act.
2.6 Financial
Statements; Statistical Data.
2.6.1 Financial
Statements. The financial statements, including the notes thereto and supporting schedules included in the Registration
Statement, the Statutory Prospectus, and the Prospectus, fairly present in all material respects the financial position and the
results of operations of the Company at the dates and for the periods to which they apply; and such financial statements have been
prepared in conformity with United States generally accepted accounting principles (“GAAP”), consistently applied
throughout the periods involved; and the supporting schedules included in the Registration Statement present fairly in all material
respects the information required to be stated therein in conformity with the Regulations. No other financial statements or
supporting schedules are required to be included or incorporated by reference in the Registration Statement, the Statutory
Prospectus, or the Prospectus. The Registration Statement, the Statutory Prospectus, and the Prospectus disclose all material
off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the Company
with unconsolidated entities or other persons that may have a material current or future effect on the Company’s financial
condition, changes in financial condition, results of operations, prospects, liquidity, capital expenditures, capital resources, or
significant components of revenues or expenses. There are no pro forma or as adjusted financial statements which are required to be
included in the Registration Statement, the Statutory Prospectus, or the Prospectus in accordance with Regulation S-X of the
Regulations which have not been included as so required.
2.6.2 Statistical
Data. The statistical, industry-related and market-related data included in the Registration Statement, the Statutory Prospectus,
and/or the Prospectus are based on or derived from sources which the Company reasonably and in good faith believes are reliable and accurate,
and such data agree with the sources from which they are derived.
EarlyBirdCapital, Inc.
[*] 2022
Page 7 of 36
2.7 Authorized
Capital; Options, etc. The Company had at the date or dates indicated in each of the Registration Statement, the Statutory Prospectus,
and the Prospectus, as the case may be, duly authorized, issued, and outstanding capitalization as set forth in the Registration Statement,
the Statutory Prospectus, and the Prospectus. Based on the assumptions stated in the Registration Statement, the Statutory Prospectus,
and the Prospectus, the Company will have on the Closing Date the adjusted stock capitalization set forth therein. Except as set forth
in, or contemplated by, the Registration Statement, the Statutory Prospectus and the Prospectus, on the Effective Date and on the Closing
Date, there will be no options, warrants, or other rights to purchase or otherwise acquire any authorized, but unissued Common Stock or
any security convertible into Common Stock, or any contracts or commitments to issue or sell Common Stock or any such options, warrants,
rights or convertible securities.
2.8 Valid
Issuance of Securities, etc.
2.8.1 Outstanding
Securities. All issued and outstanding Insider Shares have been duly authorized and validly issued and are fully paid and non-assessable;
the holders thereof have no rights of rescission with respect thereto, and are not subject to personal liability by reason of being such
holders; and none of such securities were issued in violation of the preemptive rights of any holders of any security of the Company or
similar contractual rights granted by the Company. The outstanding Insider Shares conform to the descriptions thereof contained in the
Registration Statement, the Statutory Prospectus, and the Prospectus. All offers, sales, and any transfers of the outstanding Insider
Shares were at all relevant times either registered under the Act and the applicable state securities or Blue Sky laws or exempt from
such registration requirements.
2.8.2 Public
Securities. The Public Securities, including the shares of Class A Common Stock underlying the Units, the Rights and the Warrants,
have been duly authorized and reserved for issuance and when issued and paid for in accordance with this Agreement, will be validly issued,
fully paid and non-assessable; the holders thereof are not and will not be subject to personal liability by reason of being such holders;
the Public Securities are not and will not be subject to the preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company; and all corporate action required to be taken for the authorization, issuance and sale of the
Public Securities has been duly and validly taken. The Public Securities conform in all material respects to the descriptions thereof
contained in the Registration Statement, the Statutory Prospectus, and the Prospectus, as the case may be.
2.8.3 Representative’s
Shares. The Representative’s Shares have been duly authorized and validly issued and are fully paid and non-assessable; the
holders thereof are not and will not be subject to personal liability by reason of being such holders; the Representative’s Shares
are not and will not be subject to the preemptive rights of any holders of any security of the Company or similar contractual rights granted
by the Company; and all corporate action required to be taken for the authorization, issuance and sale of the Representative’s Shares
has been duly and validly taken. The Representative’s Shares conform in all material respects to the descriptions thereof contained
in the Registration Statement, the Statutory Prospectus and the Prospectus, as the case may be.
2.8.4 Private
Warrants. The Private Warrants and the private shares underlying the Private Warrants have been duly authorized and reserved for issuance
and when issued and paid for in accordance with the Subscription Agreements, will be validly issued, fully paid and non-assessable; the
holders thereof are not and will not be subject to personal liability by reason of being such holders; the Private Warrants and the private
shares underlying the Private Warrants are not and will not be subject to the preemptive rights of any holders of any security of the
Company or similar contractual rights granted by the Company; and all corporate action required to be taken for the authorization, issuance
and sale of the Private Warrants and the private shares underlying the Private Warrants has been duly and validly taken. The Private Warrants
conform in all material respects to the descriptions thereof contained in the Registration Statement, the Statutory Prospectus, and the
Prospectus, as the case may be.
2.8.5 No
Integration. Neither the Company nor any of its affiliates has, prior to the date hereof, made any offer or sale of any securities
which are required to be “integrated” pursuant to the Act or the Regulations with the offer and sale of the Public Securities
pursuant to the Registration Statement.
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2.9 Registration
Rights of Third Parties. Except as set forth in the Registration Statement, the Statutory Prospectus, and the Prospectus, no holders
of any securities of the Company or any rights exercisable for or convertible or exchangeable into securities of the Company have the
right to require the Company to register any such securities of the Company under the Act or to include any such securities in a registration
statement to be filed by the Company.
2.10 Validity
and Binding Effect of Agreements. This Agreement, the Insider Letters (as defined in Section 2.24.1 below), the
Trust Agreement, the Subscription Agreements, the Escrow Agreement, the Services Agreement (as defined in Section 2.24.7
below), the Business Combination Marketing Agreement (as defined in Section 2.26 below), the Warrant Agreement (as
defined in Section 2.27 below), the Rights Agreement (as defined in Section 2.24.8) and the Registration
Rights Agreement (as defined in Section 2.24.6) (collectively, the “Transaction Documents”) have been
duly and validly authorized by the Company and, when executed and delivered by the Company and the other parties thereto, will
constitute valid and binding agreements of the Company, enforceable against the Company in accordance with their respective terms,
except: (i) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally; (ii) as enforceability of any indemnification or contribution provision may be limited under
foreign, federal and state securities laws; and (iii) that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor
may be brought.
2.11 No
Conflicts, etc. The execution, delivery, and performance by the Company of the Transaction Documents, the consummation by the
Company of the transactions therein contemplated, and the compliance by the Company with the terms thereof do not and will not, with or
without the giving of notice or the lapse of time or both: (i) result in a breach or violation of, or conflict with any of the terms
and provisions of, or constitute a default under, or result in the creation, modification, termination or imposition of any lien, charge
or encumbrance upon any property or assets of the Company pursuant to the terms of any agreement, obligation, condition, covenant, or
instrument to which the Company is a party or bound or to which its property is subject except pursuant to the Trust Agreement; (ii) result
in any violation of the provisions of the Certificate of Incorporation or Bylaws of the Company (collectively, the “Charter Documents”);
or (iii) violate any existing applicable statute, law, rule, regulation, judgment, order, or decree of any governmental agency or
court, domestic or foreign, having jurisdiction over the Company or any of its properties, business or assets.
2.12 No
Defaults; Violations. No material default or violation exists in the due performance and observance of any term, covenant or condition
of any material license, contract, indenture, mortgage, deed of trust, note, loan, or credit agreement, or any other agreement or instrument
evidencing an obligation for borrowed money, or any other material agreement or instrument to which the Company is a party or by which
the Company may be bound or to which any of the properties or assets of the Company is subject. The Company is not in violation of any
term or provision of its Charter Documents or in violation of any franchise, license, permit, applicable law, rule, regulation, judgment
or decree of any governmental agency or court, domestic or foreign, having jurisdiction over the Company or any of its properties or businesses.
2.13 Corporate
Power; Licenses; Consents.
2.13.1 Conduct
of Business. The Company has all requisite corporate power and authority, and has all necessary authorizations, approvals, orders,
licenses, certificates, and permits of and from all governmental regulatory officials and bodies that it needs as of the date hereof to
conduct its business for the purposes described in the Registration Statement, the Statutory Prospectus, and the Prospectus. The disclosures
in the Registration Statement, the Statutory Prospectus, and the Prospectus concerning the effects of foreign, federal, state, and local
regulation on this Offering and the Company’s business purpose as currently contemplated are correct in all material respects and
do not omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Since its formation and except as described in the Registration Statement, the
Company has conducted no business and has incurred no liabilities other than in connection with its formation and in furtherance of the
Offering.
2.13.2 Transactions
Contemplated Herein. The Company has all corporate power and authority to enter into this Agreement and to carry out the provisions
and conditions hereof, and all consents, authorizations, approvals, and orders required in connection herewith have been obtained. No
consent, authorization, or order of, and no filing with, any court, government agency, or other body, foreign or domestic, is required
for the valid issuance, sale, and delivery, of the Public Securities and Representative’s Securities and the consummation of the
transactions and agreements contemplated by the Transaction Documents and as contemplated by the Registration Statement, the Statutory
Prospectus, and Prospectus, except with respect to applicable foreign, federal, and state securities laws and the rules and regulations
promulgated by the Financial Industry Regulatory Authority, Inc. (“FINRA”).
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2.14 D&O
Questionnaires. To the Company’s knowledge, all information contained in the questionnaires completed immediately prior to the
initial filing of the Registration Statement and provided to the Representative (the “Questionnaires”) by each of the
Company’s officers, directors, 10% beneficial owners, and, other than the Representative, owners of unregistered securities acquired
within the past 180 days (the “Respondents”), as such Questionnaires may have been updated from time to time and confirmed
by each of the Respondents, as well as the biographies previously provided to the Representative, is true and correct and the Company
has not become aware of any information which would cause the information disclosed in the Questionnaires to become inaccurate and incorrect.
2.15 Litigation;
Governmental Proceedings. There is no action, suit, proceeding, inquiry, arbitration, investigation, litigation, or governmental proceeding
pending or, to the Company’s knowledge, threatened against, or involving the Company or, to the Company’s knowledge, any of
the Respondents, which has not been disclosed in the Registration Statement, the Statutory Prospectus, and the Prospectus.
2.16 Good
Standing. The Company has been duly organized and is validly existing as a corporation and is in good standing under the laws of its
jurisdiction of incorporation and is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction
in which its ownership or lease of property or the conduct of business requires such qualification, except where the failure to qualify
would not have a material adverse effect on the condition (financial or otherwise), prospects, earnings, business, or properties of the
Company, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Statutory
Prospectus and the Prospectus (exclusive of any supplement thereto) (a “Material Adverse Effect”).
2.17 No
Consideration of a Business Combination. Prior to the date hereof, no Respondent has, and as of the Closing Date, the Company and
such Respondents will not have: (a) had any specific Business Combination under consideration; or (b) directly or indirectly,
contacted any prospective target business which the Company may seek to acquire (each, a “Target Business”) or had
any substantive discussions, formal or otherwise, with respect to effecting any potential Business Combination with the Company.
2.18 Transactions
Affecting Disclosure to FINRA.
2.18.1 To
the Company’s knowledge, all information contained in the questionnaires (the “FINRA Questionnaires”) completed
by each of the Respondents and provided to the Representative, as such FINRA Questionnaires may have been updated from time to time and
confirmed by each of the Respondents, is true and correct and the Company has not become aware of any information which would cause the
information disclosed in the FINRA Questionnaires to become inaccurate and incorrect.
2.18.2 Except
as described in the Registration Statement, the Statutory Prospectus, and the Prospectus, there are no claims, payments, arrangements,
agreements, or understandings relating to the payment of a finder’s, consulting, or origination fee by the Company or any Respondent
with respect to the sale of the Public Securities hereunder or any other arrangements, agreements, or understandings of the Company or,
to the Company’s knowledge, any Respondent that may affect the Underwriters’ compensation, as determined by FINRA.
2.18.3 Except
as described herein or in the Registration Statement, the Statutory Prospectus, and the Prospectus, the Company has not made any direct
or indirect payments (in cash, securities, or otherwise) to: (i) any person, as a finder’s fee, consulting fee, or otherwise,
in consideration of such person raising capital for the Company or introducing to the Company persons who raised or provided capital to
the Company; (ii) to any FINRA member; or (iii) to any person or entity that has any direct or indirect affiliation or association
with any FINRA member, within the 180-day period prior to the initial filing date of the Registration Statement with the Commission.
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2.18.4 To
the Company’s knowledge, except as set forth in the FINRA Questionnaires, no Respondent is a member of FINRA or a person associated
or affiliated with a member of FINRA.
2.18.5 To
the Company’s knowledge, except as set forth in the FINRA Questionnaires, no Respondent is an owner of stock or other securities
of any member of FINRA (other than securities purchased in the open market).
2.18.6 To
the Company’s knowledge, except as set forth in the FINRA Questionnaires, no Respondent has made a subordinated loan to any member
of FINRA.
2.18.7 No
proceeds from the sale of the Public Securities or Private Warrants and the private shares underlying the Private Warrants (excluding
underwriting compensation) will be paid to any FINRA member, or any persons associated or affiliated with a member of FINRA, except as
specifically authorized herein.
2.18.8 Other
than the Representative’s Shares, the Company has not issued any warrants or other securities, or granted any options, directly
or indirectly to anyone who is a potential underwriter in the Offering or a related person (as defined by FINRA rules) of such an underwriter
within the 180-day period prior to the initial filing date of the Registration Statement with the Commission, except as disclosed in the
Registration Statement, the Statutory Prospectus, and the Prospectus.
2.18.9 To
the Company’s knowledge, except as set forth in the FINRA Questionnaires, no person to whom securities of the Company have been
privately issued within the 180-day period prior to the initial filing date of the Registration Statement with the Commission has any
relationship or affiliation or association with any member of FINRA.
2.18.10 To
the Company’s knowledge, no FINRA member intending to participate in the Offering has a conflict of interest (as defined by FINRA
rules) with the Company.
2.18.11 Except
with respect to the Representative in connection with the Offering, the Company has not entered into any agreement or arrangement (including,
without limitation, any consulting agreement or any other type of agreement) during the 180-day period prior to the initial filing date
of the Registration Statement with the Commission, which arrangement or agreement provides for the receipt of any item of value and/or
the transfer or issuance of any warrants, options, or other securities from the Company to a FINRA member, any person associated with
a member (as defined by FINRA rules), any potential underwriters in the Offering and/or any related persons.
2.19 Taxes.
2.19.1 There
are no transfer taxes or other similar fees or charges under U.S. federal law or the laws of any U.S. state or any political subdivision
thereof, required to be paid in connection with the execution and delivery of this Agreement or the issuance or sale by the Company of
the Public Securities.
2.19.2 The
Company has filed all U.S. federal, state, and local tax returns that are required to be filed or has requested extensions thereof, except
in any case in which the failure to so file would not have a Material Adverse Effect, and has paid all taxes required to be paid by it
and any other assessment, fine, or penalty levied against it, to the extent that any of the foregoing is due and payable, except for
any such assessment, fine, or penalty that is currently being contested in good faith or as would not have a Material Adverse Effect.
2.20 Foreign
Corrupt Practices Act. Neither the Company nor any of the Respondents or any other person acting on behalf of the Company is aware
of or has taken any action, directly or indirectly, that: (i) would result in a violation by such persons of the Foreign Corrupt
Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”) or otherwise subject
the Company to any damage or penalty in any civil, criminal, or governmental litigation or proceeding; (ii) if not done in the past,
might reasonably be expected to have had a Material Adverse Effect or (iii) if not continued in the future, might reasonably be
expected to materially and adversely affect the assets, business, or operations of the Company. The foregoing includes, without limitation,
giving or agreeing to give any money, gift, or similar benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee, or agent of a customer or supplier, or official or employee of any governmental agency
or instrumentality of any government (domestic or foreign) or any political party or candidate for office (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or other person who was, is, or may be in a position to help or hinder
the business of the Company (or assist it in connection with any actual or proposed transaction). The Company’s internal accounting
controls and procedures are sufficient to cause the Company to comply with the FCPA.
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2.21 Currency
and Foreign Transactions Reporting Act. The operations of the Company are and have been conducted at all times in material compliance
with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transaction Reporting Act of 1970, as amended,
the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder, and any related or similar rules,
regulations, or guidelines, issued, administered, or enforced by any governmental agency (collectively, the “Money Laundering
Laws”) and no action, suit, or proceeding by or before any court or governmental agency, authority, body, or any arbitrator
involving the Company with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.
2.22 Bank
Secrecy Act; Money Laundering; Patriot Act. Neither the Company, nor to the Company’s knowledge, any Respondent, has violated:
(i) the Bank Secrecy Act, as amended, (ii) the Money Laundering Laws or (iii) the Uniting and Strengthening of America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, and/or the rules and regulations
promulgated under any such law, or any successor law.
2.23 Officers’
Certificate. Any certificate signed by any duly authorized officer of the Company and delivered to the Representative or to its counsel
shall be deemed a representation and warranty by the Company to the Underwriters as to the matters covered thereby.
2.24 Agreements
with Company Affiliates and Others.
2.24.1 Insider
Letters. The Company has caused to be duly executed legally binding and enforceable agreements (except (i) as such enforceability
may be limited by bankruptcy, insolvency, reorganization, or similar laws affecting creditors’ rights generally, (ii) as enforceability
of any indemnification contribution provision may be limited under foreign, federal, and state securities laws, and (iii) that the
remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought) in the form annexed as an exhibit to the Registration Statement
(the “Insider Letters”), pursuant to which each of the Respondents agrees to certain matters, including but not limited
to, the voting of Common Stock held by them and certain matters described as being agreed to by them under the “Proposed Business”
section of the Registration Statement, the Statutory Prospectus, and Prospectus.
2.24.2 Subscription
Agreements. The Initial Stockholders and the Representative have executed and delivered subscription agreements, forms of which are
annexed as exhibits to the Registration Statement (the “Subscription Agreements”), pursuant to which the Initial Stockholders
and the Representative have agreed, among other things, to purchase on the Closing Date the Private Warrants in the Private Placement.
2.24.3 Escrow
Agreement. The Company has caused the Initial Stockholders to enter into an escrow agreement (the “Escrow Agreement”)
with CST&T substantially in the form filed as an exhibit to the Registration Statement whereby the Insider Shares will be held in
escrow by CST&T for a period (the “Escrow Period”) commencing on the Effective Date and expiring on the earlier
of the one year anniversary of the consummation of the Business Combination and the date on which the closing price of the Common Stock
exceeds $12.00 per share for any 20 trading days within a 30-trading day period commencing at least 150 days after our initial Business
Combination. During the Escrow Period, such parties shall be prohibited from selling or otherwise transferring such Insider Shares, except
in certain limited circumstances set forth in the Escrow Agreement. To the Company’s knowledge, the Escrow Agreement is enforceable
against the Initial Stockholders and will not, with or without the giving of notice or the lapse of time or both, result in a breach of,
or conflict with, any of the terms and provisions of, or constitute a default under, an agreement or instrument to which the Initial Stockholders
is a party.
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2.24.4 Non-Competition/Solicitation.
To the Company’s knowledge, no Respondent is subject to any non-competition agreement or non-solicitation agreement with any employer
or prior employer which could materially affect such Respondent’s ability to be and act in the capacity of a director or officer
of the Company, as applicable.
2.24.5 Loans
and Advances. The Sponsor has made a loan to the Company in the aggregate amount of $300,000, as described in the Registration Statement
(the “Insider Loan”). The Insider Loan does not bear any interest and is repayable by the Company on the consummation
of the Offering.
2.24.6 Registration
Rights Agreement. The Company, the Representative and the Initial Stockholders have entered into a registration rights agreement (“Registration
Rights Agreement”) substantially in the form annexed as an exhibit to the Registration Statement, whereby the Initial Stockholders
will be entitled to certain registration rights with respect to its securities, as set forth in such Registration Rights Agreement and
described more fully in the Registration Statement.
2.24.7 Administrative
Services. The Company has entered into an agreement (“Services Agreement”) with RF Dynamic, LLC (the “Affiliate”)
substantially in the form annexed as an exhibit to the Registration Statement pursuant to which the Affiliate will make available to the
Company, on the terms and subject to the conditions set forth therein, general and administrative services including office space, utilities
and secretarial support for the Company’s use for $10,000 per month payable until the earlier of the consummation by the Company
of a Business Combination or the liquidation of the Trust Account.
2.24.8 Rights
Agreement. The Company, and CST&T have entered into a rights agreement (“Rights Agreement”), which entitle
the holders to the right to receive one-tenth of one share of Class A Common Stock upon the consummation of an initial business combination,
substantially in the form annexed as an exhibit to the Registration Statement,
2.25 Investment
Management Trust Agreement. The Company has entered into the Trust Agreement with respect to certain proceeds of the Offering and
the Private Placement substantially in the form filed as an exhibit to the Registration Statement, pursuant to which the funds held in
the Trust Account may be released under limited circumstances. The Trust Agreement shall not be amended, modified, or otherwise changed
in any way that modifies the rights or obligations of the Company without the prior written consent of the Representative.
2.26 Business
Combination Marketing Agreement. The Company and the Representative have entered into a separate business combination marketing agreement
substantially in the form filed as an exhibit to the Registration Statement (the “Business Combination Marketing Agreement”).
2.27 Warrant
Agreement. The Company has entered into a warrant agreement with respect to the Warrants to be issued as part of the Public Securities,
and the Private Warrants, with CST&T substantially in the form filed as an exhibit to the Registration Statement (the “Warrant
Agreement”).
2.28 Investments.
No more than 45% of the “value” (as defined in Section 2(a)(41) of the Investment Company Act of 1940 (“Investment
Company Act”)) of the Company’s total assets (exclusive of cash items and “Government Securities,” as defined
in Section 2(a)(16) of the Investment Company Act) consist of, and no more than 45% of the Company’s net income after taxes
is derived from, securities other than Government Securities.
2.29 Investment
Company Act. The Company is not required, and upon the issuance and sale of the Public Securities as herein contemplated and the application
of the net proceeds therefrom as described in the Prospectus will not be required, to register as an “investment company”
under the Investment Company Act.
2.30 Subsidiaries.
The Company does not own an interest in any corporation, partnership, limited liability company, joint venture, trust, or other business
entity.
2.31 Related
Party Transactions. No relationship, direct or indirect, exists between or among any of the Company or any Respondent, on the one
hand, and any customer or supplier of the Company or any Respondent, on the other hand, which is required by the Act, the Exchange Act,
or the Regulations to be described in the Registration Statement, the Statutory Prospectus, and the Prospectus, which is not so described.
There are no outstanding loans, advances, or guarantees of indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of their respective family members, except as disclosed in the Registration Statement, the Statutory Prospectus,
and the Prospectus. The Company has not extended or maintained credit, arranged for the extension of credit, or renewed an extension of
credit, in the form of a personal loan to or for any director or officer of the Company.
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2.32 No
Influence. The Company has not offered, or caused the Underwriters to offer, the Firm Units to any person or entity with the intention
of unlawfully influencing: (a) a customer or supplier of the Company or any affiliate of the Company to alter the customer’s
or supplier’s level or type of business with the Company or such affiliate or (b) a journalist or publication to write or publish
favorable information about the Company or any such affiliate.
2.33 Sarbanes-Oxley.
The Company is in material compliance with the provisions of the Sarbanes-Oxley Act of 2002, as amended (“SOX”), and
the rules and regulations promulgated thereunder and related or similar rules and regulations promulgated by any governmental
or self-regulatory entity or agency, that are applicable to it as of the date hereof.
2.34 Nasdaq
Eligibility. As of the Effective Date, the Public Securities have been approved for listing on the Nasdaq Global Market (“Nasdaq”),
subject to official notice of issuance and evidence of satisfactory distribution. There is and has been no failure on the part of the
Company or any of the Company’s directors or officers, in their capacities as such, to comply with (as and when applicable), and
immediately following the effectiveness of the Registration Statement the Company will be in compliance with, the Nasdaq Marketplace Rules,
as amended.
2.35 Emerging
Growth Status. From the date of the Company’s formation through the date hereof, the Company has been and is an “emerging
growth company,” as defined in Section 2(a) of the Act (an “Emerging Growth Company”).
2.36 Free-Writing
Prospectus and Testing-the-Waters. The Company has not made any offer relating to the Public Securities that would constitute an issuer
free writing prospectus, as defined in Rule 433 under the Act, or that would otherwise constitute a “free writing prospectus”
as defined in Rule 405. The Company (a) has not engaged in any Testing-the-Waters Communication other than Testing-the-Waters
Communications with the consent of the Representative with entities that are qualified institutional buyers within the meaning of Rule 144A
under the Act or institutions that are accredited investors within the meaning of Rule 501 under the Act and (b) has not authorized
anyone to engage in Testing-the-Waters Communications other than its officers and the Representative and individuals engaged by the Representative.
The Company has not distributed any written Testing-the-Waters Communications other than those listed on Schedule B hereto. As used herein,
“Testing-the-Waters Communication” means any oral or written communication with potential investors undertaken in reliance
on Section 5(d) of the Act.
2.37 Disclosure
Controls and Procedures. The Company maintains effective “disclosure controls and procedures” (as defined under Rule 13a-15(e) under
the Exchange Act to the extent required by such rule).
2.38 Definition
of “Knowledge”. As used in herein, the term “knowledge of the Company” (or similar language) shall mean the
knowledge of the Company’s executive officers and directors, with the assumption that such officers and directors shall have made
reasonable and diligent inquiry of the matters presented.
3. Covenants
of the Company. The Company covenants and agrees as follows:
3.1 Amendments
to Registration Statement. The Company will deliver to the Representative, prior to filing, any amendment or supplement to the Registration
Statement or Prospectus proposed to be filed after the Effective Date and shall not file any such amendment or supplement to which the
Representative shall reasonably object in writing.
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3.2 Federal
Securities Laws.
3.2.1 Compliance.
During the time when a prospectus is required to be delivered under the Act, the Company will use all reasonable efforts to comply with
all requirements imposed upon it by the Act, the Regulations, and the Exchange Act and by the regulations under the Exchange Act, as from
time to time in force, so far as necessary to permit the continuance of sales of or dealings in the Public Securities in accordance with
the provisions hereof and the Prospectus. If at any time when a Prospectus relating to the Public Securities is required to be delivered
under the Act, any event shall have occurred as a result of which, in the opinion of counsel for the Company or counsel for the Underwriters,
the Statutory Prospectus and/or the Prospectus, as then amended or supplemented, includes an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or if it is necessary during such period to amend the Registration Statement or amend or supplement
the Statutory Prospectus and Prospectus to comply with the Act, the Company will notify the Representative promptly and prepare and file
with the Commission, subject to Section 3.1 hereof, an appropriate amendment to the Registration Statement or amendment or supplement
to the Statutory Prospectus and Prospectus (at the expense of the Company) so as to correct such statement or omission or effect such
compliance.
3.2.2 Filing
of Final Prospectus. The Company will promptly file the Prospectus (in form and substance satisfactory to the Representative) with
the Commission pursuant to the requirements of Rule 424 of the Regulations.
3.2.3 Exchange
Act Registration. For a period of five years from the Effective Date (except in connection with a going private transaction), or until
such earlier time upon which the Trust Account is to be liquidated if a Business Combination has not been consummated as required by its
Charter Documents (the “Termination Date”), the Company (i) will use its best efforts to maintain the registration
of the Common Stock, Rights and Warrants under the provisions of the Exchange Act and (ii) will not deregister the Common Stock,
Rights or Warrants under the Exchange Act without the prior written consent of the Representative.
3.2.4 Free
Writing Prospectuses. The Company agrees that it will not make any offer relating to the Public Securities that would constitute an
issuer free writing prospectus, as defined in Rule 433 under the Act.
3.2.5 Sarbanes-Oxley
Compliance. As soon as it is legally required to do so, the Company shall take all actions necessary to obtain and thereafter maintain
material compliance with each applicable provision of SOX and the rules and regulations promulgated thereunder and related or similar
rules and regulations promulgated by any other governmental or self-regulatory entity or agency with jurisdiction over the Company.
3.3 Emerging
Growth Company Status. The Company will promptly notify the Representative if the Company ceases to be an Emerging Growth Company
at any time prior to the earlier of five years after the consummation of the Company’s initial Business Combination, or the liquidation
of the Trust Account if a Business Combination is not consummated by the Termination Date.
3.4 Delivery
of Materials to Underwriters. The Company will deliver to each of the Underwriters, without charge and from time to time during the
period when a prospectus is required to be delivered under the Act or the Exchange Act, such number of copies of each Statutory Prospectus,
the Prospectus, and all amendments and supplements to such documents as such Underwriters may reasonably request.
3.5 Effectiveness
and Events Requiring Notice to the Representative. The Company will use its best efforts to cause the Registration Statement to remain
effective and will notify the Representative immediately and confirm the notice in writing: (i) of the effectiveness of the Registration
Statement and any amendment thereto; (ii) of the issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement, or any post-effective amendment thereto or preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or of the initiation, or the threatening, of any proceeding for that purpose; (iii) of the issuance by any foreign or
state securities commission of any proceedings for the suspension of the qualification of the Public Securities for offering or sale in
any jurisdiction or of the initiation, or the threatening, of any proceeding for that purpose; (iv) of the mailing and delivery to
the Commission for filing of any amendment or supplement to the Registration Statement or Prospectus; (v) of the receipt of any comments
or request for any additional information from the Commission; and (vi) of the happening of any event during the period described
in this Section 3.5 that, in the judgment of the Company or its counsel, makes any statement of a material fact made in the Registration
Statement, the Statutory Prospectus, or the Prospectus untrue or that requires the making of any changes in the Registration Statement,
the Statutory Prospectus, and Prospectus in order to make the statements therein, (with respect to the Prospectus and the Statutory Prospectus
and in light of the circumstances under which they were made), not misleading. If the Commission or any foreign or state securities commission
shall enter a stop order or suspend such qualification at any time, the Company will make every reasonable effort to obtain promptly the
lifting of such order.
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3.6 Review
of Financial Statements. Until the earlier of five years from the Effective Date or until the liquidation of the Trust Account
if a Business Combination is not consummated by the Termination Date, the Company, at its expense, shall cause its regularly engaged
independent certified public accountants to review (but not audit) the Company’s financial statements for each of the first
three fiscal quarters prior to the announcement of quarterly financial information and the filing of the Company’s
Form 10-Q quarterly report.
3.7 Affiliated
Transactions.
3.7.1 Business
Combinations. The Company will not consummate a Business Combination with an entity that is affiliated with any Respondent unless,
in each case, (i) the Company obtains an opinion from an independent investment banking firm or another independent firm that regularly
renders fairness opinions on the type of target business the Company is seeking to acquire that the Business Combination is fair to the
Company from a financial point of view and (ii) a majority of the Company’s disinterested and independent directors (if there
are any) approve such transaction.
3.7.2 Compensation.
Except as disclosed in the Registration Statement, the Company shall not pay any Respondent or any of their affiliates any fees or compensation
for services rendered to the Company prior to, or in connection with, either this Offering or the Business Combination.
3.8 Secondary
Market Trading and Standard & Poor’s. If the Company does not maintain the listing of the Public Securities on Nasdaq
or another national securities exchange, the Company will (i) apply to be included in Standard & Poor’s Daily News
and Corporation Records Corporate Descriptions for a period of five years from the consummation of a Business Combination, (ii) take
such commercially reasonable steps as may be necessary to obtain a secondary market trading exemption for the Company’s securities
in the State of California, and (iii) take such other action as may be reasonably requested by the Representative to obtain a secondary
market trading exemption in such other states as may be requested by the Representative; provided that no qualification shall be required
in any jurisdiction where, as a result thereof, the Company would be subject to service of general process or to taxation as a foreign
corporation doing business in such jurisdiction.
3.9 Investor
Relations Firm. Promptly after the execution of a definitive agreement for a Business Combination, the Company shall retain an investor
relations firm with the expertise necessary to assist the Company both before and after the consummation of the Business Combination for
a term to be agreed upon by the Company and the Representative.
3.10 Reports
to the Representative.
3.10.1 Periodic
Reports, etc. For a period of five years from the Effective Date or until the Termination Date or such earlier time upon which
the Company is required to be liquidated and dissolved, the Company will furnish to the Representative and its counsel copies of such
financial statements and other periodic and special reports as the Company from time to time furnishes generally to holders of any class
of its securities, and promptly furnish to the Representative: (i) a copy of each periodic report the Company is required to file
with the Commission; (ii) a copy of every press release and every news item and article with respect to the Company or its affairs
which was released by the Company; (iii) a copy of each Current Report on Form 8-K and any Schedules 13D, 13G, 14D-1, or 13E-4
received or prepared by the Company; (iv) five copies of each registration statement filed by the Company with the Commission under
the Act; and (v) such additional documents and information with respect to the Company and the affairs of any future subsidiaries
of the Company as the Representative may from time to time reasonably request; provided that the Representative shall sign, if requested
by the Company, a Regulation FD compliant confidentiality agreement which is reasonably acceptable to the Representative and its counsel
in connection with the Representative’s receipt of such information. Documents filed with the Commission pursuant to Electronic
Data Gathering, Analysis and Retrieval System (“EDGAR”) shall be deemed to have been delivered to the Representative
pursuant to this section.
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3.10.2 For
a period of five years following the Effective Date or until the Termination Date or such earlier time upon which the Company is required
to be liquidated, the Company shall retain a transfer agent and warrant agent acceptable to the Representative. CST&T is acceptable
to the Underwriters.
3.11 Payment
of Expenses. The Company hereby agrees to pay on each of the Closing Date and the Option Closing Date, if any, to the extent not
paid at Closing Date, or such later date as may be agreed to by the Representative in its sole discretion, all fees and expenses
incident to the performance of the obligations of the Company under this Agreement up to a maximum aggregate allowance of $100,000,
including, but not limited to: (i) the preparation, printing, filing, and mailing (including the payment of postage with
respect to such mailing) of the Registration Statement, the Statutory Prospectus, and the final Prospectus and mailing of this
Agreement and related documents, including the cost of all copies thereof and any amendments thereof or supplements thereto supplied
to the Underwriters in quantities as may be required by the Underwriters; (ii) the printing, engraving, issuance, and delivery
of the Firm Units, Option Units, the Common Stock, the Rights and Warrants included therein, Private Warrants and the underlying
private shares, including any transfer or other taxes payable thereon; (iii) Nasdaq filing fees or, if necessary, the
qualification of the Public Securities under state or foreign securities or Blue Sky laws; (iv) fees and expenses (including
legal fees of the Representative’s counsel not to exceed $15,000) incurred in registering the Offering with FINRA;
(v) fees and disbursements of the transfer and warrant agent; (vi) the preparation and delivery of transaction lucite
cubes or similar commemorative items in a style and quantity as reasonably requested by the Representative (not to exceed $3,000);
(vii) all costs and expenses of the Company associated with “road show” marketing and “due diligence”
trips for the Company’s management to meet with prospective investors, including without limitation, all travel, food, and
lodging expenses associated with such trips incurred by the Company or such management; and (viii) all other costs and expenses
customarily borne by an issuer incident to the performance of its obligations hereunder which are not otherwise specifically
provided for in this Section 3.11. The Company also agrees that it will pay for an investigative search firm of the
Representative’s choice to conduct an investigation of the principals of the Company as shall be mutually selected by the
Representative and the Company (not to exceed $3,500 per individual). If the Offering is consummated, the Representative may deduct
from the net proceeds of the Offering payable to the Company on the Closing Date the expenses set forth above (which shall be
mutually agreed upon between the Company and the Representative prior to the Closing Date) to be paid by the Company to the
Representative and others. If the Offering is not consummated for any reason (other than a breach by the Representative of any of
its obligations hereunder), then the Company shall reimburse the Representative in full for its out-of-pocket accountable expenses
actually incurred through such date, including, without limitation, reasonable fees and disbursements of counsel to the
Representative.
3.12 Application
of Net Proceeds. The Company will apply the net proceeds from this Offering received by it in a manner substantially consistent with
the application described under the caption “Use of Proceeds” in the Prospectus.
3.13 Delivery
of Earnings Statements to Security Holders. The Company will make generally available to its security holders as soon as practicable,
but not later than the first day of the sixteenth full calendar month following the Effective Date, an earnings statement (which need
not be certified by independent public or independent certified public accountants unless required by the Act or the Regulations, but
which shall satisfy the provisions of Rule 158(a) under Section 11(a) of the Act) covering a period of at least twelve
consecutive months beginning after the Effective Date.
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3.14 Notice
to FINRA.
3.14.1 Assistance
with Business Combination. For a period of ninety (90) days following the Effective Date, in the event any person or entity (regardless
of any FINRA affiliation or association) is engaged to assist the Company in its search for a Business Combination candidate or to provide
any similar Business Combination-related services, the Company will provide the following information (the “Business Combination
Information”) to the Representative: (i) complete details of all services and copies of agreements governing such services
(which details or agreements may be appropriately redacted to account for privilege or confidentiality concerns); and (ii) justification
as to why the person or entity providing the Business Combination-related services should not be considered an “underwriter and
related person” with respect to the Company’s initial public offering, as such term is defined in Rule 5110 of FINRA’s
Conduct Rules. The Company also agrees that proper disclosure of such arrangement or potential arrangement will be made in the proxy statement
which the Company will file for purposes of soliciting stockholder approval for the Business Combination. Upon the Company’s delivery
of the Business Combination Information to the Representative, the Company hereby expressly authorizes the Representative to provide such
information directly to FINRA as a result of representations the Representative has made to FINRA in connection with the Offering.
3.14.2 Broker/Dealer.
In the event the Company intends to register as a broker/dealer, merge with or acquire a registered broker/dealer, or otherwise become
a member of FINRA, it shall promptly notify the Representative.
3.15 Stabilization.
Neither the Company, nor, to its knowledge, any of its employees, officers, directors, or stockholders has taken or will take, directly
or indirectly, (without the consent of the Representative) any action designed to or that has constituted or that might reasonably be
expected to cause or result in, under the Exchange Act or otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Public Securities.
3.16 Internal
Controls. From and after the Closing Date, the Company will maintain a system of internal accounting controls sufficient to provide
reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorization;
(ii) transactions are recorded as necessary in order to permit preparation of financial statements in accordance with GAAP and to
maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
3.17 Accountants.
For a period of five years from the Effective Date or until the Termination Date or such earlier time upon which the Trust Account is
required to be liquidated, the Company shall retain Marcum or other independent public accountants reasonably acceptable to the Representative.
3.18 Form 8-K’s.
The Company has retained Marcum to audit the balance sheet of the Company as of the Closing Date (the “Audited Balance Sheet”)
reflecting the receipt by the Company of the proceeds of the Offering and the Private Placements. Within four (4) Business Days of
the Closing Date, the Company shall file a Current Report on Form 8-K with the Commission, which Report shall contain the Company’s
Audited Balance Sheet. If the Over-Allotment Option has not been exercised on the Effective Date, the Company will also file an amendment
to the Form 8-K, or a new Form 8-K, to provide updated financial information of the Company to reflect the exercise and consummation
of the Over-Allotment Option.
3.19 FINRA.
Until the Option Closing Date, if any, the Company shall advise the Representative if it is aware that any 5% or greater stockholder of
the Company becomes an affiliate or associated person of a FINRA member participating in the distribution of the Public Securities.
3.20 Corporate
Proceedings. All corporate proceedings and other legal matters necessary to carry out the provisions of this Agreement and the transactions
contemplated hereby shall have been done to the reasonable satisfaction to counsel for the Underwriters.
3.21 Investment
Company. The Company shall cause the proceeds of the Offering to be held in the Trust Account to be invested only as set forth in
the Trust Agreement as in effect on the date hereof and disclosed in the Prospectus. The Company will otherwise conduct its business in
a manner so that it will not become subject to the Investment Company Act. Furthermore, once the Company consummates a Business Combination,
it will be engaged in a business other than that of investing, reinvesting, owning, holding, or trading securities.
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3.22 Press
Releases. The Company agrees that it will not issue press releases or engage in any other publicity, without the Representative’s
prior written consent (not to be unreasonably withheld), for a period of twenty-five (25) days after the Closing Date; provided that in
no event shall the Company be prohibited from issuing any press release or engaging in any other publicity required by law.
3.23 Electronic
Prospectus. The Company shall cause to be prepared and delivered to the Representative, at its expense, promptly, but in no event
later than two (2) Business Days from the effective date of this Agreement, an Electronic Prospectus to be used by the Underwriters
in connection with the Offering. As used herein, the term “Electronic Prospectus” means a form of prospectus, and any amendment
or supplement thereto, that meets each of the following conditions: (i) it shall be encoded in an electronic format, satisfactory
to the Representative, that may be transmitted electronically by the other Underwriters to offerees and purchasers of the Common Stock
for at least the period during which a Prospectus relating to the Common Stock is required to be delivered under the Act; (ii) it
shall disclose the same information as the paper prospectus and prospectus filed pursuant to EDGAR, except to the extent that graphic
and image material cannot be disseminated electronically, in which case such graphic and image material shall be replaced in the electronic
prospectus with a fair and accurate narrative description or tabular representation of such material, as appropriate; and (iii) it
shall be in or convertible into a paper format or an electronic format, satisfactory to the Representative, that will allow recipients
thereof to store and have continuously ready access to the prospectus at any future time, without charge to such recipients (other than
any fee charged for subscription to the Internet as a whole and for on-line time). The Company hereby confirms that it has included or
will include in the Prospectus filed pursuant to EDGAR or otherwise with the Commission and in the Registration Statement at the time
it was declared effective an undertaking that, upon receipt of a request by an investor or his or her representative within the period
when a prospectus relating to the Common Stock is required to be delivered under the Act, the Company shall transmit or cause to be transmitted
promptly, without charge, a paper copy of the Prospectus.
3.24 Future
Financings. The Company agrees that neither it, nor any successor or subsidiary of the Company, will consummate any public or private
equity or debt financing prior to or in connection with the consummation of a Business Combination, unless all investors in such financing
expressly waive, in writing, any rights in or claims against the Trust Account.
3.25 Nasdaq
Maintenance. Until the consummation of a Business Combination, the Company will use commercially reasonable efforts to maintain the
listing by Nasdaq of the Units, Common Stock, Rights and Warrants included within the Units.
3.26 Private
Placement Proceeds. On the Closing Date, the Company shall cause to be deposited $4,550,000 of proceeds from the Private Placement
into the Trust Account. On the Option Closing Date, if any, the Company shall cause to be deposited an amount of additional proceeds from
the additional Private Warrants sold on the Option Closing Date into the Trust Account such that the amount of funds in the Trust Account
shall be $10.10 per unit sold in the Offering.
3.27 Reservation
of Shares. The Company will reserve and keep available that maximum number of its authorized but unissued securities which are issuable
pursuant to the Rights and Warrants outstanding from time to time.
3.28 Testing-the-Waters
Communications. If at any time following the distribution of any written Testing-the-Waters Communication, there occurred or occurs
an event or development as a result of which such written Testing-the-Waters Communication included or would include any untrue statement
of a material fact or omitted or would omit to state any material fact necessary to make the statements therein in light of the circumstances
existing at that subsequent time, not misleading, the Company shall promptly (i) notify the Representative so that use of the written
Testing-the-Waters Communication may cease until it is amended or supplemented; (ii) amend or supplement, at its own expense, such
written Testing-the-Waters Communication to eliminate or correct such untrue statement or omission; and (iii) supply any amendment
or supplement to the Representative in such quantities as may be reasonably requested.
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3.29 Right
of First Refusal. The Company agrees that if the Firm Units are sold in accordance with the terms of this Underwriting Agreement,
the Company hereby grants the Representative the right of first refusal to act as book running manager, placement agent and/or arranger
from any and all equity, equity-linked, debt or mezzanine financings relating to or conducted in connection with a Business Combination.
The right of first refusal shall terminate on the closing of a Business Combination or the failure to complete a Business Combination
by the time specified in the Company’s Certificate of Incorporation. If the Representative fails to accept such offer within ten
(10) Business Days after the mailing of a notice containing the material terms of the proposed financing by registered mail or overnight
courier service addressed to the Representative, then the Representative shall have no further claim or right with respect to the financing
proposal contained in such notice. If, however, the terms of such financing proposal are subsequently modified in any material respect,
the preferential right referred to herein shall apply to such modified proposal as if the original proposal had not been made. The Representative’s
failure to exercise its preferential right with respect to any particular proposal shall not affect its preferential rights relative to
future proposals.
4. Conditions
of Underwriters’ Obligations. The obligations of the several Underwriters to purchase and pay for the Public Securities, as
provided herein, shall be subject to the continuing accuracy of the representations and warranties of the Company as of the date hereof
and as of the Closing Date and the Option Closing Date, if any, to the accuracy of the statements of officers of the Company made pursuant
to the provisions hereof and to the performance by the Company of its obligations hereunder and to the following conditions:
4.1 Regulatory
Matters.
4.1.1 Effectiveness
of Registration Statement. The Effective Date of the Registration Statement shall be not later than 5:00 p.m., New York time, on the
date of this Agreement or such later date and time as shall be consented to in writing by the Representative, and, at the Closing Date,
no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for the purpose shall
have been instituted or shall be pending or contemplated by the Commission and any request on the part of the Commission for additional
information shall have been complied with.
4.1.2 FINRA
Clearance. By the Effective Date, the Representative shall have received clearance from FINRA as to the amount of compensation allowable
or payable to the Underwriters as described in the Registration Statement.
4.1.3 No
Commission Stop Order. At the Closing Date, the Commission has not issued any order or threatened to issue any order preventing or
suspending the use of any Preliminary Prospectus, the Prospectus, or any part thereof, and has not instituted or, to the Company’s
knowledge, threatened to institute any proceedings with respect to such an order.
4.1.4 Nasdaq
Listing. The Public Securities shall have been approved for listing on Nasdaq, subject to official notice of issuance and evidence
of satisfactory distribution.
4.2 Company
Counsel Matters.
4.2.1 Opinion
of Company Counsel. On each of the Closing Date or the Option Closing Date, if any, the Representative shall have received the favorable
opinion (along with negative assurance letter) of Winston & Strawn LLP, U.S. counsel to the Company, addressed to the Representative
as representative for the several Underwriters and in form mutually agreed to by the Company and the Representative.
4.2.2 Reliance.
In rendering such opinions, such counsel may rely: (i) as to matters involving the application of laws other than the laws of the
United States and jurisdictions in which they are admitted, to the extent such counsel deems proper and to the extent specified in such
opinion, if at all, upon an opinion or opinions (in form and substance reasonably satisfactory to the Representative) of other counsel
reasonably acceptable to the Representative, familiar with the applicable laws; and (ii) as to matters of fact, to the extent they
deem proper, on certificates or other written statements of officers of the Company and officers of departments of various jurisdiction
having custody of documents respecting the corporate existence or good standing of the Company, provided that copies of any such statements
or certificates shall be delivered to the Underwriters’ counsel if requested. The opinions of counsel for the Company and any opinion
relied upon by such counsel for the Company shall include a statement to the effect that it may be relied upon by counsel for the Underwriters
in its opinion delivered to the Underwriters.
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4.3 Cold
Comfort Letter. At the time this Agreement is executed, and at the Closing Date and Option Closing Date, if any, the Representative
shall have received a letter, addressed to the Representative as representative for the several Underwriters and in form and substance
satisfactory in all respects (including the non-material nature of the changes or decreases, if any, referred to in Section 4.3.3
below) to the Representative from Marcum LLP dated, respectively, as of the date of this Agreement and as of the Closing Date and Option
Closing Date, if any:
4.3.1 Confirming
that they are independent accountants with respect to the Company within the meaning of the Act and the applicable Regulations and that
they have not, during the periods covered by the financial statements included in the Registration Statement and the Prospectus, provided
to the Company any non-audit services, as such term is used in Section 10A(g) of the Exchange Act;
4.3.2 Stating
that in their opinion the financial statements of the Company included in the Registration Statement and the Prospectus comply as to form
in all material respects with the applicable accounting requirements of the Act and the published Regulations thereunder;
4.3.3 Stating
that, on the basis of a limited review which included a reading of the latest available unaudited interim financial statements of the
Company (with an indication of the date of the latest available unaudited interim financial statements), a reading of the latest available
minutes of the stockholders and board of directors and the various committees of the board of directors, consultations with officers and
other employees of the Company responsible for financial and accounting matters and other specified procedures and inquiries, nothing
has come to their attention which would lead them to believe that: (a) the unaudited financial statements of the Company included
in the Registration Statement and the Prospectus do not comply as to form in all material respects with the applicable accounting requirements
of the Act and the Regulations or are not fairly presented in conformity with GAAP applied on a basis substantially consistent with that
of the audited financial statements of the Company included in the Registration Statement, the Statutory Prospectus and the Prospectus;
or (b) at a date immediately prior to the Effective Date or Closing Date, as the case may be, there was any change in the capital
stock or long-term debt of the Company, or any decrease in the stockholders’ equity of the Company as compared with amounts shown
in the September 30 2021 balance sheet included in the Registration Statement, other than as set forth in or contemplated by the
Registration Statement, or, if there was any decrease, setting forth the amount of such decrease, and (c) during the period from
[*], 2022 to a specified date immediately prior to the Effective Date or Closing Date, as the case may be, there were any changes in revenues,
net earnings (losses), or net earnings (losses) per share of Common Stock, in each case as compared with the Statement of Operations for
the period from January 11, 2021 (inception) to February 2, 2021 included in the Registration Statement, or, if there was any
such change, setting forth the amount of such change;
4.3.4 Stating
that they have compared specific dollar amounts, numbers of shares, percentages of revenues and earnings, statements and other financial
information pertaining to the Company set forth in the Registration Statement in each case to the extent that such amounts, numbers, percentages,
statements and information may be derived from the general accounting records, including work sheets, of the Company and excluding any
questions requiring an interpretation by legal counsel, with the results obtained from the application of specified readings, inquiries
and other appropriate procedures (which procedures do not constitute an examination in accordance with generally accepted auditing standards)
set forth in the letter and found them to be in agreement; and
4.3.5 Statements
as to such other matters incident to the transaction contemplated hereby as the Representative may reasonably request.
4.4 Officers’
Certificates.
4.4.1 Officers’
Certificate. As of each of the Closing Date and the Option Closing Date, if any, the Representative shall have received a certificate
of the Company signed by the Chairman of the Board, President, or Chief Financial Officer (in their capacities as such), to the effect
that the Company has performed all covenants and complied with all conditions required by this Agreement to be performed or complied with
by the Company prior to and as of the Closing Date and that the conditions set forth in this Section 4 have been satisfied as of
such date and that, as of Closing Date, the representations and warranties of the Company set forth in Section 2 hereof are true
and correct. In addition, the Representative will have received such other and further certificates of officers of the Company as the
Representative may reasonably request.
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4.4.2 Secretary’s
Certificate. As of each of the Closing Date and the Option Closing Date, if any, the Representative shall have received a certificate
of the Company signed by the President of the Company, certifying: (i) that the Charter Documents are true and complete, have not
been modified and are in full force and effect; (ii) that the resolutions relating to the Offering are in full force and effect and
have not been modified; (iii) all correspondence between the Company or its counsel and the Commission; (iv) all correspondence
between the Company or its counsel and Nasdaq; and (v) as to the incumbency of the officers of the Company. The documents referred
to in such certificate shall be attached to such certificate.
4.5 No
Material Changes. Prior to each of the Closing Date and the Option Closing Date, if any: (i) there shall have been no material
adverse change or development involving a material adverse change in the condition or prospects or the business activities, financial
or otherwise, of the Company from the latest dates as of which such condition is set forth in the Registration Statement, the Statutory
Prospectus, and Prospectus; (ii) no action, suit, or proceeding, at law or in equity, shall have been pending or threatened against
the Company or any Respondent before or by any court or foreign, federal, or state commission, board, or other administrative agency wherein
an unfavorable decision, ruling, or finding may have a Material Adverse Effect on the business, operations, prospects, or financial condition
or income of the Company, except as set forth in the Registration Statement, the Statutory Prospectus, and Prospectus; (iii) no stop
order shall have been issued under the Act against the Company and no proceedings therefor shall have been initiated or threatened by
the Commission; and (iv) the Registration Statement, the Statutory Prospectus, and the Prospectus and any amendments or supplements
thereto shall contain all material statements which are required to be stated therein in accordance with the Act and the Regulations and
shall conform in all material respects to the requirements of the Act and the Regulations, and none of the Registration Statement, the
Statutory Prospectus, or the Prospectus, or any amendment or supplement thereto shall contain any untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary to make the statements therein (in the case of the Statutory
Prospectus and Prospectus, in light of the circumstances under which they were made), not misleading.
4.6 Delivery
of Agreements and Securities. On the Effective Date, the Company shall have delivered to the Representative executed copies of the
Transaction Documents.
4.7 Private
Warrants. On the Closing Date and the Option Closing Date, as applicable, the Private Warrants have been purchased as provided for
in the Subscription Agreements and the purchase price for such securities shall be deposited into the Trust Account.
5. Indemnification.
5.1 Indemnification
of Underwriters.
5.1.1 General.
Subject to the conditions set forth below, the Company agrees to indemnify and hold harmless each of the Underwriters and each
dealer selected by the Representative that participates in the offer and sale of the Public Securities (each a “Selected
Dealer”) and each of their respective directors, officers, partners and employees and each person, if any, who controls
any such Underwriter or Selected Dealer (“Controlling Person”) within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, and its counsel, against any and all loss, liability, claim, damage, and expense
whatsoever (including but not limited to any and all legal or other expenses reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim whatsoever, whether arising out of any action between any of
the Underwriters and the Company or between any of the Underwriters and any third party or otherwise) to which they or any of them
may become subject under the Act, the Exchange Act, or any other foreign, federal, state, or local statute, law, rule, regulation,
or ordinance or at common law or otherwise or under the laws, rules, and regulation of foreign countries, arising out of or based
upon any untrue statement or alleged untrue statement of a material fact contained in (i) any Preliminary Prospectus, the
Registration Statement, or the Prospectus (as from time to time each may be amended and supplemented); (ii) in any
post-effective amendment or amendments or any new registration statement and prospectus relating to any of the Public Securities; or
(iii) any application or other document or written communication (in this Section 5 collectively called
“application”) executed by the Company or based upon written information furnished by the Company in any jurisdiction in
order to qualify the Public Securities under the securities laws thereof or filed with the Commission, any foreign or state
securities commission or agency, Nasdaq (in each case other than statements contained in the section captioned “Selling
Restrictions”); or (iv) the omission or alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, unless such
statement or omission was made in reliance upon and in conformity with written information furnished to the Company with respect to
an Underwriter by or on behalf of such Underwriter expressly for use in any Preliminary Prospectus, the Registration Statement, the
Prospectus, or any amendment or supplement thereof, or in any application, as the case may be, which furnished written information,
it is expressly agreed, consists solely of the information described in the last clause of the last sentence of Section 2.3.1.
With respect to any untrue statement or omission or alleged untrue statement or omission made in the Preliminary Prospectus, the
indemnity agreement contained in this paragraph shall not inure to the benefit of any Underwriter to the extent that any loss,
liability, claim, damage, or expense of such Underwriter results from the fact that a copy of the Prospectus was not given or sent
to the person asserting any such loss, liability, claim, or damage at or prior to the written confirmation of sale of the Public
Securities to such person as required by the Act and the Regulations, and if the untrue statement or omission has been corrected in
the Prospectus, unless such failure to deliver the Prospectus was a result of non-compliance by the Company with its obligations
under Section 3.4 hereof. The Company agrees promptly to notify the Representative of the commencement of any litigation or
proceedings against the Company or any of its officers, directors or controlling persons in connection with the issue and sale of
the Public Securities or in connection with the Preliminary Prospectus, the Registration Statement or the Prospectus.
EarlyBirdCapital, Inc.
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5.1.2 Procedure.
If any action is brought against an Underwriter or controlling person in respect of which indemnity may be sought against the Company
pursuant to Section 5.1.1, such Underwriter shall promptly notify the Company in writing of the institution of such action and the
Company shall assume the defense of such action, including the employment and fees of counsel (subject to the reasonable approval of such
Underwriter) and payment of actual expenses. Such Underwriter or controlling person shall have the right to employ its or their own counsel
in any such case, but the fees and expenses of such counsel shall be at the expense of such Underwriter or such controlling person unless:
(i) the employment of such counsel at the expense of the Company shall have been authorized in writing by the Company in connection
with the defense of such action; (ii) the Company shall not have employed counsel to have charge of the defense of such action; or
(iii) counsel to such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or
them which are different from or additional to those available to the Company (in which case the Company shall not have the right to direct
the defense of such action on behalf of the indemnified party or parties), in any of which events the reasonable fees and expenses of
not more than one additional firm of attorneys selected by the Underwriter and/or controlling person shall be borne by the Company. Notwithstanding
anything to the contrary contained herein, if the Underwriter or controlling person shall assume the defense of such action as provided
above, the Company shall have the right to approve the terms of any settlement of such action which approval shall not be unreasonably
withheld.
5.2 Indemnification
of the Company. Each Underwriter, severally and not jointly, agrees to indemnify and hold harmless the Company, its directors, officers,
and employees and agents who control the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and its counsel, against any and all loss, liability, claim, damage and expense described in the foregoing indemnity from the Company
to the several Underwriters, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions
made in the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto, or in any application,
in reliance upon, and in strict conformity with, written information furnished to the Company with respect to such Underwriter by or on
behalf of the Underwriter expressly for use in such Registration Statement, Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto or in any such application, which furnished written information, it is expressly agreed, consists solely of the information
described in the last clause of the last sentence of Section 2.3.1. In case any action shall be brought against the Company or any
other person so indemnified based on any Preliminary Prospectus, the Registration Statement, the Prospectus or any amendment or supplement
thereto or any application, and in respect of which indemnity may be sought against any Underwriter, such Underwriter shall have the rights
and duties given to the Company, and the Company and each other person so indemnified shall have the rights and duties given to the several
Underwriters by the provisions of Section 5.1.2.
EarlyBirdCapital, Inc.
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5.3 Contribution.
5.3.1 Contribution
Rights. In order to provide for just and equitable contribution under the Act in any case in which (i) any person entitled to
indemnification under this Section 5 makes claim for indemnification pursuant hereto but it is judicially determined (by the entry
of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right
of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 5 provides for indemnification
in such case, or (ii) contribution under the Act, the Exchange Act, or otherwise may be required on the part of any such person in
circumstances for which indemnification is provided under this Section 5 but is unavailable, then, and in each such case, the Company
and the Underwriters shall contribute to the aggregate losses, liabilities, claims, damages, and expenses of the nature contemplated by
said indemnity agreement incurred by the Company and the Underwriters, as incurred, in such proportions that the Underwriters are responsible
for that portion represented by the percentage that the underwriting discount appearing on the cover page of the Prospectus bears
to the initial offering price appearing thereon and the Company is responsible for the balance; provided, that, no person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Notwithstanding the provisions of this Section 5.3.1, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total price at which the Public Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required
to pay in respect of such losses, liabilities, claims, damages and expenses. For purposes of this Section, each director, officer and
employee of an Underwriter or the Company, as applicable, and each person, if any, who controls an Underwriter or the Company, as applicable,
within the meaning of Section 15 of the Act shall have the same rights to contribution as the Underwriters or the Company, as applicable.
5.3.2 Contribution
Procedure. Within fifteen days after receipt by any party to this Agreement (or its representatives) of notice of the commencement
of any action, suit or proceeding, such party will, if a claim for contribution in respect thereof is to be made against another party
(“contributing party”), notify the contributing party of the commencement thereof, but the omission to so notify the contributing
party will not relieve it from any liability which it may have to any other party other than for contribution hereunder. In case any such
action, suit or proceeding is brought against any party, and such party notifies a contributing party or its representatives of the commencement
thereof within the aforesaid fifteen days, the contributing party will be entitled to participate therein with the notifying party and
any other contributing party similarly notified. Any such contributing party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding effected by such party seeking contribution on account of any settlement
of any claim, action or proceeding effected by such party seeking contribution without the written consent of such contributing party.
The contribution provisions contained in this Section are intended to supersede, to the extent permitted by law, any right to contribution
under the Act, the Exchange Act or otherwise available. The Underwriters’ obligations to contribute pursuant to this Section 5.3
are several and not joint.
6. Default
by an Underwriter.
6.1 Default
Not Exceeding 10% of Firm Units. If any Underwriter or Underwriters shall default in its or their obligations to purchase the Firm
Units and if the number of the Firm Units with respect to which such default relates does not exceed in the aggregate 10% of the number
of Firm Units that all Underwriters have agreed to purchase hereunder, then such Firm Units to which the default relates shall be purchased
by the non-defaulting Underwriters in proportion to their respective commitments hereunder.
6.2 Default
Exceeding 10% of Firm Units. In the event that the default addressed in Section 6.1 above relates to more than 10% of the Firm
Units, the Representative may, in its discretion, arrange for it or for another party or parties to purchase such Firm Units to which
such default relates on the terms contained herein. If within one (1) Business Day after such default relating to more than 10% of
the Firm Units the Representative does not arrange for the purchase of such Firm Units, then the Company shall be entitled to a further
period of one (1) Business Day within which to procure another party or parties satisfactory to the Representative to purchase said
Firm Units on such terms. In the event that neither the Representative nor the Company arrange for the purchase of the Firm Units to which
a default relates as provided in this Section 6, this Agreement may be terminated by the Representative or the Company without liability
on the part of the Company (except as provided in Sections 3.11 and 5 hereof) or the several Underwriters (except as provided in Section 5
hereof); provided that nothing herein shall relieve a defaulting Underwriter of its liability, if any, to the other several Underwriters
and to the Company for damages occasioned by its default hereunder.
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6.3 Postponement
of Closing Date. In the event that the Firm Units to which the default relates are to be purchased by the non-defaulting Underwriters,
or are to be purchased by another party or parties as aforesaid, the Representative or the Company shall have the right to postpone the
Closing Date for a reasonable period, but not in any event exceeding five (5) Business Days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement and/or the Prospectus, as the case may be, or in any other documents and arrangements,
and the Company agrees to file promptly any amendment to, or to supplement, the Registration Statement and/or the Prospectus, as the case
may be, that in the reasonable opinion of counsel for the Underwriters may thereby be made necessary. The term “Underwriter”
as used in this Agreement shall include any party substituted under this Section 6 with like effect as if it had originally been
a party to this Agreement with respect to such securities.
7. Additional
Covenants.
7.1 Additional
Shares or Options. Except as described in the Registration Statement, the Company hereby agrees that until the Company consummates
a Business Combination, it shall not issue any Common Stock or any options or other securities convertible into Common Stock or any shares
of preferred stock which participate in any manner in the Trust Account or which vote on a Business Combination.
7.2 Trust
Account Waiver Acknowledgments. The Company hereby agrees that, prior to commencing its due diligence investigation of any Target
Business or obtaining the services of any vendor, it will use its best efforts to have such Target Business or vendor acknowledge in writing,
whether through a letter of intent, memorandum of understanding, agreement in principle, or other similar document (and subsequently acknowledges
the same in any definitive document replacing any of the foregoing), that (a) it has read the Prospectus, and understands that the
Company has established the Trust Account, initially in an amount of $101,000,000 for the benefit of the Public Stockholders and that,
except for the interest earned on the amounts held in the Trust Account, the Company may disburse monies from the Trust Account only:
(i) to the Public Stockholders in the event of the conversion of their shares upon consummation of a Business Combination or amendment
to the Company’s Amended and Restated Certificate of Incorporation relating to pre-Business Combination activity, (ii) to the
Public Stockholders in connection with the Company’s liquidation in the event the Company is unable to consummate a Business Combination
within the required time period or (iii) to the Company concurrently with, or after it consummates a Business Combination, and (b) for
and in consideration of the Company (1) agreeing to evaluate such Target Business for purposes of consummating a Business Combination
with it or (2) agreeing to engage the services of the vendor, as the case may be, such Target Business or vendor agrees that it does
not have any right, title, interest or claim of any kind in or to any monies of the Trust Account (“Claim”) and waives
any Claim it may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with the Company and
will not seek recourse against the Trust Account for any reason whatsoever. The foregoing letters shall substantially be in the form attached
hereto as Exhibits A and B, respectively.
7.3 Insider
Letters. The Company shall not take any action or omit to take any action which would cause a breach of any of the Insider Letters
executed between each Respondent and the Representative and will not allow any amendments to, or waivers of, such Insider Letters without
the prior written consent of the Representative.
7.4 Tender
Offer, Proxy, and Other Information. The Company shall provide the Representative with copies of all proxy or tender offer documentation
and other information and all related material sent to Public Stockholders in connection with a Business Combination.
7.5 Rule 419.
The Company agrees that it will use its best efforts to prevent the Company from becoming subject to Rule 419 under the Act prior
to the consummation of any Business Combination, including, but not limited to, using its best efforts to prevent any of the Company’s
outstanding securities from being deemed to be a “penny stock” as defined in Rule 3a-51-1 under the Exchange Act during
such period.
EarlyBirdCapital, Inc.
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7.6 Presentation
of Potential Target Businesses. The Company shall cause each of the Respondents to agree that, in order to minimize potential conflicts
of interest which may arise from multiple affiliations, the Respondents will present to the Company for its consideration, prior to presentation
to any other person or company, any suitable opportunity to acquire an operating business, until the earlier of the consummation by the
Company of a Business Combination or the liquidation of the Trust Account, subject to any pre-existing fiduciary obligations the Respondents
might have.
7.7 Target
Fair Market Value. The Company agrees that the Target Business that it acquires must have a fair market value equal to at least 80%
of the balance in the Trust Account (excluding any taxes owed) at the time of signing the definitive agreement for the Business Combination
with such Target Business. The fair market value of such business must be determined by the Board of Directors of the Company based upon
standards generally accepted by the financial community, such as actual and potential sales, earnings, cash flow and book value. If the
Board of Directors of the Company is not able to independently determine that the target business meets such fair market value requirement,
the Company will obtain an opinion from an unaffiliated, independent investment banking firm, or another independent entity that commonly
renders valuation opinions. The Company is not required to obtain such an opinion as to the fair market value if the Company’s Board
of Directors independently determines that the Target Business does have sufficient fair market value.
8. Representations
and Agreements to Survive Delivery. Except as the context otherwise requires, all representations, warranties, and agreements contained
in this Agreement shall be deemed to be representations, warranties, and agreements at the Closing Date or Option Closing Date, as applicable,
and such representations, warranties, and agreements of the Underwriters and Company, including the indemnity agreements contained in
Section 5 hereof, shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any
Underwriter, the Company or any controlling person, and shall survive termination of this Agreement or the issuance and delivery of the
Public Securities to the several Underwriters until the earlier of the expiration of any applicable statute of limitations and the seventh
(7th) anniversary of the Closing Date, at which time the representations, warranties and agreements shall terminate and be of no further
force and effect.
9. Effective
Date of This Agreement and Termination Thereof.
9.1 Effective
Date. This Agreement shall become effective on the Effective Date at the time the Registration Statement is declared effective by
the Commission.
9.2 Termination.
The Representative shall have the right to terminate this Agreement at any time prior to any Closing Date: (i) if any domestic or
international event or act or occurrence has materially disrupted or, in the Representative’s sole opinion, will in the immediate
future materially disrupt, general securities markets in the United States; or (ii) if trading on the New York Stock Exchange, the
NYSE American LLC, Nasdaq or on the OTC Bulletin Board (or successor trading market) shall have been suspended, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been fixed, or maximum ranges for prices
for securities shall have been required on the OTC Bulletin Board or by order of the Commission or any other government authority having
jurisdiction, or (iii) if the United States shall have become involved in a war or an increase in existing major hostilities, or
(iv) if a banking moratorium has been declared by a New York State or federal authority, or (v) if a moratorium on foreign exchange
trading has been declared which materially adversely impacts the United States securities market, or (vi) if the Company shall have
sustained a material loss by fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity or malicious act which, whether
or not such loss shall have been insured, will, in the Representative’s sole opinion, make it inadvisable to proceed with the delivery
of the Common Stock, (vii) if any of the Company’s representations, warranties or covenants hereunder are breached, or (viii) if
the Representative shall have become aware after the date hereof of a Material Adverse Effect on the Company, or such adverse material
change in general market conditions, including, without limitation, as a result of terrorist activities after the date hereof, as in the
Representative’s sole judgment would make it impracticable to proceed with the offering, sale and/or delivery of the Common Stock
or to enforce contracts made by the Underwriters for the sale of the Common Stock.
9.3 Expenses.
In the event that the Offering is not consummated for any reason whatsoever, within the time specified herein or any extensions thereof
pursuant to the terms herein, (i) the obligations of the Company to pay the out of pocket expenses related to the transactions contemplated
herein shall be governed by Section 3.11 hereof and (ii) the Company shall reimburse the Representative for any costs and expenses
incurred in connection with enforcing any provisions of this Agreement.
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9.4 Indemnification.
Notwithstanding any contrary provision contained in this Agreement, any election hereunder or any termination of this Agreement, and whether
or not this Agreement is otherwise carried out, the provisions of Section 5 shall not be in any way effected by, such election or
termination or failure to carry out the terms of this Agreement or any part hereof.
10. Miscellaneous.
10.1 Notices.
All communications hereunder, except as herein otherwise specifically provided, shall be in writing and shall be mailed by certified mail
(with return receipt), delivered by hand or reputable overnight courier, delivered by facsimile transmission (with printed confirmation
of receipt) and confirmed, or by electronic transmission via PDF and shall be deemed given when so mailed, delivered, faxed, or transmitted
(or if mailed, five days after such mailing):
If to the Representative:
EarlyBirdCapital, Inc.
366 Madison Avenue
New York, New York 10017
Fax No.: (212) 661-4936
Attn: Steven Levine
Email: slevine@ebcap.com
With a copy (which shall not constitute notice) to:
Loeb &
Loeb LLP
345 Park Avenue
New York, New York 10154
Fax No.: (212) 407-4990
Attn: Mitchell S. Nussbaum, Esq.
Email: mnussbaum@loeb.com
If to the Company, to:
RF Acquisition Corp.
Tse Meng Ng
111 Somerset, #05-06
Singapore 238164
+65 6904 0766
With a copy (which shall not constitute notice) to:
Michael J. Blankenship
Winston & Strawn LLP
800 Capital Street, Suite 2400
Houston, Texas 77002
Tel: (713) 651-2600
10.2 Headings.
The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
10.3 Amendment.
This Agreement may only be amended by a written instrument executed by each of the parties hereto.
EarlyBirdCapital, Inc.
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10.4 Entire
Agreement. This Agreement (together with the other agreements and documents being delivered pursuant to or in connection with this
Agreement) constitute the entire agreement of the parties hereto with respect to the subject matter hereof and thereof, and supersede
all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.
10.5 Binding
Effect. This Agreement shall inure solely to the benefit of and shall be binding upon the Representative, the Underwriters, the Company,
and the controlling persons, directors, and officers referred to in Section 5 hereof, and their respective successors, legal representatives
and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect
of or by virtue of this Agreement or any provisions herein contained.
10.6 Governing
Law, Venue, etc. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New
York, without giving effect to the conflict of laws principles thereof. Each of the Company and the Representative hereby agrees that
any action, proceeding, or claim against it arising out of or relating in any way to this Agreement shall be brought and enforced in the
courts of the State of New York, New York County under the accelerated adjudication procedures of the Commercial Division, or in the United
States District Court for the Southern District of New York, as applicable, and irrevocably submits to such jurisdiction, which jurisdiction
shall be exclusive. Each of the Company and the Representative hereby waives any objection to such exclusive jurisdiction and that such
courts represent an inconvenient forum. Any such process or summons to be served upon the Company or the Representative, respectively,
may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to
it at the address set forth in Section 10.1 hereof. Such mailing shall be deemed personal service and shall be legal and binding
upon the Company or the Representative, respectively, in any action, proceeding, or claim. Each of the Company and the Representative
agrees that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable
attorneys’ fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor.
10.7 Execution
in Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts,
each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement, and shall
become effective when one or more counterparts has been signed by each of the parties hereto and delivered to each of the other parties
hereto. Delivery of a signed counterpart of this Agreement by fax or email/.pdf transmission shall constitute valid and sufficient delivery
thereof.
10.8 Waiver, etc.
The failure of any of the parties hereto to at any time enforce any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of any such provision, nor to in any way affect the validity of this Agreement or any provision hereof or
the right of any of the parties hereto to thereafter enforce each and every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Agreement shall be effective unless set forth in a written
instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such
breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
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10.9 No
Fiduciary Relationship. The Company hereby acknowledges that the Underwriters are acting solely as underwriters in connection with
the offering of the Public Securities. The Company further acknowledges that the Underwriters are acting pursuant to a contractual relationship
created solely by this Agreement entered into on an arm’s length basis and in no event do the parties intend that the Underwriters
act or be responsible as a fiduciary to the Company, its management, stockholders, creditors or any other person in connection with any
activity that the Underwriters may undertake or have undertaken in furtherance of the offering of the Public Securities, either before
or after the date hereof. The Underwriters hereby expressly disclaim any fiduciary or similar obligations to the Company, either in connection
with the transactions contemplated by this Agreement or any matters leading up to such transactions, and the Company hereby confirms its
understanding and agreement to that effect. The Company and the Underwriters agree that they are each responsible for making their own
independent judgments with respect to any such transactions, and that any opinions or views expressed by the Underwriters to the Company
regarding such transactions, including but not limited to any opinions or views with respect to the price or market for the Public Securities,
do not constitute advice or recommendations to the Company. The Company hereby waives and releases, to the fullest extent permitted by
law, any claims that the Company may have against the Underwriters with respect to any breach or alleged breach of any fiduciary or similar
duty to the Company in connection with the transactions contemplated by this Agreement or any matters leading up to such transactions.
[Signature Page Follows]
EarlyBirdCapital, Inc.
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If the foregoing correctly
sets forth the understanding between the Underwriters and the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between us.
| |
By: |
|
| |
|
Name: Tse Meng Ng |
| |
|
Title: Chief Executive Officer |
Agreed to and accepted
as of the date first written above: |
|
EARLYBIRDCAPITAL, INC.,
as Representative of the several Underwriters |
|
| By: |
|
|
| |
Name: Steven Levine |
|
| |
Title: Chief Executive Officer |
|
[Signature Page to Underwriting Agreement]
SCHEDULE A
RF ACQUISITION CORP.
10,000,000 Firm Units
| Underwriter | |
Number of Firm
Units
to be Purchased | |
| EarlyBirdCapital, Inc. | |
| 10,000,000 Units | |
| | |
| | |
| | |
| | |
| TOTAL | |
| 10,000,000 | |
SCHEDULE B
None
EXHIBIT A
Form of Target Business Letter
RF Acquisition Corp.
c/o Puglisi & Associates
850 Library Avenue
Newark, Delaware 19711
Ladies and Gentlemen:
Reference
is made to the Final Prospectus of RF Acquisition Corp. (“Company”), dated [●], 2022 (the “Prospectus”).
Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Prospectus.
We have read the Prospectus
and understand that the Company has established the Trust Account, initially in an amount of at least $101,000,000, for the benefit of
the Public Stockholders and that, except for the interest earned on the amounts held in the Trust Account, the Company may disburse monies
from the Trust Account only: (i) to the Public Stockholders in the event of the conversion of their shares upon consummation of a
Business Combination or amendment to the Company’s Amended and Restated Certificate of Incorporation relating to pre-Business Combination
activity, (ii) to the Public Stockholders in connection with the Company’s liquidation in the event the Company is unable to
consummate a Business Combination within the required time period, or (iii) to the Company concurrently with, or after it consummates,
a Business Combination.
For and in consideration of
the Company agreeing to evaluate the undersigned for purposes of consummating a Business Combination with it, the undersigned hereby agrees
that it does not have any right, title, interest or claim of any kind in or to any monies in the Trust Account (each, a “Claim”)
and hereby waives any Claim it may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with
the Company and will not seek recourse against the Trust Account for any reason whatsoever.
| |
|
| |
Print Name of Target Business |
| |
|
| |
Authorized Signature of Target Business |
EXHIBIT B
Form of Vendor Letter
RF Acquisition Corp.
c/o Puglisi & Associates
850 Library Avenue
Newark, Delaware 19711
Ladies and Gentlemen:
Reference
is made to the Final Prospectus of RF Acquisition Corp. (“Company”), dated [●], 2022 (the “Prospectus”).
Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Prospectus.
We have read the Prospectus
and understand that the Company has established the Trust Account, initially in an amount of at least $101,000,000, for the benefit of
the Public Stockholders and that, except for the interest earned on the amounts held in the Trust Account, the Company may disburse monies
from the Trust Account only: (i) to the Public Stockholders in the event of the conversion of their shares upon consummation of a
Business Combination or amendment to the Company’s Amended and Restated Certificate of Incorporation relating to pre-Business Combination
activity, (ii) to the Public Stockholders in connection with the Company’s liquidation in the event the Company is unable to
consummate a Business Combination within the required time period, or (iii) to the Company concurrently with, or after it consummates
a Business Combination.
For and in consideration of
the Company agreeing to use the services of the undersigned, the undersigned hereby agrees that it does not have any right, title, interest
or claim of any kind in or to any monies in the Trust Account (each, a “Claim”) and hereby waives any Claim it may have in
the future as a result of, or arising out of, any services provided to the Company and will not seek recourse against the Trust Account
for any reason whatsoever.
| |
|
| |
Authorized Signature of Vendor |
Exhibit 4.1
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP
[ ]
RF ACQUISITION CORP.
UNITS CONSISTING OF ONE SHARE OF CLASS A
COMMON STOCK, ONE
REDEEMABLE WARRANT, AND ONE RIGHT
EACH
WHOLE WARRANT ENTITLING THE HOLDER TO PURCHASE ONE SHARE OF CLASS A
COMMON STOCK
EACH RIGHT ENTITLING THE HOLDER TO PURCHASE
ONE-TENTH OF ONE SHARE OF
CLASS A COMMON STOCK
THIS CERTIFIES THAT is
the owner of Units of RF Acquisition Corp., a Delaware
corporation (the “Company”), transferrable on the books of the Company in person or by duly authorized attorney
upon surrender of this certificate properly endorsed.
Each Unit (“Unit”)
consists of one (1) share of Class A common stock, par value $0.0001 per share (“Class A Common Stock”),
of the Company, one redeemable warrant (each whole warrant, a “Warrant”) and one right to purchase one-tenth
of one share of Class A common stock (the “Right”). Each Warrant entitles the holder to purchase one share
of Class A Common Stock (subject to adjustment) for $11.50 per share (subject to adjustment). Each Warrant will become exercisable
thirty (30) days after the Company’s completion of a merger, stock exchange, asset acquisition, stock purchase, reorganization or
other similar business combination with one or more businesses (each a “Business Combination”) and will expire
unless exercised before 5:00 p.m., New York City Time, on the date that is five (5) years after the date on which the Company completes
its initial Business Combination, or earlier upon redemption or liquidation (the “Expiration Date”). The Class A
Common Stock, Rights, and Warrants comprising the Units represented by this certificate are not transferable separately prior to ,
2022, unless EarlyBirdCapital, Inc. elects to allow separate trading earlier, subject to the Company’s filing of a Current
Report on Form 8-K with the Securities and Exchange Commission containing an audited balance sheet reflecting the Company’s
receipt of the gross proceeds of the Company’s initial public offering and issuing a press release announcing when separate trading
will begin. No fractional Warrants nor fractional share of Class A Common Stock will be issued upon separation of the Units. The
terms of the Warrants are governed by a Warrant Agreement, dated as of ,
2022 (the “Warrant Agreement”), between the Company and Continental Stock Transfer & Trust Company,
as Warrant Agent, and are subject to the terms and provisions contained therein, all of which terms and provisions the holder of this
certificate consents to by acceptance hereof. Copies of the Warrant Agreement are on file at the office of the Warrant Agent at 1 State
Street, 30th Floor, New York, New York 10004, and are available to any Warrant holder on written request and without cost.
This certificate is not valid unless
countersigned by the Transfer Agent and registered by the Registrar of the Company.
This certificate shall be governed by
and construed in accordance with the internal laws of the State of New York.
Witness the facsimile signature
of a duly authorized signatory of the Company.
RF Acquisition Corp.
The Company will furnish without
charge to each unitholder who so requests, a statement of the powers, designations, preferences and relative, participating, optional
or other special rights of each class of equity or series thereof of the Company and the qualifications, limitations, or restrictions
of such preferences and/or rights.
The following abbreviations,
when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to
applicable laws or regulations:
| TEN COM |
— |
as tenants in common |
|
UNIF GIFT MIN ACT |
— |
___________ Custodian ___________ |
| |
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(Cust) (Minor) |
| TEN ENT |
— |
as tenants by the entireties |
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Under Uniform Gifts to Minors Act |
| JT TEN |
— |
as joint tenants with right of survivorship and not as tenants in common |
|
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_____________________________
(State) |
Additional abbreviations may also be used though
not in the above list.
| |
For value received, |
hereby sell, assign and transfer unto |
|
(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE)
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING
ZIP CODE, OF ASSIGNEE)
Units represented by the within certificate, and do
hereby irrevocably constitute and appoint Attorney to transfer the said Units on the books of the within named Company with full
power of substitution in the premises.
Dated
| |
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Notice: |
The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular, without alteration or enlargement or any change whatever. |
| Signature(s) Guaranteed: |
|
| |
|
| |
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| THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (OR ANY SUCCESSOR RULE)). |
|
As more fully described in,
and subject to the terms and conditions described in, the Company’s final prospectus for its initial public offering dated ,
the holder(s) of this certificate shall be entitled to receive a pro-rata portion of certain funds held in the trust account established
in connection with the Company’s initial public offering in the event that (i) the Company redeems the shares of Class A
Common Stock sold in its initial public offering and liquidates because it does not consummate an initial Business Combination within
the time period set forth in the Company’s Amended and Restated Certificate of Incorporation, as the same may be amended from time
to time, or (ii) if the holder(s) properly redeem for cash his, her or its respective shares of Class A Common Stock included
in the Units represented by this certificate in connection with (x) a tender offer (or proxy solicitation, solely in the event the
Company seeks stockholder approval of the proposed initial Business Combination) setting forth the details of a proposed initial Business
Combination or (y) a stockholder vote to amend the Company’s Amended and Restated Certificate of Incorporation (A) to
modify the substance or timing of the Company’s obligation to allow redemption in connection with our initial Business Combination
or to redeem 100% of the shares of Class A Common Stock if it does not consummate an initial Business Combination within the time
set forth in the Company’s Amended and Restated Certificate of Incorporation or (B) with respect to any other material provisions
relating to stockholders' rights or pre-initial Business Combination activity, as the same may be amended from time to time. In no other
circumstances shall the holder(s) have any right or interest of any kind in or to the trust account.
Exhibit 4.5
WARRANT
AGREEMENT
This agreement (“Agreement”)
is made as of [●], 2022 between RF Acquisition Corp., a Delaware corporation, with offices at 111 Somerset, #05-06, Singapore 238164
(“Company”), and Continental Stock Transfer & Trust Company, a limited purpose trust company, with offices
at 1 State Street, 30th Floor, New York, New York 10004, as warrant agent (the “Warrant Agent”, also referred to herein
as the “Transfer Agent”).
WHEREAS, the Company is engaged
in a public offering (“Public Offering”) of up to 10,000,000 units (including up to 1,500,000 units subject to the
Over-allotment Option (as defined below)) (“Public Units”), each Public Unit comprised of one share of Class A
common stock of the Company, par value $0.0001 per share (“Class A Common Stock”), one redeemable warrant (“Public
Warrants”), where each warrant entitles the holder to purchase one share of Class A Common Stock at a price of $11.50 per
share, subject to adjustment as described herein, and one right to receive one-tenth (1/10) of one share of Class A Common Stock
("Public Rights"); and
WHEREAS, the Company has filed
with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-l, File No. 333-261765
(“Registration Statement”), and a prospectus (the “Prospectus”) for the registration, under the
Securities Act of 1933, as amended (“Act”), of the Public Units, the Public Warrants, the Public Rights, the representative
shares ("Representative Shares"), and the Class A Common Stock included in the Public Units, Public Warrants and Public
Rights; and
WHEREAS, RF Dynamic LLC (the
“Sponsor”) and EarlyBirdCapital, Inc. ("EarlyBirdCapital") have agreed that they or, in the case
of EarlyBirdCapital, their designees, will purchase up to an aggregate of 4,550,000 warrants (including up to 450,000 warrants subject
to the Over-allotment Option) (“Private Placement Warrants”) at a price of $1.00 per warrant, consisting of 4,050,000
warrants by the Sponsor (or 4,450,500 warrants if the Over-allotment Option is exercised) and 500,000 warrants by EarlyBirdCapital (and/or
its designees) (or 549,500 warrants if the Over-allotment Option is exercised); and
WHEREAS, following consummation
of the Public Offering, the Company may issue additional warrants (“Post IPO Warrants” and together with the Public
Warrants and Private Placement Warrants, the “Warrants”) in connection with, or following the consummation by the Company
of, a Business Combination (defined below); and
WHEREAS, the Company desires
the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, registration,
transfer, exchange, redemption, and exercise of the Warrants; and
WHEREAS, the Company desires
to provide for the form and provisions of the Warrants, the terms upon which they shall be issued and exercised, and the respective rights,
limitation of rights, and immunities of the Company, the Warrant Agent, and the holders of the Warrants; and
WHEREAS, all acts and things
have been done and performed which are necessary to make the Warrants, when executed on behalf of the Company and countersigned by or
on behalf of the Warrant Agent, as provided herein, the valid, binding, and legal obligations of the Company, and to authorize the execution
and delivery of this Agreement.
NOW, THEREFORE, in consideration
of the mutual agreements herein contained, the parties hereto agree as follows:
1. Appointment
of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company for the Warrants, and the Warrant
Agent hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set forth in this Agreement.
2. Warrants.
2.1. Form of
Warrant. Each Warrant shall be issued in registered form only, shall be in substantially the form of Exhibit A hereto,
the provisions of which are incorporated herein and shall be signed by, or bear the facsimile signature of, the Chairman of the Board
of Directors or Chief Executive Officer and the Chief Financial Officer, Treasurer, Secretary or Assistant Secretary of the Company and
shall bear a facsimile of the Company’s seal. In the event the person whose facsimile signature has been placed upon any Warrant
shall have ceased to serve in the capacity in which such person signed the Warrant before such Warrant is issued, it may be issued with
the same effect as if he or she had not ceased to be such at the date of issuance.
2.2. Uncertificated
Warrants. Notwithstanding anything herein to the contrary, any Warrant, or portion thereof, may be issued as part of, and be represented
by, a Unit, and any Warrant may be issued in uncertificated or book-entry form through the Warrant Agent and/or the facilities of The
Depository Trust Company or other book-entry depositary system, in each case as determined by the Board of Directors of the Company or
by an authorized committee thereof. Any Warrant so issued shall have the same terms, force and effect as a certificated Warrant that has
been duly countersigned by the Warrant Agent in accordance with the terms of this Agreement.
2.3. Effect
of Countersignature. Except with respect to uncertificated Warrants as described above, unless and until countersigned by the Warrant
Agent pursuant to this Agreement, a Warrant shall be invalid and of no effect and may not be exercised by the holder thereof.
2.4. Registration.
2.4.1. Warrant
Register. The Warrant Agent shall maintain books (“Warrant Register”) for the registration of original issuance
and the registration of transfer of the Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall issue and register
the Warrants in the names of the respective holders thereof in such denominations and otherwise in accordance with instructions delivered
to the Warrant Agent by the Company.
2.4.2. Registered
Holder. Prior to due presentment for registration of transfer of any Warrant, the Company and the Warrant Agent may deem and treat
the person in whose name such Warrant is then registered in the Warrant Register ("registered holder") as the absolute
owner of such Warrant and of each Warrant represented thereby (notwithstanding any notation of ownership or other writing on the Warrant
certificate made by anyone other than the Company or the Warrant Agent), for the purpose of any exercise thereof, and for all other purposes,
and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.
2.5. Detachability
of Warrants. The securities comprising the Public Units will not be separately transferable until the 90th day following the date
of the Prospectus or, if such 90th day is not on a day, other than Saturday, Sunday or federal holiday, on which banks in New York City
are generally open for normal business (a “Business Day”), then on the immediately succeeding Business Day following
such date, or earlier with the consent of EarlyBirdCapital, Inc. (the “Representative”), but in no event will
the Representative allow separate trading of the securities comprising the Public Units until (i) the Company has filed a Current
Report on Form 8-K which includes an audited balance sheet reflecting the receipt by the Company of the gross proceeds of the Public
Offering including the proceeds received by the Company from the exercise of the underwriters’ over-allotment option in the Public
Offering (the “Over-allotment Option”) if the Over-allotment Option is exercised prior to the filing of the Form 8-K,
and (ii) the Company has issued a press release announcing when such separate trading shall begin (the “Detachment Date”);
provided that no fractional Warrants will be issued upon separation of the Units and only whole Warrants will trade.
2.6. Private
Placement Warrant Attributes. The Private Placement Warrants will be issued in the same form as the Public Warrants.
2.7. Post
IPO Warrants. The Post IPO Warrants, when and if issued, shall have the same terms and be in the same form as the Public Warrants.
3. Terms
and Exercise of Warrants
3.1. Warrant
Price. Each whole Warrant shall, when countersigned by the Warrant Agent (except with respect to uncertificated Warrants), entitle
the registered holder thereof, subject to the provisions of such Warrant and of this Agreement, to purchase from the Company the number
of shares of Class A Common Stock stated therein, at the price of $11.50 per share, subject to the adjustments provided in Section 4
hereof and in the last sentence of this Section 3.1. The term “Warrant Price” as used in this Agreement refers
to the price per share at which the shares of Class A Common Stock may be purchased at the time a Warrant is exercised.
3.2. Duration
of Warrants. A Warrant may be exercised only during the period commencing on the later of 30 days after the consummation by the Company
of a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination
with one or more businesses or entities (”Business Combination”) (as described more fully in the Registration Statement),
and terminating at 5:00 p.m., New York City time on the earlier to occur of (i) five years from the consummation of a Business Combination,
(ii) the Redemption Date as provided in Section 6.2 of this Agreement and (iii) the liquidation of the Company (”Expiration
Date”). The period of time from the date the Warrants will first become exercisable until the expiration of the Warrants shall
hereafter be referred to as the “Exercise Period.” Except with respect to the right to receive the Redemption Price
(as set forth in Section 6 hereunder), as applicable, each Warrant not exercised on or before the Expiration Date shall become void,
and all rights thereunder and all rights in respect thereof under this Agreement shall cease at 5:00 p.m., New York City time, on the
Expiration Date. The Company in its sole discretion may extend the duration of the Warrants by delaying the Expiration Date; provided,
however, that the Company will provide at least thirty (30) days’ prior written notice of any such extension to registered holders
and, provided further that any such extension shall be applied consistently to all of the Warrants.
3.3. Exercise
of Warrants.
3.3.1. Payment.
Subject to the provisions of the Warrant and this Agreement, a Warrant, when countersigned by the Warrant Agent, may be exercised by the
registered holder thereof by surrendering it, at the office of the Warrant Agent, or at the office of its successor as Warrant Agent,
in the Borough of Manhattan, City and State of New York, with the subscription form, as set forth in the Warrant, duly executed, and by
paying in full the Warrant Price for each full share of Class A Common Stock as to which the Warrant is exercised and any and all
applicable taxes due in connection with the exercise of the Warrant, the exchange of the Warrant for the shares of Class A Common
Stock and the issuance of such shares of Class A Common Stock, as follows:
(a) in
lawful money of the United States, by good certified check or wire payable to the Warrant Agent; or
(b) in
the event of redemption pursuant to Section 6 hereof in which the Company’s management has elected to force all holders
of Warrants to exercise such Warrants on a “cashless basis,” by surrendering the Warrants for 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 Warrants, multiplied by the difference between the Warrant Price and the “Fair Market Value” (defined below) by (y) the
Fair Market Value. Solely for purposes of this Section 3.3.1(b), the “Fair Market Value” shall mean the average reported
last sale price of a share of Class A Common Stock for the five (5) trading days ending on the third trading day prior to the
date on which the notice of redemption is sent to holders of the Warrants pursuant to Section 6 hereof; or
(c) in
the event the registration statement required by Section 7.4 hereof is not effective and current within sixty (60)
Business Days after the closing of a Business Combination, by surrendering such Warrants for 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 Warrants, multiplied by the difference between the Warrant Price and the “Fair Market Value” by
(y) the Fair Market Value; provided, however, that no cashless exercise shall be permitted unless the Fair Market Value is
equal to or higher than the exercise price. Solely for purposes of this Section 3.3.1(d), the “Fair Market Value”
shall mean the average reported last sale price of a share of Class A Common Stock for the five (5) trading days ending on
the trading day prior to the date of exercise.
3.3.2. Issuance
of Shares of Class A Common Stock. As soon as practicable after the exercise of any Warrant and the clearance of the funds in
payment of the Warrant Price (if any), the Company shall issue to the registered holder of such Warrant a certificate or certificates,
or book entry position, for the number of shares of Class A Common Stock to which he, she or it is entitled, registered in such name
or names as may be directed by him, her or it, and if such Warrant shall not have been exercised in full, a new countersigned Warrant,
or book entry position, for the number of shares as to which such Warrant shall not have been exercised. Notwithstanding the foregoing,
in no event will the Company be required to net cash settle the Warrant exercise. No Warrant shall be exercisable for cash and the Company
shall not be obligated to issue shares of Class A Common Stock upon exercise of a Warrant unless the Class A Common Stock issuable
upon such Warrant exercise has been registered, qualified, or deemed to be exempt under the securities laws of the state of residence
of the registered holder of the Warrants. In the event that the condition in the immediately preceding sentence is not satisfied with
respect to a Warrant, the holder of such Warrant shall not be entitled to exercise such Warrant for cash and such Warrant may have no
value and expire worthless, in which case the purchaser of a Unit containing such Public Warrants shall have paid the full purchase price
for the Unit solely for the shares of Class A Common Stock underlying such Unit. Warrants may not be exercised by, or securities
issued to, any registered holder in any state in which such exercise would be unlawful.
3.3.3. Valid
Issuance. All shares of Class A Common Stock issued upon the proper exercise of a Warrant in conformity with this Agreement shall
be validly issued, fully paid and nonassessable.
3.3.4. Date
of Issuance. Each person in whose name any book entry position or certificate for shares of Class A Common Stock is issued shall
for all purposes be deemed to have become the holder of record of such shares on the date on which the Warrant, or book entry position
representing such Warrant, was surrendered and payment of the Warrant Price was made, irrespective of the date of delivery of such certificate,
except that, if the date of such surrender and payment is a date when the share transfer books of the Company or book entry system of
the Warrant Agent are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next
succeeding date on which the share transfer books or book entry system are open.
3.3.5. 3.3.5
Maximum Percentage. A holder of a Warrant may notify the Company in writing in the event it elects to be subject to the provisions
contained in this subsection 3.3.5; however, no holder of a Warrant shall be subject to this subsection 3.3.5 unless he, she or it makes
such election. If the election is made by a holder, the Warrant Agent shall not effect the exercise of the holder’s Warrant, and
such holder shall not have the right to exercise such Warrant, to the extent that after giving effect to such exercise, such person (together
with such person’s affiliates), to the Warrant Agent’s actual knowledge, would beneficially own in excess of 4.9% or 9.8%
(as specified by the holder) (the “Maximum Percentage”) of the shares of Class A Common Stock outstanding immediately
after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Class A Common Stock
beneficially owned by such person and its affiliates shall include the number of shares of Class A Common Stock issuable upon exercise
of the Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Class A Common
Stock that would be issuable upon (x) exercise of the remaining, unexercised portion of the Warrant beneficially owned by such person
and its affiliates and (y) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company
beneficially owned by such person and its affiliates (including, without limitation, any convertible notes or convertible preferred stock
or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the
preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For purposes of the Warrant, in determining the
number of outstanding shares of Class A Common Stock, the holder may rely on the number of outstanding shares of Class A Common
Stock as reflected in(l) the Company’s most recent annual report on Form 10-K, quarterly report on Form 10-Q, current
report on Form 8-K or other public filing with the SEC as the case may be, (2) a more recent public announcement by the Company
or (3) any other notice by the Company or the Transfer Agent setting forth the number of shares of Class A Common Stock outstanding.
For any reason at any time, upon the written request of the holder of the Warrant, the Company shall, within two (2) Business Days,
confirm orally and in writing to such holder the number of shares of Class A Common Stock then outstanding. In any case, the number
of outstanding shares of Class A Common Stock shall be determined after giving effect to the conversion or exercise of equity securities
of the Company by the holder and its affiliates since the date as of which such number of outstanding shares of Class A Common Stock
was reported. By written notice to the Company, the holder of a Warrant may from time to time increase or decrease the Maximum Percentage
applicable to such holder to any other percentage specified in such notice; provided, however, that any such increase shall not be effective
until the sixty-first (61st) day after such notice is delivered to the Company.
4. Adjustments.
4.1. Stock
Dividends; Split Ups. If after the date hereof, and subject to the provisions of Section 4.6 below, the number of outstanding
shares of Class A Common Stock is increased by a stock dividend payable in shares of Class A Common Stock, or by a split up
of shares of Class A Common Stock, or other similar event, then, on the effective date of such stock dividend, split up or similar
event, the number of shares of Class A Common Stock issuable on exercise of each Warrant shall be increased in proportion to such
increase in outstanding shares of Class A Common Stock.
4.2. Aggregation
of Shares. If after the date hereof, the number of outstanding shares of Class A Common Stock is decreased by a consolidation,
combination, reverse stock split or reclassification of shares of Class A Common Stock or other similar event, then, on the effective
date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of Class A
Common Stock issuable on exercise of each Warrant shall be decreased in proportion to such decrease in outstanding shares of Class A
Common Stock.
4.3. Extraordinary
Dividends. If the Company, at any time while the Warrants are outstanding and unexpired, shall pay a dividend or make a
distribution in cash, securities or other assets to the holders of the shares of Class A Common Stock or other shares of the
Company’s capital stock into which the Warrants are convertible (an “Extraordinary Dividend”) then the
Warrant Price shall be decreased, effective immediately after the effective date of such Extraordinary Dividend, by the amount of
cash and the fair market value (as determined by the Company’s Board of Directors, in good faith) of any securities or other
assets paid in respect of such Extraordinary Dividend divided by all outstanding shares of the Company at such time (whether or not
any shareholders waived their right to receive such dividend); provided, however, that none of the following shall be deemed an
Extraordinary Dividend for purposes of this provision: (a) any adjustment described in subsection 4.1 above, (b) any cash
dividends or cash distributions which, when combined on a per share basis with all other cash dividends and cash distributions paid
on the shares of Class A Common Stock during the 365-day period ending on the date of declaration of such dividend or
distribution does not exceed $0.50 per share (taking into account all of the outstanding shares of the Company at such time (whether
or not any shareholders waived their right to receive such dividend) and as adjusted to appropriately reflect any of the events
referred to in other subsections of this Section 4 and excluding cash dividends or cash distributions that resulted in an
adjustment to the Warrant Price or to the number of shares of Class A Common Stock issuable on exercise of each Warrant) but
only with respect to the amount of the aggregate cash dividends or cash distributions equal to or less than $0.50, (c) any
payment to satisfy the conversion rights of the holders of the shares of Class A Common Stock in connection with a proposed
initial Business Combination or certain amendments to the Company’s Amended and Restated Certificate of Incorporation (as
described in the Registration Statement) or (d) any payment in connection with the Company’s liquidation and the
distribution of its assets upon its failure to consummate a Business Combination. Solely for purposes of illustration, if the
Company, at a time while the Warrants are outstanding and unexpired, pays a cash dividend of $0.35 and previously paid an aggregate
of $0.40 of cash dividends and cash distributions on the shares of Class A Common Stock during the 365-day period ending on the
date of declaration of such $0.35 dividend, then the Warrant Price will be decreased, effectively immediately after the effective
date of such $0.35 dividend, by $0.25 (the absolute value of the difference between $0.75 (the aggregate amount of all cash
dividends and cash distributions paid or made in such 365-day period, including such $0.35 dividend) and $0.50 (the greater of
(x) $0.50 and (y) the aggregate amount of all cash dividends and cash distributions paid or made in such 365-day period
prior to such $0.35 dividend)). Furthermore, solely for the purposes of illustration, if following the closing of the
Company’s initial Business Combination, there were total shares outstanding of 100,000,000 and the Company paid a $1.00
dividend to 17,500,000 of such shares (with the remaining 82,500,000 shares waiving their right to receive such dividend), then no
adjustment to the Warrant Price would occur as a $17.5 million dividend payment divided by 100,000,000 shares equals $0.175 per
share which is less than $0.50 per share.
4.4. Adjustments
in Exercise Price. Whenever the number of shares of Class A Common Stock purchasable upon the exercise of the Warrants is adjusted,
as provided in Sections 4.1 and 4.2 above, the Warrant Price shall be adjusted (to the nearest cent) by multiplying such Warrant Price
immediately prior to such adjustment by a fraction (x) the numerator of which shall be the number of shares of Class A Common
Stock purchasable upon the exercise of the Warrants immediately prior to such adjustment, and (y) the denominator of which shall
be the number of shares of Class A Common Stock so purchasable immediately thereafter.
4.5. Replacement
of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding shares of Class A
Common Stock (other than a change covered by Section 4.1,4.2 or 4.3 hereof or that solely affects the par value of the shares of
Class A Common Stock), or in the case of any merger or consolidation of the Company with or into another corporation (other than
a consolidation or merger in which the Company is the continuing corporation and that does not result in any reclassification or reorganization
of the outstanding shares of Class A Common Stock), or in the case of any sale or conveyance to another corporation or entity of
the assets or other property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved,
the Warrant holders shall thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified
in the Warrants and in lieu of the shares of Class A Common Stock of the Company immediately theretofore purchasable and receivable
upon the exercise of the rights represented thereby, the kind and amount of shares of Class A Common Stock or other securities or
property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following
any such sale or transfer, that the Warrant holder would have received if such Warrant holder had exercised his, her or its Warrant(s) immediately
prior to such event. If any reclassification also results in a change in the shares of Class A Common Stock covered by Section 4.1,
4.2 or 4.3, then such adjustment shall be made pursuant to Sections 4.1, 4.2, 4.3, 4.4 and this Section 4.5. The provisions of this
Section 4.5 shall similarly apply to successive reclassifications, reorganizations, mergers or consolidations, sales or other transfers.
In no event will the Warrant Price be reduced to less than the par value per share issuable upon exercise of the Warrant.
4.6. Issuance
in connection with a Business Combination. If, in connection with a Business Combination, the Company (a) issues additional shares
of Class A Common Stock or equity-linked securities at an issue price or effective issue price of less than $9.20 per share (with
such issue price or effective issue price as determined by the Company’s Board of Directors, in good faith, and in the case of any
such issuance to the Sponsor, the initial stockholders or their affiliates, without taking into account any shares of the Company’s
Class B common stock, par value $0.0001 per share (the “Class B Common Stock”) issued prior to the Public
Offering and held by the Sponsor, the initial stockholders or their affiliates, as applicable, prior to such issuance) (the “Newly
Issued Price”), (b) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds,
and interest thereon, available for the funding of the Business Combination on the date of the consummation of such Business Combination
(net of redemptions), and (c) the Market Value (as defined below) is below $9.20 per share, then the exercise price of the warrants
will be adjusted (to the nearest cent) to be equal to 115% of the greater of (i) the Market Value and (ii) Newly Issued Price,
and the Redemption Trigger Price (as defined below) will be adjusted (to the nearest cent) to be equal to 180% of the greater of (i) the
Market Value and (ii) the Newly Issued Price. Solely for purposes of this Section 4.6, the “Market Value”
shall mean the volume weighted average trading price of the shares of Class A Common Stock during the twenty (20) trading day period
starting on the trading day after the day on which we consummate our Business Combination.
4.7. Notices
of Changes in Warrant. Upon every adjustment of the Warrant Price or the number of shares issuable upon exercise of a Warrant, the
Company shall give written notice thereof to the Warrant Agent, which notice shall state the Warrant Price resulting from such adjustment
and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of a Warrant, setting forth
in reasonable detail the method of calculation and the facts upon which such calculation is based. Upon the occurrence of any event specified
in Sections 4.1,4.2, 4.3, 4.4, 4.5, or 4.6, then, in any such event, the Company shall give written notice to each Warrant holder, at
the last address set forth for such holder in the Warrant Register, of the record date or the effective date of the event. Failure to
give such notice, or any defect therein, shall not affect the legality or validity of such event.
4.8. No
Fractional Warrants or Shares. Notwithstanding any provision contained in this Agreement to the contrary, the Company shall not
issue fractional shares upon exercise of Warrants. If, by reason of any adjustment made pursuant to this Section 4, the holder
of any Warrant would be entitled, upon the exercise of such Warrant, to receive a fractional interest in a share, the Company shall,
upon such exercise, round up to the nearest whole number of shares of Class A Common Stock to be issued to the Warrant
holder.
4.9. Form of
Warrant. The form of Warrant need not be changed because of any adjustment pursuant to this Section 4, and Warrants issued after
such adjustment may state the same Warrant Price and the same number of shares as is stated in the Warrants initially issued pursuant
to this Agreement. However, the Company may at any time in its sole discretion make any change in the form of Warrant that the Company
may deem appropriate and that does not affect the substance thereof, and any Warrant thereafter issued or countersigned, whether in exchange
or substitution for an outstanding Warrant or otherwise, may be in the form as so changed.
4.10. Other
Events. In case any event shall occur affecting the Company as to which none of the provisions of preceding subsections of this Section 4
are strictly applicable, but which would require an adjustment to the terms of the Warrants in order to (i) avoid an adverse impact
on the Warrants and (ii) effectuate the intent and purpose of this Section 4, then, in each such case, the Company shall appoint
a firm of independent public accountants, investment banking or other appraisal firm of recognized national standing, which shall give
its opinion as to whether or not any adjustment to the rights represented by the Warrants is necessary to effectuate the intent and purpose
of this Section 4 and, if they determine that an adjustment is necessary, the terms of such adjustment. The Company shall adjust
the terms of the Warrants in a manner that is consistent with any adjustment recommended in such opinion.
4.11. No
Adjustment. For the avoidance of doubt, no adjustment shall be made to the terms of the Warrants solely as a result of an adjustment
to the conversion ratio of the Class B Common Stock into shares of Class A Common Stock or the conversion of the shares of Class B
Common Stock into shares of Class A Common Stock, in each case, pursuant to the Company’s Amended and Restated Certificate
of Incorporation, as further amended from time to time.
5. Transfer
and Exchange of Warrants.
5.1. Registration
of Transfer. The Warrant Agent shall register the transfer, from time to time, of any outstanding Warrant upon the Warrant Register,
upon surrender of such Warrant for transfer, properly endorsed with signatures, in the case of certificated Warrants, properly guaranteed
and accompanied by appropriate instructions for transfer. Upon any such transfer, a new Warrant representing an equal aggregate number
of Warrants shall be issued and the old Warrant shall be cancelled by the Warrant Agent. In the case of certificated Warrants, the Warrants
so cancelled shall be delivered by the Warrant Agent to the Company from time to time upon request.
5.2. Procedure
for Surrender of Warrants. Warrants may be surrendered to the Warrant Agent, either in certificated form or in book entry position,
together with a written request for exchange or transfer, and thereupon the Warrant Agent shall issue in exchange therefor one or more
new Warrants, or book entry positions, as requested by the registered holder of the Warrants so surrendered, representing an equal aggregate
number of Warrants; provided, however, that in the event that a Warrant surrendered for transfer bears a restrictive legend, the Warrant
Agent shall not cancel such Warrant and issue new Warrants in exchange therefor until the Warrant Agent has received an opinion of counsel
for the Company stating that such transfer may be made and indicating whether the new Warrants must also bear a restrictive legend.
5.3. Fractional
Warrants. The Warrant Agent shall not be required to effect any registration of transfer or exchange which will result in the issuance
of a warrant certificate or book-entry position for a fraction of a warrant, except as part of the Units.
5.4. Service
Charges. No service charge shall be made for any exchange or registration of transfer of Warrants.
5.5. Warrant
Execution and Countersignature. The Warrant Agent is hereby authorized to countersign and to deliver, in accordance with the terms
of this Agreement, the Warrants required to be issued pursuant to the provisions of this Section 5, and the Company, whenever required
by the Warrant Agent, will supply the Warrant Agent with Warrants duly executed on behalf of the Company for such purpose.
5.6. Private
Placement Warrants. The Warrant Agent shall not register any transfer of Private Placement Warrants until after the consummation by
the Company of an initial Business Combination, except for transfers (a) to our officers or directors, any affiliates or family members
of any of our officers or directors, any members of our sponsor, or any affiliates of our sponsor; (b) in the case of an individual,
by gift to a member of one of the members of the individual’s immediate family or to a trust, the beneficiary of which is a member
of one of the individual’s immediate family, an affiliate of such person or to a charitable organization; (c) in the case of
an individual, by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant
to a qualified domestic relations order; (e) by private sales or transfers made in connection with the consummation of an initial
business combination at prices no greater than the price at which the securities were originally purchased; (f) in the event of our
liquidation prior to the completion of our initial business combination; (g) by virtue of the laws of Delaware or our sponsor’s
limited liability company agreement upon dissolution of our sponsor; or (h) in the event of our liquidation, merger, capital stock
exchange, reorganization or other similar transaction which results in all of our stockholders having the right to exchange their shares
of common stock for cash, securities or other property subsequent to our completion of our initial business combination; provided, however,
that in the case of clauses (a) through (e) or (g) these permitted transferees (each, a "Permitted Transferee")
must enter into a written agreement agreeing to be bound by these transfer restrictions and the other restrictions contained in the letter
agreements and by the same agreements entered into by our sponsor with respect to such securities (including provisions relating to voting,
the trust account and liquidation distributions described elsewhere in this prospectus).
5.7. Transfers
prior to Detachment. Prior to the Detachment Date, the Public Warrants may be transferred or exchanged only together with the
Unit in which such Warrant is included, and only for the purpose of effecting, or in conjunction with, a transfer or exchange of
such Unit. Furthermore, each transfer of a Unit on the register relating to such Units shall operate also to transfer the Warrants
included in such Unit. Notwithstanding the foregoing, the provisions of this Section 5.7 shall have no effect on any transfer
of Warrants on or after the Detachment Date.
6. Redemption.
6.1. Redemption.
Not less than all of the outstanding Warrants may be redeemed, at the option of the Company, at any time during the Exercise Period, at
the office of the Warrant Agent, upon the notice referred to in Section 6.2, at the price of $0.01 per Warrant (“‘Redemption
Price”) provided that the last sales price of the shares of Class A Common Stock equals or exceeds $18.00 per share (subject
to adjustment in accordance with Section 4 hereof) (the “Redemption Trigger Price”) on each of twenty (20) trading
days within any thirty (30) trading day period commencing after the Warrants become exercisable and ending on the third trading day prior
to the date on which notice of redemption is given and provided that there is an effective registration statement covering the shares
of Class A Common Stock issuable upon exercise of the Warrants, and a current prospectus relating thereto, available throughout the
30-day redemption or the Company has elected to require the exercise of the Warrants on a “cashless basis” pursuant to subsection
3.3.1(b); provided, however, that if and when the Public 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.
6.2. Date
Fixed for, and Notice of. Redemption. In the event the Company shall elect to redeem all of the Warrants that are subject to redemption,
the Company shall fix a date for the redemption (the “Redemption Date”). Notice of redemption shall be mailed by first
class mail, postage prepaid, by the Company not less than thirty (30) days prior to the Redemption Date to the registered holders of the
Warrants to be redeemed at their last addresses as they shall appear on the registration books. Any notice mailed in the manner herein
provided shall be conclusively presumed to have been duly given whether or not the registered holder received such notice.
6.3. Exercise
After Notice of Redemption. The Public Warrants may be exercised, for cash (or on a “cashless basis” in accordance with
Section 3 of this Agreement) at any time after notice of redemption shall have been given by the Company pursuant to Section 6.2
hereof and prior to the Redemption Date. In the event the Company determines to require all holders of Public Warrants to exercise their
Warrants on a “cashless basis” pursuant to Section 3.3.1(b), the notice of redemption will contain the information necessary
to calculate the number of shares of Class A Common Stock to be received upon exercise of the Warrants, including the “Fair
Market Value” in such case. On and after the Redemption Date, the record holder of the Warrants shall have no further rights except
to receive, upon surrender of the Warrants, the Redemption Price.
7. Other
Provisions Relating to Rights of Holders of Warrants.
7.1. No
Rights as Stockholder. A Warrant does not entitle the registered holder thereof to any of the rights of a stockholder of the Company,
including, without limitation, the right to receive dividends, or other distributions, exercise any preemptive rights to vote or to consent
or to receive notice as stockholders in respect of the meetings of stockholders or the election of directors of the Company or any other
matter.
7.2. Lost.
Stolen. Mutilated, or Destroyed Warrants. If any Warrant is lost, stolen, mutilated, or destroyed, the Company and the Warrant Agent
may on such terms as to indemnity or otherwise as they may in their discretion impose (which shall, in the case of a mutilated Warrant,
include the surrender thereof), issue a new Warrant of like denomination, tenor, and date as the Warrant so lost, stolen, mutilated, or
destroyed. Any such new Warrant shall constitute a substitute contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated, or destroyed Warrant shall be at any time enforceable by anyone.
7.3. Reservation
of Shares of Class A Common Stock. The Company shall at all times reserve and keep available a number of its authorized but unissued
shares of Class A Common Stock that will be sufficient to permit the exercise in full of all outstanding Warrants issued pursuant
to this Agreement.
7.4. Registration
of Shares of Class A Common Stock. The Company agrees that as soon as practicable, but in no event later than 15 Business Days,
after the closing of its initial Business Combination, it shall use its best efforts to file with the SEC a registration statement for
the registration, under the Act, of the shares of Class A Common Stock issuable upon exercise of the Warrants, and it shall use its
best efforts to take such action as is necessary to register or qualify for sale, in those states in which the Warrants were initially
offered by the Company and in those states where holders of Warrants then reside, the shares of Class A Common Stock issuable upon
exercise of the Warrants, to the extent an exemption is not available. The Company will use its best efforts to cause the same to become
effective and to maintain the effectiveness of such registration statement until the expiration of the Warrants in accordance with the
provisions of this Agreement. If any such registration statement has not been declared effective by the 60th Business Day following the
closing of the Business Combination, holders of the Warrants shall have the right, during the period beginning on the 61st Business Day
after the closing of the Business Combination and ending upon such registration statement being declared effective by the SEC, and during
any other period when the Company shall fail to have maintained an effective registration statement covering the shares of Class A
Common Stock issuable upon exercise of the Warrants, to exercise such Warrants on a “cashless basis” as determined in accordance
with Section 3.3.1(d). The Company shall provide the Warrant Agent with an opinion of counsel for the Company (which shall be an
outside law firm with securities law experience) stating that (i) the exercise of the Warrants on a cashless basis in accordance
with this Section 7.4 is not required to be registered under the Act and (ii) the shares of Class A Common Stock issued
upon such exercise will be freely tradable under U.S. federal securities laws by anyone who is not an affiliate (as such term is defined
in Rule 144 under the Act) of the Company and, accordingly, will not be required to bear a restrictive legend. For the avoidance
of any doubt, unless and until all of the Warrants have been exercised on a cashless basis, the Company shall continue to be obligated
to comply with its registration obligations under the first three sentences of this Section 7.4. The provisions of this Section 7.4
may not be modified, amended, or deleted without the prior written consent of EarlyBirdCapital.
8. Concerning
the Warrant Agent and Other Matters.
8.1. Payment
of Taxes. The Company will from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Warrant
Agent in respect of the issuance or delivery of shares of Class A Common Stock upon the exercise of Warrants, but the Company shall
not be obligated to pay any transfer taxes in respect of the Warrants or such shares.
8.2. Resignation.
Consolidation, or Merger of Warrant Agent.
8.2.1. Appointment
of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged
from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company. If the office
of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor
Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after
it has been notified in writing of such resignation or incapacity by the Warrant Agent or by the holder of the Warrant (who shall, with
such notice, submit his Warrant for inspection by the Company), then the holder of any Warrant may apply to the Supreme Court of the State
of New York for the County of New York for the appointment of a successor Warrant Agent at the Company’s cost. Any successor Warrant
Agent, whether appointed by the Company or by such court, shall be a corporation organized and existing under the laws of the State of
New York, in good standing and having its principal office in the Borough of Manhattan, City and State of New York, and authorized under
such laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority. After appointment,
any successor Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties, and obligations of its predecessor
Warrant Agent with like effect as if originally named as Warrant Agent hereunder, without any further act or deed; but if for any reason
it becomes necessary or appropriate, the predecessor Warrant Agent shall execute and deliver, at the expense of the Company, an instrument
transferring to such successor Warrant Agent all the authority, powers, and rights of such predecessor Warrant Agent hereunder; and upon
request of any successor Warrant Agent the Company shall make, execute, acknowledge, and deliver any and all instruments in writing for
more fully and effectually vesting in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties,
and obligations.
8.2.2. Notice
of Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall give notice thereof to the
predecessor Warrant Agent and the Transfer Agent for the shares of Class A Common Stock not later than the effective date of any
such appointment.
8.2.3. Merger
or Consolidation of Warrant Agent. Any corporation into which the Warrant Agent may be merged or with which it may be consolidated
or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party shall be the successor Warrant
Agent under this Agreement without any further act.
8.3. Fees
and Expenses of Warrant Agent.
8.3.1. Remuneration.
The Company agrees to pay the Warrant Agent reasonable remuneration for its services as such Warrant Agent hereunder and will reimburse
the Warrant Agent upon demand for all expenditures that the Warrant Agent may reasonably incur in the execution of its duties hereunder.
8.3.2. Further
Assurances. The Company agrees to perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and
delivered all such further and other acts, instruments, and assurances as may reasonably be required by the Warrant Agent for the carrying
out or performing of the provisions of this Agreement.
8.4. Liability
of Warrant Agent.
8.4.1. Reliance
on Company Statement. Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact
or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established
by a statement signed by the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, President, Secretary or Chairman
of the Board of Directors of the Company and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement for any action
taken or suffered in good faith by it pursuant to the provisions of this Agreement.
8.4.2. Indemnity.
The Warrant Agent shall be liable hereunder only for its own fraud, gross negligence, willful misconduct or bad faith. The Company agrees
to indemnify the Warrant Agent and save it harmless against any and all liabilities, including judgments, costs and reasonable counsel
fees, for anything done or omitted by the Warrant Agent in the execution of this Agreement except as a result of the Warrant Agent’s
gross negligence or intentional misconduct.
8.4.3. Exclusions.
The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution
of any Warrant (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Warrant; nor shall it be responsible to make any adjustments required under the provisions of Section 4
hereof or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization
or reservation of any shares of Class A Common Stock to be issued pursuant to this Agreement or any Warrant or as to whether any
shares of Class A Common Stock will, when issued, be valid and fully paid and nonassessable.
8.5. Acceptance
of Agency. The Warrant Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms
and conditions herein set forth and among other things, shall account promptly to the Company with respect to Warrants exercised and
concurrently account for, and pay to the Company, all monies received by the Warrant Agent for the purchase of shares of Class A
Common Stock through the exercise of Warrants.
9. Miscellaneous
Provisions.
9.1. Successors.
All the covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the
benefit of their respective successors and assigns.
9.2. Notices.
Any notice, statement or demand authorized by this Agreement to be given or made by the Warrant Agent or by the holder of any Warrant
to or on the Company shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private
courier service within five (5) days after deposit of such notice, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent), as follows:
RF Acquisition Corp.
111 Somerset, #05-06
Singapore 238164
Attention: Tse Meng Ng
Any notice, statement or demand authorized by
this Agreement to be given or made by the holder of any Warrant or by the Company to or on the Warrant Agent shall be sufficiently given
when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five days after deposit
of such notice, postage prepaid, addressed (until another address is filed in writing by the Warrant Agent with the Company), as follows:
Continental Stock Transfer &
Trust Company
1 State Street, 30th Floor
New York, New York 10004
Attn: Compliance Department
with a copy in each case to:
Winston & Strawn LLP
800 Capitol Street, Suite 2400
Houston, TX 77002
Attn: Michael J. Blankenship
Loeb & Loeb LLP
345 Park Avenue
New York, NY 10154
Attn: Mitchell S. Nussbaum and
Giovanni Caruso
EarlyBirdCapital, Inc.
366 Madison Avenue, 8th Floor
New York, NY 10017
Attn: Steven Levine
9.3. Applicable
Law and Exclusive Forum. The validity, interpretation, and performance of this Agreement and of the Warrants shall be governed in
all respects by the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application
of the substantive laws of another jurisdiction. Subject to applicable law, the Company hereby agrees that any action, proceeding or claim
against it arising out of or relating in any way to this Agreement, including under the Act, shall be brought and enforced in the courts
of the State of New York or the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive forum for any such action, proceeding or claim. The Company hereby waives any objection to such
exclusive jurisdiction and that such courts represent an inconvenient forum. Notwithstanding the foregoing, the provisions of this paragraph
will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal
district courts of the United States of America are the sole and exclusive forum.
Any person or entity
purchasing or otherwise acquiring any interest in the Warrants shall be deemed to have notice of and to have consented to the forum
provisions in this Section 9.3. If any action, the subject matter of which is within the scope the forum provisions above, is
filed in a court other than a court located within the State of New York or the United States District Court for the Southern
District of New York (a “foreign action”) in the name of any warrant holder, such warrant holder shall be deemed to have
consented to: (x) the personal jurisdiction of the state and federal courts located within the State of New York or the United
States District Court for the Southern District of New York in connection with any action brought in any such court to enforce the
forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any
such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant
holder.
9.4. Persons
Having Rights under this Agreement. Nothing in this Agreement expressed and nothing that may be implied from any of the provisions
hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the parties hereto and the
registered holders of the Warrants any right, remedy, or claim under or by reason of this Agreement or of any covenant, condition, stipulation,
promise, or agreement hereof. All covenants, conditions, stipulations, promises, and agreements contained in this Agreement shall be for
the sole and exclusive benefit of the parties hereto (and EarlyBirdCapital with respect to Sections 7.4, 9.4, 9.8 hereof) and their successors
and assigns and of the registered holders of the Warrants.
9.5. Examination
of the Warrant Agreement. A copy of this Agreement shall be available at all reasonable times at the office of the Warrant Agent
in the Borough of Manhattan, City and State of New York, for inspection by the registered holder of any Warrant. The Warrant Agent may
require any such holder to submit his Warrant for inspection by it.
9.6. Counterparts.
This Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
9.7. Effect
of Headings. The section headings herein are for convenience only and are not part of this Agreement and shall not affect the interpretation
thereof.
9.8. Amendments.
This Agreement may be amended by the parties hereto without the consent of any registered holder for the purpose of (i) curing any
ambiguity or to correct any mistake, including to conform the provisions hereof to the description of the terms of the Warrants and this
Agreement set forth in the Prospectus, or curing, correcting or supplementing any defective provision contained herein, or (ii) adding
or changing any other provisions with respect to matters or questions arising under this Agreement as the parties may deem necessary or
desirable and that the parties deem shall not adversely affect the interest of the registered holders. All other modifications or amendments,
including any amendment to increase the Warrant Price, shorten the Exercise Period, or make any changes that adversely affect the interests
of the registered holders of Public Warrants, shall require the written consent or vote of the registered holders of at least 50% of the
then outstanding Public Warrants. Notwithstanding the foregoing, the Company may lower the Warrant Price or extend the duration of the
Exercise Period pursuant to Sections 3.1 and 3.2, respectively, without the consent of the registered holders. The provisions of this
Section 9.8 may not be modified, amended, or deleted without the prior written consent of EarlyBirdCapital.
9.9. Trust
Account Waiver. The Warrant Agent acknowledges and agrees that it shall not make any claims or proceed against the trust account
established by the Company in connection with the Public Offering (as more fully described in the Registration Statement) (“Trust
Account”), including by way of set-off, and shall not be entitled to any funds in the Trust Account under any circumstance.
In the event that the Warrant Agent has a claim against the Company under this Agreement, the Warrant Agent will pursue such claim solely
against the Company and not against the property held in the Trust Account.
9.10. Severability.
This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the
validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable
term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to
such invalid or unenforceable provision as may be possible and be valid and enforceable.
Exhibit A - Form of Warrant Certificate
[Signature
Page Follows]
IN WITNESS WHEREOF, this Agreement has been duly
executed by the parties hereto as of the day and year first above written.
| |
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Warrant Agent |
EXHIBIT A
FORM OF
WARRANT CERTIFICATE
[See attached]
Form of Warrant Certificate
[FACE]
Number
Warrants
THIS WARRANT SHALL BE VOID IF NOT EXERCISED PRIOR TO
THE EXPIRATION OF THE EXERCISE PERIOD PROVIDED FOR
IN THE WARRANT AGREEMENT DESCRIBED BELOW
RF Acquisition
corp.
Incorporated Under the Laws of The State of Delaware
CUSIP ______
Warrant Certificate
This
Warrant Certificate certifies that ________________, or registered assigns, is the registered holder of warrant(s) evidenced
hereby (the “Warrants” and each, a “Warrant”) to purchase shares of Class A common
stock, $0.0001 par value per share (“Class A Common Stock”), of RF Acquisition Corp., a Delaware corporation
(the “Company”). Each whole Warrant entitles the holder, upon exercise during the period set forth in the Warrant
Agreement referred to below, to receive from the Company that number of fully paid and non-assessable shares of Class A Common Stock
as set forth below, at the exercise price (the “Warrant Price”) as determined pursuant to the Warrant Agreement,
payable in lawful money (or through “cashless exercise” as provided for in the Warrant Agreement) of the United
States of America upon surrender of this Warrant Certificate and payment of the Warrant Price at the office or agency of the Warrant Agent
referred to below, subject to the conditions set forth herein and in the Warrant Agreement. Defined terms used in this Warrant Certificate
but not defined herein shall have the meanings given to them in the Warrant Agreement.
Each whole Warrant is initially
exercisable for one fully paid and non-assessable share of Class A Common Stock. No fractional shares will be issued upon exercise
of any Warrant. If, upon the exercise of Warrants, a holder would be entitled to receive a fractional interest in a share of Class A
Common Stock, the Company will, upon exercise, round down to the nearest whole number the number of shares of Class A Common Stock
to be issued to the Warrant holder. The number of shares of Class A Common Stock issuable upon exercise of the Warrants is subject
to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.
The initial Warrant Price
per share of Class A Common Stock for any Warrant is equal to $11.50 per share. The Warrant Price is subject to adjustment upon the
occurrence of certain events set forth in the Warrant Agreement.
Subject to the conditions
set forth in the Warrant Agreement, the Warrants may be exercised only during the Exercise Period and to the extent not exercised by the
end of such Exercise Period, such Warrants shall become void. The Warrants may be redeemed, subject to certain conditions, as set forth
in the Warrant Agreement.
Reference is hereby made to
the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes
have the same effect as though fully set forth at this place.
This Warrant Certificate shall
not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall
be governed by and construed in accordance with the internal laws of the State of New York.
| |
CONTINENTAL STOCK TRANSFER &
TRUST COMPANY |
| |
as Warrant Agent |
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by
this Warrant Certificate are part of a duly authorized issue of Warrants entitling the holder on exercise to receive shares of Class A
Common Stock and are issued or to be issued pursuant to a Warrant Agreement dated as of [●], 2022 (the “Warrant Agreement”),
duly executed and delivered by the Company to Continental Stock Transfer & Trust Company, a federally chartered trust company,
as warrant agent (the “Warrant Agent”), which Warrant Agreement is hereby incorporated by reference in and made
a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities
thereunder of the Warrant Agent, the Company and the holders (the words “holders” or “holder”
meaning the Registered Holders or Registered Holder, respectively) of the Warrants. A copy of the Warrant Agreement may be obtained by
the holder hereof upon written request to the Company. Defined terms used in this Warrant Certificate but not defined herein shall have
the meanings given to them in the Warrant Agreement.
Warrants may be exercised
at any time during the Exercise Period set forth in the Warrant Agreement. The holder of Warrants evidenced by this Warrant Certificate
may exercise them by surrendering this Warrant Certificate, with the form of election to purchase set forth hereon properly completed
and executed, together with payment of the Warrant Price as specified in the Warrant Agreement (or through “cashless exercise”
as provided for in the Warrant Agreement) at the principal corporate trust office of the Warrant Agent. In the event that upon any exercise
of Warrants evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants evidenced hereby, there
shall be issued to the holder hereof or his, her or its assignee, a new Warrant Certificate evidencing the number of Warrants not exercised.
Notwithstanding anything else
in this Warrant Certificate or the Warrant Agreement, no Warrant may be exercised unless at the time of exercise (i) a registration
statement covering the shares of Class A Common Stock to be issued upon exercise is effective under the Securities Act and (ii) a
prospectus thereunder relating to the shares of Class A Common Stock is current, except through “cashless exercise” as
provided for in the Warrant Agreement.
The Warrant Agreement provides
that upon the occurrence of certain events the number of shares of Class A Common Stock issuable upon exercise of the Warrants set
forth on the face hereof may, subject to certain conditions, be adjusted. If, upon exercise of a Warrant, the holder thereof would be
entitled to receive a fractional interest in a share of Class A Common Stock, the Company shall, upon exercise, round down to the
nearest whole number of shares of Class A Common Stock to be issued to the holder of the Warrant.
Warrant Certificates, when
surrendered at the principal corporate trust office of the Warrant Agent by the Registered Holder thereof in person or by legal representative
or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement,
but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate
a like number of Warrants.
Upon due presentation for
registration of transfer of this Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate or Warrant Certificates
of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental
charge imposed in connection therewith.
The Company and the Warrant
Agent may deem and treat the Registered Holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the
contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of the Company.
Election to Purchase
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably
elects to exercise the right, represented by this Warrant Certificate, to receive _____ shares of Class A Common Stock and herewith
tenders payment for such shares of Class A Common Stock to the order of RF Acquisition Corp. (the “Company”)
in the amount of $ _______ in accordance with the terms hereof. The undersigned requests that a certificate for such shares of Class A
Common Stock be registered in the name of _______, whose address is and that such shares of Class A Common Stock be delivered to
_______ whose address is _______. If said number of shares of Class A Common Stock is less than all of the shares of Class A
Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of such
shares of Class A Common Stock be registered in the name of _______, whose address is _______ and that such Warrant Certificate be
delivered to _______, whose address is _______.
In the event that the Warrant
has been called for redemption by the Company pursuant to Section 6.1 or 6.2 of the Warrant Agreement and the Company
has required cashless exercise pursuant to Section 6.3 of the Warrant Agreement, the number of shares of Class A Common
Stock that this Warrant is exercisable for shall be determined in accordance with subsection 3.3.1(b) and Section 6.3
of the Warrant Agreement.
In the event that the Warrant
is a Private Placement Warrant that is to be exercised on a “cashless” basis pursuant to subsection 3.3.1(b) of
the Warrant Agreement, the number of shares of Class A Common Stock that this Warrant is exercisable for shall be determined in accordance
with subsection 3.3.1(b) of the Warrant Agreement.
In the event that the Warrant
is to be exercised on a “cashless” basis pursuant to Section 7.4 of the Warrant Agreement, the number of shares
of Class A Common Stock that this Warrant is exercisable for shall be determined in accordance with Section 7.4 of the
Warrant Agreement.
In the event that the Warrant
may be exercised, to the extent allowed by the Warrant Agreement, through cashless exercise (i) the number of shares of Class A
Common Stock that this Warrant is exercisable for would be determined in accordance with the relevant section of the Warrant Agreement
which allows for such cashless exercise and (ii) the holder hereof shall complete the following: The undersigned hereby irrevocably
elects to exercise the right, represented by this Warrant Certificate, through the cashless exercise provisions of the Warrant Agreement,
to receive shares of Class A Common Stock. If said number of shares of Class A Common Stock is less than all of the shares of
Class A Common Stock purchasable hereunder (after giving effect to the cashless exercise), the undersigned requests that a new Warrant
Certificate representing the remaining balance of such shares of Class A Common Stock be registered in the name of _______, whose
address is _______ and that such Warrant Certificate be delivered to _______, whose address is _______.
[Signature Page Follows]
| Date: ______________, 20_______ |
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(Address) |
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(Tax Identification Number) |
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| Signature Guaranteed: |
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THE SIGNATURE(S) SHOULD BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (OR ANY SUCCESSOR
RULE)).
EXHIBIT B
LEGEND
“THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. IN ADDITION, SUBJECT TO ANY ADDITIONAL LIMITATIONS
ON TRANSFER DESCRIBED IN THE WARRANT AGREEMENT BY AND AMONG RF ACQUISITION CORP. (THE “COMPANY”) AND THE OTHER
PARTIES THERETO, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED PRIOR TO THE DATE THAT IS THIRTY
(30) DAYS AFTER THE DATE UPON WHICH THE COMPANY COMPLETES ITS BUSINESS COMBINATION (AS DEFINED IN SECTION 3 OF THE WARRANT
AGREEMENT REFERRED TO HEREIN) EXCEPT TO A PERMITTED TRANSFEREE (AS DEFINED IN SECTION 5 OF THE WARRANT AGREEMENT) WHO AGREES IN
WRITING WITH THE COMPANY TO BE SUBJECT TO SUCH TRANSFER PROVISIONS.
SECURITIES EVIDENCED BY THIS CERTIFICATE AND
CLASS A COMMON STOCK OF THE COMPANY ISSUED UPON EXERCISE OF SUCH SECURITIES SHALL BE ENTITLED TO REGISTRATION RIGHTS UNDER A
REGISTRATION RIGHTS AGREEMENT TO BE EXECUTED BY THE COMPANY.”
Exhibit 4.6
RIGHTS AGREEMENT
This Rights Agreement (this
“Agreement”) is made as of [●], 2022 between RF Acquisition Corp., a Delaware corporation, with offices
at 111 Somerset, #05-06, Singapore 238164 (the “Company”), and Continental Stock Transfer & Trust Company,
a New York corporation, (the “Rights Agent”).
WHEREAS, the Company has received
a firm commitment from EarlyBirdCapital, Inc. (“EBC”), as representative of the several underwriters, to
purchase up to an aggregate of 10,000,000 units (including up to 1,500,000 additional units if the underwriters’ over-allotment
option is exercised in full), each unit (“Unit”) comprised of one share of Class A common stock of the
Company, $0.0001 par value (the “Class A Common Stock”), one redeemable warrant entitling the holder thereof
to purchase one share of Class A Common Stock ("Public Warrants"), and one right to receive one-tenth (1/10)
of one Class A Common Stock (a “Public Right”) upon the happening of the triggering event described herein,
and in connection therewith, will issue and deliver up to an aggregate of 11,500,000 Public Rights upon consummation of such public offering,
1,500,000 of which are attributable to the over-allotment option (“Public Offering”);
WHEREAS, the Company has filed
with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-1, File No. 333-261765
(“Registration Statement”), for the registration, under the Securities Act of 1933, as amended (“Act”)
of, among other securities, the Units, Public Warrants, Public Rights, representative shares ("Representative Shares"),
and the Class A Common Stock issuable to the holders of the Units, Public Rights and Public Warrants;
WHEREAS, the Company desires
the Rights Agent to act on behalf of the Company, and the Rights Agent is willing to so act, in connection with the issuance, registration,
transfer and exchange of the Rights;
WHEREAS, the Company desires
to provide for the form and provisions of the Rights, the terms upon which they shall be issued, and the respective rights, limitation
of rights, and immunities of the Company, the Rights Agent, and the holders of the Rights; and
WHEREAS, all acts and things
have been done and performed which are necessary to make the Rights, when executed on behalf of the Company and countersigned by or on
behalf of the Rights Agent, as provided herein, the valid, binding and legal obligations of the Company, and to authorize the execution
and delivery of this Agreement.
NOW, THEREFORE, in consideration
of the mutual agreements herein contained, the parties hereto agree as follows:
| 1. |
Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company for the Rights, and the Rights Agent hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set forth in this Agreement. |
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| 2. |
Rights. |
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2.1. |
Form of Right. Each Right shall be issued in registered form only, shall be in substantially the form of Exhibit A hereto, the provisions of which are incorporated herein and shall be signed by, or bear the facsimile signature of, the Chairman of the Board or Chief Executive Officer and Treasurer, Secretary or Assistant Secretary of the Company and shall bear a facsimile of the Company’s seal. In the event the person whose facsimile signature has been placed upon any Right shall have ceased to serve in the capacity in which such person signed the Right before such Right is issued, it may be issued with the same effect as if he or she had not ceased to be such at the date of issuance.
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2.2. |
Effect of Countersignature. Unless and until countersigned by the Rights Agent pursuant to this Agreement, a Right shall be invalid and of no effect and may not be exchanged for Class A Common Stock.
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2.3. |
Registration. |
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2.3.1. |
Right Register. The Rights Agent shall maintain books (“Right Register”) for the registration of original issuance and the registration of transfer of the Rights. Upon the initial issuance of the Rights, the Rights Agent shall issue and register the Rights in the names of the respective holders thereof in such denominations and otherwise in accordance with instructions delivered to the Rights Agent by the Company. |
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2.3.2. |
Registered Holder. Prior to due presentment for registration of transfer of any Right, the Company and the Rights Agent may deem and treat the person in whose name such Right shall be registered upon the Right Register (“registered holder”) as the absolute owner of such Right and of each Right represented thereby (notwithstanding any notation of ownership or other writing on the Right Certificate made by anyone other than the Company or the Rights Agent), for the purpose of the exchange thereof, and for all other purposes, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary. |
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2.4. |
Detachability of Rights. The securities comprising the Units, including the Rights, will not be separately transferable until the ninetieth (90th) day after the date hereof unless EBC informs the Company of its decision to allow earlier separate trading, but in no event will separate trading of the securities comprising the Units begin until (i) the Company files a Current Report on Form 8-K which includes an audited balance sheet reflecting the receipt by the Company of the gross proceeds of the Public Offering including the proceeds received by the Company from the exercise of the over-allotment option, if the over-allotment option is exercised on the date hereof, and (ii) the Company issues a press release and files a Current Report on Form 8-K announcing when such separate trading shall begin. |
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Terms and Exchange of Rights. |
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3.1. |
Rights. Each Right shall entitle the holder thereof to receive one-tenth of one share of Class A Common Stock upon the happening of the Exchange Event (described below). Subject to Section 3.3.1 below with respect to the registered holders of Rights, in the event that the Company is not the surviving entity immediately following the Exchange Event, holders of Rights shall automatically receive the kind and amount of securities or properties of the surviving entity as the holders of each one-tenth of one share of Class A Common Stock is entitled to receive in the Exchange Event. No additional consideration shall be paid by a holder of Rights in order to receive his, her or its shares of Class A Common Stock upon the Exchange Event as the purchase price for such shares of Class A Common Stock has been included in the purchase price for the Units. In no event will the Company be required to net cash settle the Rights or issue fractional shares of Class A Common Stock.
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3.2. |
Exchange Event. The Exchange Event shall be the Company’s consummation of an initial Business Combination (as defined in the Company’s Certificate of Incorporation and all amendments thereto).
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3.3. |
Exchange of Rights. |
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3.3.1. |
Issuance of Certificates. As soon as practicable upon the occurrence of the Exchange Event, the Company shall direct registered holders of the Rights to return their Rights Certificates to the Rights Agent. Upon receipt of a valid Rights Certificate, the Company shall issue to the registered holder of such Right(s) a certificate or certificates for the number of full Class A Common Stock to which he, she or it is entitled, registered in such name or names as may be directed by him, her or it; provided that in the event that the Company is not the surviving entity following the Exchange Event, the Company shall notify the registered holders of Rights at least two business days prior to the occurrence of the Exchange Event and the registered holders of Rights shall have the right to receive the kind and amount of securities or properties of the surviving entity pursuant to Section 3.3.4 of this Agreement provided that they affirmatively elect to such conversion. Notwithstanding the foregoing, or any provision contained in this Agreement to the contrary, in no event will the Company be required to net cash settle the Rights. The Company shall not issue fractional Class A Common Stock upon exchange of Rights. At the time of the Exchange Event, the Company will instruct the Rights Agent to round down to the nearest whole Class A Common Stock. |
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3.3.2. |
Valid Issuance. All shares of Class A Common Stock issued upon an Exchange Event in conformity with this Agreement shall be validly issued, fully paid and nonassessable. |
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3.3.3. |
Date of Issuance. Each person in whose name any such certificate for Class A Common Stock is issued shall for all purposes be deemed to have become the holder of record of such shares on the date of the Exchange Event, irrespective of the date of delivery of such certificate. |
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3.3.4. |
Company Not Surviving Following Exchange Event. If the Exchange Event results in the Company is not the surviving entity, the definitive agreement will provide for the holders of Rights to receive the same kind and amount of securities or properties of the surviving entity as the holders of the Class A Common Stock will receive in with the Exchange Event, for the number of shares of Class A Common Stock such holder is entitled to pursuant to Section 3.3.1 above. |
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3.4. |
Duration of Rights. If the Exchange Event does not occur within the time period as described in the Company’s Memorandum and Articles of Association and all amendments thereto, and such Business Combination has not yet been consummated within the applicable time period, the Rights shall expire and shall be worthless. |
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Transfer and Exchange of Rights. |
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4.1. |
Registration of Transfer. The Rights Agent shall register the transfer, from time to time, of any outstanding Right upon the Right Register, upon surrender of such Right for transfer, properly endorsed with signatures properly guaranteed and accompanied by appropriate instructions for transfer. Upon any such transfer, a new Right representing an equal aggregate number of Rights shall be issued and the old Right shall be cancelled by the Rights Agent. The Rights so cancelled shall be delivered by the Rights Agent to the Company from time to time upon request. |
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4.2. |
Procedure for Surrender of Rights. Rights may be surrendered to the Rights Agent, together with a written request for exchange or transfer, and thereupon the Rights Agent shall issue in exchange therefor one or more new Rights as requested by the registered holder of the Rights so surrendered, representing an equal aggregate number of Rights; provided, however, that in the event that a Right surrendered for transfer bears a restrictive legend, the Rights Agent shall not cancel such Right and issue new Rights in exchange therefor until the Rights Agent has received an opinion of counsel for the Company stating that such transfer may be made and indicating whether the new Rights must also bear a restrictive legend. |
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4.3. |
Fractional Rights. The Rights Agent will not issue fractional shares in connection with an exchange or transfer of rights. Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the Delaware General Corporations Law. As a result, you must hold rights in multiples of 10 in order to receive shares for all of your rights upon closing of a business combination. |
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4.4. |
Service Charges. No service charge shall be made for any exchange or registration of transfer of Rights. |
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4.5. |
Adjustments to Conversion Ratios. The number of shares of Class A Common Stock that the holders of Rights are entitled to receive as a result of the occurrence of an Exchange Event shall be equitably adjusted to reflect appropriately the effect of any stock split, reverse stock split, stock dividend, reorganization, recapitalization, reclassification, combination, exchange of stock or other like change with respect to the Class A Common Stock occurring on or after the date hereof and prior to the Exchange Event. |
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4.6. |
Right Execution and Countersignature. The Rights
Agent is hereby authorized to countersign and to deliver, in accordance with the terms of this Agreement, the Rights required to be issued
pursuant to the provisions of this Section 4, and the Company, whenever required by the Rights Agent, will supply the Rights
Agent with Rights duly executed on behalf of the Company for such purpose. |
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Other Provisions Relating to Rights of Holders of Rights. |
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5.1. |
No Rights as Stockholder. Until exchange of a Right for Class A Common Stock as provided for herein, a Right does not entitle the registered holder thereof to any of the rights of a stockholder of the Company, including, without limitation, the right to receive dividends, or other distributions, exercise any preemptive rights to vote or to consent or to receive notice as stockholders in respect of the meetings of stockholders or the election of directors of the Company or any other matter. |
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5.2. |
Lost, Stolen, Mutilated, or Destroyed Rights. If any Right is lost, stolen, mutilated, or destroyed, the Company and the Rights Agent may on such terms as to indemnity or otherwise as they may in their discretion impose (which shall, in the case of a mutilated Right, include the surrender thereof), issue a new Right of like denomination, tenor, and date as the Right so lost, stolen, mutilated, or destroyed. Any such new Right shall constitute a substitute contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated, or destroyed Right shall be at any time enforceable by anyone. |
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5.3. |
Reservation of Class A Common Stock. The Company shall at all times reserve and keep available a number of its authorized but unissued shares of Class A Common Stock that will be sufficient to permit the exchange of all outstanding Rights issued pursuant to this Agreement. |
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Concerning the Rights Agent and Other Matters. |
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6.1. |
Payment of Taxes. The Company will from time
to time promptly pay all taxes and charges that may be imposed upon the Company or the Rights Agent in respect of the issuance or delivery
of shares of Class A Common Stock upon the exchange of Rights, but the Company shall not be obligated to pay any transfer taxes
in respect of the Rights or such shares. |
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6.2. |
Resignation, Consolidation, or Merger of Rights Agent. |
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6.2.1. |
Appointment of Successor Rights Agent. The Rights Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company. If the office of the Rights Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor Rights Agent in place of the Rights Agent. If the Company shall fail to make such appointment within a period of 30 days after it has been notified in writing of such resignation or incapacity by the Rights Agent or by the holder of the Right (who shall, with such notice, submit his, her or its Right for inspection by the Company), then the holder of any Right may apply to the Supreme Court of the State of New York for the County of New York for the appointment of a successor Rights Agent at the Company’s cost. Any successor Rights Agent, whether appointed by the Company or by such court, shall be a corporation organized and existing under the laws of the State of New York, in good standing and having its principal office in the Borough of Manhattan, City and State of New York, and authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority. After appointment, any successor Rights Agent shall be vested with all the authority, powers, rights, immunities, duties, and obligations of its predecessor Rights Agent with like effect as if originally named as Rights Agent hereunder, without any further act or deed; but if for any reason it becomes necessary or appropriate, the predecessor Rights Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Rights Agent all the authority, powers, and rights of such predecessor Rights Agent hereunder; and upon request of any successor Rights Agent the Company shall make, execute, acknowledge, and deliver any and all instruments in writing for more fully and effectually vesting in and confirming to such successor Rights Agent all such authority, powers, rights, immunities, duties, and obligations. |
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6.2.2. |
Notice of Successor Rights Agent. In the event a successor Rights Agent shall be appointed, the Company shall give notice thereof to the predecessor Rights Agent and the transfer agent for the Class A Common Stock not later than the effective date of any such appointment. |
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6.2.3. |
Merger or Consolidation of Rights Agent. Any
corporation into which the Rights Agent may be merged or with which it may be consolidated or any corporation resulting from any merger
or consolidation to which the Rights Agent shall be a party shall be the successor Rights Agent under this Agreement without any further
act. |
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6.3. |
Fees and Expenses of Rights Agent. |
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6.3.1. |
Remuneration. The Company agrees to pay the Rights Agent reasonable remuneration for its services as such Rights Agent hereunder and will reimburse the Rights Agent upon demand for all expenditures that the Rights Agent may reasonably incur in the execution of its duties hereunder. |
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6.3.2. |
Further Assurances. The Company agrees to perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and delivered all such further and other acts, instruments, and assurances as may reasonably be required by the Rights Agent for the carrying out or performing of the provisions of this Agreement. |
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6.4. |
Liability of Rights Agent. |
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6.4.1. |
Reliance on Company Statement. Whenever in the performance of its duties under this Agreement, the Rights Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement signed by the Chief Executive Officer or Chief Financial Officer and delivered to the Rights Agent. The Rights Agent may rely upon such statement for any action taken or suffered in good faith by it pursuant to the provisions of this Agreement. |
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6.4.2. |
Indemnity. The Rights Agent shall be liable hereunder only for its own gross negligence, willful misconduct or bad faith. Subject to Section 6.6, the Company agrees to indemnify the Rights Agent and save it harmless against any and all liabilities, including judgments, costs and reasonable counsel fees, for anything done or omitted by the Rights Agent in the execution of this Agreement except as a result of the Rights Agent’s gross negligence or intentional misconduct. |
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6.4.3. |
Exclusions. The Rights Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution of any Right (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Right; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Class A Common Stock to be issued pursuant to this Agreement or any Right or as to whether any shares of Class A Common Stock will, when issued, be valid and fully paid and nonassessable. |
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6.5. |
Acceptance of Agency. The Rights Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms and conditions herein set forth. |
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6.6. |
Waiver. The Rights Agent hereby waives any right
of set-off or any other right, title, interest or claim of any kind (“Claim”) in, or to any distribution of,
the Trust Account (as defined in that certain Investment Management Trust Agreement, dated as of the date hereof, by and between the
Company and the Rights Agent as trustee thereunder) and hereby agrees not to seek recourse, reimbursement, payment or satisfaction for
any Claim against the Trust Account for any reason whatsoever. |
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Miscellaneous Provisions. |
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7.1. |
Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns. |
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7.2. |
Notices. Any notice, statement or demand authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right to or on the Company shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Company with the Rights Agent), as follows: |
RF Acquisition Corp.
111 Somerset, #05-06
Singapore 238164
Attn: Tse Meng Ng
Any notice, statement
or demand authorized by this Agreement to be given or made by the holder of any Right or by the Company to or on the Rights Agent shall
be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within
five days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Rights Agent with
the Company), as follows:
Continental Stock Transfer &
Trust Company One State Street, 30th Floor New York, NY 10004 Attn: Compliance Department
and
Loeb & Loeb LLP
345 Park Avenue
New York, NY 10154
Attn: Mitchell S. Nussbaum and Giovanni
Caruso
and
EarlyBirdCapital, Inc.
366 Madison Avenue, 8th Floor
New York, NY 10017
Attn: Steven Levine
and
Winston & Strawn LLP
800 Capitol Street, Suite 2400
Houston, Texas 77002
Attn: Michael J. Blankenship, Esq.
and
Winston & Strawn LLP
Bank of China Tower, 42nd Floor
1 Garden Road
Central, Hong Kong
Attn: Simon Luk
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7.3. |
Applicable Law. The validity, interpretation, and performance of this Agreement and of the Rights shall be governed in all respects by the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. The Company hereby agrees that any action, proceeding or claim against it arising out of or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any such process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 7.2 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. |
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7.4. |
Persons Having Rights under this Agreement. Nothing in this Agreement expressed and nothing that may be implied from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the parties hereto and the registered holders of the Rights and, any right, remedy, or claim under or by reason of this Agreement or of any covenant, condition, stipulation, promise, or agreement hereof. All covenants, conditions, stipulations, promises, and agreements contained in this Agreement shall be for the sole and exclusive benefit of the parties hereto and their successors and assigns and of the registered holders of the Rights. |
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7.5. |
Examination of this Agreement. A copy of this Agreement shall be available at all reasonable times at the office of the Rights Agent in the Borough of Manhattan, City and State of New York, for inspection by the registered holder of any Right. The Rights Agent may require any such holder to submit his, her or its Right for inspection by it. |
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7.6. |
Counterparts. This Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. |
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7.7. |
Effect of Headings. The Section headings herein are for convenience only and are not part of this Agreement and shall not affect the interpretation thereof. |
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7.8. |
Amendments. This Agreement may be amended by the parties hereto without the consent of any registered holder for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein or adding or changing any other provisions with respect to matters or questions arising under this Agreement as the parties may deem necessary or desirable and that the parties deem shall not adversely affect the interest of the registered holders. All other modifications or amendments shall require the written consent or vote of the registered holders of a majority of the then outstanding Rights. The provisions of this Section 7.8 may not be modified, amended or deleted without the prior written consent of EBC. |
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7.9. |
Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable. |
[Signature Page Follows]
IN WITNESS WHEREOF, this Agreement
has been duly executed by the parties hereto as of the day and year first above written.
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RF ACQUISITION CORP. |
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By: |
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Name: Tse Meng Ng |
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Title: Chief Executive Officer |
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CONTINENTAL STOCK TRANSFER & TRUST COMPANY |
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By: |
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Name: |
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Title: |
EXHIBIT A
Form of Right
Exhibit 5.1
March 15, 2022
RF Acquisition Corp.
111 Somerset, #05-06
Singapore 238164
Re: Form S-1
Registration Statement
Ladies and Gentlemen:
We have acted as special counsel
to RF Acquisition Corp., a Delaware corporation (the “Company”), in connection with the preparation of the Company’s
registration statement on Form S-1 (Registration No. 333-261765) initially filed with the U.S. Securities and Exchange Commission
(the “Commission”) on December 20, 2021 (the “Registration Statement”), under the Securities
Act of 1933, as amended (the “Securities Act”).
The Registration Statement
relates to the registration of the offer and sale of up to 11,500,000 Units of the Company (the “Units”) (including
up to 1,500,000 Units subject to the Underwriter’s (as defined below) over-allotment option), with each Unit consisting of (i) one
share of the Company’s Class A common stock, par value $0.0001 per share (the “Class A Common Stock”
and the Class A Common Stock underlying the Units, the “Shares”), for an aggregate of up to 11,500,000 Shares
(including up to 1,500,000 Shares included in the Units subject to the Underwriter’s over-allotment option) and 1,150,000 Shares
underlying the Rights (including up to 150,000 Shares underlying the Rights subject to the Underwriter's over-allotment option), (ii) one
redeemable warrant (a “Warrant”), with each whole Warrant entitling the holder to purchase one share of Class A
Common Stock, for an aggregate of up to 11,500,000 Warrants (including up to 1,500,000 Warrants included in the Units subject to the Underwriter’s
over-allotment option) to be issued under a warrant agreement (the “Warrant Agreement”) to be entered into by the Company
and Continental Stock Transfer & Trust Company, as Warrant Agent, pursuant to the terms of an underwriting agreement (the “Underwriting
Agreement”) to be executed by the Company and EarlyBirdCapital, Inc., (the “Underwriter”), (iii) and
one right to receive one-tenth of one share of Class A Common Stock (a “Right”), for an aggregate of up to 11,500,000
Rights (including up to 1,500,000 Rights subject to the Underwriter's over-allotment option).
This opinion letter is being
furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K promulgated under the Securities Act.
In rendering the opinions
set forth below, we examined and relied upon such certificates, corporate records, agreements, instruments, and other documents, and examined
such matters of law, that we considered necessary or appropriate as a basis for the opinions. In rendering the opinions set forth below,
we have examined and are familiar with originals or copies, certified or otherwise identified to our satisfaction, of (i) the Registration
Statement, (ii) the Underwriting Agreement, and (iii) such other documents as we have deemed necessary or appropriate as a basis
for the opinions set forth below. In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted
to us as certified or photostatic copies, the authenticity of the originals of such latter documents, that all parties to such documents
had the power, corporate or other, to enter into and perform all obligations thereunder and all such documents have been duly authorized
by all requisite action, corporate or other, and duly executed and delivered by all parties thereto. As to any facts material to the opinions
expressed herein that we did not independently establish or verify, we have relied upon oral or written statements and representations
of officers and other representatives of the Company and others. In rendering the opinions set forth below, we have further assumed that,
before the issuance of the Units, the Shares, the Rights, and the Warrants, (i) the Registration Statement will have become effective
under the Securities Act and (ii) the conditions to consummating the transactions contemplated by the Underwriting Agreement will
have been satisfied or duly waived and such transactions are consummated.
Based upon the foregoing and
subject to the assumptions, qualifications and limitations set forth herein, we are of the opinion that:
1. When the Units are delivered
to the Underwriter against payment of the agreed consideration therefor in accordance with the Underwriting Agreement, each Unit will
be a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms.
2. When the Units are delivered
to the Underwriter against payment of the agreed consideration therefor in accordance with the Underwriting Agreement, each Warrant and
Right included in the Units will be a valid and binding agreement of the Company, enforceable against the Company in accordance with its
terms.
3. The Shares underlying
the Units, and the Rights and Warrants included in such Units, have been duly authorized by the Company and, when issued and delivered
by the Company against receipt therefor, in the manner contemplated by the Registration Statement, will be validly issued, fully paid
and non-assessable.
The opinions expressed herein
are based upon and limited to the laws of the State of New York and the laws of the State of Delaware, as applicable. We express no opinion
herein as to any other laws, statutes, regulations, or ordinances. The opinions expressed herein that are based on the laws of the State
of New York and laws of the State of Delaware are limited to the laws generally applicable in transactions of the type covered by the
Registration Statement.
We hereby consent to the filing
of this opinion letter as Exhibit 5.1 to the Registration Statement and to the reference to our firm under the caption “Legal
Matters” in the prospectus included in the Registration Statement. In giving such consent, we do not thereby admit that we are experts
within the meaning of the Securities Act or the rules and regulations of the Commission or that this consent is required by Section 7
of the Securities Act.
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Very truly yours, |
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/s/ Winston & Strawn LLP |
Exhibit 10.1
[●], 2022
RF Acquisition Corp.
111 Somerset, #05-06
Singapore 238164
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Re: |
Initial Public Offering |
Ladies and Gentlemen:
This letter (this “Letter Agreement”)
is being delivered to you in accordance with the Underwriting Agreement (the “Underwriting Agreement”) entered
into by and among RF Acquisition Corp., a Delaware corporation (the “Company”), and EarlyBirdCapital, Inc.,
(the “Underwriter”), relating to an underwritten initial public offering (the “Public Offering”),
of up to 11,500,000 of the Company’s units (including up to 1,500,000 units that may be purchased to cover over-allotments, if any)
(the “Units”), each comprised of one share of the Company’s Class A common stock, par value $0.0001 per
share (the “Class A Common Stock”), one redeemable warrant, and one right to receive one-tenth of one share
of Class A Common Stock (“Right”). Each whole warrant (each, a “Warrant”) entitles
the holder thereof to purchase one share of Class A Common Stock at a price of $11.50 per share, subject to adjustment as described in
the Prospectus (as defined below). The Units will be sold in the Public Offering pursuant to a registration statement on Form S-1 and
prospectus (the “Prospectus”) filed by the Company with the U.S. Securities and Exchange Commission (the “Commission”)
and the Company has applied to have the Units listed on the Nasdaq Global Market. Certain capitalized terms used herein are defined in
paragraph 11 hereof.
In order to induce the Company and the Underwriter
to enter into the Underwriting Agreement and to proceed with the Public Offering and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, each of RF Dynamic LLC (the “Sponsor”) and the undersigned
individuals, each of whom is a member of the Company’s board of directors and/or management team (each of the undersigned individuals,
an “Insider” and collectively, the “Insiders”), hereby agrees with the Company as
follows:
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1. |
The Sponsor and each Insider agrees that if the Company seeks stockholder approval of a proposed Business Combination, then in connection with such proposed Business Combination, it, he or she shall (i) vote any Common Stock (as defined below) owned by it, him or her in favor of any proposed Business Combination and (ii) not redeem any Common Stock owned by it, him or her in connection with such stockholder approval. If the Company seeks to consummate a proposed Business Combination by engaging in a tender offer, the Sponsor and each Insider agrees that it, he or she will not sell or tender any Common Stock owned by it, him or her in connection therewith. |
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2. |
The Sponsor and each Insider hereby agrees that in the event that the Company fails to consummate a Business Combination within 18 months from the closing of the Public Offering, or such later period approved by the Company’s stockholders in accordance with the Company’s amended and restated certificate of incorporation (as it may be amended from time to time, the “Charter”), the Sponsor and each Insider shall take all reasonable steps to cause the Company to (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten (10) business days thereafter, redeem 100% of the shares of Class A Common Stock sold as part of the Units in the Public Offering (the “Offering Shares”), at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account (as defined below), including interest earned on the funds held in the Trust Account (which interest shall be net of taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Offering Shares, which redemption will completely extinguish all Public Stockholders’ (as defined below) rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) to the Company’s obligations under Delaware law to provide for claims of creditors and in all cases subject to the other requirements of applicable law. The Sponsor and each Insider agrees to not propose any amendment to the Charter (A) to modify the substance or timing of the Company’s obligation to allow redemption in connection with our initial business combination or to redeem 100% of the Offering Shares if the Company does not complete a Business Combination within the required time period set forth in the Charter or (B) with respect to any other material provisions relating to stockholders' rights or pre-initial Business Combination activity, unless the Company provides its Public Stockholders with the opportunity to redeem their Offering Shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes, divided by the number of then outstanding Offering Shares. |
The Sponsor and each Insider acknowledges
that it, he or she has no right, title, interest or claim of any kind in or to any monies held in the Trust Account or any other asset
of the Company as a result of any liquidation of the Company with respect to the Founder Shares held by it, him or her. The Sponsor and
each Insider hereby further waives, with respect to any Common Stock held by it, him or her, if any, any redemption rights it, he or she
may have in connection with (a) the consummation of a Business Combination, including, without limitation, any such rights available
in the context of a stockholder vote to approve such Business Combination, or (b) a stockholder vote to approve an amendment to the
Charter (A) to modify the substance or timing of the Company’s obligation to allow redemption in connection with our initial
business combination or to redeem 100% of the Offering Shares if the Company has not consummated a Business Combination within the time
period set forth in the Charter or (B) with respect to any other material provisions relating to stockholders' rights or pre-initial
Business Combination activity or in the context of a tender offer made by the Company to purchase Offering Shares (although the Sponsor,
the Insiders and their respective affiliates shall be entitled to redemption and liquidation rights with respect to any Offering Shares
it or they hold if the Company fails to consummate a Business Combination within the time period set forth in the Charter).
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3. |
During the period commencing on the effective date of the Underwriting Agreement and ending 180 days after such date, the Sponsor and each Insider shall not, without the prior written consent of the Underwriter, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the Commission promulgated thereunder, with respect to, any Units, Common Stock (including, but not limited to, Founder Shares), Warrants, Rights, or any securities convertible into, or exercisable, or exchangeable for, Common Stock owned by it, him or her, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Units, Common Stock (including, but not limited to, Founder Shares), Warrants, Rights, or any securities convertible into, or exercisable, or exchangeable for, Common Stock owned by it, him or her, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (iii) publicly announce any intention to effect any transaction specified in clause (i) or (ii). Each of the Insiders and the Sponsor acknowledges and agrees that, prior to the effective date of any release or waiver, of the restrictions set forth in this paragraph 3 or paragraph 7 below, the Company shall announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver. Any release or waiver granted shall only be effective two business days after the publication date of such press release. The provisions of this paragraph will not apply if the release or waiver is effected solely to permit a transfer not for consideration and the transferee has agreed in writing to be bound by the same terms described in this Letter Agreement to the extent and for the duration that such terms remain in effect at the time of the transfer. |
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In the event of the liquidation of the Trust Account upon the failure of the Company to consummate its initial Business Combination within the time period set forth in the Charter, the Sponsor (the “Indemnitor”) agrees to indemnify and hold harmless the Company against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all legal or other expenses reasonably incurred in investigating, preparing or defending against any litigation, whether pending or threatened) to which the Company may become subject as a result of any claim by (i) any third party for services rendered or products sold to the Company or (ii) any prospective target business with which the Company has entered into a written letter of intent, confidentiality or other similar agreement or Business Combination agreement (a “Target”); provided, however, that such indemnification of the Company by the Indemnitor (x) shall apply only to the extent necessary to ensure that such claims by a third party or a Target do not reduce the amount of funds in the Trust Account to below the lesser of (i) $10.10 per Offering Share and (ii) the actual amount per Offering Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.10 per Offering Share is then held in the Trust Account due to reductions in the value of the trust assets, less taxes payable, (y) shall not apply to any claims by a third party or a Target which executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) and (z) shall not apply to any claims under the Company’s indemnity of the Underwriter against certain liabilities, including liabilities under the Securities Act of 1933, as amended. The Indemnitor shall have the right to defend against any such claim with counsel of its choice reasonably satisfactory to the Company if, within 15 days following written receipt of notice of the claim to the Indemnitor, the Indemnitor notifies the Company in writing that it shall undertake such defense. |
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To the extent that the Underwriter does not exercise its over-allotment option to purchase up to an additional 1,500,000 Units within 45 days from the date of the Prospectus (and as further described in the Prospectus), the Initial Stockholders agree to forfeit, at no cost, a number of Founder Shares, to be split pro rata between them based on the number of Founder Shares they hold upon the consummation of the Public Offering, equal to 375,000 multiplied by a fraction, (i) the numerator of which is 1,500,000 minus the number of Units purchased by the Underwriter upon the exercise of their over-allotment option, and (ii) the denominator of which is 1,500,000. The forfeiture will be adjusted to the extent that the over-allotment option is not exercised in full by the Underwriter so that the Founder Shares will represent an aggregate of 20.0% of the Company’s issued and outstanding Class A Common Stock after the Public Offering (not including Class A Common Stock underlying the Private Placement Warrants (as defined below)). The Initial Stockholders further agree that to the extent that the size of the Public Offering is increased or decreased, the Company will purchase or sell Units or effect a stock repurchase or stock capitalization, as applicable, immediately prior to the consummation of the Public Offering in such amount as to maintain the ownership of the Initial Stockholders prior to the Public Offering at 20.0% of its issued and outstanding Capital Stock upon the consummation of the Public Offering. In connection with such increase or decrease in the size of the Public Offering, then (A) the references to 1,500,000 in the numerator and denominator of the formula in the first sentence of this paragraph shall be changed to a number equal to 15% of the number of Public Stock included in the Units issued in the Public Offering and (B) the reference to 375,000 in the formula set forth in the first sentence of this paragraph shall be adjusted to such number of Founder Shares that the Initial Stockholders would have to surrender to the Company in order for the Initial Stockholders to hold an aggregate of 20.0% of the Company’s issued and outstanding Class A Common Stock after the Public Offering (not including Class A Common Stock underlying the Warrants, Rights, or Private Placement Warrants). |
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6. |
(a) The Company’s officers and directors each hereby agree not to become an officer or director of, any other special purpose acquisition company with a class of securities registered under the Exchange Act until the Company has entered into a definitive agreement regarding a Business Combination or the Company has failed to complete a Business Combination within the time period set forth in the Charter. |
(b) The Sponsor and each Insider
hereby agrees and acknowledges that: (i) the Underwriter and the Company would be irreparably injured in the event of a breach by
such Sponsor or an Insider of its, his or her obligations under paragraphs 1, 2, 3, 4, 5, 7(a), and 7(b), as applicable, of this Letter
Agreement, (ii) monetary damages may not be an adequate remedy for such breach and (iii) the non-breaching party shall be entitled
to injunctive relief, in addition to any other remedy that such party may have in law or in equity, in the event of such breach.
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7. |
(a) The Sponsor and each Insider agrees that it, he or she shall not Transfer any Founder Shares (or any Class A Common Stock issuable upon conversion thereof) until the earlier of (A) one year after the completion of the Company’s initial Business Combination and (B) subsequent to the Business Combination, (x) if the closing price of the Class A Common Stock equals or exceeds $12.00 per share (as adjusted for stock sub-divisions, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Company’s initial Business Combination or (y) the date on which the Company completes a liquidation, merger, stock exchange or other similar transaction that results in all of the Company’s Public Stockholders having the right to exchange their shares of Class A Common Stock for cash, securities or other property (the “Founder Shares Lock-up Period”). |
(b) The Sponsor, EarlyBirdCapital, Inc.,
and each Insider agrees that it, he or she shall not Transfer any Private Placement Warrants (or any Class A Common Stock underlying
the Private Placement Warrants), until 30 days after the completion of a Business Combination (the “Private Placement Warrants
Lock-up Period”, together with the Founder Shares Lock-up Period, the “Lock-up Periods”).
(c) Notwithstanding the provisions
set forth in paragraphs 7(a) and (b), Transfers of the Founder Shares, Private Placement Warrants and the shares of Class A
Common Stock underlying the Private Placement Warrants that are held by the Sponsor, any Insider or any of their permitted transferees
(that have complied with this paragraph 7(c)), are permitted (a) to the Company’s officers or directors, any affiliate or family
member of any of the Company’s officers or directors, any affiliate of the Sponsor or to any members of the Sponsor or any of their
affiliates; (b) in the case of an individual, by gift to a member of such individual’s immediate family or to a trust, the
beneficiary of which is a member of such individual’s immediate family, an affiliate of such individual or to a charitable organization;
(c) in the case of an individual, by virtue of laws of descent and distribution upon death of such individual; (d) in the case
of an individual, pursuant to a qualified domestic relations order; (e) by private sales or transfers made in connection with any
forward purchase agreement or similar arrangement or in connection with the consummation of an initial Business Combination at prices
no greater than the price at which the securities were originally purchased; (f) in the event of the Company’s liquidation
prior to the completion of an initial Business Combination; (g) by virtue of the laws of the Delaware or the Sponsor’s limited
liability company agreement upon dissolution of the Sponsor; or (h) in the event of the Company’s liquidation, merger, stock
exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange their shares
of Class A Common Stock for cash, securities or other property subsequent to the Company’s completion of an initial Business
Combination; provided, however, that in the case of clauses (a) through (e) or (g), these permitted transferees
must enter into a written agreement with the Company agreeing to be bound by the transfer restrictions herein and the other restrictions
contained in this Agreement (including provisions relating to voting, the Trust Account and liquidating distributions).
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8. |
The Sponsor and each Insider represents and warrants that it, he or she has never been suspended or expelled from membership in any securities or commodities exchange or association or had a securities or commodities license or registration denied, suspended or revoked. Each Insider’s biographical information furnished to the Company (including any such information included in the Prospectus) is true and accurate in all respects and does not omit any material information with respect to the Insider’s background. The Sponsor and each Insider’s questionnaire furnished to the Company is true and accurate in all respects. The Sponsor and each Insider represents and warrants that: it, he or she is not subject to or a respondent in any legal action for, any injunction, cease-and-desist order or order or stipulation to desist or refrain from any act or practice relating to the offering of securities in any jurisdiction; it, he or she has never been convicted of, or pleaded guilty to, any crime (i) involving fraud, (ii) relating to any financial transaction or handling of funds of another person, or (iii) pertaining to any dealings in any securities and it, he or she is not currently a defendant in any such criminal proceeding. |
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The Sponsor and each Insider has full right and power, without violating any agreement to which it is bound (including, without limitation, any non-competition or non-solicitation agreement with any employer or former employer), to enter into this Letter Agreement and, as applicable, to serve as an officer and/or director on the board of directors of the Company and hereby consents to being named in the Prospectus as an officer and/or director of the Company. |
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10. |
As used herein, (i) “Business Combination” shall mean a merger, stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, involving the Company and one or more businesses; (ii) “Common Stock” shall mean the shares of Class A Common Stock and Class B common stock, par value $0.0001 per share (the “Class B Common Stock”); (iii) “Founder Shares” shall mean the 2,875,000 Class B Common Stock issued and outstanding (up to 375,000 of which are subject to complete or partial forfeiture if the over-allotment option is not exercised by the Underwriter); (iv) “Initial Stockholders” shall mean the Sponsor and any Insider that holds Founder Shares; (v) “Private Placement Warrants” shall mean (i) the 4,050,000 warrants (or 4,450,500 warrants if the over-allotment option is exercised in full) that the Sponsor has agreed to purchase for an aggregate purchase price of $4,050,000 (or $4,450,500 if the over-allotment option is exercised in full), or $1.00 per warrant, in a private placement that shall occur simultaneously with the consummation of the Public Offering and (ii) the 500,000 warrants (or 549,500 warrants if the over-allotment option is exercised in full) that EarlyBirdCapital, Inc. has agreed to purchase for an aggregate purchase price of $500,000 (or $549,500 if the over-allotment option is exercised in full), or $1.00 per warrant, in a private placement that shall occur simultaneously with the consummation of the Public Offer; (vi) “Public Stockholders” shall mean the holders of securities issued in the Public Offering; (vii) “Trust Account” shall mean the trust fund into which a portion of the net proceeds of the Public Offering and the sale of the Private Placement Warrants shall be deposited; and (viii) “Transfer” shall mean the (a) sale of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the Commission promulgated thereunder with respect to, any security, (b) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) public announcement of any intention to effect any transaction specified in clause 7(a) or 7(b). |
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The Company will maintain an insurance policy or policies providing directors’ and officers’ liability insurance, and each Director shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any of the Company’s directors or officers. |
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12. |
This Letter Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersedes all prior understandings, agreements, or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby. This Letter Agreement may not be changed, amended, modified or waived (other than to correct a typographical error) as to any particular provision, except by a written instrument executed by all parties hereto. |
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13. |
No party hereto may assign either this Letter Agreement or any of its rights, interests, or obligations hereunder without the prior written consent of the other parties. Any purported assignment in violation of this paragraph shall be void and ineffectual and shall not operate to transfer or assign any interest or title to the purported assignee. This Letter Agreement shall be binding on the Sponsor and each Insider and their respective successors, heirs and assigns and permitted transferees. |
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14. |
Nothing in this Letter Agreement shall be construed to confer upon, or give to, any person or corporation other than the parties hereto any right, remedy or claim under or by reason of this Letter Agreement or of any covenant, condition, stipulation, promise or agreement hereof. All covenants, conditions, stipulations, promises, and agreements contained in this Letter Agreement shall be for the sole and exclusive benefit of the parties hereto and their successors, heirs, personal representatives and assigns and permitted transferees. |
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15. |
This Letter Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. |
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16. |
This Letter Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Letter Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Letter Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable. |
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17. |
This Letter Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York. The parties hereto (i) all agree that any action, proceeding, claim or dispute arising out of, or relating in any way to, this Letter Agreement shall be brought and enforced in the courts of New York City, in the State of New York, and irrevocably submit to such jurisdiction and venue, which jurisdiction and venue shall be exclusive and (ii) waive any objection to such exclusive jurisdiction and venue or that such courts represent an inconvenient forum. |
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18. |
Any notice, consent or request to be given in connection with any of the terms or provisions of this Letter Agreement shall be in writing and shall be sent by express mail or similar private courier service, by certified mail (return receipt requested), by hand delivery or facsimile transmission. |
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19. |
This Letter Agreement shall terminate on the earlier of (i) the expiration of the Lock-up Periods or (ii) the liquidation of the Company; provided, however, that this Letter Agreement shall earlier terminate in the event that the Public Offering is not consummated and closed by [●] 2022; provided further that paragraph 4 of this Letter Agreement shall survive such liquidation. |
[Signature Page Follows]
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Sincerely, |
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RF DYNAMIC LLC |
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By: |
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Name: |
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Title: |
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| Acknowledged and Agreed: |
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| RF ACQUISITION CORP. |
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| By: |
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Name: |
Tse Meng Ng |
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Title: |
Chief Executive Officer |
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[Signature Page to Letter Agreement]
Exhibit 10.3
INVESTMENT MANAGEMENT TRUST AGREEMENT
This Investment Management
Trust Agreement (this “Agreement”) is made effective as of [●], 2022 by and between RF Acquisition Corp.,
a Delaware corporation (the “Company”), and Continental Stock Transfer & Trust Company, a New York
corporation (the “Trustee”).
WHEREAS, the Company’s
registration statement on Form S-1, File No. 333-261765 (the “Registration Statement”) and prospectus
(the “Prospectus”) for the initial public offering (the “Offering”) of the Company’s
units (the “Units”), each of which consists of one share of Class A common stock, par value $0.0001 per
share (the “Class A Common Stock”), one redeemable warrant, and one right to receive one-tenth of one share
of Class A Common Stock, has been declared effective as of the date hereof by the U.S. Securities and Exchange Commission; and
WHEREAS, the Company has entered
into an Underwriting Agreement (the “Underwriting Agreement”) with EarlyBirdCapital, Inc.; and
WHEREAS, as described in the
Prospectus, $101,000,000 of the gross proceeds of the Offering and sale of the Private Placement Warrants (as defined in the Underwriting
Agreement) (or $116,150,000 if the Underwriters’ over-allotment option is exercised in full) will be delivered to the Trustee to
be deposited and held in a segregated trust account located at all times in the United States (the “Trust Account”)
for the benefit of the Company and the holders of the shares of Class A Common Stock included in the Units issued in the Offering
as hereinafter provided (the amount to be delivered to the Trustee (and any interest subsequently earned thereon) is referred to herein
as the “Property,” the stockholders for whose benefit the Trustee shall hold the Property will be referred
to as the “Public Stockholders,” and the Public Stockholders and the Company will be referred to together as
the “Beneficiaries”); and
WHEREAS, the Company and the
Trustee desire to enter into this Agreement to set forth the terms and conditions pursuant to which the Trustee shall hold the Property.
NOW THEREFORE, IT IS
AGREED:
1. Agreements and Covenants
of Trustee. The Trustee hereby agrees and covenants to:
(a) Hold the Property in
trust for the Beneficiaries in accordance with the terms of this Agreement in the Trust Account established by Continental Stock Transfer &
Trust Company, acting as Trustee, in the United States at [●] (or at another U.S. chartered commercial bank with consolidated assets
of $100 billion or more) and at a brokerage institution selected by the Trustee that is reasonably satisfactory to the Company;
(b) Manage, supervise and
administer the Trust Account subject to the terms and conditions set forth herein;
(c) In a timely manner,
upon the written instruction of the Company, invest and reinvest the Property solely in United States government securities within the
meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, having a maturity of 185 days or less, or in money
market funds meeting the conditions of paragraphs (d)(1), (d)(2), (d)(3) and (d)(4) of Rule 2a-7 promulgated under the
Investment Company Act of 1940, as amended (or any successor rule), which invest only in direct U.S. government treasury obligations,
as determined by the Company; it being understood that the Trust Account will earn no interest while account funds are uninvested awaiting
the Company’s instructions hereunder and the Trustee may earn bank credits or other consideration;
(d) Collect and receive,
when due, all interest or other income arising from the Property, which shall become part of the “Property,” as such term
is used herein;
(e) Promptly notify the
Company and the Representative of all communications received by the Trustee with respect to any Property requiring action by the Company;
(f) Supply any necessary
information or documents as may be requested by the Company (or its authorized agents) in connection with the Company’s preparation
of the tax returns relating to assets held in the Trust Account;
(g) Participate in any
plan or proceeding for protecting or enforcing any right or interest arising from the Property if, as and when instructed by the Company
to do so;
(h) Render to the Company
monthly written statements of the activities of, and amounts in, the Trust Account reflecting all receipts and disbursements of the Trust
Account;
(i) Commence liquidation
of the Trust Account only after and promptly after (x) receipt of, and only in accordance with the terms of, a letter from the Company
(“Termination Letter”) in a form substantially similar to that attached hereto as either Exhibit A
or Exhibit B, as applicable, signed on behalf of the Company by its Chief Executive Officer, Chief Financial Officer, President,
Executive Vice President, Vice President, Secretary or Chairman of the board of directors of the Company (the “Board”)
or other authorized officer of the Company, and, in the case of Exhibit A, acknowledged and agreed to by the Representative,
and complete the liquidation of the Trust Account and distribute the Property in the Trust Account, including interest earned on the funds
held in the Trust Account (which interest shall be net of taxes payable and up to $100,000 of interest to pay dissolution expenses), only
as directed in the Termination Letter and the other documents referred to therein, or (y) upon the date which is the later of (1) 18
months after the closing of the Offering and (2) such later date as may be approved by the Company’s stockholders in accordance
with the Company’s amended and restated certificate of incorporation if a Termination Letter has not been received by the Trustee
prior to such date, in which case the Trust Account shall be liquidated in accordance with the procedures set forth in the Termination
Letter attached as Exhibit B and the Property in the Trust Account, including interest earned on the funds held in the Trust
Account (which interest shall be net of taxes payable and up to $100,000 of interest to pay dissolution expenses), shall be distributed
to the Public Stockholders of record as of such date;
(j) Upon written request
from the Company, which may be given from time to time in a form substantially similar to that attached hereto as Exhibit C
(a “Tax Payment Withdrawal Instruction”), withdraw from the Trust Account and distribute to the Company the
amount of interest earned on the Property requested by the Company to cover any tax obligation owed by the Company as a result of assets
of the Company or interest or other income earned on the Property, which amount shall be delivered directly to the Company by electronic
funds transfer or other method of prompt payment, and the Company shall forward such payment to the relevant taxing authority so long
as there is no reduction in the principal amount per share initially deposited in the Trust Account; provided, however,
that to the extent there is not sufficient cash in the Trust Account to pay such tax obligation, the Trustee shall liquidate such assets
held in the Trust Account as shall be designated by the Company in writing to make such distribution (it being acknowledged and agreed
that any such amount in excess of interest income earned on the Property shall not be payable from the Trust Account). The written request
of the Company referenced above shall constitute presumptive evidence that the Company is entitled to said funds, and the Trustee shall
have no responsibility to look beyond said request;
(k) Upon written request
from the Company, which may be given from time to time in a form substantially similar to that attached hereto as Exhibit D
(a “Stockholder Redemption Withdrawal Instruction”), the Trustee shall distribute to the Public Stockholders
on behalf of the Company the amount requested by the Company to be used to redeem shares of Class A Common Stock from Public Stockholders
properly submitted in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate
of incorporation (A) to modify the substance or timing of the Company’s obligation to allow redemption in connection with our
initial Business Combination or to redeem 100% of the shares of Class A Common Stock included in the Units sold in the Offering (the
“public common stock”) if the Company has not consummated an initial Business Combination within such time as
is described in the Company’s amended and restated certificate of incorporation or (B) with respect to any other material provisions
relating to stockholders’ rights or pre- initial Business Combination activity. The written request of the Company referenced above
shall constitute presumptive evidence that the Company is entitled to distribute said funds, and the Trustee shall have no responsibility
to look beyond said request; and
(l) Not make any withdrawals
or distributions from the Trust Account other than pursuant to Section 1(i), (j) or (k) above.
2. Agreements and Covenants
of the Company. The Company hereby agrees and covenants to:
(a) Give all instructions
to the Trustee hereunder in writing, signed by the Company’s Chairman of the Board, Chief Executive Officer, Chief Financial Officer,
President, Executive Vice President, Vice President or Secretary. In addition, except with respect to its duties under Sections 1(i),
1(j) and 1(k) hereof, the Trustee shall be entitled to rely on, and shall be protected in relying on, any verbal
or telephonic advice or instruction which it, in good faith and with reasonable care, believes to be given by any one of the persons authorized
above to give written instructions, provided that the Company shall promptly confirm such instructions in writing;
(b) Subject to Section 4
hereof, hold the Trustee harmless and indemnify the Trustee from and against any and all expenses, including reasonable counsel fees and
disbursements, or losses suffered by the Trustee in connection with any action taken by it hereunder and in connection with any action,
suit or other proceeding brought against the Trustee involving any claim, or in connection with any claim or demand, which in any way
arises out of or relates to this Agreement, the services of the Trustee hereunder, or the Property or any interest earned on the Property,
except for expenses and losses resulting from the Trustee’s gross negligence, fraud or willful misconduct. Promptly after the receipt
by the Trustee of notice of demand or claim or the commencement of any action, suit or proceeding, pursuant to which the Trustee intends
to seek indemnification under this Section 2(b), it shall notify the Company in writing of such claim (hereinafter referred
to as the “Indemnified Claim”). The Trustee shall have the right to conduct and manage the defense against such
Indemnified Claim; provided that the Trustee shall obtain the consent of the Company with respect to the selection of
counsel, which consent shall not be unreasonably withheld. The Trustee may not agree to settle any Indemnified Claim without the prior
written consent of the Company, which such consent shall not be unreasonably withheld. The Company may participate in such action with
its own counsel;
(c) Pay the Trustee the
fees set forth on Schedule A hereto, including an initial acceptance fee, annual administration fee, and transaction processing
fee which fees shall be subject to modification by the parties from time to time. It is expressly understood that the Property shall not
be used to pay such fees unless and until it is distributed to the Company pursuant to Sections 1(i) through 1(j) hereof.
The Company shall pay the Trustee the initial acceptance fee and the first annual administration fee at the consummation of the Offering.
The Company shall not be responsible for any other fees or charges of the Trustee except as set forth in this Section 2(c),
Schedule A and as may be provided in Section 2(b) hereof;
(d) In connection with
any vote of the Company’s stockholders regarding a merger, stock exchange, asset acquisition, stock purchase, reorganization or
similar business combination involving the Company and one or more businesses (the “Business Combination”),
provide to the Trustee an affidavit or certificate of the inspector of elections for the stockholder meeting verifying the vote of such
stockholders regarding such Business Combination;
(e) Provide the Representative
with a copy of any Termination Letter(s) and/or any other correspondence that is sent to the Trustee with respect to any proposed
withdrawal from the Trust Account promptly after it issues the same; and
(f) Instruct the Trustee
to make only those distributions that are permitted under this Agreement, and refrain from instructing the Trustee to make any distributions
that are not permitted under this Agreement.
3. Limitations of Liability.
The Trustee shall have no responsibility or liability to:
(a) Imply obligations, perform
duties, inquire or otherwise be subject to the provisions of any agreement or document other than this Agreement and that which is expressly
set forth herein;
(b) Take any action with
respect to the Property, other than as directed in Section 1 hereof, and the Trustee shall have no liability to any third
party except for liability arising out of the Trustee’s gross negligence, fraud or wilful misconduct;
(c) Institute any proceeding
for the collection of any principal and income arising from, or institute, appear in or defend any proceeding of any kind with respect
to, any of the Property unless and until it shall have received instructions from the Company given as provided herein to do so and the
Company shall have advanced or guaranteed to it funds sufficient to pay any expenses incident thereto;
(d) Refund any depreciation
in principal of any Property;
(e) Assume that the authority
of any person designated by the Company to give instructions hereunder shall not be continuing unless provided otherwise in such designation,
or unless the Company shall have delivered a written revocation of such authority to the Trustee;
(f) The other parties hereto
or to anyone else for any action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith and in the
Trustee’s best judgment, except for the Trustee’s gross negligence, fraud or wilful misconduct. The Trustee may rely conclusively
and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen by
the Trustee, which counsel may be the Company’s counsel), statement, instrument, report or other paper or document (not only as
to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information
therein contained) which the Trustee believes, in good faith and with reasonable care, to be genuine and to be signed or presented by
the proper person or persons. The Trustee shall not be bound by any notice or demand, or any waiver, modification, termination or rescission
of this Agreement or any of the terms hereof, unless evidenced by a written instrument delivered to the Trustee, signed by the proper
party or parties and, if the duties or rights of the Trustee are affected, unless it shall give its prior written consent thereto;
(g) Verify the accuracy
of the information contained in the Registration Statement;
(h) Provide any assurance
that any Business Combination entered into by the Company or any other action taken by the Company is as contemplated by the Registration
Statement;
(i) File information returns
with respect to the Trust Account with any local, state or federal taxing authority or provide periodic written statements to the Company
documenting the taxes payable by the Company, if any, relating to any interest income earned on the Property;
(j) Prepare, execute and
file tax reports, income or other tax returns and pay any taxes with respect to any income generated by, and activities relating to, the
Trust Account, regardless of whether such tax is payable by the Trust Account or the Company, including, but not limited to, tax obligations,
except pursuant to Section 1(j) hereof; or
(k) Verify calculations,
qualify or otherwise approve the Company’s written requests for distributions pursuant to Sections 1(i), 1(j) or
1(k) hereof.
4. Trust Account Waiver.
The Trustee has no right of set-off or any right, title, interest or claim of any kind (“Claim”) to, or to any
monies in, the Trust Account, and hereby irrevocably waives any Claim to, or to any monies in, the Trust Account that it may have now
or in the future. In the event the Trustee has any Claim against the Company under this Agreement, including, without limitation, under Section 2(b) or Section 2(c) hereof,
the Trustee shall pursue such Claim solely against the Company and its assets outside the Trust Account and not against the Property or
any monies in the Trust Account.
5. Termination. This
Agreement shall terminate as follows:
(a) If the Trustee gives
written notice to the Company that it desires to resign under this Agreement, the Company shall use its reasonable efforts to locate a
successor trustee, pending which the Trustee shall continue to act in accordance with this Agreement. At such time that the Company notifies
the Trustee that a successor trustee has been appointed and has agreed to become subject to the terms of this Agreement, the Trustee shall
transfer the management of the Trust Account to the successor trustee, including but not limited to the transfer of copies of the reports
and statements relating to the Trust Account, whereupon this Agreement shall terminate; provided, however, that in
the event that the Company does not locate a successor trustee within ninety (90) days of receipt of the resignation notice from the Trustee,
the Trustee may submit an application to have the Property deposited with any court in the State of New York or with the United States
District Court for the Southern District of New York and upon such deposit, the Trustee shall be immune from any liability whatsoever;
or
(b) At such time that the
Trustee has completed the liquidation of the Trust Account and its obligations in accordance with the provisions of Section 1(i) hereof
and distributed the Property in accordance with the provisions of the Termination Letter, this Agreement shall terminate except with respect
to Section 2(b).
6. Miscellaneous.
(a) The Company and the
Trustee each acknowledge that the Trustee will follow the security procedures set forth below with respect to funds transferred from the
Trust Account. The Company and the Trustee will each restrict access to confidential information relating to such security procedures
to authorized persons. Each party must notify the other party immediately if it has reason to believe unauthorized persons may have obtained
access to such confidential information, or of any change in its authorized personnel. In executing funds transfers, the Trustee shall
rely upon all information supplied to it by the Company, including, account names, account numbers, and all other identifying information
relating to a Beneficiary, Beneficiary’s bank or intermediary bank. Except for any liability arising out of the Trustee’s
gross negligence, fraud or wilful misconduct, the Trustee shall not be liable for any loss, liability or expense resulting from any error
in the information or transmission of the funds.
(b) This Agreement shall
be governed by and construed and enforced in accordance with the laws of the State of New York. This Agreement may be executed in several
original or facsimile counterparts, each one of which shall constitute an original, and together shall constitute but one instrument.
(c) This Agreement contains
the entire agreement and understanding of the parties hereto with respect to the subject matter hereof. Except for Section 1(i),
1(j) and 1(k) hereof (which sections may not be modified, amended or deleted without the affirmative vote of sixty-five
percent (65%) of the then outstanding Class A Common Stock and Class B common stock, par value $0.0001 per share, of the Company,
voting together as a single class; provided that no such amendment will affect any Public Stockholder who has properly elected
to redeem his or her Class A Common Stock in connection with a stockholder vote to amend this Agreement (A) to modify the substance
or timing of the Company’s obligation to allow redemption in connection with our initial Business Combination or to redeem 100%
of its shares of Class A Common Stock if the Company does not complete its initial Business Combination within the time frame specified
in the Company’s certificate of incorporation or (B) with respect to any other material provisions relating to stockholders’
rights or pre-initial Business Combination activity), this Agreement or any provision hereof may only be changed, amended or modified
(other than to correct a typographical error) by a writing signed by each of the parties hereto.
(d) The parties hereto
consent to the jurisdiction and venue of any state or federal court located in the City of New York, State of New York, for purposes of
resolving any disputes hereunder. AS TO ANY CLAIM, CROSS-CLAIM OR COUNTERCLAIM IN ANY WAY RELATING TO THIS AGREEMENT, EACH PARTY WAIVES
THE RIGHT TO TRIAL BY JURY.
(e) Any notice, consent
or request to be given in connection with any of the terms or provisions of this Agreement shall be in writing and shall be sent by express
mail or similar private courier service, by certified mail (return receipt requested), by hand delivery or by electronic mail:
| |
if to the Trustee, to: |
| |
|
| |
Continental Stock Transfer & Trust Company |
| |
1 State Street, 30th Floor |
| |
New York, New York 10004 |
| |
Attn: Francis Wolf & Celeste Gonzalez |
| |
Email: fwolf@continentalstock.com
Email: cgonzalez@continentalstock.com |
| |
|
| |
if to the Company, to: |
| |
|
| |
RF Acquisition Corp.
111 Somerset, #05-06
Singapore 238164
Attn: Tse Meng Ng |
| |
|
| |
in each case, with copies to: |
| |
|
| |
Winston & Strawn LLP |
| |
800 Capitol Street,
Suite 2400 |
| |
Houston, Texas 77002 |
| |
Attn: Michael J. Blankenship |
| |
Email: mblankenship@winston.com
Tel: (713) 651-2600 |
| |
|
| |
And |
| |
|
| |
EarlyBirdCapital, Inc.366 Madison Avenue, 8th FloorNew
York, NY 10017
Attn: General Counsel |
| |
|
| |
And |
| |
|
| |
Loeb & Loeb LLP
345 Park Avenue
New York, NY 10154
Attn: Giovanni Caruso
Email: gcaruso@loeb.com
Tel: (212) 407-4866 |
| |
|
(f) Each of the Company
and the Trustee hereby represents that it has the full right and power and has been duly authorized to enter into this Agreement and to
perform its respective obligations as contemplated hereunder. The Trustee acknowledges and agrees that it shall not make any claims or
proceed against the Trust Account, including by way of set-off, and shall not be entitled to any funds in the Trust Account under any
circumstance.
(g) This Agreement is the
joint product of the Trustee and the Company and each provision hereof has been subject to the mutual consultation, negotiation and agreement
of such parties and shall not be construed for or against any party hereto.
(h) This Agreement may
be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute
one and the same instrument. Delivery of a signed counterpart of this Agreement by facsimile or electronic transmission shall constitute
valid and sufficient delivery thereof.
(i) Each of the Company
and the Trustee hereby acknowledges and agrees that the Representative on behalf of the Underwriters are third-party beneficiaries of
this Agreement.
(j) Except as specified
herein, no party to this Agreement may assign its rights or delegate its obligations hereunder to any other person or entity.
[Signature Page Follows]
IN
WITNESS WHEREOF, the parties have duly executed this Investment Management Trust Agreement as of the date first written above.
| |
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Trustee |
| |
|
| |
By: |
|
| |
|
Name: Francis Wolf |
| |
|
Title: Vice President |
| |
|
| |
RF ACQUISITION CORP. |
| |
|
| |
By: |
|
| |
|
Name: Tse Meng Ng |
| |
|
Title: Chief Executive Officer |
[Signature Page to Investment Management
Trust Agreement]
SCHEDULE A
| Fee Item |
|
Time and method of payment |
|
Amount |
|
| Initial set-up fee. |
|
Initial closing of Offering by wire transfer. |
|
$ |
3,500.00 |
|
| Trustee administration fee |
|
Payable annually. First year fee payable, at initial closing of Offering by wire transfer, thereafter by wire transfer or check. |
|
$ |
10,000.00 |
|
| Transaction processing fee for disbursements to Company under Section 1 |
|
Billed to Company following disbursement made to Company under Section 1 |
|
$ |
250.00 |
|
| Paying Agent services as required pursuant to Section 1(i) and 1(k) |
|
Billed to Company upon delivery of service pursuant to Section 1(i) and 1(k) |
|
|
Prevailing rates |
|
EXHIBIT A
[Letterhead of Company]
[Insert date]
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
Attn: Francis Wolf & Celeste Gonzalez
| |
Re: |
Trust Account - Termination Letter |
Dear Mr. Wolf and Ms. Gonzalez:
Pursuant to Section 1(i) of
the Investment Management Trust Agreement between RF Acquisition Corp. (the “Company”) and Continental Stock
Transfer & Trust Company (“Trustee”), dated as of __________, 2022 (the “Trust Agreement”),
this is to advise you that the Company has entered into an agreement with ___________ (the “Target Business”)
to consummate a business combination with Target Business (the “Business Combination”) on or about [insert
date]. The Company shall notify you at least seventy-two (72) hours in advance of the actual date (or such shorter period as you may
agree) of the consummation of the Business Combination (the “Consummation Date”). Capitalized
terms used but not defined herein shall have the meanings set forth in the Trust Agreement.
In accordance with the terms
of the Trust Agreement, we hereby authorize you to commence to liquidate all of the assets of the Trust Account at [●], and to transfer
the proceeds to a segregated account held by you on behalf of the Beneficiaries to the effect that, on the Consummation Date, all of the
funds held in the Trust Account will be immediately available for transfer to the account or accounts that the Company shall direct on
the Consummation Date.
On the Consummation Date
(i) counsel for the Company shall deliver to you written notification that the Business Combination has been consummated, or
will be consummated concurrently with your transfer of funds to the accounts as directed by the Company (the
“Notification”), and (ii) the Company shall deliver to you (a) a certificate of the Chief
Executive Officer, Chief Financial Officer, Chief Operating Officer or President, which verifies that the Business Combination has
been approved by a vote of the Company’s stockholder, if a vote is held and (b) a joint written instruction signed by the
Company and the Representative with respect to the transfer of the funds held in the Trust Account, including payment of amounts
owed to public stockholders who have properly exercised their redemption rights from the Trust Account (the “Instruction
Letter”). You are hereby directed and authorized to transfer the funds held in the Trust Account immediately upon your
receipt of the Notification and the Instruction Letter, in accordance with the terms of the Instruction Letter. In the event that
certain deposits held in the Trust Account may not be liquidated by the Consummation Date without penalty, you will notify the
Company in writing of the same and the Company shall direct you as to whether such funds should remain in the Trust Account and be
distributed after the Consummation Date to the Company. Upon the distribution of all the funds, net of any payments necessary for
reasonable unreimbursed expenses related to liquidating the Trust Account, your obligations under the Trust Agreement shall be
terminated.
In the event that the Business
Combination is not consummated on the Consummation Date described in the notice thereof and we have not notified you on or before the
original Consummation Date of a new Consummation Date, then upon receipt by the Trustee of written instructions from the Company, the
funds held in the Trust Account shall be reinvested as provided in Section 1(c) of the Trust Agreement on the business day immediately
following the Consummation Date as set forth in such notice as soon thereafter as possible.
| |
Very truly yours, |
| |
|
| |
RF Acquisition Corp. |
| |
|
| |
By: |
|
| |
|
Name: Tse Meng Ng |
| |
|
Title: Chief Executive Officer |
| Agreed and acknowledged by: |
|
| |
|
| EarlyBirdCapital, Inc. |
|
| |
|
| By: |
|
|
| |
Name: |
|
| |
Title: |
|
EXHIBIT B
[Letterhead of Company]
[Insert date]
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
Attn: Francis Wolf & Celeste Gonzalez
| |
Re: |
Trust Account -- Termination Letter |
Dear Mr. Wolf and Ms. Gonzalez:
Pursuant to Section 1(i) of
the Investment Management Trust Agreement between RF Acquisition Corp. (the “Company”) and Continental Stock
Transfer & Trust Company (the “Trustee”), dated as of _________, 2022 (the “Trust
Agreement”), this is to advise you that the Company has been unable to effect a business combination with a Target Business
(the “Business Combination”) within the time frame specified in the Company’s Amended and Restated Certificate
of Incorporation, as described in the Company’s Prospectus relating to the Offering. Capitalized terms used but not defined herein
shall have the meanings set forth in the Trust Agreement.
In accordance with the terms
of the Trust Agreement, we hereby authorize you to liquidate all of the assets in the Trust Account and to transfer the total proceeds
into a segregated account held by you on behalf of the Beneficiaries to await distribution to the Public Stockholders. The Company has
selected __________1 as the effective date for the purpose of determining when the Public Stockholders will be entitled
to receive their share of the liquidation proceeds. You agree to be the Paying Agent of record and, in your separate capacity as Paying
Agent, agree to distribute said funds directly to the Company’s Public Stockholders in accordance with the terms of the Trust Agreement
and the Amended and Restated Certificate of Incorporation of the Company. Upon the distribution of all the funds, net of any payments
necessary for reasonable unreimbursed expenses related to liquidating the Trust Account, your obligations under the Trust Agreement shall
be terminated, except to the extent otherwise provided in Section 1(i) of the Trust Agreement.
| |
1 |
12 months from the closing of the Offering, or at a later date, if extended. |
| |
Very truly yours, |
| |
|
| |
RF Acquisition Corp. |
| |
|
| |
By: |
|
| |
|
Name: Tse Meng Ng |
| |
|
Title: Chief Executive Officer |
| cc: EarlyBirdCapital, Inc. |
|
EXHIBIT C
[Letterhead of Company]
[Insert date]
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
Attn: Francis Wolf & Celeste Gonzalez
| |
Re: |
Trust Account - Tax Payment Withdrawal Instruction |
Dear Mr. Wolf and Ms. Gonzalez:
Pursuant to Section 1(j) of
the Investment Management Trust Agreement between RF Acquisition Corp. (the “Company”) and Continental Stock
Transfer & Trust Company (the “Trustee”), dated as of ________, 2022 (the “Trust Agreement”),
the Company hereby requests that you deliver to the Company $_______ of the interest income earned on the Property as of the date hereof.
Capitalized terms used but not defined herein shall have the meanings set forth in the Trust Agreement.
The Company needs such funds
to pay for the tax obligations as set forth on the attached tax return or tax statement. In accordance with the terms of the Trust Agreement,
you are hereby directed and authorized to transfer (via wire transfer) such funds promptly upon your receipt of this letter to the Company’s
operating account at:
| |
[WIRE INSTRUCTION INFORMATION] |
| |
|
| |
Very truly yours, |
| |
|
| |
RF Acquisition Corp. |
| |
|
| |
By: |
|
| |
|
Name: Tse Meng Ng |
| |
|
Title: Chief Executive Officer |
| |
|
| cc: EarlyBirdCapital, Inc. |
|
EXHIBIT D
[Letterhead of Company]
[Insert date]
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
Attn: Francis Wolf & Celeste Gonzalez
| |
Re: |
Trust Account - Stockholder Redemption Withdrawal Instruction |
Dear Mr. Wolf and Ms. Gonzalez:
Pursuant to Section 1(k) of
the Investment Management Trust Agreement between RF Acquisition Corp. (the “Company”) and Continental Stock
Transfer & Trust Company (the “Trustee”), dated as of _____, 2022 (the “Trust Agreement”),
the Company hereby requests that you deliver to the redeeming Public Stockholders of the Company $____ of the principal and interest income
earned on the Property as of the date hereof to a segregated account held by you on behalf of the Beneficiaries for distribution to the
Public Stockholders who have requested redemption of their shares of Class A Common Stock. Capitalized terms used but not defined
herein shall have the meanings set forth in the Trust Agreement.
The Company needs such
funds to pay its Public Stockholders who have properly elected to have their shares of Class A Common Stock redeemed by the
Company in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of
incorporation (A) to modify the substance or timing of the Company’s obligation to allow redemption in connection with
our initial business combination or to redeem 100% of its public shares of Class A Common Stock if the Company has not
consummated an initial Business Combination within such time as is described in the Company’s amended and restated certificate
of incorporation or (B) with respect to any other material provisions relating to stockholders’ rights or pre-initial
Business Combination activity. As such, you are hereby directed and authorized to transfer (via wire transfer) such funds promptly
upon your receipt of this letter.
| |
Very truly yours, |
| |
|
| |
RF Acquisition Corp. |
| |
|
| |
By: |
|
| |
|
Name: Tse Meng Ng |
| |
|
Title: Chief Executive Officer |
| |
|
| cc: EarlyBirdCapital, Inc. |
|
Exhibit 10.5
RF Acquisition Corp.
111 Somerset, #05-06
Singapore 238164
[●], 2022
RF Dynamic LLC
111 Somerset, #05-06
Singapore 238164
RE: Securities Subscription
Agreement
Ladies and Gentlemen:
RF Acquisition Corp., a Delaware
corporation (the “Company,” “we” or “us”), is pleased to accept the offer made
by RF Dynamic LLC, a Delaware limited liability company (“Subscriber” or “you”), to purchase 2,875,000
shares (the “Shares”) of Class B common stock of the Company, $0.0001 par value per share , up to 375,000 of which
are subject to forfeiture by you to the extent that the underwriters of the initial public offering (“IPO”) of the
Company’s units, each unit comprised of one share of Class A common stock, one redeemable warrant, and one right to purchase
one-tenth (1/10) of one share of Class A common stock (“Units”), do not fully exercise their option to purchase
additional Units to cover over-allotments, if any (the “Over-allotment Option”). The terms of the sale by the Company
of the Shares to Subscriber, and the Company and Subscriber’s agreements regarding the Shares, are as follows:
1. Purchase
of Securities.
1.1. Purchase
of Shares. For the sum of $25,000 (the “Purchase Price”), which the Company acknowledges receiving in cash, the
Company hereby issues the Shares to Subscriber, and Subscriber hereby purchases the Shares from the Company, on the terms and subject
to the conditions, including regarding forfeiture, set forth in this letter agreement (this “Agreement”). Concurrently
with Subscriber’s execution of this Agreement, the Company shall, at its option, deliver to Subscriber a certificate registered
in Subscriber’s name representing the shares (the “Original Certificate”) or effect such delivery in book-entry
form.
2. Representations,
Warranties and Agreements.
2.1. Subscriber’s
Representations, Warranties and Agreements. To induce the Company to issue the Shares to Subscriber, Subscriber hereby represents
and warrants to the Company and agrees with the Company as follows:
2.1.1. Organization
and Authority. Subscriber is a limited liability company, duly organized, validly existing and in good standing under the laws of
State of Delaware, and possesses all requisite power and authority necessary to carry out the transactions contemplated by this Agreement.
This Agreement is a legal, valid and binding agreement of Subscriber, enforceable against Subscriber in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance or similar laws affecting the enforcement
of creditors’ rights generally and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding
at law or in equity).
2.1.2. No
Conflicts. The execution, delivery and performance of this Agreement and the consummation by Subscriber of the transactions contemplated
hereby do not violate, conflict with or constitute a default under (i) the formation and governing documents of Subscriber, (ii) any
agreement, indenture or instrument to which Subscriber is a party or (iii) any law, statute, rule, regulation, order, judgment or
decree to which Subscriber is subject.
2.1.3. No
Governmental Consents. No governmental, administrative or other third party consents or approvals are required, necessary or appropriate
on the part of Subscriber in connection with the transactions contemplated by this Agreement.
2.1.4. Experience,
Financial Capability and Suitability. Subscriber is sophisticated in financial matters and is able to evaluate the risks and benefits
of the investment in the Shares. Subscriber acknowledges that the Shares have not been registered under the Securities Act of 1933, as
amended (the “Securities Act”), and therefore cannot be sold unless subsequently registered under the Securities Act
or an exemption from such registration is available. Subscriber understands that it must bear the economic risk of this investment until
the Shares are sold pursuant to: (i) an effective registration statement under the Securities Act or (ii) an exemption from
registration available with respect to such sale. Subscriber is able to bear the economic risk of an investment in the Shares for an
indefinite period of time and to afford a complete loss of Subscriber’s investment in the Shares.
2.1.5. No
Government Recommendation or Approval. Subscriber understands that no federal or state agency has passed upon or made any recommendation
or endorsement of the offering of the Shares.
2.1.6. Access
to Information; Independent Investigation. Prior to the execution of this Agreement, Subscriber has had the opportunity to ask questions
of and receive answers from representatives of the Company concerning an investment in the Company, as well as the financial condition,
business and prospects of the Company, and the opportunity to obtain additional information to verify the accuracy of all information
so obtained. In determining whether to make this investment, Subscriber has relied solely on Subscriber’s own knowledge and understanding
of the Company and its business based upon Subscriber’s own due diligence investigation. Subscriber understands that no person
has been authorized to make any representations other than as set forth in this Agreement and Subscriber has not relied on any other
written or oral representations relating to the financial condition, business, and prospects of the Company in making its investment
decision.
2.1.7. Investment
Representations. Subscriber represents that it is an “accredited investor” as such term is defined in Rule 501(a) of
Regulation D under the Securities Act and acknowledges the sale contemplated hereby is being made in reliance on the private placement
exemption in Section 4(a)(2) of the Securities Act and/or said Regulation D and similar exemptions under state law. Subscriber
is purchasing the Shares solely for investment purposes, for Subscriber’s own account and not for the account or benefit of any
other person, and not with a view towards the distribution or dissemination thereof. Subscriber did not decide to enter into this Agreement
as a result of any general solicitation or general advertising within the meaning of Rule 502 under the Securities Act.
2.1.8. Restrictions
on Transfer; Shell Company. Subscriber understands the Shares are being offered in a transaction not involving a public offering
within the meaning of the Securities Act. Subscriber understands the Shares will be “restricted securities” within the meaning
of Rule 144(a)(3) under the Securities Act, and Subscriber understands that the certificates or book-entries representing the
Shares will contain a legend or notation in respect of such restrictions. If, in the future, Subscriber decides to offer, resell, pledge,
or otherwise transfer the Shares, such Shares may be offered, resold, pledged or otherwise transferred only pursuant to: (i) an
effective registration statement under the Securities Act or (ii) an exemption from registration available with respect to such
sale. Subscriber agrees that if any transfer of its Shares or any interest therein is proposed to be made, as a condition precedent to
any such transfer, Subscriber may be required to deliver to the Company an opinion of counsel satisfactory to the Company. Absent registration
or available exemption, Subscriber agrees not to resell the Shares. Subscriber further acknowledges that because the Company is a shell
company, Rule 144 may not be available to Subscriber for the resale of the Shares until one year following consummation of the initial
business combination of the Company, despite the release or waiver of any contractual transfer restrictions.
2.2. Company’s
Representations, Warranties and Agreements. To induce Subscriber to purchase the Shares, the Company hereby represents and warrants
to Subscriber and agrees with Subscriber as follows:
2.2.1. Organization
and Authority. The Company is a corporation, duly organized, validly existing and in good standing under the laws of the State of
Delaware, and possesses all requisite power and authority necessary to carry out the transactions contemplated by this Agreement. This
Agreement is a legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance or similar laws affecting the enforcement
of creditors’ rights generally and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding
at law or in equity).
2.2.2. No
Conflicts. The execution, delivery and performance of this Agreement and the consummation by the Company of the transactions contemplated
hereby do not violate, conflict with or constitute a default under (i) the formation and governing documents of the Company, (ii) any
agreement, indenture or instrument to which the Company is a party or (iii) any law, statute, rule, regulation, order, judgment or
decree to which the Company is subject.
2.2.3. No
Governmental Consents. No governmental, administrative or other third party consents or approvals are required, necessary or appropriate
on the part of the Company in connection with the transactions contemplated by this Agreement.
2.2.4. Title
to Securities. Upon issuance in accordance with, and payment pursuant to, the terms hereof, the Shares will be duly and validly issued,
fully paid and nonassessable. Upon issuance in accordance with, and payment pursuant to, the terms hereof, Subscriber will have
or receive good title to the Shares, free and clear of all liens, claims and encumbrances of any kind, other than (a) transfer restrictions
hereunder and other agreements to which the Shares may become subject, (b) transfer restrictions under federal and state securities
laws, and (c) liens, claims or encumbrances imposed due to the actions of Subscriber.
2.2.5. No
Adverse Actions. There are no actions, suits, investigations, or proceedings pending, threatened against or affecting the Company
which: (i) seek to restrain, enjoin, prevent the consummation of or otherwise affect the transactions contemplated by this Agreement
or (ii) question the validity or legality of any such transactions or seeks to recover damages or to obtain other relief in connection
with any such transactions.
3. Forfeiture
of Shares.
3.1. Partial
or No Exercise of the Over-allotment Option. In the event the Over-allotment Option is not exercised in full, Subscriber acknowledges
and agrees that it (or, if applicable, it and/or any transferees of Shares) shall forfeit any and all rights to such number of Shares
(up to an aggregate of 375,000 Shares (as such amount may be adjusted for share splits, share dividends, reorganizations, recapitalizations
and the like) and pro rata based upon the percentage of the Over-allotment Option exercised) such that immediately following such forfeiture,
Subscriber will own an aggregate number of Shares equal to 20% of the issued and outstanding Shares immediately following the IPO.
3.2. Termination
of Rights as Stockholder. If any of the Shares are forfeited in accordance with this Section 3, then after such time Subscriber
(or its successor in interest), shall no longer have any rights as a holder of such forfeited Shares, and the Company shall take such
action as is appropriate to cancel such forfeited Shares.
3.3. Share
Certificates. In the event an adjustment to the Original Certificates, if any, is required
pursuant to this Section 3, then Subscriber shall return such Original Certificates to the Company or its designated agent
as soon as practicable upon its receipt of notice from the Company advising Subscriber of such adjustment, following which a new certificate
(the “New Certificate”), if any, shall be issued in such amount representing the adjusted number of Shares held by
Subscriber. The New Certificate, if any, shall be returned to Subscriber as soon as practicable. Any such adjustment for any uncertificated
securities held by Subscriber shall be made in book-entry form.
4. Waiver
of Redemption Rights. Subscriber hereby waives any and all rights to redeem the Shares for a portion of the amounts held in the trust
account into which substantially all of the proceeds of the IPO will be deposited (the “Trust Account”) in the event
of (i) the Company’s failure to timely complete an initial business combination, (ii) an extension of the time period
to complete an initial business combination or (iii) upon the consummation of an initial business combination. For purposes of clarity,
in the event Subscriber purchases shares of Class A common stock included in the Units issued in the IPO (“Public Shares”),
either in the IPO or in the aftermarket, any Public Shares so purchased shall be eligible to be redeemed for a portion of the amounts
held in the Trust Account in the event of the Company’s failure to timely complete an initial business combination (but, for the
avoidance of doubt, not in connection with an extension of the time period to complete an initial business combination or upon the consummation
of an initial business combination).
5. Restrictions
on Transfer.
5.1. Securities
Law Restrictions. In addition to any restrictions to be contained in that certain letter agreement
(commonly known as an “Insider Letter”) to be dated as of the closing of the IPO by and between Subscriber
and the Company (which will also contain other agreements with respect to the Shares), Subscriber agrees not to sell, transfer, pledge,
hypothecate or otherwise dispose of all or any part of the Shares unless, prior thereto, (a) a registration statement on the appropriate
form under the Securities Act and applicable state securities laws with respect to the Shares proposed to be transferred shall then be
effective or (b) the Company has received an opinion from counsel, reasonably satisfactory to the Company, that registration is
not required because such transaction is exempt from registration under the Securities Act and the rules promulgated by the Securities
and Exchange Commission thereunder and all applicable state securities laws.
5.2. Lock-up.
Subscriber acknowledges that the Shares will not be transferable, assignable or salable until the earlier to occur of: (i) 12 months
after the completion of the initial business combination and (ii) the date of completion of a liquidation, merger, capital stock
exchange or other similar transaction after the initial business combination that results in all of our stockholders having the right
to exchange their Class A common stock for cash, securities or other property; except to certain permitted transferees and under
certain circumstances as described in the Registration Statement.
5.3. Restrictive
Legends. Any certificates representing the Shares shall have endorsed thereon legends substantially as follows (and any book-entries
representing the Shares shall have similar notations):
“THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION
OF COUNSEL, IS AVAILABLE.”
“THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER SET FORTH IN A LETTER AGREEMENT WITH RF ACQUISITION CORP. (THE “COMPANY”)
(A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT THE COMPANY’S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE) AND MAY NOT
BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN VIOLATION OF SUCH RESTRICTIONS.”
5.4. Additional
Shares or Substituted Securities. In the event of the declaration of a share dividend, the declaration of an extraordinary dividend
payable in a form other than Shares, a spin-off, a share split, an adjustment in conversion ratio, a recapitalization or a similar transaction
affecting the Company’s outstanding Shares without receipt of consideration, any new, substituted or additional securities or other
property which are by reason of such transaction distributed with respect to any Shares subject to this Section 5 or into which
such Shares thereby become convertible shall immediately be subject to this Section 5 and Section 3 hereof. Appropriate adjustments
to reflect the distribution of such securities or property shall be made to the number and/or class of Shares subject to this Section 5
and Section 3.
6. Other
Agreements.
6.1. Further
Assurances. Subscriber agrees to execute such further instruments and to take such further action as may reasonably be necessary
to carry out the intent of this Agreement.
6.2. Notices.
All notices, statements or other documents which are required or contemplated by this Agreement shall be in writing and delivered (i) personally
or by certified mail (return receipt requested) or overnight courier service or (ii) by electronic mail, if to the Company, at the
address of its principal offices and any electronic mail address as may be designated in writing by the Company and, if to Subscriber,
at its address in the books and records of the Company and any electronic mail address as may be designated in writing by Subscriber,
or to such other addresses as may be designated in writing by the Company or Subscriber. All such notices, statements or other documents
shall be deemed received on the date of receipt by the recipient thereof if received prior to 8:00 p.m. on a business day in the
place of receipt. Otherwise, any such notices, statements or other documents shall be deemed to have been received on the next succeeding
business day in the place of receipt.
6.3. Entire
Agreement. This Agreement, together with the Insider Letter and the registration rights agreement to be entered into with respect
to the Shares, each substantially in the form to be filed as an exhibit to the Registration Statement on Form S-1 associated with
the Company’s IPO, embodies the entire agreement and understanding between Subscriber and the Company with respect to the subject
matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement,
representation, warranty, covenant, or agreement of any kind not expressly set forth in this Agreement shall affect, or be used to interpret,
change or restrict, the express terms and provisions of this Agreement.
6.4. Modifications
and Amendments. The terms and provisions of this Agreement may be modified or amended only by written agreement executed by all parties
hereto.
6.5. Waivers
and Consents. The terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by a
written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed
to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar.
Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not
constitute a continuing waiver or consent.
6.6. Assignment.
The rights and obligations under this Agreement may not be assigned by either party hereto without the prior written consent of the other
party.
6.7. Benefit.
All statements, representations, warranties, covenants, and agreements in this Agreement shall be binding on the parties hereto and
shall inure to the benefit of the respective successors and permitted assigns of each party hereto. Nothing in this Agreement
shall be construed to create any rights or obligations except among the parties hereto, and no person or entity shall be regarded as
a third-party beneficiary of this Agreement.
6.8. Governing
Law. This Agreement and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by
the laws of the State of New York applicable to contracts wholly performed within the borders of such state, without giving effect to
the conflict of law principles thereof.
6.9. Severability.
In the event that any court of competent jurisdiction shall determine that any provision, or any portion thereof, contained in this Agreement
shall be unreasonable or unenforceable in any respect, then such provision shall be deemed limited to the extent that such court deems
it reasonable and enforceable, and, as so limited, shall remain in full force and effect. In the event that such court shall deem any
such provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall nevertheless remain in full
force and effect.
6.10. No
Waiver of Rights, Powers and Remedies. No failure or delay by a party hereto in exercising any right, power or remedy under this
Agreement, and no course of dealing between the parties hereto, shall operate as a waiver of any such right, power or remedy of such
party. No single or partial exercise of any right, power or remedy under this Agreement by a party hereto, nor any abandonment or discontinuance
of steps to enforce any such right, power or remedy, shall preclude such party from any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder. The election of any remedy by a party hereto shall not constitute a waiver of the right
of such party to pursue other available remedies. No notice to or demand on a party not expressly required under this Agreement shall
entitle the party receiving such notice or demand to any other or further notice or demand in similar or other circumstances or constitute
a waiver of the rights of the party giving such notice or demand to any other or further action in any circumstances without such notice
or demand.
6.11. Survival
of Representations and Warranties. All representations and warranties made by the parties hereto in this Agreement or in any other
agreement, certificate or instrument provided for or contemplated hereby, shall survive the execution and delivery hereof and any investigations
made by or on behalf of the parties.
6.12. No
Broker or Finder. Each of the parties hereto represents and warrants to the other that no broker, finder, or other financial consultant
has acted on its behalf in connection with this Agreement or the transactions contemplated hereby in such a way as to create any liability
on the other. Each of the parties hereto agrees to indemnify and save the other harmless from any claim or demand for commission or other
compensation by any broker, finder, financial consultant or similar agent claiming to have been employed by or on behalf of such party
and to bear the cost of legal expenses incurred in defending against any such claim.
6.13. Headings
and Captions. The headings and captions of the various subdivisions of this Agreement are for convenience of reference only and shall
in no way modify or affect the meaning or construction of any of the terms or provisions hereof.
6.14. Counterparts.
This Agreement may be executed in one or more counterparts, all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that
both parties need not sign the same counterpart. In the event that any signature is delivered in pdf format via electronic mail, such
signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such signature page were an original thereof.
6.15. Construction.
The parties hereto have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent
or interpretation arises, this Agreement will be construed as if drafted jointly by the parties hereto and no presumption or burden of
proof will arise favoring or disfavoring any party hereto because of the authorship of any provision of this Agreement. The words “include,”
“includes,” and “including” will be deemed to be followed by “without limitation.”
Pronouns in masculine, feminine, and neuter genders will be construed to include any other gender, and words in the singular form will
be construed to include the plural and vice versa, unless the context otherwise requires. The words “this Agreement,”
“herein,” “hereof,” “hereby,” “hereunder,” and words of similar
import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The parties hereto intend
that each representation, warranty, and covenant contained herein will have independent significance. If any party hereto has breached
any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty
or covenant relating to the same subject matter (regardless of the relative levels of specificity) which such party hereto has not breached
will not detract from or mitigate the fact that such party hereto is in breach of the first representation, warranty, or covenant.
6.16. Mutual
Drafting. This Agreement is the joint product of Subscriber and the Company and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of such parties and shall not be construed for or against any party hereto.
7. Indemnification. Each
party shall indemnify the other against any loss, cost or damages (including reasonable attorney’s fees and expenses) incurred
as a result of such party’s breach of any representation, warranty, covenant or agreement in this Agreement.
[Signature Page Follows]
If the foregoing accurately
sets forth our understanding and agreement, please sign the enclosed copy of this Agreement and return it to us.
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Very truly yours,
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RF ACQUISITION CORP. |
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By: |
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Name: Tse Meng Ng |
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Title: Chief Executive Officer |
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Accepted and agreed as of the date first written above.
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RF Dynamic LLC
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| By: |
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Name:
Tse Meng Ng
Title: Manager |
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[Signature
Page to Securities Subscription Agreement]
Exhibit 10.7
PRIVATE PLACEMENT WARRANTS PURCHASE AGREEMENT
THIS PRIVATE PLACEMENT WARRANTS
PURCHASE AGREEMENT, dated as of [●], 2022 (as it may from time to time be amended, this “Agreement”),
is entered into by and between RF Acquisition Corp., a Delaware corporation (the “Company”), and RF Dynamic
LLC, a Delaware limited liability company (the “Purchaser”).
WHEREAS, the Company intends
to consummate an initial public offering of the Company’s units (the “Public Offering”), each unit consisting
of one share of Class A Common Stock, par value $0.0001 per share, of the Company (each a share of “Class A Common
Stock”), one redeemable warrant, and one right to receive one-tenth of one share of Class A Common Stock. Each whole
warrant entitles the holder to purchase one share of Class A Common Stock at an exercise price of $11.50 per share of Class A
Common Stock. The Purchaser has agreed to purchase an aggregate of 4,050,000 warrants (or 4,450,500 in the aggregate if the over-allotment
option in connection with the Public Offering is exercised in full) (the “Private Placement Warrants”), each
Private Placement Warrant entitling the holder to purchase one share of Class A Common Stock at an exercise price of $11.50 per share
of Class A Common Stock.
NOW THEREFORE, in consideration
of the mutual promises contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties to this Agreement hereby, intending legally to be bound, agree as follows:
AGREEMENT
Section 1. Authorization,
Purchase and Sale; Terms of the Private Placement Warrants.
A. Authorization of the
Private Placement Warrants. The Company has duly authorized the issuance and sale of the Private Placement Warrants to the Purchaser.
B. Purchase and Sale of
the Private Placement Warrants.
(i) On the date of the
consummation of the Public Offering or on such earlier time and date as may be mutually agreed by the Purchaser and the Company (the “Initial
Closing Date”), the Company shall issue and sell to the Purchaser, and the Purchaser shall purchase from the Company, an
aggregate of 4,050,000 Private Placement Warrants at a price of $1.00 per warrant for an aggregate purchase price of $4,050,000 (the “Purchase
Price”), which shall be paid by wire transfer of immediately available funds to the Company at least one business day prior
to the Initial Closing Date in accordance with the Company’s wiring instructions. On the Initial Closing Date, upon the payment
by the Purchaser of the Purchase Price, the Company, at its option, shall deliver a certificate evidencing the Private Placement Warrants
purchased by the Purchaser on such date duly registered in the Purchaser’s name to the Purchaser, or effect such delivery in book-entry
form.
(ii) On the date of the
consummation of the closing of the over-allotment option in connection with the Public Offering or on such earlier time and date as may
be mutually agreed by the Purchaser and the Company (each such date, an “Over-allotment Closing Date”, and each
Over-allotment Closing Date (if any) and the Initial Closing Date being sometimes referred to herein as a “Closing Date”),
the Company shall issue and sell to the Purchaser, and the Purchaser shall purchase from the Company, up to an aggregate of 400,500 additional
Private Placement Warrants at a price of $1.00 per warrant for an aggregate purchase price of up to $400,500 (if the over-allotment option
in connection with the Public Offering is exercised in full) (the “Over-allotment Purchase Price”). The Purchaser
shall pay the Over-allotment Purchase Price by wire transfer of immediately available funds to the Company at least one business day prior
to the Over-Allotment Closing Date in accordance with the Company’s wiring instructions. On the Over-allotment Closing Date, upon
the payment by the Purchaser of the Over-allotment Purchase Price, the Company shall, at its option, deliver a certificate evidencing
the Private Placement Warrants purchased by the Purchaser on such date duly registered in the Purchaser’s name to the Purchaser,
or effect such delivery in book-entry form.
C. Terms of the Private
Placement Warrants.
(i) Each Private Placement
Warrant shall have the terms set forth in a Warrant Agreement to be entered into by the Company and a warrant agent in connection with
the Public Offering (a “Warrant Agreement”).
(ii) At the time of the
closing of the Public Offering, the Company and the Purchaser shall enter into a registration rights agreement (the “Registration
Rights Agreement”) pursuant to which the Company will grant certain registration rights to the Purchaser relating to the
Private Placement Warrants and the Class A Common Stock underlying the Private Placement Warrants.
Section 2.
Representations and Warranties of the Company. As a material inducement to the Purchaser to enter into this Agreement
and purchase the Private Placement Warrants, the Company hereby represents and warrants to the Purchaser (which representations and warranties
shall survive the Closing Date) that:
A. Incorporation and Corporate
Power. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware
and is qualified to do business in every jurisdiction in which the failure to so qualify would reasonably be expected to have a material
adverse effect on the financial condition, operating results or assets of the Company. The Company possesses all requisite corporate power
and authority necessary to carry out the transactions contemplated by this Agreement and the Warrant Agreement.
B. Authorization; No Breach.
(i) The execution, delivery
and performance of this Agreement and the Private Placement Warrants have been duly authorized by the Company as of the Closing Date.
This Agreement constitutes the valid and binding obligation of the Company, enforceable in accordance with its terms. Upon issuance in
accordance with, and payment pursuant to, the terms of the Warrant Agreement and this Agreement, the Private Placement Warrants will constitute
valid and binding obligations of the Company, enforceable in accordance with their terms as of the Closing Date.
(ii) The execution and
delivery by the Company of this Agreement and the Private Placement Warrants, the issuance and sale of the Private Placement Warrants,
the issuance of the shares of Class A Common Stock upon exercise of the Private Placement Warrants and the fulfillment of, and compliance
with, the respective terms hereof and thereof by the Company, do not and will not as of the Closing Date (a) conflict with or result
in a breach of the terms, conditions or provisions of, (b) constitute a default under, (c) result in the creation of any lien,
security interest, charge or encumbrance upon the Company’s equity or assets under, (d) result in a violation of, or (e) require
any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any court or administrative
or governmental body or agency pursuant to the Amended and Restated Certificate of Incorporation of the Company in effect on the date
hereof or as may be amended prior to completion of the contemplated Public Offering, or any material law, statute, rule or regulation
to which the Company is subject, or any agreement, order, judgment or decree to which the Company is subject, except for any filings required
after the date hereof under federal or state securities laws.
C. Title to Securities.
Upon issuance in accordance with, and payment pursuant to, the terms hereof and the Warrant Agreement, and upon registration in the Company’s
register of members, the shares of Class A Common Stock issuable upon exercise of the Private Placement Warrants will be duly and
validly issued, fully paid and nonassessable. Upon issuance in accordance with, and payment pursuant to, the terms hereof and the Warrant
Agreement, and upon registration in the Company’s register of members, the Purchaser will have good title to the Private Placement
Warrants and the shares of Class A Common Stock issuable upon exercise of such Private Placement Warrants, free and clear of all
liens, claims and encumbrances of any kind, other than (i) transfer restrictions hereunder and under the other agreements contemplated
hereby, (ii) transfer restrictions under federal and state securities laws, and (iii) liens, claims or encumbrances imposed
due to the actions of the Purchaser.
D. Governmental Consents.
No permit, consent, approval or authorization of, or declaration to or filing with, any governmental authority is required in connection
with the execution, delivery and performance by the Company of this Agreement or the consummation by the Company of any other transactions
contemplated hereby.
E. Regulation D Qualification.
Neither the Company nor, to its knowledge, any of its affiliates, members, officers, directors or beneficial stockholders of 20% or more
of its outstanding securities, has experienced a disqualifying event as enumerated pursuant to Rule 506(d) of Regulation D under
the Securities Act of 1933, as amended (the “Securities Act”).
Section 3.
Representations and Warranties of the Purchaser. As a material inducement to the Company to enter into this Agreement
and issue and sell the Private Placement Warrants to the Purchaser, the Purchaser hereby represents and warrants to the Company (which
representations and warranties shall survive each Closing Date) that:
A. Organization and Requisite
Authority. The Purchaser possesses all requisite power and authority necessary to carry out the transactions contemplated by this
Agreement.
B. Authorization; No Breach.
(i) This Agreement constitutes
a valid and binding obligation of the Purchaser, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other laws of general applicability relating to or affecting creditors’ rights and to
general equitable principles (whether considered in a proceeding in equity or law).
(ii) The execution and
delivery by the Purchaser of this Agreement and the fulfillment of and compliance with the terms hereof by the Purchaser does not and
shall not as of each Closing Date conflict with or result in a breach by the Purchaser of the terms, conditions or provisions of any agreement,
instrument, order, judgment or decree to which the Purchaser is subject.
C. Investment Representations.
(i) The Purchaser is
acquiring the Private Placement Warrants and, upon exercise of the Private Placement Warrants, the Class A Common Stock issuable
upon such exercise (collectively, the “Securities”), for the Purchaser’s own account, for investment purposes
only and not with a view towards, or for resale in connection with, any public sale or distribution thereof.
(ii) The Purchaser is
an “accredited investor” as such term is defined in Rule 501(a)(3) of Regulation D, and the Purchaser has not
experienced a disqualifying event as enumerated pursuant to Rule 506(d) of Regulation D under the Securities Act.
(iii) The Purchaser understands
that the Securities are being offered and will be sold to it in reliance on specific exemptions from the registration requirements of
the United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser’s
compliance with, the representations and warranties of the Purchaser set forth herein in order to determine the availability of such exemptions
and the eligibility of the Purchaser to acquire such Securities.
(iv) The Purchaser did
not decide to enter into this Agreement as a result of any general solicitation or general advertising within the meaning of Rule 502(c) under
the Securities Act.
(v) The Purchaser has
been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer
and sale of the Securities which have been requested by the Purchaser. The Purchaser has been afforded the opportunity to ask questions
of the executive officers and directors of the Company. The Purchaser understands that its investment in the Securities involves a high
degree of risk and it has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision
with respect to the acquisition of the Securities.
(vi) The Purchaser understands
that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation
or endorsement of the Securities or the fairness or suitability of the investment in the Securities by the Purchaser nor have such authorities
passed upon or endorsed the merits of the offering of the Securities.
(vii) The Purchaser
understands that: (a) the Securities have not been and are not being registered under the Securities Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred unless (1) subsequently registered thereunder
or (2) sold in reliance on an exemption therefrom; and (b) except as specifically set forth in the Registration Rights
Agreement, neither the Company nor any other person is under any obligation to register the Securities under the Securities Act or
any state securities laws or to comply with the terms and conditions of any exemption thereunder. While the Purchaser understands
that Rule 144 is not available for the resale of securities initially issued by shell companies (other than business
combination related shell companies) or issuers that have been at any time previously a shell company, the Purchaser understands
that Rule 144 includes an exception to this prohibition if the following conditions are met: (i) the issuer of the
securities that was formerly a shell company has ceased to be a shell company; (ii) the issuer of the securities is subject to
the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”); (iii) the issuer of the securities has filed all Exchange Act reports and material
required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file
such reports and materials), other than Form 8-K reports; and (iv) at least one year has elapsed from the time that the
issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
(viii) The Purchaser
has such knowledge and experience in financial and business matters, knows of the high degree of risk associated with investments in the
securities of companies in the development stage such as the Company, is capable of evaluating the merits and risks of an investment in
the Securities and is able to bear the economic risk of an investment in the Securities in the amount contemplated hereunder for an indefinite
period of time. The Purchaser has adequate means of providing for its current financial needs and contingencies and will have no current
or anticipated future needs for liquidity which would be jeopardized by the investment in the Securities. The Purchaser can afford a complete
loss of its investment in the Securities.
Section 4.
Conditions of the Purchaser’s Obligations. The obligation of the Purchaser to purchase and pay for the Private Placement
Warrants is subject to the fulfillment, on or before each Closing Date, of each of the following conditions:
A. Representations and
Warranties. The representations and warranties of the Company contained in Section 2 shall be true and correct at and as of such
Closing Date as though then made.
B. Performance. The
Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required
to be performed or complied with by it on or before such Closing Date.
C. No Injunction. No
litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby, which prohibits the consummation of any of the transactions contemplated by this Agreement or the Warrant
Agreement.
D. Warrant Agreement.
The Company shall have entered into the Warrant Agreement with a warrant agent on terms satisfactory to the Purchaser.
Section 5.
Conditions of the Company’s Obligations. The obligations of the Company to the Purchaser under this Agreement are
subject to the fulfillment, on or before each Closing Date, of each of the following conditions:
A. Representations and
Warranties. The representations and warranties of the Purchaser contained in Section 3 shall be true and correct at and as of
such Closing Date as though then made.
B. Performance. The
Purchaser shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required
to be performed or complied with by the Purchaser on or before such Closing Date.
C. Corporate Consents.
The Company shall have obtained the consent of its Board of Directors authorizing the execution, delivery and performance of this Agreement
and the Warrant Agreement and the issuance and sale of the Private Placement Warrants hereunder.
D. No Injunction. No
litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby, which prohibits the consummation of any of the transactions contemplated by this Agreement or the Warrant
Agreement.
E. Warrant Agreement.
The Company shall have entered into the Warrant Agreement with a warrant agent on terms satisfactory to the Company.
Section 6.
Survival of Representations and Warranties. All of the representations and warranties contained herein shall survive each
Closing Date.
Section 7.
Definitions. Terms used but not otherwise defined in this Agreement shall have the meaning assigned to such terms in the
registration statement on Form S-1 the Company plans to file with the U.S. Securities and Exchange Commission, under the Securities
Act.
Section 8. Miscellaneous.
A. Successors and Assigns.
Except as otherwise expressly provided herein, all covenants and agreements contained in this Agreement by or on behalf of any of the
parties hereto shall bind and inure to the benefit of the respective successors of the parties hereto whether so expressed or not. Notwithstanding
the foregoing or anything to the contrary herein, the parties may not assign this Agreement, other than assignments by the Purchaser to
affiliates thereof (including, without limitation one or more of its members).
B. Severability. Whenever
possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but
if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only
to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.
C. Counterparts. This
Agreement may be executed simultaneously in two or more counterparts, none of which need contain the signatures of more than one party,
but all such counterparts taken together shall constitute one and the same agreement.
D. Descriptive Headings;
Interpretation. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a substantive part
of this Agreement. The use of the word “including” in this Agreement shall be by way of example rather than by limitation.
E. Governing Law. This
Agreement shall be deemed to be a contract made under the laws of the State of New York and for all purposes shall be construed in accordance
with the internal laws of the State of New York.
F. Amendments. This
Agreement may not be amended, modified or waived as to any particular provision, except by a written instrument executed by all parties
hereto.
[Signature Page Follows]
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective as of the date first set forth above.
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RF ACQUISITION CORP. |
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Name: Tse Meng Ng |
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Title: Chief Executive Officer |
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PURCHASER: |
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RF DYNAMIC LLC |
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Name: |
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[Signature Page to Private Placement Warrants
Purchase Agreement]
Exhibit 10.8
PRIVATE PLACEMENT WARRANTS PURCHASE AGREEMENT
THIS PRIVATE PLACEMENT WARRANTS
PURCHASE AGREEMENT, dated as of [●], 2022 (as it may from time to time be amended, this “Agreement”),
is entered into by and between RF Acquisition Corp., a Delaware corporation (the “Company”), and EarlyBirdCapital, Inc.
(the “Purchaser”).
WHEREAS, the Company intends
to consummate an initial public offering of the Company’s units (the “Public Offering”), each unit consisting
of one share of Class A Common Stock, par value $0.0001 per share, of the Company (each a share of “Class A Common Stock”),
one redeemable warrant, and one right to receive one-tenth of one share of Class A Common Stock. Each whole warrant entitles the holder
to purchase one share of Class A Common Stock at an exercise price of $11.50 per share of Class A Common Stock. The Purchaser has agreed
to purchase an aggregate of 500,000 warrants (or 549,500 in the aggregate if the over-allotment option in connection with the Public Offering
is exercised in full) (the “Private Placement Warrants”), each Private Placement Warrant entitling the holder
to purchase one share of Class A Common Stock at an exercise price of $11.50 per share of Class A Common Stock.
NOW THEREFORE, in consideration
of the mutual promises contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties to this Agreement hereby, intending legally to be bound, agree as follows:
AGREEMENT
Section 1. Authorization,
Purchase and Sale; Terms of the Private Placement Warrants.
A. Authorization of the
Private Placement Warrants. The Company has duly authorized the issuance and sale of the Private Placement Warrants to the Purchaser.
B. Purchase and Sale of
the Private Placement Warrants.
(i) On the date of the
consummation of the Public Offering or on such earlier time and date as may be mutually agreed by the Purchaser and the Company (the “Initial
Closing Date”), the Company shall issue and sell to the Purchaser, and the Purchaser shall purchase from the Company, an
aggregate of 500,000 Private Placement Warrants at a price of $1.00 per warrant for an aggregate purchase price of $500,000 (the “Purchase
Price”), which shall be paid by wire transfer of immediately available funds to the Company at least one business day prior
to the Initial Closing Date in accordance with the Company’s wiring instructions. On the Initial Closing Date, upon the payment
by the Purchaser of the Purchase Price, the Company, at its option, shall deliver a certificate evidencing the Private Placement Warrants
purchased by the Purchaser on such date duly registered in the Purchaser’s name to the Purchaser, or effect such delivery in book-entry
form.
(ii) On the date of the
consummation of the closing of the over-allotment option in connection with the Public Offering or on such earlier time and date as may
be mutually agreed by the Purchaser and the Company (each such date, an “Over-allotment Closing Date”, and each
Over-allotment Closing Date (if any) and the Initial Closing Date being sometimes referred to herein as a “Closing Date”),
the Company shall issue and sell to the Purchaser, and the Purchaser shall purchase from the Company, up to an aggregate of 49,500 additional
Private Placement Warrants at a price of $1.00 per warrant for an aggregate purchase price of up to $49,500 (if the over-allotment option
in connection with the Public Offering is exercised in full) (the “Over-allotment Purchase Price”). The Purchaser
shall pay the Over-allotment Purchase Price by wire transfer of immediately available funds to the Company at least one business day prior
to the Over-Allotment Closing Date in accordance with the Company’s wiring instructions. On the Over-allotment Closing Date, upon
the payment by the Purchaser of the Over-allotment Purchase Price, the Company shall, at its option, deliver a certificate evidencing
the Private Placement Warrants purchased by the Purchaser on such date duly registered in the Purchaser’s name to the Purchaser,
or effect such delivery in book-entry form.
C. Terms of the Private
Placement Warrants.
(i) Each Private Placement
Warrant shall have the terms set forth in a Warrant Agreement to be entered into by the Company and a warrant agent in connection with
the Public Offering (a “Warrant Agreement”).
(ii) At the time of the
closing of the Public Offering, the Company and the Purchaser shall enter into a registration rights agreement (the “Registration
Rights Agreement”) pursuant to which the Company will grant certain registration rights to the Purchaser relating to the
Private Placement Warrants and the shares of Class A Common Stock underlying the Private Placement Warrants.
(iii) The Private Placement
Warrants have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following
the date of the effectiveness of the registration statement pursuant to FINRA Rule 5110(e)(1). Pursuant to FINRA Rule 5110(e)(1),
these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic
disposition of the securities by any person for a period of 180 days immediately following the effective date of the registration statement
of which this prospectus forms a part, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days immediately
following the effective date of the registration statement except to any underwriter and selected dealer participating in the offering
and their bona fide officers or partners. Pursuant to FINRA Rule 5110(g)(8), the Private Placement Warrants will not be exercisable
or convertible more than five years from the commencement of sales of the public offering. Such Private Placement Warrants grant to holders
demand and “piggy back” rights for periods of five and seven years, respectively, from the effective date of the registration
statement respect to the registration under the Securities Act of the shares of Class A Common Stock issuable upon exercise of the
warrants, pursuant to FINRA Rule 5110(g)(8).
Section 2.
Representations and Warranties of the Company. As a material inducement to the Purchaser to enter into this Agreement
and purchase the Private Placement Warrants, the Company hereby represents and warrants to the Purchaser (which representations and warranties
shall survive the Closing Date) that:
A. Incorporation and
Corporate Power. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and is qualified to do business in every jurisdiction in which the failure to so qualify would reasonably be
expected to have a material adverse effect on the financial condition, operating results or assets of the Company. The Company
possesses all requisite corporate power and authority necessary to carry out the transactions contemplated by this Agreement and the
Warrant Agreement.
B. Authorization; No Breach.
(i) The execution, delivery
and performance of this Agreement and the Private Placement Warrants have been duly authorized by the Company as of the Closing Date.
This Agreement constitutes the valid and binding obligation of the Company, enforceable in accordance with its terms. Upon issuance in
accordance with, and payment pursuant to, the terms of the Warrant Agreement and this Agreement, the Private Placement Warrants will constitute
valid and binding obligations of the Company, enforceable in accordance with their terms as of the Closing Date.
(ii) The execution and
delivery by the Company of this Agreement and the Private Placement Warrants, the issuance and sale of the Private Placement Warrants,
the issuance of the shares of Class A Common Stock upon exercise of the Private Placement Warrants and the fulfillment of, and compliance
with, the respective terms hereof and thereof by the Company, do not and will not as of the Closing Date (a) conflict with or result
in a breach of the terms, conditions or provisions of, (b) constitute a default under, (c) result in the creation of any lien,
security interest, charge or encumbrance upon the Company’s equity or assets under, (d) result in a violation of, or (e) require
any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any court or administrative
or governmental body or agency pursuant to the Amended and Restated Certificate of Incorporation of the Company in effect on the date
hereof or as may be amended prior to completion of the contemplated Public Offering, or any material law, statute, rule or regulation
to which the Company is subject, or any agreement, order, judgment or decree to which the Company is subject, except for any filings required
after the date hereof under federal or state securities laws.
C. Title to Securities.
Upon issuance in accordance with, and payment pursuant to, the terms hereof and the Warrant Agreement, and upon registration in the Company’s
register of members, the Class A Common Stock issuable upon exercise of the Private Placement Warrants will be duly and validly issued,
fully paid and nonassessable. Upon issuance in accordance with, and payment pursuant to, the terms hereof and the Warrant Agreement, and
upon registration in the Company’s register of members, the Purchaser will have good title to the Private Placement Warrants and
the Class A Common Stock issuable upon exercise of such Private Placement Warrants, free and clear of all liens, claims and encumbrances
of any kind, other than (i) transfer restrictions hereunder and under the other agreements contemplated hereby, (ii) transfer
restrictions under federal and state securities laws, and (iii) liens, claims or encumbrances imposed due to the actions of the Purchaser.
D. Governmental Consents.
No permit, consent, approval or authorization of, or declaration to or filing with, any governmental authority is required in connection
with the execution, delivery and performance by the Company of this Agreement or the consummation by the Company of any other transactions
contemplated hereby.
E. Regulation D Qualification.
Neither the Company nor, to its knowledge, any of its affiliates, members, officers, directors or beneficial stockholders of 20% or more
of its outstanding securities, has experienced a disqualifying event as enumerated pursuant to Rule 506(d) of Regulation D under
the Securities Act of 1933, as amended (the “Securities Act”).
Section 3.
Representations and Warranties of the Purchaser. As a material inducement to the Company to enter into this Agreement
and issue and sell the Private Placement Warrants to the Purchaser, the Purchaser hereby represents and warrants to the Company (which
representations and warranties shall survive each Closing Date) that:
A. Organization and Requisite
Authority. The Purchaser possesses all requisite power and authority necessary to carry out the transactions contemplated by this
Agreement.
B. Authorization; No Breach.
(i) This Agreement constitutes
a valid and binding obligation of the Purchaser, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other laws of general applicability relating to or affecting creditors’ rights and to
general equitable principles (whether considered in a proceeding in equity or law).
(ii) The execution and
delivery by the Purchaser of this Agreement and the fulfillment of and compliance with the terms hereof by the Purchaser does not and
shall not as of each Closing Date conflict with or result in a breach by the Purchaser of the terms, conditions or provisions of any agreement,
instrument, order, judgment or decree to which the Purchaser is subject.
C. Investment Representations.
(i) The Purchaser is
acquiring the Private Placement Warrants and, upon exercise of the Private Placement Warrants, the Class A Common Stock issuable
upon such exercise (collectively, the “Securities”), for the Purchaser’s own account, for investment purposes
only and not with a view towards, or for resale in connection with, any public sale or distribution thereof.
(ii) The Purchaser is
an “accredited investor” as such term is defined in Rule 501(a)(3) of Regulation D, and the Purchaser has not
experienced a disqualifying event as enumerated pursuant to Rule 506(d) of Regulation D under the Securities Act.
(iii) The Purchaser understands
that the Securities are being offered and will be sold to it in reliance on specific exemptions from the registration requirements of
the United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser’s
compliance with, the representations and warranties of the Purchaser set forth herein in order to determine the availability of such exemptions
and the eligibility of the Purchaser to acquire such Securities.
(iv) The Purchaser did
not decide to enter into this Agreement as a result of any general solicitation or general advertising within the meaning of Rule 502(c) under
the Securities Act.
(v) The Purchaser
has been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the
offer and sale of the Securities which have been requested by the Purchaser. The Purchaser has been afforded the opportunity to ask
questions of the executive officers and directors of the Company. The Purchaser understands that its investment in the Securities
involves a high degree of risk and it has sought such accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to the acquisition of the Securities.
(vi) The Purchaser understands
that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation
or endorsement of the Securities or the fairness or suitability of the investment in the Securities by the Purchaser nor have such authorities
passed upon or endorsed the merits of the offering of the Securities.
(vii) The Purchaser understands
that: (a) the Securities have not been and are not being registered under the Securities Act or any state securities laws, and may
not be offered for sale, sold, assigned or transferred unless (1) subsequently registered thereunder or (2) sold in reliance
on an exemption therefrom; and (b) except as specifically set forth in the Registration Rights Agreement, neither the Company nor
any other person is under any obligation to register the Securities under the Securities Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder. While the Purchaser understands that Rule 144 is not available for the
resale of securities initially issued by shell companies (other than business combination related shell companies) or issuers that have
been at any time previously a shell company, the Purchaser understands that Rule 144 includes an exception to this prohibition if
the following conditions are met: (i) the issuer of the securities that was formerly a shell company has ceased to be a shell company;
(ii) the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”); (iii) the issuer of the securities has filed all Exchange
Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was
required to file such reports and materials), other than Form 8-K reports; and (iv) at least one year has elapsed from the time
that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
(viii) The Purchaser
has such knowledge and experience in financial and business matters, knows of the high degree of risk associated with investments in the
securities of companies in the development stage such as the Company, is capable of evaluating the merits and risks of an investment in
the Securities and is able to bear the economic risk of an investment in the Securities in the amount contemplated hereunder for an indefinite
period of time. The Purchaser has adequate means of providing for its current financial needs and contingencies and will have no current
or anticipated future needs for liquidity which would be jeopardized by the investment in the Securities. The Purchaser can afford a complete
loss of its investment in the Securities.
Section 4.
Conditions of the Purchaser’s Obligations. The obligation of the Purchaser to purchase and pay for the Private Placement
Warrants is subject to the fulfillment, on or before each Closing Date, of each of the following conditions:
A. Representations and
Warranties. The representations and warranties of the Company contained in Section 2 shall be true and correct at and as of such
Closing Date as though then made.
B. Performance. The
Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required
to be performed or complied with by it on or before such Closing Date.
C. No Injunction. No
litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated, or
endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby, which prohibits the consummation of any of the transactions contemplated by this Agreement or the Warrant
Agreement.
D. Warrant Agreement.
The Company shall have entered into the Warrant Agreement with a warrant agent on terms satisfactory to the Purchaser.
Section 5.
Conditions of the Company’s Obligations. The obligations of the Company to the Purchaser under this Agreement are
subject to the fulfillment, on or before each Closing Date, of each of the following conditions:
A. Representations and
Warranties. The representations and warranties of the Purchaser contained in Section 3 shall be true and correct at and as of
such Closing Date as though then made.
B. Performance. The
Purchaser shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required
to be performed or complied with by the Purchaser on or before such Closing Date.
C. Corporate Consents.
The Company shall have obtained the consent of its Board of Directors authorizing the execution, delivery and performance of this Agreement
and the Warrant Agreement and the issuance and sale of the Private Placement Warrants hereunder.
D. No Injunction. No
litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated, or
endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby, which prohibits the consummation of any of the transactions contemplated by this Agreement or the Warrant
Agreement.
E. Warrant Agreement.
The Company shall have entered into the Warrant Agreement with a warrant agent on terms satisfactory to the Company.
Section 6.
Survival of Representations and Warranties. All of the representations and warranties contained herein shall survive each
Closing Date.
Section 7.
Definitions. Terms used but not otherwise defined in this Agreement shall have the meaning assigned to such terms in the
registration statement on Form S-1 the Company plans to file with the U.S. Securities and Exchange Commission, under the Securities
Act.
Section 8. Miscellaneous.
A. Successors and Assigns.
Except as otherwise expressly provided herein, all covenants and agreements contained in this Agreement by or on behalf of any of the
parties hereto shall bind and inure to the benefit of the respective successors of the parties hereto whether so expressed or not. Notwithstanding
the foregoing or anything to the contrary herein, the parties may not assign this Agreement, other than assignments by the Purchaser to
affiliates thereof (including, without limitation one or more of its members).
B. Severability. Whenever
possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but
if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only
to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.
C. Counterparts. This
Agreement may be executed simultaneously in two or more counterparts, none of which need contain the signatures of more than one party,
but all such counterparts taken together shall constitute one and the same agreement.
D. Descriptive Headings;
Interpretation. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a substantive part
of this Agreement. The use of the word “including” in this Agreement shall be by way of example rather than by limitation.
E. Governing Law. This
Agreement shall be deemed to be a contract made under the laws of the State of New York and for all purposes shall be construed in accordance
with the internal laws of the State of New York.
F. Amendments. This
Agreement may not be amended, modified or waived as to any particular provision, except by a written instrument executed by all parties
hereto.
[Signature Page Follows]
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective as of the date first set forth above.
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COMPANY: |
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RF ACQUISITION CORP. |
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By: |
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Name: Tse Meng Ng |
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Title: Chief Executive Officer |
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PURCHASER: |
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EARLYBIRDCAPITAL, INC. |
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By: |
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Name: |
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Title: |
[Signature Page to Private Placement Warrants
Purchase Agreement]
Exhibit 23.1
Independent
Registered Public Accounting Firm’s Consent
We consent to the inclusion in this Registration
Statement of RF Acquisition Corp. (the “Company”) on Amendment No. 4 to Form S-1 (File No. 333-261765) of our
report dated March 7, 2022, which includes an explanatory paragraph as to the Company’s ability to continue as a going concern,
with respect to our audit of the financial statements of RF Acquisition Corp. as of December 31, 2021 and for the period from January 11,
2021 (inception) through December 31, 2021, which report appears in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to our Firm under the heading “Experts” in such Prospectus.
/s/ Marcum llp
Marcum llp
Boston, MA
March 15, 2022
Exhibit 107
Calculation of Filing Fee Tables
S-1
(Form Type)
RF ACQUISITION CORP.
(Exact Name of Registrant as Specified in its
Charter)
Table 1: Newly Registered and Carry Forward
Securities
| | |
Security
Type | |
Security
Class
Title | |
Fee
Calculation
or Carry
Forward
Rule | |
Amount
Registered | |
Proposed
Maximum
Offering
Price Per
Unit(1) | |
Maximum
Aggregate
Offering
Price(1) | |
Fee
Rate | |
Amount
of
Registration
Fee | |
Carry
Forward
Form
Type | |
Carry
Forward
File
Number | |
Carry
Forward
Initial
effective
date | |
Filing
Fee
Previously
Paid In
Connection
with
Unsold
Securities
to be
Carried
Forward |
| Newly Registered
Securities |
| Fees
to Be Paid | |
Equity | |
Units,
each consisting of one share of Class A common stock, $0.0001 par value, one-half of one redeemable warrant, and one right to
receive one-tenth of one share of Class A common stock(2) | |
Rule 457(o) | |
11,500,000 | |
$ | 10.00 | |
$ | 115,000,000 | |
0.0000927 | |
$ | 10,661 | |
- | |
- | |
- | |
- |
| | |
Equity | |
Shares
of Class A common stock included as part of the units(3) | |
Other(4) | |
11,500,000 | |
| - | |
| - | |
- | |
| - | |
- | |
- | |
- | |
- |
| | |
Equity | |
Redeemable
warrants included as part of the units(3) | |
Other(4) | |
11,500,000 | |
| - | |
| - | |
- | |
| - | |
- | |
- | |
- | |
- |
| | |
Equity | |
Rights
included as part of the units(3) | |
Other(4) | |
11,500,000 | |
| - | |
| - | |
- | |
| - | |
- | |
- | |
- | |
- |
| | |
Equity | |
EBC
founder shares of Class A common stock | |
- | |
200,000 | |
$ | 0.0001 | |
$ | 20 | |
- | |
$ | 0.002 | |
- | |
- | |
- | |
- |
| | |
Equity | |
Shares
of Class A common stock underlying the redeemable warrants included as part of the units | |
- | |
11,500,000 | |
$ | 11.50 | (5) |
$ | 66,125,000 | |
- | |
$ | 12,260 | |
- | |
- | |
- | |
- |
| | |
Equity | |
Shares
of Class A common stock underlying the Rights included as part of the units | |
- | |
1,150,000 | |
$ | 10.00 | |
$ | 11,500,000 | |
- | |
$ | 1,066 | |
- | |
- | |
- | |
- |
| Carry Forward
Securities |
| Carry
Forward Securities | |
| |
| |
| |
| |
| | |
| | |
| |
| | |
| |
| |
| |
|
| | |
Total Offering Amounts | |
| | |
| | |
| |
$ | 258,750,020 | |
| |
| |
| |
|
| | |
Total Fees Previously Paid | |
| | |
| | |
| |
$ | 23,987 | |
| |
| |
| |
|
| | |
Total Fee Offsets | |
| | |
| | |
| |
| | |
| |
| |
| |
|
| | |
Net Fee Due | |
| | |
| | |
| |
| | |
| |
| |
| |
|
| (1) |
Estimated solely for the
purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended (the “Securities
Act”). |
| |
|
| (2) |
Includes 1,500,000 units,
consisting of (i) 1,500,000 shares of Class A common stock, 750,000 redeemable warrants, which may be issued upon exercise
of a 45-day option granted to the underwriter to cover over-allotments, if any; and (ii) 1,500,000 rights, with each right entitling
the holder to receive one-tenth of one Class A common stock upon the closing of the business combination. |
| |
|
| (3) |
Pursuant to Rule 416,
there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting
from stock splits, stock dividends or similar transactions. |
| |
|
| (4) |
No fee pursuant to Rule 457(g). |
| |
|
| (5) |
Calculated pursuant to Rule 457(g) under
the Securities Act, based on the price of the warrants. |
Table 2: Fee Offset Claims and Sources
| |
Registrant
or Filer
Name | |
Form
or
Filing
Type | |
File
Number | |
Initial
Filing
Date | |
Filing
Date | |
Fee
Offset
Claimed | |
Security
Type
Associated
with Fee
Offset
Claimed | |
Security
Title
Associated
with Fee
Offset
Claimed | |
Unsold
Securities
Associated
with Fee
Offset
Claimed | |
Unsold
Aggregate
Offering
Amount
Associated
with Fee Offset
Claimed | |
Fee Paid
with Fee
Offset Source |
| Rules 457(b) and
0-11(a)(2) |
Fee
Offset
Claims |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
|
Fee
Offset
Sources |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
|
| Rule 457(p) |
Fee
Offset
Claims |
| |
| |
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| |
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| |
| |
|
Fee
Offset
Sources |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
|
Table 3: Combined Prospectuses
| Security Type | |
Security Class Title | |
Amount of Securities
Previously Registered | |
Maximum
Aggregate
Offering
Price of Securities
Previously
Registered | |
Form
Type | |
File
Number | |
Initial Effective
Date |
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