UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 6, 2021

 

 

Khosla Ventures Acquisition Co. II

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-40246   86-1776836

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

2128 Sand Hill Road

Menlo Park, California

  94025
(Address of principal executive offices)   (Zip Code)

(650) 376-8500

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Class A common stock, par value $0.0001 per share   KVSB   The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 1.01

Entry into a Material Definitive Agreement.

Merger Agreement

Khosla Ventures Acquisition Co. II (“KVSB”) is a blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. On July 6, 2021, KVSB entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Nextdoor, Inc., a Delaware corporation (“Nextdoor”), and Lorelei Merger Sub Inc., a Delaware corporation and a direct wholly owned subsidiary of KVSB (“Merger Sub”).

The Merger

The Merger Agreement provides that, among other things and upon the terms and subject to the conditions thereof, the following transactions will occur (together with the other agreements and transactions contemplated by the Merger Agreement, the “Business Combination”):

(i) at the closing of the transactions contemplated by the Merger Agreement (the “Closing”), upon the terms and subject to the conditions of the Merger Agreement, in accordance with the Delaware General Corporation Law (the “DGCL”), Merger Sub will merge with and into Nextdoor, the separate corporate existence of Merger Sub will cease and Nextdoor will be the surviving corporation and a wholly owned subsidiary of KVSB (the “Merger”);

(ii) as a result of the Merger, KVSB will implement a 10:1 high-vote class of stock designated as Class B common stock, par value $0.0001 per share (“New Nextdoor Class B common stock”), and among other things, (a) all outstanding shares of capital stock and share issuance commitments of Nextdoor will be canceled in exchange for the right to receive 350.0 million shares of New Nextdoor Class B common stock less the number of shares underlying the shares subject to the equity awards in (b) (with the exchange ratio determined by using treasury share method for options), (b) all outstanding equity awards of Nextdoor will be cancelled in exchange for equity awards of KVSB pursuant to which shares of New Nextdoor Class B common stock may be issuable as set forth in, and upon the terms and subject to the conditions of, the Merger Agreement, (c) all outstanding shares of existing KVSB Class B common stock, par value $0.0001 per share (“KVSB Class B common stock”), will be converted into an aggregate of 7,347,249 shares of KVSB Class A common stock, par value $0.0001 per share (“KVSB Class A common stock”), and exchanged on a 1:1 basis for shares of New Nextdoor Class B common stock and (d) all outstanding shares of KVSB Class K common stock, par value $0.0001 per share (“KVSB Class K common stock”), will be reclassified as 3,061,354 shares of New Nextdoor Class B common stock; and

(iii) upon the effective time of the Business Combination, KVSB will immediately be renamed to a name to be agreed by KVSB and Company.

The Board of Directors of KVSB (the “Board”) has unanimously (i) approved and declared advisable the Merger Agreement and the Business Combination and (ii) resolved to recommend approval of the Merger Agreement and related matters by the stockholders of KVSB.

Conditions to Closing

The Merger Agreement is subject to the satisfaction or waiver of certain customary closing conditions, including, among others, (i) approval of the Business Combination and related agreements and transactions by the stockholders of KVSB and stockholders of Nextdoor, (ii) effectiveness of the proxy statement / registration statement on Form S-4 to be filed by KVSB in connection with the Business Combination, (iii) expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, (iv) receipt of approval for listing on the Nasdaq Stock Market or New York Stock Exchange of the shares of KVSB Class A common


stock, par value $0.0001 per shares (“New Nextdoor Class A common stock”), into which the New Nextdoor Class B common stock would be convertible on a 1:1 basis, (v) that KVSB have at least $5,000,001 of net tangible assets upon Closing and (vi) the absence of any injunctions enjoining or prohibiting the Merger.

Other conditions to Nextdoor’s obligations to consummate the Merger include, among others, that as of the Closing, (i) the Sponsor Share Conversion (as defined below) is in full force and effect, and (ii) the amount of (x) cash available in the trust account into which substantially all of the proceeds of KVSB’s initial public offering and private placements of its common stock have been deposited for the benefit of KVSB, certain of its public stockholders and the underwriters of KVSB’s initial public offering (the “Trust Account”), after deducting the amount required to satisfy KVSB’s obligations to its stockholders (if any) that exercise their rights to redeem their KVSB Class A common stock pursuant to KVSB’s existing constitutional documents, and after payment of (a) any deferred underwriting commissions being held in the Trust Account and (b) any transaction expenses of KVSB, Nextdoor or their respective affiliates (collectively, the “Trust Amount”) plus (y) the aggregate amount of cash received in connection with the PIPE Investment (as defined below), plus (z) the aggregate amount of cash that has been funded to KVSB pursuant to that certain forward purchase agreement, dated March 23, 2021, between KVSB and the Sponsor (as defined below) is at least equal to or greater than $400,000,000.

Covenants

The Merger Agreement contains additional covenants, including, among others, providing for (i) the parties to conduct their respective businesses in the ordinary course through the Closing, (ii) the parties to not initiate any negotiations or enter into any agreements for certain alternative transactions, (iii) Nextdoor to prepare and deliver to KVSB certain unaudited consolidated financial statements of Nextdoor, (iv) KVSB to prepare and file a proxy statement/registration statement on Form S-4 and take certain other actions to obtain the requisite approval of KVSB stockholders of certain proposals regarding the Business Combination and (v) the parties to use reasonable best efforts to obtain necessary approvals from governmental agencies and to consummate the Merger.

Representations and Warranties

The Merger Agreement contains customary representations and warranties by KVSB, Merger Sub, and Nextdoor. The representations and warranties of the respective parties to the Merger Agreement generally will not survive the Closing.

KVSB Change in Recommendation

The Board has approved the transaction proposals set forth in the Merger Agreement and KVSB is required to include in the proxy statement/registration statement on Form S-4 the recommendation of the Board to KVSB’s stockholders that they approve the transaction proposals set forth in the Merger Agreement, including the Merger (the “KVSB Board Recommendation”). KVSB is not permitted to change the KVSB Board Recommendation (such change, a “Modification in Recommendation”) unless, as a result of an unforeseeable intervening event occurring after the date of the Merger Agreement that materially and adversely impacts Nextdoor (subject to certain exceptions), it determines in good faith, after consultation with its outside legal counsel, that the failure to make such a Modification in Recommendation would be inconsistent with its fiduciary duties under applicable law.

Termination

The Merger Agreement may be terminated at any time prior to the Closing (i) by mutual written consent of KVSB and Nextdoor, (ii) by Nextdoor, if there is a Modification in Recommendation (as defined in the Merger Agreement), and (iii) by either KVSB or Nextdoor in certain other circumstances set forth in the Merger Agreement, including (a) if certain approvals of the stockholders of


KVSB, to the extent required under the Merger Agreement, are not obtained as set forth therein, (b) if any Governmental Authority (as defined in the Merger Agreement) shall have issued or otherwise entered a final, nonappealable order making consummation of the Merger illegal or otherwise preventing or prohibiting consummation of the Merger, (c) in the event of certain uncured breaches by the other party or (d) if the Closing has not occurred on or before April 6, 2022, the date that is nine months after the date of the Merger Agreement.

Certain Related Agreements

Subscription Agreements

On July 6, 2021, concurrently with the execution of the Merger Agreement, KVSB entered into subscription agreements (the “Subscription Agreements”) with certain investors (collectively, the “PIPE Investors”), pursuant to, and on the terms and subject to the conditions of which, the PIPE Investors have independently subscribed for an aggregate of 27 million shares of KVSB Class A common stock for an aggregate purchase price equal to $270 million (the “PIPE Investment”). The PIPE Investment will be consummated substantially concurrently with the Closing.

The Subscription Agreements with the PIPE Investors provide for certain registration rights. In particular, KVSB is required to, no later than 30 calendar days following the Closing, submit to or file with the SEC a registration statement registering the resale of such shares. Additionally, KVSB is required to use its commercially reasonable efforts to have the registration statement declared effective as soon as practicable after the filing thereof, but no later than the earlier of (i) the 90th calendar day following the Closing if the SEC notifies KVSB that it will “review” the registration statement) and (ii) the fifth business day after the date KVSB is notified (orally or in writing, whichever is earlier) by the SEC that the registration statement will not be “reviewed” or will not be subject to further review. KVSB must use commercially reasonable efforts to keep the registration statement effective until the earliest of: (a) the date the PIPE Investors no longer hold any registrable shares, (b) the date all registrable shares held by the PIPE Investors may be sold without restriction under Rule 144 and (c) two years from the date of effectiveness of the registration statement.

Each Subscription Agreement will terminate with no further force and effect upon the earliest to occur of: (i) such date and time as the Merger Agreement is terminated in accordance with its terms; (ii) the mutual written agreement of the parties to such Subscription Agreement; (iii) if any of the conditions to closing set forth in such Subscription Agreement are not satisfied on or prior to the Closing and, as a result thereof, the transactions contemplated by such Subscription Agreement fail to occur; and (iv) April 2, 2022, if the Closing has not occurred on or before such date.

Sponsor Support Agreement and Sponsor Holders Lock-Up

On July 6, 2021, the Sponsor entered into the Sponsor Support Agreement (the “Sponsor Support Agreement”) with KVSB, Nextdoor and the other parties thereto, pursuant to which the Sponsor and each director and officer of KVSB agreed to, among other things, (i) vote in favor of the Merger Agreement and the transactions contemplated and (ii) vote for any amendments to the governing documents as are necessary and/or agree to convert and exchange or reclassify all shares of KVSB Class K common stock and KVSB Class B common stock into an aggregate of 10,408,603 shares of New Nextdoor Class B common stock at the Closing, and waive any adjustments to the conversion ratio that would otherwise have been applicable for a conversion into any amount in excess of such amount (the “Sponsor Share Conversion”), in each case, subject to the terms and conditions contemplated by the Sponsor Support Agreement. In addition, 1,132,688 private placement shares held by the sponsor will also all be exchanged on a 1:1 basis into shares of New Nextdoor Class B common stock.

Also pursuant to the Sponsor Support Agreement, at the Closing the Sponsor and certain affiliated individuals (the “Sponsor Holders”) will enter into a Lock-Up Agreement (the “Sponsor Holders Lock-Up Agreement”), described further below under “Transfer Restrictions and Registration Rights.”


Stockholder Support Agreement

On July 6, 2021, certain stockholders of Nextdoor, including each of those stockholders that is a director (or affiliated with a director) or executive officer of Nextdoor, entered into the Stockholder Support Agreement (the “Stockholder Support Agreement”) with KVSB, Nextdoor and the other parties thereto, pursuant to which such stockholders of Nextdoor agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby, in each case, subject to the terms and conditions contemplated by the Stockholder Support Agreement.

Transfer Restrictions and Registration Rights

The Merger Agreement contemplates that, at the Closing, KVSB, the Sponsor, certain stockholders of Nextdoor and certain of their respective affiliates, as applicable, and the other parties thereto, will enter into an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which KVSB will agree to register for resale, pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), certain shares of New Nextdoor Class A common stock (including New Nextdoor Class A common stock issuable upon conversion of New Nextdoor Class B common stock) and other equity securities of KVSB that are held by the parties thereto from time to time.

At the Closing, the Bylaws of KVSB will provide that Nextdoor equityholders (the “Nextdoor Holders”) pursuant to the Merger Agreement will be subject to certain restrictions on transfer with respect to shares of New Nextdoor Class A common stock and New Nextdoor Class B common stock held by the Nextdoor Holders immediately following the Closing (other than shares purchased in the public market or in the PIPE Investment) and the shares of New Nextdoor Class B common stock issuable upon settlement or exercise of restricted stock units, stock options or other equity awards outstanding as of immediately following the Closing in respect of awards of Nextdoor outstanding immediately prior to the Closing (the “Nextdoor Holders Lock-up Shares”). Such restrictions begin at the Closing and end on the date that is 180 days after the Closing, subject to certain customary exceptions, including if, after Closing, KVSB completes a transaction that results in a change of control, the Nextdoor Holders Lock-up Shares will be released from restriction immediately prior to such change of control.

The Sponsor Holders Lock-Up Agreement contains certain restrictions on transfer with respect to shares of New Nextdoor Class A common stock and New Nextdoor Class B common stock held by the Sponsor Holders immediately following the Closing (other than shares purchased in the public market, shares purchased in the PIPE Investment or shares purchased pursuant to the Forward Purchase Agreement) (the “Sponsor Holders Lock-up Shares”). Such restrictions begin at the Closing and end on the date that is one year after the Closing, subject to certain customary exceptions, including if, after Closing, KVSB completes a transaction that results in a change of control, the Sponsor Holders Lock-up Shares are released from restriction immediately prior to such change of control.

The foregoing description of the Merger Agreement, the Subscription Agreements, the Sponsor Support Agreement, the Stockholder Support Agreement and the Sponsor Holders Lock-Up Agreement, and the transactions and documents contemplated thereby, is not complete and is subject to and qualified in its entirety by reference to the Merger Agreement, the form of Subscription Agreement, the Sponsor Support Agreement, the Stockholder Support Agreement and the Sponsor Holders Lock-Up Agreement, copies of which are filed with this Current Report on Form 8-K as Exhibit 2.1, Exhibit 10.1, Exhibit 10.2, Exhibit 10.3 and Exhibit 10.4, respectively, and the terms of which are incorporated by reference herein.

The Merger Agreement, the form of Subscription Agreement, the Sponsor Support Agreement, the Stockholder Support Agreement and the Sponsor Holders Lock-Up Agreement have been included to provide investors with information regarding their respective terms. They are not intended to provide any other factual information about KVSB or its affiliates. The representations, warranties, covenants and agreements contained in the Merger Agreement, the Subscription Agreements, the Sponsor Support Agreement, the Stockholder Support Agreement, the Sponsor Holders Lock-Up Agreement and the other documents related thereto were made only for purposes of the Merger Agreement as of the specific dates therein, were solely for the benefit of the parties to the Merger Agreement, the Subscription Agreements, the Sponsor Support Agreement, the Stockholder Support Agreement and the Sponsor Holders Lock-Up Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement, the


Subscription Agreements, the Sponsor Support Agreement, the Stockholder Support Agreement and the Sponsor Holders Lock-Up Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under any of the Merger Agreement, the Subscription Agreements, the Sponsor Support Agreement, the Stockholder Support Agreement or the Sponsor Holders Lock-Up Agreement and should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Merger Agreement, the Subscription Agreements, the Sponsor Support Agreement, the Stockholder Support Agreement and the Sponsor Holders Lock-Up Agreement, as applicable, which subsequent information may or may not be fully reflected in the KVSB’s public disclosures.

High Vote Stock Structure

Following the Closing, and subject to approval by KVSB’s stockholders, the New Nextdoor Class B common stock will have 10 votes per share and the New Nextdoor Class A common stock will have one vote per share. Because of the 10-to-one voting ratio between the New Nextdoor Class B common stock and the New Nextdoor Class A common stock, the holders of the New Nextdoor Class B common stock, which will consist of the former stockholders of Nextdoor, the Sponsor, and upon exercise or settlement, holders of Nextdoor stock options, restricted stock units, and other other equity awards outstanding as of immediately following the Closing in respect of awards of Nextdoor outstanding immediately prior to the Closing, collectively will control a majority of the combined voting power of KVSB following the Closing and therefore will be able to control all matters submitted to KVSB’s stockholders for approval until the earlier of (i) the date specified by a vote of the holders of 66 2/3% of the then outstanding shares of New Nextdoor Class B common stock and (ii) ten years from Closing. This concentrated control will limit or preclude the ability of holders of New Nextdoor Class A common stock to influence corporate matters for the foreseeable future following the Closing, including the election of directors, amendments of KVSB’s organizational documents, and any merger, consolidation, sale of all or substantially all of KVSB’s assets, or other major corporate transaction requiring stockholder approval. In addition, this may prevent or discourage unsolicited acquisition proposals or offers for KVSB’s capital stock that a stockholder may feel are in the best interest of KVSB’s stockholders.

Following the Closing, transfers by holders of New Nextdoor Class B common stock will generally result in those shares converting to New Nextdoor Class A common stock, subject to limited exceptions, such as certain transfers effected for estate planning purposes. The conversion of New Nextdoor Class B common stock to New Nextdoor Class A common stock will have the effect, over time, of increasing the relative voting power of those holders of the New Nextdoor Class B common stock who retain their shares.

 

Item 3.02

Unregistered Sales of Equity Securities

The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K with respect to the PIPE Investment is incorporated by reference in this Item 3.02. The shares of KVSB Class A common stock to be issued in connection with the PIPE Investment will not be registered under the Securities Act, and will be issued in reliance on the exemption from registration requirements provided by Section 4(a)(2) of the Securities Act.

 

Item 7.01

Regulation FD Disclosure

On July 6, 2021, KVSB and Nextdoor issued a joint press release (the “Press Release”) announcing the execution of the Merger Agreement. The Press Release is attached hereto as Exhibit 99.1 and incorporated by reference herein.


Attached as Exhibit 99.2 and incorporated herein by reference is the investor presentation, dated as of July 2021, for use by KVSB in meetings with certain of its stockholders as well as other persons with respect to KVSB’s proposed transaction with Nextdoor, as described in this Current Report on Form 8-K.

Attached as Exhibit 99.3 and incorporated herein by reference are risk factors for Nextdoor and KVSB that were used by KVSB in meetings with certain of its stockholders as well as other persons with respect to KVSB’s proposed transaction with Nextdoor, as described in this Current Report on Form 8-K.

The information in this Item 7.01, including Exhibits 99.1, 99.2 and 99.3, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities under that section, and shall not be deemed to be incorporated by reference into the filings of KVSB under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filings. This Current Report on Form 8-K will not be deemed an admission as to the materiality of any information of the information contained in this Item 7.01, including 99.1, 99.2 and 99.3.

Additional Information and Where to Find It

This Current Report on Form 8-K relates to a proposed transaction between KVSB and Nextdoor. This Current Report on Form 8-K does not constitute an offer to sell or exchange, or the solicitation of an offer to buy or exchange, any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, sale or exchange would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. KVSB intends to file a registration statement on Form S-4 with the SEC, which will include a document that serves as a prospectus and proxy statement of KVSB, referred to as a proxy statement/prospectus. A proxy statement/prospectus will be sent to all KVSB stockholders. KVSB also will file other documents regarding the proposed transaction with the SEC. Before making any voting decision, investors and security holders of KVSB are urged to read the registration statement, the proxy statement/prospectus and all other relevant documents filed or that will be filed with the SEC in connection with the proposed transaction as they become available because they will contain important information about the proposed transaction.

Investors and security holders will be able to obtain free copies of the registration statement, the proxy statement/prospectus and all other relevant documents filed or that will be filed with the SEC by KVSB through the website maintained by the SEC at www.sec.gov.

The documents filed by KVSB with the SEC also may be obtained free of charge at KVSB’s website at https://khoslaventuresacquisitionco.com/KVSB.

Participants in Solicitation

KVSB and Nextdoor and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from KVSB’s stockholders in connection with the proposed transaction. A list of the names of the directors and executive officers of KVSB and information regarding their interests in the business combination will be contained in the proxy statement/prospectus when available. You may obtain free copies of these documents as described in the preceding paragraph.

Non-Solicitation

This Current Report on Form 8-K is not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the potential transaction and shall not constitute an offer to sell or a solicitation of an offer to buy the securities of KVSB, the combined company or Nextdoor, nor shall there be any sale of any such securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act.


Cautionary Statement Regarding Forward-Looking Statements

This Current Report on Form 8-K contains certain forward-looking statements within the meaning of the federal securities laws with respect to the proposed transaction between KVSB and Nextdoor. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this Current Report on Form 8-K, including but not limited to: (i) the risk that the transaction may not be completed in a timely manner or at all, which may adversely affect the price of KVSB’s securities, (ii) the risk that the transaction may not be completed by KVSB’s business combination deadline and the potential failure to obtain an extension of the business combination deadline if sought by KVSB, (iii) the failure to satisfy the conditions to the consummation of the transaction, including the adoption of the Merger Agreement by the stockholders of KVSB, the satisfaction of the minimum cash condition following redemptions by KVSB’s public stockholders and the receipt of certain governmental and regulatory approvals, (iv) the lack of a third party valuation in determining whether or not to pursue the proposed transaction, (v) the inability to complete the PIPE investment in connection with the transaction, (vi) the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement, (vii) the effect of the announcement or pendency of the transaction on Nextdoor’s business relationships, operating results and business generally, (viii) risks that the proposed transaction disrupts current plans and operations of Nextdoor and potential difficulties in Nextdoor employee retention as a result of the transaction, (ix) the outcome of any legal proceedings that may be instituted against Nextdoor or against KVSB related to the Merger Agreement or the proposed transaction, (x) the ability to maintain the listing of KVSB’s securities on a national securities exchange, (xi) the price of KVSB’s securities may be volatile due to a variety of factors, including changes in the highly competitive industries in which KVSB plans to operate or Nextdoor operates, variations in operating performance across competitors, changes in laws and regulations affecting KVSB’s or Nextdoor’s business and changes in the combined capital structure, and (xii) the ability to implement business plans, forecasts, and other expectations after the completion of the proposed transaction, and identify and realize additional opportunities. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of KVSB’s registration on Form S-1 (File No. 333-253098), the registration statement on Form S-4 discussed above and other documents filed by KVSB from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and KVSB and Nextdoor assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Neither KVSB nor Nextdoor gives any assurance that either KVSB or Nextdoor or the combined company will achieve its expectations.



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Khosla Ventures Acquisition Co.
Date: July 6, 2021   By:  

/s/ Peter Buckland

    Name:   Peter Buckland
    Title:   Chief Financial Officer

Exhibit 2.1

 

 

 

AGREEMENT AND PLAN OF MERGER

by and among

KHOSLA VENTURES ACQUISITION CO. II

LORELEI MERGER SUB INC.,

and

NEXTDOOR, INC.

dated as of JULY 6, 2021

 

 

 

 


TABLE OF CONTENTS

 

         Page  
ARTICLE I

 

CERTAIN DEFINITIONS

 

Section 1.1.

  Definitions      3  

Section 1.2.

  Construction      17  

Section 1.3.

  Knowledge      17  
ARTICLE II

 

THE MERGER; CLOSING

 

Section 2.1.

  The Merger      18  

Section 2.2.

  Effects of the Merger      18  

Section 2.3.

  Closing; Effective Time      18  

Section 2.4.

  Closing Deliverables      19  

Section 2.5.

  Governing Documents      20  

Section 2.6.

  Directors and Officers      20  

Section 2.7.

  Tax Free Reorganization Matters      20  
ARTICLE III

 

EFFECTS OF THE MERGER ON THE COMPANY CAPITAL STOCK AND EQUITY AWARDS

 

Section 3.1.

  Conversion of Securities      21  

Section 3.2.

  Exchange Procedures      21  

Section 3.3.

  Treatment of Company Options; Restricted Stock Awards; Company RSUs      22  

Section 3.4.

  Allocation Schedule      23  

Section 3.5.

  Withholding      24  

Section 3.6.

  Dissenting Shares      24  
ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Section 4.1.

  Company Organization      25  

Section 4.2.

  Subsidiaries      25  

Section 4.3.

  Due Authorization      25  

Section 4.4.

  No Conflict      26  

Section 4.5.

  Governmental Authorities; Consents      26  

Section 4.6.

  Capitalization of the Company      26  

Section 4.7.

  Capitalization of Subsidiaries      27  

Section 4.8.

  Financial Statements      28  

Section 4.9.

  Undisclosed Liabilities      29  

Section 4.10.

  Litigation and Proceedings      29  

Section 4.11.

  Legal Compliance      29  

Section 4.12.

  Contracts; No Defaults      29  

 

-i-


TABLE OF CONTENTS

(continued)

 

         Page  

Section 4.13.

  Company Benefit Plans      32  

Section 4.14.

  Labor Relations; Employees      34  

Section 4.15.

  Taxes      36  

Section 4.16.

  Brokers’ Fees      38  

Section 4.17.

  Insurance      38  

Section 4.18.

  Licenses      38  

Section 4.19.

  Equipment and Other Tangible Property      38  

Section 4.20.

  Real Property      38  

Section 4.21.

  Intellectual Property      39  

Section 4.22.

  Privacy and Cybersecurity      42  

Section 4.23.

  Environmental Matters      43  

Section 4.24.

  Absence of Changes      43  

Section 4.25.

  Anti-Corruption Compliance      44  

Section 4.26.

  Sanctions and International Trade Compliance      44  

Section 4.27.

  Information Supplied      44  

Section 4.28.

  Vendors      44  

Section 4.29.

  Government Contracts      45  

Section 4.30.

  No Outside Reliance      45  

Section 4.31.

  No Additional Representation or Warranties      45  
ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB

 

Section 5.1.

  Company Organization      45  

Section 5.2.

  Due Authorization      46  

Section 5.3.

  No Conflict      46  

Section 5.4.

  Litigation and Proceedings      47  

Section 5.5.

  SEC Filings      47  

Section 5.6.

  Internal Controls; Listing; Financial Statements      47  

Section 5.7.

  Governmental Authorities; Consents      48  

Section 5.8.

  Trust Account      48  

Section 5.9.

  Investment Company Act; JOBS Act      49  

Section 5.10.

  Absence of Changes      49  

Section 5.11.

  No Undisclosed Liabilities      49  

Section 5.12.

  Capitalization of Acquiror      49  

Section 5.13.

  Brokers’ Fees      51  

Section 5.14.

  Indebtedness      52  

Section 5.15.

  Taxes      52  

Section 5.16.

  Business Activities      53  

Section 5.17.

  Stock Market Quotation      54  

Section 5.18.

  Registration Statement, Proxy Statement and Proxy Statement/Registration Statement      54  

Section 5.19.

  No Outside Reliance      54  

Section 5.20.

  No Additional Representation or Warranties      55  

 

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TABLE OF CONTENTS

(continued)

 

         Page  
ARTICLE VI

 

COVENANTS OF THE COMPANY

 

Section 6.1.

  Conduct of Business      55  

Section 6.2.

  Inspection      58  

Section 6.3.

  Preparation and Delivery of Additional Company Financial Statements      59  

Section 6.4.

  Affiliate Agreements      59  

Section 6.5.

  Acquisition Proposals      59  
ARTICLE VII

 

COVENANTS OF ACQUIROR

 

Section 7.1.

  Equity Plans      60  

Section 7.2.

  Trust Account Proceeds and Related Available Equity      60  

Section 7.3.

  Listing      60  

Section 7.4.

  No Solicitation by Acquiror      60  

Section 7.5.

  Acquiror Conduct of Business      61  

Section 7.6.

  Post-Closing Directors and Officers of Acquiror      63  

Section 7.7.

  Indemnification and Insurance      63  

Section 7.8.

  Acquiror Public Filings; Qualification as an Emerging Growth Company      64  

Section 7.9.

  PIPE Subscriptions; Forward Purchase Agreement      64  

Section 7.10.

  Transfer of Listing      65  
ARTICLE VIII

 

JOINT COVENANTS

 

Section 8.1.

  HSR Act; Other Filings      65  

Section 8.2.

  Preparation of Proxy Statement/Registration Statement; Stockholders’ Meeting and Approvals      66  

Section 8.3.

  Support of Transaction      70  

Section 8.4.

  Section 16 Matters      70  

Section 8.5.

  Cooperation; Consultation      70  

Section 8.6.

  Stockholder Litigation      71  
ARTICLE IX

 

CONDITIONS TO OBLIGATIONS

 

Section 9.1.

  Conditions to Obligations of Acquiror, Merger Sub, and the Company      71  

Section 9.2.

  Conditions to Obligations of Acquiror and Merger Sub      71  

Section 9.3.

  Conditions to the Obligations of the Company      72  

 

-iii-


TABLE OF CONTENTS

(continued)

 

         Page  
ARTICLE X

 

TERMINATION/EFFECTIVENESS

 

Section 10.1.

  Termination      73  

Section 10.2.

  Effect of Termination      74  
ARTICLE XI

 

MISCELLANEOUS

 

Section 11.1.

  Trust Account Waiver      74  

Section 11.2.

  Waiver      75  

Section 11.3.

  Notices      75  

Section 11.4.

  Assignment      76  

Section 11.5.

  Rights of Third Parties      76  

Section 11.6.

  Expenses      76  

Section 11.7.

  Governing Law      76  

Section 11.8.

  Headings; Counterparts      77  

Section 11.9.

  Company Disclosure Letter      77  

Section 11.10.

  Entire Agreement      77  

Section 11.11.

  Amendments      77  

Section 11.12.

  Publicity      77  

Section 11.13.

  Severability      78  

Section 11.14.

  Jurisdiction; Waiver of Jury Trial      78  

Section 11.15.

  Enforcement      79  

Section 11.16.

  Non-Recourse      79  

Section 11.17.

  Non-Survival of Representations, Warranties and Covenants      79  

Section 11.18.

  Conflicts and Privilege      79  

Exhibits

 

Exhibit A    Form of Acquiror Amended and Restated Certificate of Incorporation
Exhibit B    Form of Acquiror Amended and Restated Bylaws
Exhibit C    Form of Registration Rights Agreement

Exhibit D

Exhibit E

  

Form of Incentive Equity Plan

Form of Employee Stock Purchase Plan

 

 

-iv-


AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger, dated as of July 6, 2021 (this “Agreement”), is made and entered into by and among Khosla Ventures Acquisition Co. II, a Delaware corporation (“Acquiror”), Lorelei Merger Sub Inc., a Delaware corporation and a direct wholly-owned subsidiary of Acquiror (“Merger Sub”), and Nextdoor, Inc., a Delaware corporation (the “Company”).

RECITALS

WHEREAS, Acquiror is a Delaware corporation formed for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses;

WHEREAS, upon the terms and subject to the conditions of this Agreement, and in accordance with the Delaware General Corporation Law (the “DGCL”), on the Closing Date (as defined below) (i) Merger Sub will merge with and into the Company, the separate corporate existence of Merger Sub will cease and the Company will be the surviving corporation and a wholly owned subsidiary of Acquiror (the “Merger”) and (ii) Acquiror will change its name to “Nextdoor Holdings, Inc.”;

WHEREAS, upon the Effective Time (as defined below), all shares of Company Capital Stock (as defined below) will be converted into the right to receive shares of Acquiror Post-Merger Class B Common Stock (as defined below) as set forth in this Agreement;

WHEREAS, upon the Effective Time, each Company Option (as defined below) that is then outstanding will be converted into the right to receive an Acquiror Option (as defined below), subject to certain exceptions and conditions as set forth in this Agreement;

WHEREAS, upon the Effective Time, each Restricted Stock Award (as defined below) that is then outstanding will be converted into the right to receive an Adjusted Restricted Stock Award (as defined below), subject to certain exceptions and conditions as set forth in this Agreement;

WHEREAS, upon the Effective Time, each Company RSU (as defined below) that is then outstanding will be converted into the right to receive an Adjusted RSU (as defined below), subject to certain exceptions and conditions as set forth in this Agreement;

WHEREAS, each of the parties intends that, for United States federal income tax purposes, the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), to which each of Acquiror, the Company and Merger Sub are to be parties under Section 368(b) of the Code, and this Agreement is intended to constitute a “plan of reorganization” within the meaning of Treasury Regulations Section 1.368-2(g);

WHEREAS, the Board of Directors of the Company has approved this Agreement and the documents contemplated hereby and the transactions contemplated hereby and thereby, declared it advisable for the Company to enter into this Agreement and the other documents contemplated hereby and recommended the approval and adoption of this Agreement by the holders of Company Capital Stock;

WHEREAS, as a condition and inducement to Acquiror’s willingness to enter into this Agreement, simultaneously with the execution and delivery of this Agreement, the Requisite Stockholders (as defined below) have each executed and delivered to Acquiror a Company Stockholder Support Agreement (as defined below) pursuant to which the Requisite Stockholders have agreed, among other things, to vote (whether pursuant to a duly convened meeting of the stockholders of Company or pursuant to an action by written consent of the stockholders of the Company) in favor of the adoption and approval, promptly following the time at which the Registration Statement shall have been declared effective and delivered or otherwise made available to stockholders of the Company, of this Agreement and the other documents contemplated hereby and the transactions contemplated hereby and thereby;


WHEREAS, each of the Boards of Directors of Acquiror and Merger Sub has (i) determined that it is advisable for Acquiror and Merger Sub, as applicable, to enter into this Agreement and the documents contemplated hereby, (ii) approved the execution and delivery of this Agreement and the documents contemplated hereby and the transactions contemplated hereby and thereby, and (iii) recommended the adoption and approval of this Agreement and the other documents contemplated hereby and the transactions contemplated hereby and thereby by the Acquiror Stockholders and sole stockholder of Merger Sub, as applicable;

WHEREAS, in furtherance of the Merger and in accordance with the terms hereof, Acquiror shall provide an opportunity to its stockholders to have their outstanding shares of Acquiror Class A Common Stock (as defined below) redeemed on the terms and subject to the conditions set forth in this Agreement and Acquiror’s Governing Documents (as defined below) in connection with obtaining the Acquiror Stockholder Approval (as defined below);

WHEREAS, as a condition and inducement to the Company’s willingness to enter into this Agreement, simultaneously with the execution and delivery of this Agreement, the Sponsor has executed and delivered to the Company the Sponsor Support Agreement (as defined below) pursuant to which the Sponsor has agreed to, among other things, vote to adopt and approve this Agreement and the other documents contemplated hereby and the transactions contemplated hereby and thereby;

WHEREAS, Sponsor has agreed to subscribe for and purchase, and Acquiror has agreed to issue and sell to Sponsor, 1,000,000 shares of Acquiror Post-Merger Class A Common Stock in exchange for an aggregate purchase price of up to $10,000,000 pursuant to the Forward Purchase Agreement (as defined below), on the terms and subject to the conditions set forth therein;

WHEREAS, on or prior to the date hereof, Acquiror entered into Subscription Agreements (as defined below) with PIPE Investors (as defined below) pursuant to which, and on the terms and subject to the conditions of which, such PIPE Investors agreed to purchase from Acquiror shares of Acquiror Post-Merger Class A Common Stock for an aggregate purchase price equal to the Minimum PIPE Investment Amount (as defined below), such purchases to be consummated prior to or substantially concurrently with the Closing;

WHEREAS, on the Closing Date but following the Effective Time, (i) subject to obtaining the Acquiror Stockholder Approval, Acquiror shall amend and restate the certificate of incorporation of Acquiror to be substantially in the form of Exhibit A attached hereto, and (ii) amend and restate the bylaws of Acquiror to be substantially in the form of Exhibit B attached hereto; and

WHEREAS, at the Closing, Acquiror, the Sponsor, the Major Company Stockholders (as defined below), and certain of their respective Affiliates, as applicable, shall enter into a Registration Rights Agreement (the “Registration Rights Agreement”) in the form attached hereto as Exhibit C (with such changes as may be agreed in writing by Acquiror and the Company), which shall be effective as of the Closing.

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement and intending to be legally bound hereby, Acquiror, Merger Sub and the Company agree as follows:

 

2


ARTICLE I

CERTAIN DEFINITIONS

Section 1.1. Definitions. As used herein, the following terms shall have the following meanings:

Acquiror” has the meaning specified in the Preamble hereto.

Acquiror Class A Common Stock” means the Class A common stock, par value $0.0001 per share, of Acquiror.

Acquiror Class B Common Stock” means the Class B common stock, par value $0.0001 per share, of Acquiror.

Acquiror Class K Common Stock” means the Class K common stock, par value $0.0001 per share, of Acquiror.

Acquiror Common Stock” means the Acquiror Class A Common Stock, the Acquiror Class B Common Stock and the Acquiror Class K Common Stock.

Acquiror Cure Period” has the meaning specified in Section 10.1(f).

Acquiror Financial Statements” has the meaning specified in Section 5.6(c).

Acquiror Indemnified Parties” has the meaning specified in Section 7.7.

Acquiror Option” has the meaning specified in Section 3.3(a).

Acquiror Post-Merger Charter” means the form of certificate of incorporation of the Acquiror attached hereto as Exhibit A and to be filed with the Office of the Secretary of State of the State of Delaware following the Effective Time on the Closing Date.

Acquiror Post-Merger Class A Common Stock” means the Class A common stock, par value $0.0001 per share, of Acquiror, authorized under the Acquiror Post-Merger Charter.

Acquiror Post-Merger Class B Common Stock” means the Class B common stock, par value $0.0001 per share, of Acquiror, authorized under the Acquiror Post-Merger Charter.

Acquiror SEC Filings” has the meaning specified in Section 5.5.

Acquiror Securities” has the meaning specified in Section 5.12(a).

Acquiror Stockholder Approval” means (i) with respect to the approval and adoption of the Acquiror Post-Merger Charter, the affirmative vote of the holders of majority in voting power of outstanding Acquiror Common Stock and the affirmative vote of the holders of a majority in voting power of each of Acquiror’s Class B Common Stock and Acquiror’s Class K Common Stock, (ii) with respect to the adoption and approval of this Agreement and Merger, the approval of the affirmative vote of the holders of a majority of the shares of Acquiror Common Stock that are voted at the Acquiror Stockholders’ Meeting, (iii) with respect to the issuance of shares of Acquiror Post-Merger Class A Common Stock and Acquiror Post-Merger Class B Common Stock, the stockholder approval required under the rules of the Stock Exchange; (iv) with respect to the approval of the Incentive Equity Plan and the ESPP, the approval of the affirmative vote of a majority of the votes cast and (v) with respect to any Transaction Proposals set forth in Section 8.2(b)(E)-(G), the requisite vote as required by the Governing Documents of the Acquiror, the DGCL and/or any applicable Stock Exchange, as applicable.

 

3


Acquiror Stockholder Redemption” means the election of an eligible (as determined in accordance with Acquiror’s Governing Documents) holder of Acquiror Class A Common Stock to redeem all or a portion of the shares of Acquiror Class A Common Stock held by such holder at a per-share price, payable in cash, equal to a pro rata share of the aggregate amount on deposit in the Trust Account (including any interest earned on the funds held in the Trust Account) (as determined in accordance with Acquiror’s Governing Documents) in connection with the Transaction Proposals.

Acquiror Stockholder Redemption Amount” means the aggregate amount payable with respect to all Acquiror Stockholder Redemptions.

Acquiror Stockholders” means the stockholders of Acquiror as of immediately prior to the Effective Time.

Acquiror Stockholders’ Meeting” has the meaning specified in Section 8.2(b).

Acquiror Transaction Expenses” has the meaning specified in Section 2.4(c).

Acquisition Proposal” means, as to any Person, other than the transactions contemplated hereby and the acquisition or disposition of equipment or other tangible personal property in the ordinary course of business, any offer or proposal relating to: (a) any acquisition or purchase, direct or indirect, of (i) 15% or more of the consolidated assets of such Person and its Subsidiaries or (ii) 15% or more of any class of equity or voting securities of (A) such Person or (B) one or more Subsidiaries of such Person holding assets constituting, individually or in the aggregate, 15% or more of the consolidated assets of such Person and its Subsidiaries; (b) any tender offer (including a self-tender offer) or exchange offer that, if consummated, would result in any Person beneficially owning 15% or more of any class of equity or voting securities of (i) such Person or (ii) one or more Subsidiaries of such Person holding assets constituting, individually or in the aggregate, 15% or more of the consolidated assets of such Person and its Subsidiaries; or (c) a merger, consolidation, share exchange, business combination, sale of substantially all the assets, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving the sale or disposition of (i) such Person or (ii) one or more Subsidiaries of such Person holding assets constituting, individually or in the aggregate, 15% or more of the consolidated assets of such Person and its Subsidiaries.

Action” means any lawsuit, claim, action, suit, audit, examination, complaint, charge, assessment, arbitration, mediation or inquiry, or any proceeding or investigation (in each case, whether civil, criminal or administrative and whether public or private), pending by or before or otherwise involving any Governmental Authority.

Adjusted Restricted Stock Award” has the meaning specified in Section 3.3(b).

Affiliate” means, with respect to any specified Person, any Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person, whether through one or more intermediaries or otherwise. The term “control” (including the terms “controlling”, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by Contract or otherwise.

Affiliate Agreements” has the meaning specified in Section 4.12(a)(vii).

 

4


Aggregate Fully Diluted Company Common Shares” means, without duplication, (a) the aggregate number of shares of Company Common Stock that are (i) issued and outstanding immediately prior to the Effective Time (after giving effect to the conversion of all shares of Preferred Stock to Common Stock immediately prior to the Effective Time), (ii) issuable upon, or subject to, the settlement of Company Options (whether or not then vested or exercisable) that are outstanding immediately prior to the Effective Time, (iii) subject to Restricted Stock Awards (whether or not then vested) that are outstanding immediately prior to the Effective Time, or (iv) issuable upon settlement of Company RSUs (whether or not then vested) that are outstanding immediately prior to the Effective Time, plus (b) the Consideration Shares, minus (c) the Treasury Shares outstanding immediately prior to the Effective Time, minus (d) a number of shares equal to the aggregate exercise price of the Company Options described in clause (ii) above divided by the Per Share Merger Consideration; provided that the calculation of Aggregate Fully Diluted Company Common Shares shall not include any shares of Company Common Stock subject to Company Options, Restricted Stock Awards or Company RSUs that are first granted after the date of this Agreement, unless (x) the Company had, on or prior to the date of this Agreement, committed in writing to grant such Company Options, Restricted Stock Awards or Company RSUs and (y) the holder of such promised Company Options, Restricted Stock Awards or Company RSUs commences employment with the Company on or prior to the date of this Agreement (Company Options, Restricted Stock Awards and Company RSUs referenced in (x) and (y), “Promised Equity”).

Aggregate Merger Consideration” means a number of shares of Acquiror Post-Merger Class B Common Stock equal to the quotient obtained by dividing (i) the Base Purchase Price, by (ii) $10.00.

Agreement” has the meaning specified in the Preamble hereto.

Agreement End Date” has the meaning specified in Section 10.1(d).

Allocation Schedule” has the meaning specified in Section 3.4.

Ancillary Agreements” means this Agreement, the Company Stockholder Support Agreement, the Sponsor Support Agreement, the Registration Rights Agreement, the Confidentiality Agreement, the Company Closing Certificate and the Acquiror Closing Certificate.

Anti-Bribery Laws” means the anti-bribery provisions of the Foreign Corrupt Practices Act of 1977, and all other applicable anti-corruption and bribery Laws (including the U.K. Bribery Act 2010, and any rules or regulations promulgated thereunder or other Laws of other countries implementing the OECD Convention on Combating Bribery of Foreign Officials).

Antitrust Authorities” means the Antitrust Division of the United States Department of Justice, the United States Federal Trade Commission or the antitrust or competition Law authorities of any other jurisdiction (whether United States, foreign or multinational).

Antitrust Information or Document Request” means any request or demand for the production, delivery or disclosure of documents or other evidence, or any request or demand for the production of witnesses for interviews or depositions or other oral or written testimony, by any Antitrust Authorities relating to the transactions contemplated hereby or by any third party challenging the transactions contemplated hereby, including any so called “second request” for additional information or documentary material or any civil investigative demand made or issued by any Antitrust Authority or any subpoena, interrogatory or deposition.

Audited Financial Statements” has the meaning specified in Section 4.8(a).

 

5


Base Purchase Price” means $3,500,000,000.

Business” means the operation of a social networking platform.

Business Combination” has the meaning set forth in Acquiror’s Governing Documents as in effect on the date hereof.

“Business Combination Proposal” means any offer, inquiry, proposal or indication of interest (whether written or oral, binding or non-binding, and other than an offer, inquiry, proposal or indication of interest with respect to the transactions contemplated hereby), relating to a Business Combination by Acquiror.

Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York or San Francisco, California are authorized or required by Law to close.

Closing” has the meaning specified in Section 2.3(a).

Closing Date” has the meaning specified in Section 2.3(a).

Code” has the meaning specified in the Recitals hereto.

Company” has the meaning specified in the Preamble hereto.

Company Award” means a Company Option, Restricted Stock Award or Company RSU.

Company Benefit Plan” means each “employee benefit plan” as defined in Section 3(3) of ERISA (whether or not subject to ERISA) and each other plan, policy, program or agreement (including any employment, bonus, incentive or deferred compensation, employee loan, note or pledge agreement, equity or equity-based compensation, severance, retention, supplemental retirement, change in control or similar plan, policy, program or agreement) providing compensation or other benefits to any current or former director, officer, individual consultant, worker or employee of the Company or any Subsidiary of the Company, which is maintained, sponsored or contributed to by the Company or any Subsidiary of the Company, or to which the Company or any Subsidiary of the Company is a party or has or may have any liability (whether actual or contingent), and in each case whether or not (i) subject to the Laws of the United States, (ii) in writing or (iii) funded, but excluding in each case any statutory plan, program or arrangement that is required under applicable Law (other than the Laws of the United States) and maintained by any Governmental Authority.

Company Capital Stock” means the Company Common Stock and the Company Preferred Stock.

Company Common Stock” means the shares of common stock, par value $0.0001 per share, of the Company.

Company Cure Period” has the meaning specified in Section 10.1(d).

Company Disclosure Letter” has the meaning specified in the introduction to Article IV.

Company Fundamental Representations” means the representations and warranties made pursuant to Section 4.1 (Company Organization), the first and second sentences of Section 4.2 (Subsidiaries), Section 4.3 (Due Authorization), Section 4.4(a) and Section 4.4(b) (No Conflict), Section 4.6 (Capitalization of the Company), Section 4.7 (Capitalization of Subsidiaries) and Section 4.16 (Brokers’ Fees).

 

6


Company Group” has the meaning specified in Section 11.18(b).

Company Incentive Plans” means the Company’s 2008 Equity Incentive Plan and the Company’s 2018 Equity Incentive Plan, in each case, as may be amended from time to time.

Company Indemnified Parties” has the meaning specified in Section 7.7.

Company Licensed Intellectual Property” means Intellectual Property owned by any Person (other than the Company or any Subsidiary of the Company) that is licensed to the Company or any Subsidiary of the Company.

Company Material Adverse Effect” means any event, state of facts, development, circumstance, occurrence or effect (collectively, “Events”) that (a) has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, assets, results of operations or financial condition of the Company and its Subsidiaries, taken as a whole or (b) does or would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impair the ability of the Company to consummate the Merger; provided, however, that solely for purposes of clause (a), in no event would any of the following, alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be, a “Company Material Adverse Effect”: (i) any change in applicable Laws, GAAP or any COVID-19 Measures or any interpretation thereof following the date of this Agreement, (ii) any change in interest rates or economic, political, business or financial market conditions generally, (iii) the taking of any action required by this Agreement, (iv) any natural disaster (including hurricanes, storms, tornados, flooding, earthquakes, volcanic eruptions or similar occurrences), pandemic, outbreak of disease or illness or public health event (including COVID-19) or change in climate, (v) any acts of terrorism or war, the outbreak or escalation of hostilities, geopolitical conditions, local, national or international political conditions, (vi) any failure of the Company to meet any projections or forecasts (provided that clause (vi) shall not prevent a determination that any Event not otherwise excluded from this definition of Company Material Adverse Effect underlying such failure to meet budgets, projections or forecasts has resulted in a Company Material Adverse Effect), (vii) any Events generally applicable to the industries or markets in which the Company and its Subsidiaries operate (including increases in the cost of products, supplies, materials or other goods purchased from third party suppliers), (viii) the announcement of this Agreement and consummation of the transactions contemplated hereby, including any termination of, reduction in or similar adverse impact (but in each case only to the extent attributable to such announcement or consummation) on relationships, contractual or otherwise, with any landlords, customers, suppliers, distributors, partners or employees of the Company and its Subsidiaries (it being understood that this clause (viii) shall be disregarded for purposes of the representation and warranty set forth in Section 4.4 and the condition to Closing with respect thereto), (ix) the taking by the Company and its Subsidiaries of any COVID-19 Response Measures, or (x) any action taken by, or at the request of, Acquiror or Merger Sub; provided, further, that any Event referred to in clauses (i), (ii), (iv), (v) or (vii) above may be taken into account in determining if a Company Material Adverse Effect has occurred to the extent it has a disproportionate and adverse effect on the business, assets, results of operations or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole, relative to similarly situated companies in the industry in which the Company and its Subsidiaries conduct their respective operations, but only to the extent of the incremental disproportionate effect on the Company and its Subsidiaries, taken as a whole, relative to similarly situated companies in the industry in which the Company and its Subsidiaries conduct their respective operations.

Company Option” means an option to purchase shares of Company Common Stock.

 

7


Company-Owned Intellectual Property” shall mean all Intellectual Property owned by the Company or its Subsidiaries or that was developed by or for the Company or its Subsidiaries.

Company Preferred Stock” means the shares of preferred stock, par value $0.0001 per shares, of the Company.

Company Registered Intellectual Property” has the meaning specified in Section 4.21(a).

Company RSU” means a restricted stock unit of the Company.

Company Stockholder Approvals” means the approval and adoption of this Agreement and the transactions contemplated hereby, including the Merger and the transactions contemplated thereby, by the affirmative vote or written consent of the holders of (a) at least a majority of the shares of Company Preferred Stock, voting as a single class on an as-converted to Company Common Stock basis, and (b) at least a majority of the shares of Company Preferred Stock and Company Common Stock, voting as a single class on an as-converted to Company Common Stock basis, pursuant to the terms and subject to the conditions of the Company’s Governing Documents and applicable Law.

Company Stockholder Support Agreement” means that certain Support Agreement, dated as of the date hereof, by and among each of the Requisite Stockholders, Acquiror and the Company, as amended or modified from time to time.

Company Transaction Expenses” has the meaning specified in Section 2.4(c).

Confidentiality Agreement” means the Nondisclosure Agreement, dated as of April 21, 2021, between Acquiror and the Company.

Consideration Share Entitlement” means an entitlement to receive any of the Consideration Shares under and pursuant to the terms of the Pixel Labs Merger Agreement.

Consideration Shares” means the aggregate remaining number of shares of Company Common Stock the Company is obligated to issue to eligible former stockholders of Pixel Labs pursuant to the terms of the Pixel Labs Merger Agreement, but which, as of immediately prior to the Effective Time, have not yet been so issued (and are thus not included in clause (a) of the definition of Aggregate Fully Diluted Company Common Shares), not to exceed 57,828 shares of Company Common Stock.

Constituent Corporations” has the meaning specified in Section 2.1(a).

“Contracts” means any contracts, agreements, subcontracts, leases or purchase orders purporting to be legally binding.

Copyleft License” means any license that requires, as a condition of use, modification and/or distribution of software subject to such license, that such software subject to such license, or other software incorporated into, derived from, or used or distributed with such software subject to such license (i) in the case of software, be made available or distributed in a form other than binary (e.g., source code form), (ii) be licensed for the purpose of preparing derivative works, (iii) be licensed under terms that allow the Company’s or any of their Subsidiary’s products or portions thereof or interfaces therefor to be reverse engineered, reverse assembled or disassembled (other than by operation of Law) or (iv) be redistributable at no license fee. Copyleft Licenses include the GNU General Public License, the GNU Lesser General Public License, the Mozilla Public License, the Common Development and Distribution License, the Eclipse Public License and all Creative Commons “sharealike” licenses.

 

8


COVID-19” means SARS CoV-2 or COVID-19, and any evolutions thereof.

COVID-19 Measures” means any quarantine, “shelter in place”, “stay at home”, workforce reduction, social distancing, shut down, closure, sequester, safety or similar Law, Governmental Order, Action, directive, guidelines or recommendations promulgated by any Governmental Authority that has jurisdiction over the Company or its Subsidiaries, including the Centers for Disease Control and Prevention and the World Health Organization, in each case, in connection with or in response to COVID-19, including the Coronavirus Aid, Relief, and Economic Security Act and the Families First Coronavirus Response Act.

COVID-19 Response Measures” means any reasonable action, taken or omitted to be taken after the date of this Agreement that is reasonably necessary or prudent in light of the circumstances to be taken in response to COVID-19 or any COVID-19 Measures, including the establishment of any commercially reasonable policy, procedure or protocol or to address the easing or removal of operating restrictions previously adopted to address COVID-19.

D&O Indemnified Parties” has the meaning specified in Section 7.7.

DGCL” has the meaning specified in the Recitals hereto.

Dissenting Shares” has the meaning specified in Section 3.6.

Dollars” or “$” means lawful money of the United States.

Effective Time” has the meaning specified in Section 2.3(b).

Environmental Laws” means any and all applicable Laws relating to Hazardous Materials, pollution, or the protection or management of the environment or natural resources, or protection of human health (with respect to exposure to Hazardous Materials).

ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

ERISA Affiliate” means any trade or business, whether or not incorporated, that together with the Company or any Subsidiary thereof would be deemed to be a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code.

ESPP” has the meaning specified in Section 7.1.

Exchange Act” means the Securities Exchange Act of 1934, as amended.

Exchange Agent” has the meaning specified in Section 3.2(a).

Exchange Ratio” means the quotient obtained by dividing (a) the number of shares of Acquiror Post-Merger Class B Common Stock constituting the Aggregate Merger Consideration, by (b) the number of shares of Company Common Stock constituting the Aggregate Fully Diluted Company Common Shares.

Export Approvals” has the meaning specified in Section 4.26(a).

Fenwick” has the meaning specified in Section 11.18(b).

Fenwick Privileged Communications” has the meaning specified in Section 11.18(b).

Financial Statements” has the meaning specified in Section 4.8(a).

 

9


Foreign Benefit Plan” means each Company Benefit Plan that is governed by the laws of any jurisdiction outside of the United States or provides compensation or benefits to any current or former director, officer, individual consultant, worker or employee of the Company or any Subsidiary of the Company (or any dependent thereof) who resides outside of the United States.

Forward Purchase Agreement” means the Forward Purchase Agreement entered into as of March 23, 2021, between Acquiror and Sponsor, as further amended, restated, modified or supplemented from time to time.

GAAP” means generally accepted accounting principles in the United States as in effect from time to time.

Governing Documents” means the legal document(s) by which any Person (other than an individual) establishes its legal existence or which govern its internal affairs. For example, the “Governing Documents” of a corporation are its certificate of incorporation and bylaws, the “Governing Documents” of a limited partnership are its limited partnership agreement and certificate of limited partnership, the “Governing Documents” of a limited liability company are its operating agreement and certificate of formation and the “Governing Documents” of an exempted company are its memorandum and articles of association.

Governmental Authority” means any federal, state, provincial, municipal, local or foreign government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court or tribunal.

Governmental Authorization” has the meaning specified in Section 4.5.

Governmental Order” means any order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any Governmental Authority.

Hazardous Material” means any (i) pollutant, contaminant, chemical, (ii) industrial, solid, liquid or gaseous toxic or hazardous substance, material or waste, (iii) petroleum or any fraction or product thereof, (iv) asbestos or asbestos-containing material, (v) polychlorinated biphenyl, (vi) chlorofluorocarbons, and (vii) other substance, material or waste, in each case, which are regulated under any Environmental Law or as to which liability may be imposed pursuant to Environmental Law.

HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Incentive Equity Plan” has the meaning specified in Section 7.1.

Indebtedness” means with respect to any Person, without duplication, any obligations, contingent or otherwise, in respect of (a) the principal of and premium (if any) in respect of all indebtedness for borrowed money, including accrued interest and any per diem interest accruals, (b) the principal and interest components of capitalized lease obligations under GAAP, (c) amounts drawn (including any accrued and unpaid interest) on letters of credit, bank guarantees, bankers’ acceptances and other similar instruments (solely to the extent such amounts have actually been drawn), (d) the principal of and premium (if any) in respect of obligations evidenced by bonds, debentures, notes and similar instruments, (e) the termination value of interest rate protection agreements and currency obligation swaps, hedges or similar arrangements (without duplication of other indebtedness supported or guaranteed thereby), (f) the principal component of all obligations to pay the deferred and unpaid purchase price of property and equipment which have been delivered, including “earn outs” and “seller notes” and (g) breakage costs, prepayment or early termination premiums, penalties, or other fees or expenses payable as a result of the consummation of the transactions contemplated hereby in respect of any of the items in the foregoing clauses (a) through (f), and (h) all Indebtedness of another Person referred to in clauses (a) through (g) above guaranteed directly or indirectly, jointly or severally.

 

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Intellectual Property” means any rights in or to the following throughout the world: (i) patents, patent and provisional applications, invention disclosures, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions, and extensions thereof, including any patents issuing on any of the foregoing and any reissues, reexaminations, substitutes, supplementary protection certificates, and extensions of any of the foregoing (collectively, “Patents”); (ii) registered and unregistered trademarks, logos, service marks, trade dress and trade names, slogans, brand names, other source or business identifiers, pending applications therefor, and internet domain names, together with the goodwill of the Company or any of its Subsidiaries or their respective businesses symbolized by or associated with any of the foregoing, and all applications, registrations, extensions and renewals of any of the foregoing; (iii) registered and unregistered copyrights, database and design rights, mask work rights and moral rights, whether or not registered or published, and applications for registration of copyright, including such corresponding rights in Software and other works of authorship; (iv) trade secrets, know-how, processes, and other confidential information; and (v) any other intellectual property rights protectable, arising under or associated with any of the foregoing, including those protected by any Law anywhere in the world.

Interim Period” has the meaning specified in Section 6.1.

“International Trade Laws” means all Laws relating to the import, export, re-export, deemed export, deemed re-export, or transfer of information, data, goods, and technology, including but not limited to the Export Administration Regulations administered by the United States Department of Commerce, the International Traffic in Arms Regulations administered by the United States Department of State, customs and import Laws administered by United States Customs and Border Protection, any other export or import controls administered by an agency of the United States government, the anti-boycott regulations administered by the United States Department of Commerce and the United States Department of the Treasury, and other Laws adopted by Governmental Authorities of other countries relating to the same subject matter as the United States Laws described above.

Intervening Event” means an Event occurring after the date of this Agreement (but specifically excluding (a) any Event that relates to or is reasonably likely to give rise to or result in any Business Combination Proposal, (b) any Event described in subsections (ii), (iv), (v) or (vii) of the definition of “Company Material Adverse Effect”; provided, however, that any such Event may be taken into account in determining whether an Intervening Event has occurred to the extent (but only to the extent) it has a disproportionate effect on the Company, taken as a whole, relative to similarly situated Persons operating in the industries in which the Company operates, (c) any change in the price or trading volume of Acquiror Common Stock, or (d) the timing of any approval or clearance of any Governmental Authority required for the consummation of the Merger) that materially and negatively affects the business, assets or results of operations of the Company and its Subsidiaries, taken as a whole, that is consequential to the Company’s earning power over a long-term duration and that was not reasonably foreseeable as of the date of this Agreement and is not cured by the Company prior to the Modification in Recommendation.

Intervening Event Notice” has the meaning specified in Section 8.2(b).

Intervening Event Notice Period” has the meaning specified in Section 8.2(b).

Investment Company Act” means the Investment Company Act of 1940.

IRS” means Internal Revenue Service.

 

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JOBS Act” has the meaning specified in Section 5.6(a).

KVSB Group” has the meaning specified in Section 11.18(a).

Latham” has the meaning specified in Section 11.18(a).

Latham Privileged Communications” has the meaning specified in Section 11.18(a).

“Law” means any statute, law, ordinance, rule, regulation or Governmental Order, in each case, of any Governmental Authority.

Leased Real Property” means all real property leased, licensed, subleased or otherwise used or occupied by the Company or any of its Subsidiaries.

Legal Proceeding” means any lawsuit, litigation, action, audit, suit, judgment, claim, proceeding or any other Actions (including any investigations or inquiries initiated, pending or threatened by any Governmental Authority), or other proceeding at law or in equity.

Letter of Transmittal” has the meaning specified in Section 3.2(d).

Liability” or “liability” means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, known or unknown, matured or unmatured or determined or determinable, including those arising under any Law (including any Environmental Law), Legal Proceeding or Governmental Order and those arising under any Contract, agreement, arrangement, commitment or undertaking.

Licenses” means any approvals, authorizations, consents, licenses, registrations, permits, certifications, registrations, exemptions, clearances or certificates of a Governmental Authority.

Lien” means all liens, mortgages, deeds of trust, pledges, hypothecations, encumbrances, security interests, adverse claim, options, restrictions, claims or other liens of any kind whether consensual, statutory or otherwise.

Major Company Stockholder” means each of the holders of Company Capital Stock set forth on Section 2.4(a)(iii) of the Company Disclosure Letter.

Merger” has the meaning specified in the Recitals hereto.

Merger Certificate” has the meaning specified in Section 2.1(a).

Merger Sub” has the meaning specified in the Preamble hereto.

Merger Sub Capital Stock” means the shares of the common stock, par value $0.0001 per share, of Merger Sub.

Minimum PIPE Investment Amount” has the meaning specified in Section 5.12(e).

Modification in Recommendation” has the meaning specified in Section 8.2(b).

Nasdaq” means Nasdaq Capital Market.

NYSE” means the New York Stock Exchange.

 

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Offer Documents” has the meaning specified in Section 8.2(a)(i).

Open Source License” means any license meeting the Open Source Definition (as promulgated by the Open Source Initiative) or the Free Software Definition (as promulgated by the Free Software Foundation), or any substantially similar license, including any license approved by the Open Source Initiative or any Creative Commons License. “Open Source Licenses” shall include Copyleft Licenses.

Open Source Materials” means any Software subject to an Open Source License.

Owned Real Property” means all real property owned in fee simple by the Company or any of its Subsidiaries.

PCAOB” means the Public Company Accounting Oversight Board.

Per Share Merger Consideration” means the product obtained by multiplying (i) the Exchange Ratio by (ii) $10.00.

“Permitted Liens” means (a) mechanic’s, materialmen’s and similar Liens arising in the ordinary course of business with respect to any amounts (i) not yet due and payable or which are being contested in good faith through appropriate proceedings and (ii) for which adequate accruals or reserves have been established in accordance with GAAP, (b) Liens for Taxes (i) not yet due and payable or (ii) which are being contested in good faith through appropriate proceedings and for which adequate accruals or reserves have been established in accordance with GAAP, (c) defects or imperfections of title, easements, encroachments, covenants, rights-of-way, conditions, matters that would be apparent from a physical inspection or current, accurate survey of such real property, restrictions and other similar charges or encumbrances that do not, in the aggregate, materially impair the value or materially interfere with the present use of the Owned Real Property or Leased Real Property, (d) zoning, building, entitlement and other land use and environmental regulations promulgated by any Governmental Authority that do not, in the aggregate, materially interfere with the current use of, or materially impair the value of, the Owned Real Property or Leased Real Property, (e) non-exclusive licenses of Intellectual Property entered into in the ordinary course of business consistent with past practice, (f) ordinary course purchase money Liens and Liens securing rental payments under operating or capital lease arrangements for amounts not yet due or payable and (g) other Liens that do not materially and adversely affect the value, ordinary course use or operation of the asset subject thereto.

Person” means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or instrumentality or other entity of any kind.

Personal Information” means information and data related to or capable of being used to identify, contact or locate a Person, device or household, including name, street address, telephone number, email address, photograph, payment information, social security number, driver’s license number, passport number, customer or account number and/or any information that is “personal information,” “personal data,” “personal identifiable information” or similar term under any applicable Law.

Pixel Labs Merger Agreement” means that certain Agreement and Plan of Reorganization, dated August 22, 2019, entered into by and among the Company, Gutenberg Merger Sub I, Inc., Gutenberg Merger Sub II, LLC, Pixel Labs, Inc. and Fortis Advisors LLC.

 

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Privacy Laws” means applicable foreign and domestic Laws, guidelines, industry frameworks and codes of conduct binding on the Company or that the Company has otherwise represented in writing it complies with, in each case as applicable and in force from time to time, and as amended, consolidated, re-enacted or replaced from time to time, governing the Processing of Personal Information; data security; data breach; data breach notification; data protection; consumer protection; the requirements for website and mobile application privacy policies and practices; profiling and tracking; advertising and marketing; and email, messaging and/or telecommunications, including to the extent applicable to the Company, the Federal Trade Commission Act (the “FTC”), the Controlling the Assault of Non-Solicited Pornography And Marketing Act (“CAN-SPAM”), the Telephone Consumer Protection Act (“TCPA”), California Consumer Privacy Act (“CCPA”), the General Data Protection Regulation 2016/679 (“GDPR”), the UK Data Protection the UK Data Protection Act 2018 (“UK DPA”), the UK General Data Protection Regulation as defined by the UK DPA as amended by the Data Protection, Privacy and Electronic Communications (Amendments etc.) (EU Exit) Regulations 2019 (“UK GDPR”), and the Privacy and Electronic Communications Regulations 2003, and Directive 2002/58/EC concerning the processing of personal data and the protection of privacy in the electronic communications sector (“e-Privacy Directive”) the European Electronic Communications Code (“EECC”) (and any national legislation that implements it) and the Payment Card Industry Data security Standards.

PIPE Investment” means the purchase of shares of Acquiror Post-Merger Class A Common Stock pursuant to the Subscription Agreements.

PIPE Investment Amount” means the aggregate gross purchase price received by Acquiror prior to or substantially concurrently with Closing for the shares in the PIPE Investment.

PIPE Investors” means those certain investors participating in the PIPE Investment pursuant to the Subscription Agreements.

Processing” means the receipt, collection, storage, use, security, transfer, disclosure or other operation or set of operations performed on Personal Information.

Prospectus” has the meaning specified in Section 11.1.

Proxy Statement” has the meaning specified in Section 8.2(a)(i).

Proxy Statement/Registration Statement” has the meaning specified in Section 8.2(a)(i).

Q2 Financial Statements” has the meaning specified in Section 6.3(a).

Q3 Financial Statements” has the meaning specified in Section 6.3(b).

Real Property Leases” has the meaning specified in Section 4.20(a)(ii).

Registration Rights Agreement” has the meaning specified in the Recitals hereto.

Registration Statement” means the Registration Statement on Form S-4, or other appropriate form, including any pre-effective or post-effective amendments or supplements thereto, to be filed with the SEC by Acquiror under the Securities Act with respect to the Registration Statement Securities.

Registration Statement Securities” has the meaning specified in Section 8.2(a)(i).

Requisite Stockholders” means each of the holders of Company Capital Stock set forth on Section 8.2(c) of the Company Disclosure Letter.

 

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Restricted Stock Award” means an award of restricted shares of Company Common Stock.

Sanctioned Country” means at any time, a country or territory which is itself the subject or target of any country-wide or territory-wide Sanctions Laws (at the time of this Agreement, the Crimea region, Cuba, Iran, North Korea and Syria).

Sanctioned Person” means (i) any Person identified in any sanctions-related list of designated Persons maintained by (a) the United States Department of the Treasury’s Office of Foreign Assets Control, the United States Department of Commerce, Bureau of Industry and Security, or the United States Department of State; (b) Her Majesty’s Treasury of the United Kingdom; (c) any committee of the United Nations Security Council; or (d) the European Union; (ii) any Person located, organized, or resident in, organized in, or a Governmental Authority or government instrumentality of, any Sanctioned Country; and (iii) any Person directly or indirectly owned or controlled by, or acting for the benefit or on behalf of, a Person described in clause (i) or (ii), either individually or in the aggregate.

Sanctions Laws” means those trade, economic and financial sanctions Laws administered, enacted or enforced from time to time by (i) the United States (including the Department of the Treasury’s Office of Foreign Assets Control), (ii) the European Union and enforced by its member states, (iii) the United Nations, or (iv) Her Majesty’s Treasury of the United Kingdom.

Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.

SEC” means the United States Securities and Exchange Commission.

Securities Act” means the Securities Act of 1933.

Software” shall mean any and all (a) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code; (b) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise; (c) descriptions, flowcharts and other work product used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons; and (d) all documentation, including user manuals and other training documentation, related to any of the foregoing.

Sponsor” means Khosla Ventures SPAC Sponsor II LLC.

Sponsor Support Agreement” means that certain Support Agreement, dated as of the date hereof, by and among the Sponsor, Acquiror and the Company, as amended or modified from time to time.

Stock Exchange” means Nasdaq, or in the event of a transfer of listing pursuant to Section 7.10, the NYSE.

Subscription Agreements” means the subscription agreements pursuant to which the PIPE Investment will be consummated.

Subsidiary” means, with respect to a Person, a corporation or other entity of which more than 50% of the voting power of the equity securities or equity interests is owned, directly or indirectly, by such Person.

Surviving Corporation” has the meaning specified in Section 2.1(b).

 

15


Tax Return” means any return, declaration, report, statement, information statement or other document filed or required to be filed with any Governmental Authority with respect to Taxes, including any claims for refunds of Taxes, any information returns and any schedules, attachments, amendments or supplements of any of the foregoing.

Taxes” means any and all federal, state, local, foreign or other taxes imposed by any Governmental Authority, including all income, gross receipts, license, payroll, recapture, net worth, employment, escheat and unclaimed property obligations, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, ad valorem, value added, inventory, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, governmental charges, duties, levies and other similar charges imposed by a Governmental Authority in the nature of a tax, alternative or add-on minimum, or estimated taxes, and including any interest, penalty, or addition thereto.

Terminating Acquiror Breach” has the meaning specified in Section 10.1(f).

Terminating Company Breach” has the meaning specified in Section 10.1(d).

Top Vendors” has the meaning specified in Section 4.28(a).

Transaction Expenses” means, with respect to any Person, the following out-of-pocket fees and expenses paid or payable by such Person or any of its Subsidiaries (whether or not billed or accrued for) as a result of or in connection with the negotiation, documentation and consummation of the transactions contemplated hereby: (a) all fees, costs, expenses, brokerage fees, commissions, finders’ fees and disbursements of financial advisors, investment banks, data room administrators, attorneys, accountants and other advisors and service providers (and, in the case of Acquiror, any deferred or unpaid underwriting commissions and other fees relating to Acquiror’s initial public offering), (b) change-in-control payments, transaction bonuses, retention payments, severance or similar compensatory payments payable by such Person or such Person’s Subsidiaries to any current or former employee (including any amounts due under any consulting agreement with any such former employee), independent contractor, officer, or director of such Person or any Subsidiary of such Person in connection with the transactions contemplated hereby (whether or not tied to any subsequent event or condition, such as a termination of service), including the employer portion of payroll Taxes arising therefrom (but excluding, for clarity, any payments that become payable due to a termination of service following Closing), (c) the portion of the fees payable by such Person pursuant to Section 8.1(e) and Section 8.2(a)(vi), (d) all fees and expenses incurred in connection with obtaining approval of the Stock Exchange under Section 7.3, and (e) amounts owing or that may become owed, payable or otherwise due, directly or indirectly, by such Person or any of its Subsidiaries to any Affiliate of the Company or any of its Subsidiaries in connection with the consummation of the transactions contemplated hereby, including fees, costs and expenses related to the termination of any Affiliate Agreement.

Transaction Proposals” has the meaning specified in Section 8.2(b).

Treasury Regulations” means the regulations promulgated under the Code by the United States Department of the Treasury (whether in final, proposed or temporary form), as the same may be amended from time to time.

Treasury Share” has the meaning specified in Section 3.1(a).

Trust Account” has the meaning specified in Section 11.1.

 

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Trust Agreement” has the meaning specified in Section 5.8.

Trustee” has the meaning specified in Section 5.8.

Unaudited Financial Statements” has the meaning specified in Section 4.8(a).

Working Capital Loans” means any loan made to Acquiror by any of the Sponsor, an Affiliate of the Sponsor, or any of Acquiror’s officers or directors, and evidenced by a promissory note, for the purpose of financing costs incurred in connection with a Business Combination.

Written Consent” has the meaning specified in Section 8.2(c).

Section 1.2. Construction.

(a) Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms “hereof,” “herein,” “hereby,” “hereto” and derivative or similar words refer to this entire Agreement; (iv) the terms “Article” or “Section” refer to the specified Article or Section of this Agreement; (v) the word “including” shall mean “including, without limitation” and (vi) the word “or” shall be disjunctive but not exclusive.

(b) Unless the context of this Agreement otherwise requires, references to statutes shall include all regulations promulgated thereunder and references to statutes or regulations shall be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation.

(c) Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified.

(d) All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.

(e) The term “actual fraud” means, with respect to a party to this Agreement, an actual and intentional fraud with respect to the making of the representations and warranties set forth in this Agreement or any Ancillary Agreement, provided, that such actual and intentional fraud of such Person shall only be deemed to exist if (i) if such Person is the Company, any of the individuals included on Section 1.3 of the Company Disclosure Letter (in the case of the Company) or (ii) if such Person is Acquiror or Merger Sub, any of the executive officers of the Acquiror as disclosed in the Acquiror SEC Filings (in the case of Acquiror), had actual knowledge (as opposed to imputed or constructive knowledge) that the representations and warranties made by such Person pursuant to this Agreement or any Ancillary Agreement, in each case, as qualified by the applicable Disclosure Letter, were actually breached when made, with the express intention that the other party to this Agreement rely thereon to its detriment.

Section 1.3. Knowledge. As used herein, (i) the phrase “to the knowledge” of the Company shall mean the actual knowledge of the individuals identified on Section 1.3 of the Company Disclosure Letter and (ii) the phrase “to the knowledge” of Acquiror shall mean the actual knowledge of each of the executive officers of the Acquiror as disclosed in the Acquiror SEC Filings.

 

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ARTICLE II

THE MERGER; CLOSING

Section 2.1. The Merger.

(a) Upon the terms and subject to the conditions set forth in this Agreement, Acquiror, Merger Sub and the Company (Merger Sub and the Company sometimes being referred to herein as the “Constituent Corporations”) shall cause Merger Sub to be merged with and into the Company, with the Company being the surviving corporation in the Merger. The Merger shall be consummated in accordance with this Agreement and shall be evidenced by a certificate of merger with respect to the Merger (as so filed, the “Merger Certificate”), executed by the Company in accordance with the relevant provisions of the DGCL, such Merger to be effective as of the Effective Time.

(b) Upon consummation of the Merger, the separate corporate existence of Merger Sub shall cease and the Company, as the surviving corporation of the Merger (hereinafter referred to for the periods at and after the Effective Time as the “Surviving Corporation”), shall continue its corporate existence under the DGCL, as a wholly owned subsidiary of Acquiror.

Section 2.2. Effects of the Merger. At and after the Effective Time, the Surviving Corporation shall thereupon and thereafter possess all of the rights, privileges, powers and franchises, of a public as well as a private nature, of the Constituent Corporations, and shall become subject to all the restrictions, disabilities and duties of each of the Constituent Corporations; and all rights, privileges, powers and franchises of each Constituent Corporation, and all property, real, personal and mixed, and all debts due to each such Constituent Corporation, on whatever account, shall become vested in the Surviving Corporation; and all property, rights, privileges, powers and franchises, and all and every other interest shall become thereafter the property of the Surviving Corporation as they are of the Constituent Corporations; and the title to any real property vested by deed or otherwise or any other interest in real estate vested by any instrument or otherwise in either of such Constituent Corporations shall not revert or become in any way impaired by reason of the Merger; but all Liens upon any property of a Constituent Corporation shall thereafter attach to the Surviving Corporation and shall be enforceable against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it; all of the foregoing in accordance with the applicable provisions of the DGCL.

Section 2.3. Closing; Effective Time.

(a) In accordance with the terms and subject to the conditions of this Agreement, the closing of the Merger (the “Closing”) shall take place electronically by the mutual exchange of electronic signatures (including portable document format (.PDF)) as promptly as practicable, but in no event later than the date that is three Business Days after the first date on which all conditions set forth in Article IX shall have been satisfied or waived (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver thereof) or such other time and place as Acquiror and the Company may mutually agree in writing. The date on which the Closing actually occurs is referred to in this Agreement as the “Closing Date”.

(b) Subject to the satisfaction or waiver of all of the conditions set forth in Article IX of this Agreement, and provided this Agreement has not theretofore been terminated pursuant to its terms, Acquiror, Merger Sub, and the Company shall cause the Merger Certificate to be executed and duly submitted for filing on the Closing Date with the Secretary of State of the State of Delaware in accordance with the applicable provisions of the DGCL. The Merger shall become effective at the time when the Merger Certificate has been accepted for filing by the Secretary of State of the State of Delaware, or at such later time as may be agreed by Acquiror and the Company in writing and specified in each of the Merger Certificate (the “Effective Time”).

 

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Section 2.4. Closing Deliverables.

(a) At the Closing, the Company will deliver or cause to be delivered:

(i) to Acquiror, a certificate signed by an officer of the Company, dated as of the Closing Date, certifying that, to the knowledge and belief of such officer, the conditions specified in Section 9.2(a) and Section 9.2(b) have been fulfilled (the “Company Closing Certificate”);

(ii) to Acquiror, the written resignations of all of the directors of the Company (other than any such Persons identified as initial directors of the Surviving Corporation, in accordance with Section 2.6), effective as of the Effective Time;

(iii) to Acquiror, the Registration Rights Agreement, duly executed by the Major Company Stockholders who have elected to execute the Registration Rights Agreement; and

(iv) to Acquiror, a certificate on behalf of the Company, prepared in a manner consistent and in accordance with the requirements of Treasury Regulations Sections 1.897-2(g), (h) and 1.1445-2(c)(3), certifying that no interest in the Company is, or has been during the relevant period specified in Section 897(c)(1)(A)(ii) of the Code, a “United States real property interest” within the meaning of Section 897(c) of the Code, and a form of notice to the IRS prepared in accordance with the provisions of Treasury Regulations Section 1.897-2(h)(2).

(b) At the Closing, Acquiror will deliver or cause to be delivered:

(i) to the Exchange Agent, the number of shares of Acquiror Post-Merger Class B Common Stock equal to the portion of the Aggregate Merger Consideration to be paid to holders of Company Capital Stock for further distribution to the Company’s stockholders pursuant to Section 3.2, provided, that, for the avoidance of doubt, such shares shall be delivered immediately following the effectiveness of the Acquiror Post-Merger Charter;

(ii) to the Company, a certificate signed by an officer of Acquiror, dated the Closing Date, certifying that, to the knowledge and belief of such officer, the conditions specified in Section 9.3(a) and Section 9.3(b) have been fulfilled (the “Acquiror Closing Certificate”);

(iii) to the Company, the Registration Rights Agreement, duly executed by duly authorized representatives of Acquiror and the Sponsor; and

(iv) to the Company, the written resignations of all of the directors and officers of Acquiror and Merger Sub (other than those Persons identified as the initial directors and officers, respectively, of Acquiror after the Effective Time, in accordance with the provisions of Section 2.6 and Section 7.6), effective as of the Effective Time.

(c) On the Closing Date, concurrently with the Effective Time, Acquiror shall pay or cause to be paid by wire transfer of immediately available funds, without duplication, (i) (A) all accrued and unpaid Transaction Expenses of Acquiror (“Acquiror Transaction Expenses”) as set forth on a written statement to be delivered to the Company not less than three Business Days prior to the Closing Date, and (B) any amounts outstanding under any Working Capital Loans, and (ii) all accrued and unpaid Transaction

 

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Expenses of the Company (“Company Transaction Expenses”) as set forth on a written statement to be delivered to Acquiror by or on behalf of the Company not less than three Business Days prior to the Closing Date, which shall include the respective amounts and wire transfer instructions for the payment thereof, together with corresponding invoices for the foregoing; provided, that any Company Transaction Expenses due to current or former employees, independent contractors, officers, or directors of the Company or any of its Subsidiaries shall be paid to the Company for further payment to such employee, independent contractor, officer or director through the Company’s payroll.

Section 2.5. Governing Documents.

(a) At the Effective Time, the certificate of incorporation of the Surviving Company shall be the certificate of incorporation of the Merger Sub until thereafter amended as provided therein and under the DGCL. The parties shall take all actions necessary to ensure that, at the Effective Time, the bylaws of the Surviving Company shall be the bylaws of Merger Sub as in effect as of immediately prior to the Effective Time, until thereafter amended as provided therein or by the DGCL.

(b) The certificate of incorporation and bylaws of Acquiror shall be amended on the Closing Date but after the Effective Time to read in the form attached as Exhibits A and B hereto (with such changes that are not material as may be agreed in writing by Acquiror and the Company), and such certificate of incorporation and bylaws shall be the certificate of incorporation and bylaws of Acquiror from and after the effectiveness thereof, until thereafter amended as provided therein and under the DGCL.

Section 2.6. Directors and Officers.

(a) The parties shall take all actions necessary to ensure that, from and after the Effective Time, the Persons identified as the initial post-Closing directors and officers of the Surviving Corporation in accordance with the provisions of Section 7.6 shall be the directors and officers (and in the case of such officers, holding such positions as are set forth on Section 2.6(a) of the Company Disclosure Letter), respectively, of the Surviving Corporation, each to hold office in accordance with the Governing Documents of the Surviving Corporation until such director’s or officer’s successor is duly elected or appointed and qualified, or until the earlier of their death, resignation or removal.

(b) The parties shall take all actions necessary to ensure that, from and after the Effective Time, the Persons identified as the initial post-Closing directors and officers of Acquiror in accordance with the provisions of Section 7.6 shall be the directors and officers (and in the case of such officers, holding such positions as are set forth on Section 2.6(b) of the Company Disclosure Letter), respectively, of Acquiror, each to hold office in accordance with the Governing Documents of Acquiror until such director’s or officer’s successor is duly elected or appointed and qualified, or until the earlier of their death, resignation or removal.

Section 2.7. Tax Free Reorganization Matters. The parties intend that, for United States federal income tax purposes, the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code to which each of Acquiror, the Company and Merger Sub are to be parties under Section 368(b) of the Code and this Agreement is intended to be, and is adopted as, a plan of reorganization for purposes of Sections 354, 361 and 368 of the Code and within the meaning of Treasury Regulations Section 1.368-2(g). None of the parties knows of any fact or circumstance (without conducting independent inquiry or diligence of the other relevant party), or has taken or will take any action, if such fact, circumstance or action would be reasonably expected to cause the Merger to fail to qualify as a reorganization within the meaning of Section 368(a) of the Code. The Merger shall be reported by the parties for all Tax purposes in accordance with the foregoing, unless otherwise required by a Governmental Authority as a result of a “determination” within the meaning of Section 1313(a) of the Code. The parties shall cooperate with each

 

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other and their respective counsel to document and support the Tax treatment of the Merger as a “reorganization” within the meaning of Section 368(a) of the Code, including in the event the SEC requests or requires a tax opinion with respect to any discussion in the Registration Statement of the United States federal income tax consequences to the Company stockholders of the transactions contemplated by this Agreement, such tax opinion shall be provided by the Company’s tax advisor and each party shall execute and deliver customary tax representation letters to the applicable tax advisor in form and substance reasonably satisfactory to such advisor upon which such advisor shall be entitled to rely in rendering such tax opinion.

ARTICLE III

EFFECTS OF THE MERGER ON THE COMPANY CAPITAL STOCK AND EQUITY

AWARDS

Section 3.1. Conversion of Securities.

(a) At the Effective Time, by virtue of the Merger and without any action on the part of any holder of Company Common Stock or any other party: (x) each share of Company Common Stock that is issued and outstanding immediately prior to the Effective Time, after giving effect to the conversion of all shares of Preferred Stock to Common Stock immediately prior to the Effective Time, (other than (i) any shares of Company Common Stock subject to Company Awards (which shall be respectively subject to Section 3.3), (ii) any shares of Company Common Stock held in the treasury of the Company, which treasury shares shall be canceled as part of the Merger and shall not constitute “Company Capital Stock” hereunder (each such share, a “Treasury Share”), and (iii) any shares of Company Common Stock held by stockholders of the Company who have perfected and not withdrawn a demand for appraisal rights pursuant to the applicable provisions of the DGCL) and (y) each Consideration Share Entitlement, shall be canceled and converted into the right to receive the applicable portion of the Aggregate Merger Consideration as determined pursuant to Section 3.2(a).

(b) At the Effective Time, by virtue of the Merger and without any action on the part of Acquiror or Merger Sub, each share of Merger Sub Capital Stock, shall be converted into a share of common stock, par value $0.0001 of the Surviving Corporation.

Section 3.2. Exchange Procedures

(a) Each holder of shares of Company Common Stock as of immediately prior to the Effective Time (other than in respect of (x) Treasury Shares, (y) Dissenting Shares, and (z) any shares of Company Common Stock subject to Company Awards (which shall be subject to Section 3.3)) shall be converted into the right to receive a portion of the Aggregate Merger Consideration equal to (i) the Exchange Ratio, multiplied by (ii) the number of shares of Company Common Stock held by such holder as of immediately prior to the Effective Time, with fractional shares rounded down to the nearest whole share. Each holder of a Consideration Shares Entitlement shall, upon and subject to delivery of the exchange documentation required under the terms of the Pixel Labs Merger Agreement, be entitled to receive a portion of the Aggregate Merger Consideration equal to (i) the Exchange Ratio, multiplied by (ii) the number of Consideration Shares to which such holder was entitled (upon and subject to completion and delivery of the exchange documentation required under the terms of the Pixel Labs Merger Agreement) as of immediately prior to the Effective Time, with fractional shares rounded down to the nearest whole share.

(b) Notwithstanding anything in this Agreement to the contrary, no fractional shares of Acquiror Post-Merger Class B Common Stock shall be issued as a result of the Merger.

 

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(c) Prior to the Closing, Acquiror shall appoint an exchange agent (the “Exchange Agent”) to act as the agent for the purpose of paying the Aggregate Merger Consideration to the Company’s stockholders. Immediately following the effectiveness of the Acquiror Post-Merger Charter (which shall be effective promptly after the Effective Time and in any event on the Closing Date), Acquiror shall deposit with the Exchange Agent the number of shares of Acquiror Post-Merger Class B Common Stock equal to the portion of the Aggregate Merger Consideration to be paid in shares of Acquiror Post-Merger Class B Common Stock.

(d) Reasonably promptly after the Effective Time, Acquiror shall send or shall cause the Exchange Agent to send, to each record holder of shares of Company Common Stock as of immediately prior to the Effective Time, whose Company Common Stock was converted pursuant to Section 3.1(a) into the right to receive a portion of the Aggregate Merger Consideration, a letter of transmittal and instructions (which shall specify that the delivery shall be effected, and the risk of loss and title shall pass, only upon proper transfer of each share to the Exchange Agent, and which letter of transmittal will be in customary form and have such other provisions as Acquiror may reasonably specify and are consented to by the Company (such consent not to be unreasonably withheld, conditioned or delayed)) for use in such exchange (each, a “Letter of Transmittal”).

(e) Upon delivery to the Exchange Agent of a duly completed and validly executed Letter of Transmittal and such other documents as may reasonably be requested by the Exchange Agent, each holder of shares of Company Common Stock that have been converted into the right to receive a portion of the Aggregate Merger Consideration, pursuant to Section 3.1(a), shall be entitled to receive such portion of the Aggregate Merger Consideration. No interest shall be paid or accrued upon the transfer of any share.

(f) Promptly following the date that is one (1) year after the Effective Time, Acquiror shall instruct the Exchange Agent to deliver to Acquiror all documents in its possession relating to the transactions contemplated hereby, and the Exchange Agent’s duties shall terminate. Thereafter, any portion of the Aggregate Merger Consideration that remains unclaimed shall be returned to Acquiror, and any Person that was a holder of shares of Company Common Stock or a Consideration Share Entitlement as of immediately prior to the Effective Time that has not exchanged such shares of Company Common Stock or Consideration Share Entitlement for an applicable portion of the Aggregate Merger Consideration in accordance with this Section 3.2 prior to the date that is one (1) year after the Effective Time, may transfer such shares of Company Common Stock to Acquiror and (subject to applicable abandoned property, escheat and similar Laws) receive in consideration therefor, and Acquiror shall promptly deliver, such applicable portion of the Aggregate Merger Consideration without any interest thereupon. None of Acquiror, Merger Sub, the Company, the Surviving Corporation or the Exchange Agent shall be liable to any Person in respect of any of the Aggregate Merger Consideration delivered to a public official pursuant to and in accordance with any applicable abandoned property, escheat or similar Laws. If any such shares shall not have not been transferred immediately prior to such date on which any amounts payable pursuant to this Article III would otherwise escheat to or become the property of any Governmental Authority, any such amounts shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto.

Section 3.3. Treatment of Company Options; Restricted Stock Awards; Company RSUs.

(a) As of the Effective Time, each Company Option that is outstanding and unexercised as of immediately prior to the Effective Time shall automatically be converted into the right to receive an option to acquire a number of shares of Acquiror Post-Merger Class B Common Stock (each, an “Acquiror Option”) equal to the number of shares of Company Common Stock subject to such Company Option as of immediately prior to the Effective Time, multiplied by the Exchange Ratio (rounded down to

 

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the nearest whole share), at an exercise price per share equal to the exercise price per share of such Company Option in effect immediately prior to the Effective Time, divided by the Exchange Ratio (rounded up to the nearest whole cent); provided, however, that the conversion of the Company Options will be made in a manner consistent with Treasury Regulation Section 1.424-1, such that such conversion will not constitute a “modification” of such Company Options for purposes of Section 409A or Section 424 of the Code (to the extent applicable).

(b) As of the Effective Time, each Restricted Stock Award that is outstanding as of immediately prior to the Effective Time shall automatically be converted into the right to receive restricted shares of Acquiror Post-Merger Class B Common Stock (each, an “Adjusted Restricted Stock Award”) covering a number of shares of Acquiror Post-Merger Class B Common Stock equal to the product of (i) the number of shares of Company Common Stock subject to such Restricted Stock Award immediately prior to the Effective Time, multiplied by (ii) the Exchange Ratio, rounded down to the nearest whole share.

(c) As of the Effective Time, each Company RSU that is outstanding as of immediately prior to the Effective Time shall automatically be converted into the right to receive restricted stock units of Acquiror (each, an “Adjusted RSU”) covering a number of shares of Acquiror Post-Merger Class B Common Stock equal to the product of (i) the number of shares of Company Common Stock subject to such Company RSU immediately prior to the Effective Time, multiplied by (ii) the Exchange Ratio, rounded down to the nearest whole share.

(d) Each Acquiror Option, Adjusted Restricted Stock Award and Adjusted RSU shall be subject to substantially the same terms and conditions (including applicable vesting, expiration and forfeiture provisions) that applied to the corresponding Company Option, Restricted Stock Award or Company RSU (as applicable) immediately prior to the Effective Time, except for (i) terms (A) rendered inoperative by reason of the transactions contemplated by this Agreement (including any anti-dilution or other similar provisions that adjust the number of underlying shares that could become exercisable subject to the options) or (B) to the extent they conflict with the Incentive Equity Plan and (ii) such other immaterial administrative or ministerial changes as the Board of Directors of Acquiror (or the compensation committee thereof) may determine in good faith are appropriate to effectuate the administration of the Acquiror Options.

(e) Prior to the Effective Time, the Company shall take all necessary actions to give effect to the provisions of this Section 3.3 in accordance with the Company Incentive Plans and the applicable award agreements. The Board of Directors of the Company shall terminate the Company Incentive Plans effective as of immediately prior to the Closing and take all other necessary actions, effective as of immediately prior to the Closing, in order to provide that shares in respect of Company Awards that for any reason become re-eligible for future issuance shall be cancelled.

Section 3.4. Allocation Schedule. No later than five Business Days prior to the Closing Date, the Company shall deliver to Acquiror an allocation schedule (the “Allocation Schedule”) setting forth: (a) (i) the number of shares of Company Common Stock held by each Company stockholder or, in the case of Persons with a Consideration Share Entitlement, the number of Consideration Shares to which such Person is entitled under the terms of the Pixel Labs Merger Agreement, (ii) the number of shares of Company Common Stock subject to each Company Award held by each holder thereof, and (iii) in the case of the Company Options, the exercise price thereof, (b) the portion of the Aggregate Merger Consideration allocated to each holder of Company Common Stock or Consideration Share Entitlement pursuant to Section 3.1(b), and (c) on a holder-by-holder basis and award-by-award basis, (i) each Acquiror Option that will be outstanding as of the Closing, and, with respect to such Acquiror Option, the number of shares of Acquiror Post-Merger Class B Common Stock issuable upon exercise of such Acquiror Option and the exercise price of such Acquiror Option, (ii) each Adjusted Restricted Stock Award that will be outstanding

 

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as of the Closing and the number of shares of Acquiror Post-Merger Class B Common Stock subject to such Adjusted Restricted Stock Award, (iii) each Adjusted RSU that will be outstanding as of the Closing and the number of shares of Acquiror Post-Merger Class B Common Stock subject to such Adjusted RSU, in each case, including a reasonably detailed itemization of the components thereof. The Company will review any comments to the Allocation Schedule provided by Acquiror and consider in good faith and incorporate any reasonable comments proposed by Acquiror to correct inaccuracies.

Section 3.5. Withholding. Notwithstanding any other provision to this Agreement, Acquiror, the Company, the Surviving Corporation and the Exchange Agent, as applicable, shall be entitled to deduct and withhold from any amount payable pursuant to this Agreement such Taxes that are required to be deducted and withheld from such amounts under the Code or any other applicable Law (as reasonably determined by Acquiror, the Company, the Surviving Corporation or the Exchange Agent, respectively). To the extent that any amounts are so deducted and withheld and timely remitted to the appropriate Governmental Authority, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such withholding was made. Other than with respect to any compensatory payment subject to payroll withholding, the parties shall cooperate in good faith to eliminate or reduce any such deduction or withholding (including through the request and provision of any statements, forms or other documents to reduce or eliminate any such deduction or withholding).

Section 3.6. Dissenting Shares. Notwithstanding any provision of this Agreement to the contrary, shares of Company Common Stock issued and outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of adoption of this Agreement or consented thereto in writing and who is entitled to demand and has properly exercised appraisal rights of such shares in accordance with Section 262 of the DGCL (such shares of Company Common Stock being referred to collectively as the “Dissenting Shares” until such time as such holder fails to perfect or otherwise waives, withdraws, or loses such holder’s appraisal rights under the DGCL with respect to such shares) shall not be converted into a right to receive a portion of the Aggregate Merger Consideration, but instead shall be entitled to only such rights as are granted by Section 262 of the DGCL; provided, however, that if, after the Effective Time, such holder fails to perfect, waives, withdraws, or loses such holder’s right to appraisal pursuant to Section 262 of the DGCL, or if a court of competent jurisdiction shall determine that such holder is not entitled to the relief provided by Section 262 of the DGCL, such shares of Company Common Stock shall be treated as if they had been converted as of the Effective Time into the right to receive the Aggregate Merger Consideration in accordance with Section 3.1 without interest thereon, upon transfer of such shares. The Company shall provide Acquiror prompt written notice of any demands received by the Company for appraisal of shares of Company Common Stock, any waiver or withdrawal of any such demand, and any other demand, notice, or instrument delivered to the Company prior to the Effective Time that relates to such demand. Except with the prior written consent of Acquiror (which consent shall not be unreasonably conditioned, withheld, delayed or denied), the Company shall not make any payment with respect to, or settle, or offer to settle, any such demands.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the disclosure letter delivered to Acquiror and Merger Sub by the Company on the date of this Agreement (the “Company Disclosure Letter”) (each section of which, subject to Section 11.9, qualifies the correspondingly numbered and lettered representations in this Article IV), the Company represents and warrants to Acquiror and Merger Sub as follows:

 

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Section 4.1. Company Organization. The Company has been duly formed or organized and is validly existing under the Laws of its jurisdiction of incorporation or organization, and has the requisite corporate or limited liability company power and authority to own, lease or operate all of its properties and assets and to conduct its business as it is now being conducted. The Governing Documents of the Company, as amended to the date of this Agreement and as previously made available by or on behalf of the Company to Acquiror, are true, correct and complete. The Company is duly licensed or qualified and in good standing as a foreign or extra-provincial corporation (or other entity, if applicable) in each jurisdiction in which its ownership of property or the character of its activities is such as to require it to be so licensed or qualified or in good standing, as applicable, except where the failure to be so licensed or qualified or in good standing would not have, or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 4.2. Subsidiaries. A complete list of each Subsidiary of the Company as of the date hereof and its jurisdiction of incorporation, formation or organization, as applicable, is set forth on Section 4.2 of the Company Disclosure Letter. As of the date hereof, the Subsidiaries of the Company have been duly formed or organized and are validly existing under the Laws of their jurisdiction of incorporation or organization and have the requisite power and authority to own, lease or operate all of their respective properties and assets and to conduct their respective businesses as they are now being conducted. True, correct and complete copies of the Governing Documents of the Company’s Subsidiaries, in each case as amended to the date of this Agreement, have been previously made available to Acquiror by or on behalf of the Company. As of the date hereof, each Subsidiary of the Company is duly licensed or qualified and in good standing as a foreign or extra-provincial corporation (or other entity, if applicable) in each jurisdiction in which its ownership of property or the character of its activities is such as to require it to be so licensed or qualified or in good standing, as applicable, except where the failure to be so licensed or qualified or in good standing would not have, or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 4.3. Due Authorization.

(a) Other than the Company Stockholder Approvals, the Company has all requisite company or corporate power, as applicable, and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is a party and (subject to the approvals described in Section 4.5) to consummate the transactions contemplated hereby and thereby and to perform all of its obligations hereunder and thereunder. The execution and delivery of this Agreement and the applicable Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized and approved by the Board of Directors of the Company, and no other company or corporate proceeding on the part of the Company is necessary to authorize this Agreement and the applicable Ancillary Agreements (other than the Company Stockholder Approvals). This Agreement has been, and on or prior to the Closing, the applicable Ancillary Agreements will be, duly and validly executed and delivered by the Company and this Agreement constitutes, and on or prior to the Closing, each applicable Ancillary Agreement will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity.

(b) On or prior to the date of this Agreement, the Board of Directors of the Company has duly adopted resolutions (i) declaring that this Agreement and the applicable Ancillary Agreements, and the transactions contemplated hereby and thereby, including the Merger, are advisable and fair to, and in the best interests of, the Company and its stockholders, and (ii) authorizing and approving the execution, delivery and performance by the Company of this Agreement and the applicable Ancillary Agreements, and the transactions contemplated hereby and thereby, including the Merger. No other company or corporate action is required on the part of the Company or any of its stockholders to enter into this Agreement or the applicable Ancillary Agreements, or to approve the Merger, other than the Company Stockholder Approvals.

 

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Section 4.4. No Conflict. Subject to the receipt of the consents, approvals, authorizations and other requirements set forth in Section 4.5 and except as set forth on Section 4.4 of the Company Disclosure Letter, the execution and delivery by the Company of this Agreement and the applicable Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby do not and will not (a) violate or conflict with any provision of, or result in the breach of, or default under the Governing Documents of the Company, (b) violate or conflict with any provision of, or result in the breach of, or default under any Law or Governmental Order applicable to the Company or any of its Subsidiaries, (c) violate or conflict with any provision of, or result in the breach of, result in the loss of any right or benefit, or cause acceleration, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any Material Contract, or terminate or result in the termination of any Material Contract, (d) result in the creation of any Lien (other than Permitted Liens) upon any of the properties or assets of the Company or any of its Subsidiaries, (e) constitute an event which, after notice or lapse of time or both, would result in any violation, breach, termination, acceleration, modification, cancellation or creation of a Lien (except for Permitted Liens), or (f) result in a violation or revocation of any license, permit or approval from any Governmental Authority or other Person, except, in the case of clauses (b) through (f), to the extent that the occurrence of the foregoing would not (i) have, or would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the ability of the Company to enter into and perform their obligations under this Agreement or (ii) be material to the business of the Company and its Subsidiaries, taken as a whole.

Section 4.5. Governmental Authorities; Consents. No action or non-action by, notice to, consent, waiver, permit, approval or authorization of, expiration of any waiting period under applicable Law promulgated by, or designation, declaration or filing with, or notification to, any Governmental Authority (each, a “Governmental Authorization”) is required on the part of the Company or any of its Subsidiaries with respect to the Company’s execution or delivery of this Agreement or the consummation by the Company of the transactions contemplated hereby, except for (i) applicable requirements of the HSR Act, the Exchange Act and the Securities Act (and any other applicable U.S. state or federal securities Laws); (ii) as disclosed on Section 4.5 of the Company Disclosure Letter; (iii) any consents, approvals, authorizations, designations, declarations, waivers or filings, the absence of which would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect and (iv) the filing of the Merger Certificate in accordance with the DGCL.

Section 4.6. Capitalization of the Company.

(a) Section 4.6(a) of the Company Disclosure Letter sets forth a true and complete statement as of the date of this Agreement of (i) the number and class or series (as applicable) of all equity securities of the Company issued and outstanding, (ii) the identity of the Persons that are the record and beneficial owners thereof, and (iii) with respect to each Company Award, as applicable, (A) the holder thereof, (B) the type of Company Award (including whether the Company Award qualifies as an incentive stock option), (C) the date of grant and expiration date thereof, (D) the number of vested and unvested shares of Company Common Stock subject thereto, (E) the vesting schedule (including any accelerated vesting provisions), and (F) the exercise or purchase price thereof. The equity securities of the Company (x) have been duly authorized and validly issued and are fully paid and non-assessable; (y) have been offered, sold and issued in compliance with applicable Law, including federal and state securities Laws, and all requirements set forth in (1) the Governing Documents of the Company and (2) any other applicable Contracts governing the issuance of such securities; and (z) are not subject to, nor have they been issued in violation of, any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, the Governing Documents of the Company or any Contract to which the Company is a party or otherwise bound. Immediately prior to the Effective Time each share of Company Preferred Stock will be converted into one share of Company Common Stock.

 

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(b) All Company Awards are evidenced by award agreements in substantially the forms previously made available to Acquiror, and no Company Award is subject to terms that are materially different from those set forth in such forms. Each Company Award has been validly issued and properly approved by the Board of Directors of the Company (or the appropriate committee thereof) as of the applicable date of grant, and each Company Award has been granted in accordance with the terms of the Company Incentive Plans and compliance in all material respects with all applicable Laws. No Company Award is subject to Section 409A of the Code. All Company Options have an exercise price that has never been and is not less than the fair market value of the Company Common Stock on the date the option was granted (within the meaning of United States Treasury Regulation §1.409A-1(b)(5)(vi)(B)). No Company Awards have been retroactively granted, nor has the exercise price of any Company Option been determined retroactively, in any case, in contravention of any applicable Law. Each Company Option intended to qualify as an “incentive stock option” as of the date hereof under Section 422 of the Code so qualifies as of the date hereof. The treatment of Company Awards under this Agreement does not violate the terms of the Company Incentive Plans or any Contract governing the terms of such awards.

(c) Except as otherwise set forth in this Section 4.6 or on Section 4.6(a) of the Company Disclosure Letter, the Company has not granted any outstanding subscriptions, options, stock appreciation rights, warrants, rights or other securities (including debt securities) convertible into or exchangeable or exercisable for equity securities of the Company, any other commitments, calls, conversion rights, rights of exchange or privilege (whether pre-emptive, contractual or by matter of Law), plans or other agreements of any character providing for the issuance of additional shares, the sale of treasury shares or other equity interests, or for the repurchase or redemption of shares or other equity interests of the Company or the value of which is determined by reference to shares or other equity interests of the Company, and there are no voting trusts, proxies or agreements of any kind which may obligate the Company to issue, purchase, register for sale, redeem or otherwise acquire any equity securities of the Company.

Section 4.7. Capitalization of Subsidiaries.

(a) Section 4.7 of the Company Disclosure Letter sets forth a true and complete statement as of the date of this Agreement of (i) the number and class or series (as applicable) of all equity securities of each Subsidiary of the Company issued and outstanding and (ii) the identity of the Persons that are the record and beneficial owners thereof. The outstanding shares of capital stock or equity interests of each of the Company’s Subsidiaries (w) have been duly authorized and validly issued, are, to the extent applicable, fully paid and non-assessable; (x) have been offered, sold and issued in compliance with applicable Law, including federal and state securities Laws, and all requirements set forth in (1) the Governing Documents of each such Subsidiary, and (2) any other applicable Contracts governing the issuance of such securities; (y) are not subject to, nor have they been issued in violation of, any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, the Governing Documents of each such Subsidiary or any Contract to which each such Subsidiary is a party or otherwise bound; and (z) are free and clear of any Liens (other than Permitted Liens).

(b) There are no outstanding or authorized subscriptions, options, compensatory equity awards, warrants, rights or other securities (including debt securities) exercisable or exchangeable for any capital stock of such Subsidiaries, any other commitments, calls, conversion rights, rights of exchange or privilege (whether pre-emptive, contractual or by matter of Law), plans or other agreements of any character providing for the issuance of additional shares, the sale of treasury shares or other equity

 

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interests, or for the repurchase or redemption of shares or other equity interests of such Subsidiaries or the value of which is determined by reference to shares or other equity interests of the Subsidiaries, and there are no voting trusts, proxies or agreements of any kind which may obligate any Subsidiary of the Company to issue, purchase, register for sale, redeem or otherwise acquire any of its capital stock.

Section 4.8. Financial Statements.

(a) Attached as Section 4.8(a) of the Company Disclosure Letter are true and complete copies of (i) the audited consolidated balance sheet and statements of operations and comprehensive loss, stockholders’ (deficit) earnings and cash flows of the Company and its Subsidiaries as of and for the years ended December 31, 2019 and December 31, 2020 (the “Audited Financial Statements”) and (ii) the unaudited consolidated balance sheet and statements of operations and comprehensive loss, stockholders’ (deficit) earnings and cash flows of the Company and its Subsidiaries as of and for the three-month period ended March 31, 2021 (the “Unaudited Financial Statements,” and together with the Audited Financial Statements, the “Financial Statements”).

(b) The Financial Statements (i) fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries, as at the respective dates thereof, and the consolidated results of their operations, their consolidated incomes, their consolidated changes in stockholders’ earnings and their consolidated cash flows for the respective periods then ended (subject, in the case of the Unaudited Financial Statements, to normal year-end adjustments and the absence of footnotes), (ii) were prepared in conformity with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto and except that the Unaudited Financial Statements do not contain notes thereto or account for normal year-end audit adjustments), (iii) were prepared from, and are in accordance in all material respects with, the books and records of the Company and its consolidated Subsidiaries, (iv) in the case of the Audited Financial Statements, were audited in accordance with the standards of the PCAOB and as of the Closing contain an unqualified report of the Company’s auditors and (v) when delivered by the Company for inclusion in the Registration Statement for filing with the SEC following the date of this Agreement in accordance with Section 6.3, will comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act applicable to a registrant, in effect as of the respective dates thereof.

(c) The Company has established and maintains systems of internal accounting controls that are designed to provide, in all material respects, reasonable assurance that (i) all transactions are executed in accordance with management’s authorization and (ii) all transactions are recorded as necessary to permit preparation of proper and accurate financial statements in accordance with GAAP and to maintain accountability for the Company and its Subsidiaries’ assets. The Company maintains and, for all periods covered by the Financial Statements, has maintained books and records of the Company and its Subsidiaries in the ordinary course of business that are accurate and complete and reflect the revenues, expenses, assets and liabilities of the Company and its Subsidiaries in all material respects.

(d) Neither the Company (including, to the knowledge of the Company, any employee thereof) nor, to the knowledge of the Company, any independent auditor of the Company has identified or been made aware of (i) any significant deficiency or material weakness in the system of internal accounting controls utilized by the Company, (ii) any fraud, whether or not material, that involves the Company’s management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by the Company or (iii) any claim or allegation regarding any of the foregoing.

 

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Section 4.9. Undisclosed Liabilities. Except as set forth on Section 4.9 of the Company Disclosure Letter, there is no other liability, debt (including Indebtedness) or obligation of, or claim or judgment against, in each case of a type required to be reflected or reserved for on a balance sheet prepared in accordance with GAAP, the Company or any of its Subsidiaries (whether direct or indirect, absolute or contingent, accrued or unaccrued, known or unknown, liquidated or unliquidated, or due or to become due), except for liabilities, debts, obligations, claims or judgments (a) adequately reflected or reserved for on the Financial Statements or disclosed in the notes thereto, (b) that have arisen since the date of the most recent balance sheet included in the Financial Statements in the ordinary course of business, consistent with past practice, of the Company and its Subsidiaries (none of which is a liability for breach of Contract, breach of warranty, tort, infringement or violation of Law), (c) that that have arisen in connection with the authorization, negotiation, execution or performance of this Agreement or the transactions contemplated hereby, and will be disclosed or otherwise taken into account in the notice of Company Transaction Expenses to be delivered to Acquiror by the Company pursuant to Section 2.4(c) or (d) that are not, and would not be expected to be, material to the Company and its Subsidiaries taken as a whole.

Section 4.10. Litigation and Proceedings. Except as set forth on Section 4.10 of the Company Disclosure Letter, there are, and for the past three years there have been, (a) no pending or, to the knowledge of the Company, threatened, Legal Proceedings against the Company or any Subsidiary of the Company or their respective properties or assets; and (b) no outstanding Governmental Order imposed upon the Company or any Subsidiary of the Company; nor are any properties or assets of the Company or its Subsidiaries’ respective businesses bound or subject to any Governmental Order, except, in each case, as has not been, and would not reasonably be expected to be, material to the Company and its Subsidiaries, taken as a whole.

Section 4.11. Legal Compliance.

(a) Each of the Company and its Subsidiaries is, and for the prior three years has been, in compliance with all applicable Laws in all material respects, except where the failure to so comply with such applicable Laws has not been, and would not be expected to be, material to the Company and its Subsidiaries taken as a whole.

(b) For the past three years, none of the Company or any of its Subsidiaries has received any written notice of, or been charged with, the violation of any Laws, except where such violation has not been, and would not reasonably be expected to be, material to the Company and its Subsidiaries, taken as a whole.

(c) The Company and its Subsidiaries maintain a program of policies, procedures and internal controls reasonably designed and implemented to provide reasonable assurance that violation of applicable Law by any of the Company or its Subsidiaries’ directors, officers, employees or its or their respective agents, representatives or other Persons, acting on behalf of the Company or its Subsidiaries, will be prevented, detected and deterred.

Section 4.12. Contracts; No Defaults.

(a) Section 4.12(a) of the Company Disclosure Letter contains a listing of all Contracts described in clauses (i) through (xviii) below to which, as of the date of this Agreement, a Company or any Subsidiary of the Company is a party or by which they are bound.

(i) Contracts with the Top Vendors;

(ii) Each note, debenture, other evidence of Indebtedness, guarantee, loan, credit or financing agreement or instrument or other Contract for money borrowed by the Company or any of its Subsidiaries, including any agreement or commitment for future loans, credit or financing;

 

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(iii) Each Contract for the acquisition of any Person or any business unit thereof or the disposition of any material assets of the Company or any of its Subsidiaries in the last two (2) years, or under which the Company or Subsidiary has any continuing obligation with respect to an “earn-out”, contingent purchase price or other contingent or deferred payment;

(iv) Each lease, rental or occupancy agreement, license, installment and conditional sale agreement, and other Contract that provides for the ownership of, leasing of, title to, use of, or any leasehold or other interest in any real or personal property that involves aggregate payments in excess of $250,000 in any calendar year;

(v) Each Contract involving the formation of a (A) joint venture, (B) partnership, or (C) limited liability company (excluding, in the case of clauses (B) and (C), any wholly owned Subsidiary of the Company);

(vi) Each Contract that involves profit-sharing, which requires, or would reasonably be expected to require (based on any occurrence, development, or event contemplated by such Contract), aggregate payments to or from the Company and its Subsidiaries in excess of $500,000 over the life of the Contract;

(vii) Contracts (other than employment agreements, employee confidentiality and invention assignment agreements, equity or incentive equity documents and Governing Documents) between the Company and its Subsidiaries, on the one hand, and Affiliates of the Company or its Subsidiaries (other than the Company or any of its Subsidiaries), the officers, directors or managers (or equivalents) of the Company or the Company’s Subsidiaries, the members or stockholders of the Company or its Subsidiaries, any employee of the Company or its Subsidiaries or a member of the immediate family of the foregoing Persons, on the other hand (collectively, “Affiliate Agreements”);

(viii) Contracts with each current executive, officer, director or current employee of the Company or its Subsidiaries with a title of Vice President or higher, other than offer letters, equity award agreements, and confidentiality and assignment agreements, in each case, that do not (i) differ materially from the form of such agreements provided to Acquiror or (ii) provide for severance or change in control payments or benefits;

(ix) Contracts with any employee, officer, manager, director or consultant of the Company or its Subsidiaries that provide for (A) annual compensation that may exceed $250,000, (B) change in control, retention or similar payments or benefits upon, in connection with, accelerated by or triggered by the consummation of the transactions contemplated hereby, and/or (C) severance, termination or notice payments or benefits upon a termination of the applicable Person’s service with the Company or any Subsidiary of the Company (excluding payments and benefits mandated by applicable Law);

(x) Contracts of the Company or any of its Subsidiaries that (A) prohibit or limit the right of the Company or any of its Subsidiaries to engage in or compete with any Person in any line of business in any material respect; (B) prohibit or restrict the Company and its Subsidiaries’ ability to conduct their business with any Person in any geographic area in any material respect; or (C) contain any other provisions restricting or purporting to restrict in any material respect the ability of the Company or any of its Subsidiaries to sell, manufacture, develop, commercialize, test or research products, directly or indirectly through third parties, or to solicit any potential employee or customer in any material respect or that would so limit or purports to limit, in any material respect, the Acquiror or any of its Affiliates after the Closing;

 

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(xi) Any collective bargaining (or similar) agreement or Contract with any labor union or other body representing employees of the Company or any of its Subsidiaries;

(xii) Each Contract (including license agreements, coexistence agreements, and agreements with covenants not to sue, but not including Contracts, purchase orders and insertion orders entered into in the ordinary course of business, non-disclosure agreements, contractor services agreements, consulting services agreements, incidental trademark licenses incident to marketing, printing or advertising Contracts) pursuant to which the Company or any Subsidiary of the Company (i) grants to a third Person the right to use material Intellectual Property of the Company and its Subsidiaries or (ii) is granted by a third Person the right to use Intellectual Property that is material to the business of the Company and its Subsidiaries (other than (A) Contracts granting nonexclusive rights to use commercially available off-the-shelf software and any other similar software licenses (including software-as-a-service) that are commercially available on standard terms to the public, (B) Open Source Licenses, (C) non-exclusive licenses for content or assets used in the products, services, or in the conduct of the business of the Company or any of its Subsidiaries involving payments of less than $500,000 per year and (D) employee confidentiality and invention assignment agreements);

(xiii) Each Contract requiring capital expenditures by the Company or any of its Subsidiaries after the date of this Agreement in an amount in excess of $750,000 in any calendar year;

(xiv) Contracts that (A) grants to any third Person any material “most favored nation rights” or similar provisions, obligations or restrictions, or (B) grants to any third Person price guarantees for a period greater than one (1) year from the date of this Agreement and requires aggregate future payments to the Company and its Subsidiaries in excess of $750,000 in any calendar year;

(xv) Contracts with any Person (A) pursuant to which the Company or any Subsidiary of the Company (or Acquiror or any of its Affiliates after the Closing) may be required to pay material milestones, royalties or other contingent payments based on any research, testing, development, regulatory filings or approval, sale, distribution, commercial manufacture or other similar occurrences, developments, activities or events or (B) under which the Company or any Subsidiary of the Company grants to any Person any right of first refusal, right of first negotiation, option to purchase, option to license or any other similar rights with respect to any Company product or Intellectual Property;

(xvi) Contracts granting to any Person (other than the Company or its Subsidiaries) a right of first refusal, first offer or similar preferential right to purchase or acquire equity interests in the Company or any of its Subsidiaries;

(xvii) Any Contract for the settlement or conciliation of an Action or Legal Proceeding or other dispute with a third party (A) the performance of which would involve any payments after the date of this Agreement, (B) with a Governmental Authority or (C) that imposes any material, non-monetary obligations on the Company or any of its Subsidiaries (or the Surviving Corporation after the Closing); and

 

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(xviii) Any outstanding written commitment to enter into any Contract of the type described in subsections (i) through (xvii) of this Section 4.12(a).

(b) All of the foregoing Contracts listed or required to be listed pursuant to Section 4.12(a) in the Company Disclosure Letter, including all amendment and modifications thereto, are sometimes collectively referred to as “Material Contracts”. True, correct and complete copies of the Material Contracts have previously been delivered to or made available to Acquiror or its agents or representatives. Each Material Contract is (i) in full force and effect, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity, (ii) represents the legal, valid and binding obligations of the Company or the Subsidiary of the Company party thereto and, to the knowledge of the Company, represents the legal, valid and binding obligations of the counterparties thereto. Except, in each case, where the occurrence of such breach or default or failure to perform would not be material to the Company and its Subsidiaries, taken as a whole, (x) the Company and its Subsidiaries have performed in all respects all respective obligations required to be performed by them to date under the Material Contracts and none of the Company, the Company Subsidiaries, or, to the knowledge of the Company, any other party thereto is in breach of or default under any such Contract, (y) during the 12 months prior to the date of this Agreement, none of the Company or any of its Subsidiaries has received any written claim or written notice of termination or breach of or default under any such Contract, and (z) to the knowledge of the Company, no event has occurred which individually or together with other events, would reasonably be expected to result in a breach of or a default under any such Contract by the Company or any of its Subsidiaries or, to the knowledge of the Company, any other party thereto (in each case, with or without notice or lapse of time or both).

Section 4.13. Company Benefit Plans.

(a) Section 4.13(a) of the Company Disclosure Letter sets forth a complete list, as of the date hereof, of each Company Benefit Plan (separately identifying each Foreign Benefit Plan as such). With respect to each Company Benefit Plan, the Company has made available to Acquiror, to the extent applicable, true, complete and correct copies of (A) such Company Benefit Plan (or, if not written a written summary of its material terms) and all plan documents, trust agreements, insurance Contracts or other funding vehicles and all amendments thereto, (B) the most recent summary plan descriptions, including any summary of material modifications, (C) the most recent annual reports (Form 5500 series) filed with the IRS with respect to such Company Benefit Plan, (D) the most recent actuarial report or other financial statement relating to such Company Benefit Plan, (E) the most recent determination or opinion letter, if any, issued by the IRS with respect to any Company Benefit Plan and any pending request for such a determination letter, (F) the most recent non-discrimination testing results relating to such Company Benefit Plan, and (G) all non-routine written correspondence to or from any Governmental Authority relating to such Company Benefit Plan.

(b) (i) Each Company Benefit Plan has been operated, funded and administered in all material respects in compliance with its terms and all applicable Laws, including ERISA and the Code; (ii) all contributions required to be made with respect to any Company Benefit Plan have been made or, to the extent not yet due, accrued and reflected in the Company’s financial statements to the extent required by GAAP in accordance with the terms of the Company Benefit Plan and applicable Law; (iii) each Company Benefit Plan which is intended to be qualified within the meaning of Section 401(a) of the Code has received a favorable determination or opinion letter from the IRS as to its qualification or may rely upon an opinion letter for a prototype plan and, to the knowledge of the Company, no fact or event has occurred that would reasonably be expected to adversely affect the qualified status of any such Company Benefit Plan.

 

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(c) No Company Benefit Plan is, and none of the Company, its Subsidiaries or any of their ERISA Affiliates has sponsored or contributed to, been required to contribute to, or has any liability (whether actual or contingent) with respect to, (i) a multiemployer pension plan (as defined in Section 3(37) of ERISA), (ii) a defined benefit pension plan that is subject to Title IV of ERISA, Section 412 of the Code or Section 302 of ERISA, (iii) a multiple employer plan (within the meaning of Section 413(c) of the Code), or (iv) a multiple employer welfare arrangement (as defined in Section 3(40) of ERISA). None of the Company, its Subsidiaries or any of their ERISA Affiliates has incurred or would reasonably be expected to incur any liability under Title IV of ERISA.

(d) With respect to each Company Benefit Plan, no Legal Proceedings (other than routine claims for benefits in the ordinary course) are pending or, to the knowledge of the Company, threatened, and to the knowledge of the Company, no facts or circumstances exist that would reasonably be expected to give rise to any such Legal Proceedings.

(e) No Company Benefit Plan provides medical, surgical, hospitalization, death, life insurance, welfare or similar benefits (whether or not insured) for employees, former employees, consultants, managers or directors of the Company or any Subsidiary of the Company (or any dependent or beneficiary thereof) for periods extending beyond their retirement or other termination of service, other than coverage mandated by applicable Law or benefits the full cost of which is borne by the current or former employee, consultant, manager or director (or his or her beneficiary).

(f) Except as set forth on Section 4.13(f) of the Company Disclosure Letter, the consummation of the transactions contemplated hereby will not, either alone or in combination with another event (such as termination following the consummation of the transactions contemplated hereby), (i) entitle any current or former employee, officer or other service provider of the Company or any Subsidiary of the Company to any severance pay or any other compensation or benefits, (ii) accelerate the time of payment, funding or vesting, or increase the amount of compensation or benefits due any such employee, officer or other service provider, (iii) accelerate the vesting and/or settlement of any Company Award, or (iv) restrict the Company’s or any Subsidiary’s rights to amend or terminate any Company Benefit Plan.

(g) The consummation of the transactions contemplated hereby will not, either alone or in combination with another event, result in any “excess parachute payment” under Section 280G of the Code. No Company Benefit Plan provides for, and the Company and its Subsidiaries do not have any obligation to make, a Tax gross-up, make whole or similar payment with respect to any Taxes, including any Taxes imposed under Sections 409A or 4999 of the Code. Each Company Benefit Plan that is a “nonqualified deferred compensation plan” within the meaning of Section 409A(d)(1) of the Code has been operated in all material respects in compliance with Section 409A of the Code. No payment or benefit under any Company Benefit Plan has been, is or is reasonably expected to be subject to the penalties imposed under or by operation of Section 409A of the Code.

(h) There have been no non-exempt “prohibited transactions” within the meaning of Section 4975 of the Code or Sections 406 or 407 of ERISA and no breaches of fiduciary duty (as determined under ERISA) with respect to any Company Benefit Plan. Each Company Benefit Plan may be amended, terminated or otherwise modified (including cessation of participation) by the Company or any of its Subsidiaries to the greatest extent permitted by applicable Law. Except as required by applicable Law, neither the Company nor any of its Subsidiaries has announced its intention to modify or terminate any Company Benefit Plan or adopt any arrangement or program which, once established, would come within the definition of a Company Benefit Plan. No Company Benefit Plan is, or within the past six years has been, the subject of an application or filing under a government sponsored amnesty, voluntary compliance, or similar program, or been the subject of any self-correction under any such program. Neither the Company nor any Subsidiary of the Company has incurred (whether or not assessed) any material penalty or Tax under Section 4980H, 4980B, 4980D, 6721 or 6722 of the Code.

 

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(i) There is no action currently contemplated by the Company or any of its Subsidiaries, and for the past three years, no action has been taken by the Company or any of its Subsidiaries, in respect of any current or former employee or individual independent contractor of the Company or any of its Subsidiaries or such individuals’ compensation or benefits, in each case, in response to COVID-19.

(j) Each Foreign Benefit Plan that is required to be registered or intended to be tax exempt has been registered (and, where applicable, accepted for registration) and is tax exempt and has been maintained in good standing, to the extent applicable, with each Governmental Authority. No Foreign Benefit Plan is a “defined benefit plan” (as defined in ERISA, whether or not subject to ERISA) or has any material unfunded or underfunded liabilities. All material contributions required to have been made by or on behalf of the Company or any of its Subsidiaries with respect to plans or arrangements maintained or sponsored a Governmental Authority (including severance, termination indemnities or other similar benefits maintained for employees outside of the United States) have been timely made or fully accrued.

Section 4.14. Labor Relations; Employees.

(a) (i) Neither the Company nor any of its Subsidiaries is or has at any time been a party to or bound by any collective bargaining agreement, or any similar agreement with a labor union, works council or other employee representative, (ii) no such agreement is being negotiated by the Company or any Subsidiary of the Company, and (iii) no labor union or any other employee representative body has requested or, to the knowledge of the Company, has sought to represent any of the employees of the Company or its Subsidiaries. To the knowledge of the Company, there has been no labor organization activity involving any employees of the Company or any of its Subsidiaries. There is no pending and, in the past three years, there has been no actual or, to the knowledge of the Company, threatened strike, slowdown, work stoppage, lockout or other material labor dispute against or affecting the Company or any Subsidiary of the Company.

(b) Each of the Company and its Subsidiaries are, and have been for the past three years, in compliance in all material respects with all applicable Laws respecting labor and employment including, but not limited to, all Laws respecting terms and conditions of employment, health and safety, wages and hours, holiday pay and the calculation of holiday pay, working time, employee classification (with respect to both exempt vs. non-exempt status and employee vs. independent contractor and worker status), child labor, immigration, employment discrimination, disability rights or benefits, equal opportunity and equal pay, plant closures and layoffs, affirmative action, workers’ compensation, labor relations, employee leave issues and unemployment insurance.

(c) In the past three years, the Company and its Subsidiaries have not received (i) notice of any unfair labor practice charge or material complaint pending or threatened before the National Labor Relations Board or any other Governmental Authority against them, (ii) notice of any complaints, grievances or arbitrations arising out of any collective bargaining agreement or any other complaints, grievances or arbitration procedures against them, (iii) notice of any material charge or complaint with respect to or relating to them pending before the Equal Employment Opportunity Commission or any other Governmental Authority responsible for the prevention of unlawful employment practices, (iv) notice of the intent of any Governmental Authority responsible for the enforcement of labor, employment, wages and hours of work, child labor, immigration, or occupational safety and health Laws to conduct an investigation with respect to or relating to them or notice that such investigation is in progress, or (v) notice of any complaint, lawsuit or other proceeding pending or threatened in any forum by or on behalf of any present or former employee of such entities, any applicant for employment or classes of the foregoing

 

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alleging breach of any express or implied Contract of employment, any applicable Law governing employment or the termination thereof or other discriminatory, wrongful or tortious conduct in connection with the employment relationship, and no Legal Proceeding relating to the foregoing matters or any other employment or labor matters is pending or, to the knowledge of the Company, threatened, nor has any such Legal Proceeding occurred in the past three years.

(d) None of the Company or any of its Subsidiaries (A) has or has had in the past three years any material liability for any arrears of wages or other compensation for services (including salaries, wage premiums, commissions, fees or bonuses), or any penalty or other sums for failure to comply with any of the foregoing, and (B) has or has had in the past three years any material liability for any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Authority with respect to unemployment compensation benefits, social security, social insurances or other benefits or obligations for any employees of the Company or any of its Subsidiaries (other than routine payments to be made in the normal course of business and consistent with past practice), or (C) is delinquent in any payments to any employee or independent contractor for any wages, salaries, commissions, bonuses, severance, fees or other direct compensation due with respect to any services performed for it or amounts required to be reimbursed to such employees or independent contractor.

(e) To the knowledge of the Company, no present or former employee, worker or independent contractor of the Company or any Subsidiary of the Company is in violation of (i) any restrictive covenant, nondisclosure obligation or fiduciary duty to the Company or any Subsidiary of the Company or (ii) any restrictive covenant or nondisclosure obligation to a former employer or engager of any such individual relating to (A) the right of any such individual to work for or provide services to the Company or any Subsidiary of the Company or (B) the knowledge or use of trade secrets or proprietary information. In the past 12 months (i) no director, manager, officer, or management-level or key employee’s employment with the Company or any of its Subsidiaries has been terminated or furloughed for any reason; and (ii) no director, manager, officer, or management-level or key employee, or group of employees, has provided notice of any plans to terminate his, her or their employment or service arrangement with the Company or any of its Subsidiaries.

(f) None of the Company or its Subsidiaries is party to a settlement agreement with a current or former officer, employee or independent contractor of the Company or any Subsidiary of the Company that involves allegations relating to sexual harassment, sexual misconduct or discrimination by any officer, director, manager or employee of the Company or any Subsidiary of the Company and, in the last three years, there have not been any internal investigations by or on behalf of the Company or any Subsidiary of the Company with respect to any claims or allegations of sexual harassment, misconduct or abuse against or involving any employee, officer, manager or director of the Company or any of its Subsidiaries. In the last three years, no allegations of sexual harassment, sexual misconduct or discrimination have been made against any officer, director, manager or employee of the Company or any Subsidiary of the Company, and the Company and its Subsidiaries have not otherwise become aware of any such allegations. To the knowledge of the Company, there are no facts that would reasonably be expected to give rise to a claim of sexual harassment or misconduct, other unlawful harassment or unlawful discrimination or retaliation against or involving the Company or its Subsidiaries or any employee, officer, manager or director thereof.

(g) In the past three years, the Company and its Subsidiaries have not engaged in layoffs, furloughs or employment terminations sufficient to trigger application of the Workers’ Adjustment and Retraining Notification Act or any similar state or local law relating to group terminations. The Company, taken as a whole with its Subsidiaries, has sufficient employees to operate the business of the Company and its Subsidiaries as currently conducted.

 

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(h) The Company and its Subsidiaries currently classify and have properly classified (i) each of its employees as exempt or non-exempt for the purposes of the Fair Labor Standards Act and similar applicable Laws (as applicable), and (ii) each of its individual service providers as either employees or independent contractors in accordance with applicable Law and for the purpose of all Company Benefit Plans.

(i) No employee layoff, facility closure or shutdown (whether voluntary or by order), reduction-in-force, furlough, temporary layoff, material work schedule change or reduction in hours, or reduction in salary or wages, or other workforce changes affecting employees of the Company or any of its Subsidiaries has occurred in the past six (6) months or is currently contemplated, planned or announced, including as a result of COVID-19 or any COVID-19 Measures. None of the Company or any of its Subsidiaries have otherwise experienced any material employment-related liability with respect to or arising out of COVID-19 or any COVID-19 Measures.

(j) None of the Company or any of its Subsidiaries (i) is subject to any affirmative action obligations under any Law, including, without limitation, Executive Order 11246, and/or (ii) is a government contractor or subcontractor for purposes of any Law with respect to the terms and conditions of employment, including, without limitation, prevailing wage Laws. There are no outstanding assessments, penalties, fines, liens, charges, surcharges, or other amounts due or owing pursuant to any workplace safety and insurance legislation and none of the Company or any of its Subsidiaries has been reassessed in any material respect under such legislation during the past three years and, to the knowledge of the Company, no audit of the Company or any of its Subsidiaries is currently being performed pursuant to any applicable workplace safety and insurance legislation.

Section 4.15. Taxes.

(a) All material Tax Returns required to be filed by or with respect to the Company or any of its Subsidiaries have been timely filed (taking into account any applicable extensions), all such Tax Returns are true, complete and accurate in all material respects and all material Taxes due and payable (whether or not shown on any Tax Return) have been paid.

(b) The Company and each of its Subsidiaries have withheld from amounts owing to any employee, creditor or other Person all material Taxes required by Law to be withheld, paid over to the proper Governmental Authority in a timely manner all such withheld amounts required to have been so paid over and complied in all material respects with all applicable withholding and related reporting requirements with respect to such Taxes.

(c) There are no Liens for Taxes (other than Permitted Liens) upon the property or assets of the Company or any of its Subsidiaries.

(d) No claim, assessment, deficiency or proposed adjustment for any material amount of Tax has been asserted or assessed by any Governmental Authority against the Company or any of its Subsidiaries that remains unresolved or unpaid.

(e) There are no ongoing or pending Legal Proceedings with respect to any material Taxes of the Company or any of its Subsidiaries, and there are no waivers, extensions or requests for any waivers or extensions of any statute of limitations currently in effect with respect to any material Taxes of the Company or any of its Subsidiaries.

(f) None of the Company or any of its Subsidiaries has made a request for an advance tax ruling, request for technical advice, a request for a change of any method of accounting or any similar request that is in progress or pending with any Governmental Authority with respect to any Taxes of the Company and its Subsidiaries.

 

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(g) None of the Company or any of its Subsidiaries is a party to any Tax indemnification or Tax sharing or similar agreement (other than any agreement (i) solely between the Company and its existing Subsidiaries or (ii) commercial Contracts the principal purpose of which is not Taxes).

(h) During the past three years, neither the Company nor any of its Subsidiaries was a distributing corporation or a controlled corporation in a transaction purported or intended to be governed by Section 355 of the Code.

(i) None of the Company or any of its Subsidiaries (i) is liable for Taxes of any other Person (other than the Company and its Subsidiaries) under Treasury Regulations Section 1.1502-6 or any similar provision of state, local or foreign Tax Law or as a transferee or successor or by Contract (other than commercial Contracts the principal purpose of which is not related to Taxes) or (ii) has ever been a member of an affiliated, consolidated, combined or unitary group filing for United States federal, state or local income Tax purposes, other than a group the common parent of which was the Company.

(j) No written claim has been made by any Governmental Authority where the Company or any of its Subsidiaries does not file Tax Returns that it is or may be subject to taxation in that jurisdiction.

(k) None of the Company or any of its Subsidiaries has, or has ever had, a permanent establishment in any country other than the country of its organization, or is, or has ever been, subject to income Tax in a jurisdiction outside the country of its organization.

(l) None of the Company or any of its Subsidiaries has participated in a “listed transaction” within the meaning of Treasury Regulation 1.6011-4(b)(2).

(m) None of the Company or any of its Subsidiaries will be required to include any material amount in taxable income, exclude any material item of deduction or loss from taxable income, or make any adjustment under Section 481 of the Code (or any similar provision of state, local or foreign Law) for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) installment sale, excess loss account or deferred intercompany transaction described in the Treasury Regulations under Section 1502 of the Code (or any similar provision of state, local or foreign Law) or open transaction disposition made prior to the Closing outside the ordinary course of business, (ii) prepaid amount received or deferred revenue recognized prior to the Closing outside the ordinary course of business, (iii) change in method of accounting for a taxable period ending on or prior to the Closing Date, (iv) “closing agreements” described in Section 7121 of the Code (or any similar provision of state, local or foreign Law) executed prior to the Closing, or (v) by reason of Section 965(a) of the Code or election pursuant to Section 965(h) of the Code (or any similar provision of state, local or foreign Law), and to the knowledge of the Company, the IRS has not proposed any such adjustment or change in accounting method.

(n) The Company and its Subsidiaries have not taken any action, nor to the knowledge of the Company or any of its Subsidiaries are there any facts or circumstances, that could reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.

 

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Section 4.16. Brokers Fees. Except as set forth on Section 4.16 of the Company Disclosure Letter, no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated hereby based upon arrangements made by the Company, its Subsidiaries or any of their Affiliates for which Acquiror, the Company or any of its Subsidiaries has any obligation.

Section 4.17. Insurance. Section 4.17 of the Company Disclosure Letter contains a list of, as of the date hereof, all material policies or binders of property, fire and casualty, product liability, workers’ compensation, and other forms of insurance held by, or for the benefit of, the Company or any Subsidiary of the Company as of the date of this Agreement. True, correct and complete copies of such insurance policies as in effect as of the date hereof have previously been made available to Acquiror. All such policies are in full force and effect, all premiums due have been paid, and no notice of cancellation or termination has been received by the Company or any of its Subsidiaries with respect to any such policy. To the knowledge of the Company, there are no events, circumstances or other liabilities that give rise to a material claim under such insurance policies. Except as disclosed on Section 4.17 of the Company Disclosure Letter, no insurer has denied or disputed coverage of any material claim under an insurance policy during the last 12 months.

Section 4.18. Licenses. The Company and its Subsidiaries have obtained, and maintain, all of the material Licenses reasonably required to permit the Company and its Subsidiaries to acquire, originate, own, operate, use and maintain their assets in the manner in which they are now operated and maintained and to conduct the business of the Company and its Subsidiaries as currently conducted. Except as is not and would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, (a) each material License is in full force and effect in accordance with its terms and (b) no written notice of revocation, cancellation or termination of any material License has been received by the Company or Subsidiary of the Company.

Section 4.19. Equipment and Other Tangible Property. The Company or its Subsidiaries owns and has good title to, and has the legal and beneficial ownership of or a valid leasehold interest in or right to use by license or otherwise, all material machinery, equipment and other tangible property reflected on the books of the Company and its Subsidiaries as owned by the Company or one of its Subsidiaries, free and clear of all Liens other than Permitted Liens. All material personal property and leased personal property assets of the Company and its Subsidiaries are structurally sound and in good operating condition and repair (ordinary wear and tear expected) and are suitable for their present use.

Section 4.20. Real Property.

(a) Section 4.20(a) of the Company Disclosure Letter sets forth a true, correct and complete list as of the date of this Agreement of all Leased Real Property and all Real Property Leases (as hereinafter defined) pertaining to such Leased Real Property. With respect to each parcel of Leased Real Property:

(i) The Company or one of its Subsidiaries holds a good and valid leasehold estate in such Leased Real Property, free and clear of all Liens, except for Permitted Liens.

(ii) The Company and its Subsidiaries have delivered to Acquiror true, correct and complete copies of all leases, lease guaranties, subleases, agreements for the leasing, use or occupancy of, or otherwise granting a right in and to the Leased Real Property by or to the Company and its Subsidiaries, including all amendments, terminations and modifications thereof (collectively, the “Real Property Leases”).

(iii) The Company and its Subsidiaries’, as applicable, possession and quiet enjoyment of the Leased Real Property under such Real Property Leases has not been materially disturbed and, to the knowledge of the Company, there are no material disputes with respect to such Real Property Leases.

 

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(i) There is no material breach or default by the Company or any of its Subsidiaries or, to the knowledge of the Company, any third party under any Real Property Lease, and, to the knowledge of the Company, no event has occurred which (with or without notice or lapse of time or both) would constitute a material breach or default or would permit termination of, or a material modification or acceleration thereof by any party to such Real Property Leases.

(ii) As of the date of this Agreement, no party, other than the Company or its Subsidiaries, has any right to use or occupy the Leased Real Property or any portion thereof.

(iii) None of the Company or any of its Subsidiaries have received written notice of any current condemnation proceeding or proposed similar Action or agreement for taking in lieu of condemnation with respect to any portion of the Leased Real Property.

(b) None of the Company or any of its Subsidiaries owns any Owned Real Property.

Section 4.21. Intellectual Property.

(a) Section 4.21(a) of the Company Disclosure Letter lists each item of Intellectual Property that is registered or applied-for or filed with a Governmental Authority and is owned by the Company or any of its Subsidiaries as of the date of this Agreement, whether applied for or registered in the United States or internationally as of the date of this Agreement (“Company Registered Intellectual Property”). The Company or one of its Subsidiaries is the sole and exclusive beneficial and record owner of all of the items of Company Registered Intellectual Property and all such Company Registered Intellectual Property is subsisting and, to the knowledge of the Company, is valid (or validly applied for) and enforceable. Except as set forth on Section 4.21(a) of the Company Disclosure Letter, no application for Company Registered Intellectual Property filed by or on behalf of the Company has been abandoned, allowed to lapse, or rejected, except as would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole. All maintenance and renewal fees in connection with Company Registered Intellectual Property have been made and all documents, recordations and certifications in connection with such Company Registered Intellectual Property have been filed, with the relevant patent, copyright, trademark or other authorities in the United States or foreign jurisdictions, as the case may be, for the purpose of prosecuting, perfecting and maintaining such Company Registered Intellectual Property, except as would not reasonably be expected to be, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole.

(b) The Company or one of its Subsidiaries owns exclusively, free and clear of all Liens (other than Permitted Liens) all Company-Owned Intellectual Property and has a valid right to use all other Intellectual Property reasonably necessary for or used in the continued conduct of the business of the Company and its Subsidiaries. Except as set forth on Section 4.21(b) of the Company Disclosure Letter, the Company has not (i) transferred ownership of, (ii) agreed to transfer ownership of, (iii) permitted any Person to retain joint ownership of, (iv) granted any exclusive license to any Person with respect to, or (v) permitted to enter into the public domain, any material Intellectual Property that is or was Company-Owned Intellectual Property.

 

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(c) Section 4.21(c) of the Company Disclosure Letter sets forth: (i) a list of all Contracts under which any Person has been granted any right or otherwise has received or acquired any right (whether or not exercisable) or interest in, any Company-Owned Intellectual Property, other than (A) Contracts, purchase orders, insertion orders entered into in the ordinary course of business on the Company’s standard forms, copies of which have been provided to Acquiror, (B) non-disclosure agreements, (C) contractor services agreements and consulting services agreements that do not involve the creation or development of any Company-Owned Intellectual Property, and (D) marketing, printing or advertising Contracts containing incidental trademark licenses, and (ii) a list of all Contracts pursuant to which the Company or any Subsidiary of the Company receives any rights in any Company Licensed Intellectual Property, other than (w) Contracts granting nonexclusive rights to use commercially available off-the-shelf software and any other similar software licenses (including software-as-a-service) that are commercially available on standard terms to the public, (x) Open Source Licenses, (y) non-exclusive licenses for content or assets used in the products, services, or in the conduct of the business of the Company or any of its Subsidiaries involving payments of less than $500,000 per year; and (z) employee confidentiality and invention assignment agreements.

(d) The Company and its Subsidiaries have not infringed upon, misappropriated or otherwise violated and are not infringing upon, misappropriating or otherwise violating any Intellectual Property of any Person. Within the three years preceding the date of this Agreement, no claim or action has been brought against the Company and the Company has not received any written communications (i) alleging that the Company or a Subsidiary of the Company has infringed, misappropriated or otherwise violated any intellectual property rights of any other Person, (ii) challenging the validity, enforceability, use or exclusive ownership of any Company-Owned Intellectual Property, (iii) inviting the Company or any of its Subsidiaries to take a license under any Patent or consider the applicability of any Patents to any products, services, or the conduct of the business of the Company or any of its Subsidiaries, or (iv) otherwise claiming that the operation of the Company’s business, infringes, misappropriates or violates the Intellectual Property rights or any other rights of any Person (including any right to privacy or right of publicity) or constitutes unfair competition or trade practices under the Laws of any jurisdiction.

(e) To the knowledge of the Company (i) no Person is infringing upon, misappropriating or otherwise violating any material Company-Owned Intellectual Property in any material respect, and (ii) the Company and its Subsidiaries have not brought any Legal Proceeding against any Person for infringement, misappropriation or violation of any of its Intellectual Property rights within the three years preceding the date of this Agreement or sent any written notice, charge, complaint, claim or other assertion against any Person claiming infringement or violation by or misappropriation of any Company-Owned Intellectual Property.

(f) The Company and its Subsidiaries take and have taken all reasonable measures to protect the confidentiality of trade secrets, know-how, and other confidential information included in the Company-Owned Intellectual Property that is material to the business of the Company and its Subsidiaries. Without limiting the foregoing, none of the Company or any of its Subsidiaries have disclosed any trade secrets, know-how, or confidential information to any other person unless such disclosure was under an appropriate written non-disclosure agreement containing appropriate limitations on use, reproduction, or disclosure. Each of the Company and its Subsidiaries’ employees, consultants, advisors and independent contractors who independently or jointly contributed to or otherwise participated in the authorship, invention, creation, improvement, modification or development of any material Company-Owned Intellectual Property (each such person, a “Creator”) has executed and delivered to the Company or its Subsidiary a written legally binding agreement with customary terms restricting the use and disclosure of such confidential information. The Company and its Subsidiaries have implemented and maintain reasonable and appropriate disaster recovery and security plans, procedures and facilities and has taken other reasonable steps to safeguard its confidential information and information technology systems used in the operation of the business of the Company and its Subsidiaries, from unauthorized or illegal access and use or loss of confidentiality, integrity or availability. To the knowledge of the Company, there has not been any material unauthorized disclosure of or unauthorized access to any trade secrets, know-how, or other confidential information of the Company or its Subsidiaries to or by any Person in a manner that has resulted or may result in the misappropriation of, or loss of trade secret or other rights in and to such information.

 

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(g) Each Creator who independently or jointly contributed to or otherwise participated in the authorship, invention, creation, improvement, modification or development of any material Intellectual Property has entered into an enforceable proprietary information and invention disclosure and Intellectual Property Rights assignment agreement with the Company or its Subsidiary that includes a present assignment of the Company or such Subsidiary all Intellectual Property authored, invented, created, improved, modified or developed by such person in the course of such Creator’s employment or other engagement with the Company or such Subsidiary.

(h) To the knowledge of the Company, no employee of the Company or any of its Subsidiaries is (i) bound by or otherwise subject to any Contract restricting him or her from performing his or her duties for the Company or such Subsidiary or (ii) in breach of any Contract with any former employer or other Person concerning Company-Owned Intellectual Property or confidentiality provisions protecting trade secrets and confidential information comprising Company-Owned Intellectual Property.

(i) No government funding, nor any facilities of a university, college, other educational institution or research center, was used in the development of the Company-Owned Intellectual Property and used in connection with the business.

(j) None of the Company-Owned Intellectual Property and, to the knowledge of the Company, none of the Company Licensed Intellectual Property is subject to any outstanding Governmental Order that restricts in any manner the use, sale, transfer, licensing or exploitation thereof by the Company or any of its Subsidiaries, or affects the validity, use or enforceability of any such Intellectual Property, except as is not and would not reasonably be expected to be, individually or in the aggregate, material to the Company or any of its Subsidiaries, taken as a whole.

(k) Neither the Company nor any of its Subsidiaries is bound by, and no Company-Owned Intellectual Property is subject to, any Contract containing any covenant or other provision that in any way limits or restricts the ability of the Company or any of its Subsidiaries to use, exploit, assert, enforce, sell, transfer or dispose of any such Company-Owned Intellectual Property anywhere in the world, in each case, in a manner that would materially limit the business of the Company as conducted or planned to be conducted.

(l) Neither the Company nor any of its Subsidiaries has disclosed, delivered or licensed to any escrow agent or Person, agreed or obligated itself to disclose, deliver, license or make available to any escrow agent or Person, or permitted the disclosure or delivery to any escrow agent or other Person, other than employees or contractors who are subject to confidentiality obligations, any of the source code that is Company-Owned Intellectual Property (“Company Source Code”), and no other Person has the right, contingent or otherwise, to obtain access to or use any Company Source Code other than in the ordinary course of business. Without limiting the foregoing, neither the execution of this Agreement nor any of the transactions contemplated by this Agreement will result in a release from escrow or other delivery to a Person of any Company Source Code.

(m) With respect to the Software used or held for use in the business of the Company and its Subsidiaries, to the knowledge of the Company, no such Software contains any undisclosed or hidden device or feature designed to disrupt, disable, or otherwise impair the functioning of any Software or any “back door,” “time bomb”, “Trojan horse,” “worm,” “drop dead device,” or other malicious code or routines that permit unauthorized access or the unauthorized disablement or erasure of such or other Software or information or data (or any parts thereof) of the Company or any of its Subsidiaries or customers of the Company and its Subsidiaries.

 

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(n) The Company and its Subsidiaries’ use and distribution of (i) Software developed by the Company or any of its Subsidiaries, and (ii) Open Source Materials, is in material compliance with all Open Source Licenses applicable thereto. The Company and its Subsidiaries have not used any Open Source Materials in a manner that requires any Software or Company-Owned Intellectual Property, to be subject to Copyleft Licenses.

(o) The Company-Owned Intellectual Property and the Company Licensed Intellectual Property, to the knowledge of the Company, constitutes all of the intellectual property rights used or held for use by the Company or any Subsidiary of the Company in the operation of their respective businesses, and, to the knowledge of the Company, all Intellectual Property necessary and sufficient to enable the Company and any Subsidiary of the Company to conduct their respective businesses as currently conducted in all material respects.

Section 4.22. Privacy and Cybersecurity.

(a) The Company and its Subsidiaries maintain and have at all times been in material compliance with (i) Privacy Laws, (ii) policies, notices, statements and representations relating to the Processing of Personal Information, (iii) any privacy choices, including opt-out preferences offered by the Company or its Subsidiaries to end users relating to Personal Information, and (iv) any contractual commitment made by the Company or any Subsidiary of the Company that is applicable to Personal Information, including contractual obligations concerning cybersecurity, data security and the security of the Company’s and each of its Subsidiaries’ information technology systems, ((i)-(iv) together with Privacy Laws, the “Company Privacy Commitments”).

(b) The execution and delivery by the Company of this Agreement and the applicable Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby do not and will not (i) require the delivery of any notice to or consent from any Person relating to Personal Information and (ii) conflict with or materially violate any Company Privacy Commitments. For the avoidance of doubt, to the extent Personal Information held or controlled by the Company is “personal information” under the CCPA, such data is an asset as contemplated by section 1798.140(t)(2)(D). The Company and its Subsidiaries currently make, and have at all times made, available to individuals (in each case, at or before the moment of collection of Personal Information) privacy policies and such policies are, and have at all times been, accurate, complete and not misleading (including by omission) of the Company’s and its Subsidiaries’ practices in relation to Personal Information and inclusive of all disclosures required by Privacy Laws.

(c) The Company and its Subsidiaries have implemented and maintained, and have required their vendors and any other third Person with whom Personal Information is shared or who Processes Personal Information on or on behalf of the Company’s or the Subsidiaries’ behalf to implement and maintain, commercially reasonable technical, physical and organizational measures, security systems and technologies to protect such Personal Information owned or controlled by the Company and/or its Subsidiaries and computers, networks, software and systems used by the Company or any Subsidiary of the Company from loss, theft, unauthorized access, use, disclosure or modification (a “Security Incident”).

(d) Where the Company or any of its Subsidiaries uses a processor to process Personal Information, the processor has provided guarantees, warranties or covenants in relation to processing of Personal Information, confidentiality, security measures and agreed to compliance with those obligations that are materially sufficient for the Company’s and its Subsidiaries’ compliance with applicable Privacy

 

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Laws, and there is in existence a written Contract between the Company and each such processor that complies with the requirements of applicable Privacy Laws. To the knowledge of the Company, such processors have not breached any such Contracts pertaining to Personal Information processed by such Persons on behalf of the Company or any of its Subsidiaries. The term “processor” has the meaning assigned to it in the GDPR and the UK DPA as well as “service provider” under the CCPA, as applicable.

(e) In the past three years, there have been no material Security Incidents and no such Security Incidents are currently threatened. No circumstance has arisen in which Company Privacy Commitments would require the Company or any Subsidiary of the Company to notify a Governmental Authority or other third Person of a Security Incident. There are no Actions by any Person (including any Governmental Authority) pending to which the Company or any of its Subsidiaries is a named party and, to the knowledge of the Company, no Actions have been threatened against the Company or any of its Subsidiaries alleging a violation of any Company Privacy Commitments. To the knowledge of the Company, no facts or circumstances exist that would give rise to any such Action.

Section 4.23. Environmental Matters.

(a) The Company and its Subsidiaries are and, except for matters which have been fully resolved, for the past three years have been in material compliance with all Environmental Laws.

(b) There has been no release of any Hazardous Materials by the Company or any of its Subsidiaries (i) at, in, on or under any Leased Real Property or in connection with the Company and its Subsidiaries’ operations off-site of the Leased Real Property or (ii) to the knowledge of the Company, at, in, on or under any formerly owned or Leased Real Property during the time that the Company owned or leased such property or at any other location where Hazardous Materials generated by the Company or any of its Subsidiaries have been transported to, sent, placed or disposed of.

(c) None the Company or its Subsidiaries is subject to any current Governmental Order relating to any material non-compliance with Environmental Laws by the Company or its Subsidiaries or the investigation, sampling, monitoring, treatment, remediation, removal or cleanup of Hazardous Materials.

(d) No material Legal Proceeding is pending or, to the knowledge of the Company, threatened with respect to the Company and its Subsidiaries’ compliance with or liability under Environmental Laws, and, to the knowledge of the Company, there are no facts or circumstances which could reasonably be expected to form the basis of such a Legal Proceeding.

(e) The Company has made available to Acquiror all material environmental reports, assessments, audits and inspections and any material communications or notices from or to any Governmental Authority concerning any material non-compliance of the Company or any of its Subsidiaries with, or liability of the Company or any of its Subsidiaries under, Environmental Law.

Section 4.24. Absence of Changes. From the date of the most recent balance sheet included in the Financial Statements (that have been provided as of the date of this Agreement) until the date of this Agreement: (a) except in connection with the transactions contemplated hereby, (i) the Company and its Subsidiaries have conducted their business in all material respects in the ordinary course of business, consistent with past practice and (ii) none of the Company or any of its Subsidiaries has taken any action that would require the consent of Acquiror if taken during the period from the date of this Agreement until Closing pursuant to Section 6.1(b)(b), Section 6.1(b)(e), Section 6.1(b)(h) and Section 6.1(b)(n) and (b) there has not been any Company Material Adverse Effect.

 

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Section 4.25. Anti-Corruption Compliance.

(a) For the past three years, none of the Company or any of its Subsidiaries, nor, to the knowledge of the Company, any director, officer, employee or agent acting on behalf of the Company or its Subsidiaries, has offered or given anything of value to: (i) any official or employee of a Governmental Authority, any political party or official thereof, or any candidate for political office or (ii) any other Person, in any such case while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to any official or employee of a Governmental Authority or candidate for political office, in each case in violation of the Anti-Bribery Laws.

(b) Each of the Company and its Subsidiaries, has instituted and maintains policies and procedures reasonably designed to ensure compliance in all material respects with the Anti-Bribery Laws.

(c) To the knowledge of the Company, as of the date hereof, there are no current or pending internal investigations, third party investigations (including by any Governmental Authority), or internal or external audits that address any material allegations or information concerning possible material violations of the Anti-Bribery Laws related to the Company or its Subsidiaries.

Section 4.26. Sanctions and International Trade Compliance.

(a) The Company and its Subsidiaries (i) are, and have been for the past three years, in compliance in all material respects with all International Trade Laws and Sanctions Laws, and (ii) have obtained all required licenses, consents, notices, waivers, approvals, orders, registrations, declarations, or other authorizations from, and have made any material filings with, any applicable Governmental Authority for the import, export, re-export, deemed export, deemed re-export, or transfer required under the International Trade Laws and Sanctions Laws (the “Export Approvals”). There are no pending or, to the knowledge of the Company, threatened, claims, complaints, charges, investigations, voluntary disclosures or Legal Proceedings against the Company or its Subsidiaries related to any International Trade Laws or Sanctions Laws or any Export Approvals.

(b) None of the Company nor any of its Subsidiaries or any of their respective directors or officers, or to the knowledge of the Company, employees or the Company or its Subsidiaries’ respective agents, representatives or other Persons acting on behalf of the Company or its Subsidiaries, (i) is, or has during the past three years, been a Sanctioned Person or (ii) has transacted business directly or indirectly with any Sanctioned Person or in any Sanctioned Country.

Section 4.27. Information Supplied. None of the information supplied or to be supplied by the Company or its Subsidiaries specifically for inclusion or incorporation by reference in the Registration Statement will, at the date on which the Proxy Statement/Registration Statement is first mailed to the Acquiror Stockholders or at the time of the Acquiror Stockholders’ Meeting, and, in the case of any amendment thereto, at the time of such amendment, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.

Section 4.28. Vendors.

(a) Section 4.28(a) of the Company Disclosure Letter sets forth, as of the date of this Agreement, the top 20 vendors, suppliers and service providers based on the aggregate Dollar value of the Company and its Subsidiaries’ transaction volume with such counterparty during the trailing twelve months for the period ending December 31, 2020 (the “Top Vendors”).

 

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(b) Except as set forth on Section 4.28(b) of the Company Disclosure Letter, none of the Top Vendors has, as of the date of this Agreement, informed in writing the Company or its Subsidiaries that it will, or, to the knowledge of the Company, has threatened to, terminate, cancel, or materially limit or materially and adversely modify any of its existing business with the Company or any of its Subsidiaries (other than due to the expiration of an existing contractual arrangement), and to the knowledge of the Company, none of the Top Vendors is, as of the date of this Agreement, otherwise involved in or threatening a material dispute against the Company or its Subsidiaries or their respective businesses.

Section 4.29. Government Contracts. The Company is not party to: (i) any Contract, including an individual task order, delivery order, purchase order, basic ordering agreement, letter Contract or blanket purchase agreement between the Company or any of its Subsidiaries, on one hand, and any Governmental Authority, on the other hand, or (ii) any subcontract or other Contract by which the Company or any of its Subsidiaries has agreed to provide goods or services through a prime contractor directly to a Governmental Authority that is expressly identified in such subcontract or other Contract as the ultimate consumer of such goods or services. None of the Company or any of its Subsidiaries have provided any offer, bid, quotation or proposal to sell products made or services provided by the Company or any of its Subsidiaries that, if accepted or awarded, would lead to any Contract or subcontract of the type described by the foregoing sentence.

Section 4.30. No Outside Reliance. The Company acknowledges that the Company and its advisors, have made their own investigation of Acquiror, Merger Sub and their respective Subsidiaries and, except as provided in the Article V or any Ancillary Agreement to which the Acquiror is or will be a party, are not relying on any representation or warranty whatsoever as to the condition, merchantability, suitability or fitness for a particular purpose or trade as to any of the assets of Acquiror, Merger Sub or any of their respective Subsidiaries, the prospects (financial or otherwise) or the viability or likelihood of success of the business of Acquiror, Merger Sub and their respective Subsidiaries as conducted after the Closing, as contained in any materials provided by Acquiror, Merger Sub or any of their Affiliates or any of their respective directors, officers, employees, stockholders, partners, members or representatives or otherwise.

Section 4.31. No Additional Representation or Warranties. Except as provided in and this Article IV and the Ancillary Agreements to which the Company is party, none of the Company or any of its Affiliates, or any of their respective directors, managers, officers, employees, equityholders, partners, members or representatives has made, or is making, any representation or warranty whatsoever to Acquiror or Merger Sub or their Affiliates and no such party shall be liable in respect of the accuracy or completeness of any information provided to Acquiror or Merger Sub or their Affiliates.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB

Except as set forth in any Acquiror SEC Filings filed or submitted on or prior to the date hereof (excluding any disclosures in any risk factors section that do not constitute statements of fact, disclosures in any forward-looking statements disclaimer and other disclosures that are generally cautionary, predictive or forward-looking in nature), Acquiror and Merger Sub represent and warrant to the Company as follows:

Section 5.1. Company Organization. Each of Acquiror and Merger Sub has been duly incorporated, organized or formed and is validly existing as a corporation or exempted company in good standing (or equivalent status, to the extent that such concept exists) under the Laws of its jurisdiction of incorporation, organization or formation, and has the requisite company power and authority to own, lease or operate all of its properties and assets and to conduct its business as it is now being conducted. The copies of Acquiror’s Governing Documents and the Governing Documents of Merger Sub, in each case, as

 

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amended to the date of this Agreement, previously delivered by Acquiror to the Company, are true, correct and complete. Merger Sub has no assets or operations other than those required to effect the transactions contemplated hereby. All of the equity interests of Merger Sub are held directly by Acquiror. Except for Merger Sub, Acquiror does not directly own any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, any corporation, partnership, joint venture or business association or other person. Each of Acquiror and Merger Sub is duly licensed or qualified and in good standing as a foreign corporation or company in all jurisdictions in which its ownership of property or the character of its activities is such as to require it to be so licensed or qualified, except where failure to be so licensed or qualified would not have, or would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Acquiror or Merger Sub.

Section 5.2. Due Authorization.

(a) Each of Acquiror and Merger Sub has all requisite corporate power and authority to (a) execute and deliver this Agreement and the documents contemplated hereby, and (b) consummate the transactions contemplated hereby and thereby and perform all obligations to be performed by it hereunder and thereunder. The execution and delivery of this Agreement and the documents contemplated hereby and the consummation of the transactions contemplated hereby and thereby have been (i) duly and validly authorized and approved by the Board of Directors of Acquiror and by the Board of Directors of Merger Sub and (ii) determined by the Board of Directors of Acquiror as advisable to Acquiror and the Acquiror Stockholders and recommended for approval by the Acquiror Stockholders. No other company proceeding on the part of Acquiror or Merger Sub is necessary to authorize this Agreement and the documents contemplated hereby (other than the Acquiror Stockholder Approval and the adoption of this Agreement by Acquiror as the sole stockholder of Merger Sub). This Agreement has been, and at or prior to the Closing, the other documents contemplated hereby will be, duly and validly executed and delivered by each of Acquiror and Merger Sub, and this Agreement constitutes, and at or prior to the Closing, the other documents contemplated hereby will constitute, a legal, valid and binding obligation of each of Acquiror and Merger Sub, enforceable against Acquiror and Merger Sub in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity.

(b) The Acquiror Stockholder Approval represents the only votes of the holders of any of Acquiror’s capital stock necessary in connection with entry into this Agreement by Acquiror and the consummation of the transactions contemplated hereby, including the Closing.

(c) At a meeting duly called and held, the Board of Directors of Acquiror has unanimously approved the transactions contemplated by this Agreement as a Business Combination.

Section 5.3. No Conflict. Subject to the Acquiror Stockholder Approval, the execution and delivery of this Agreement by Acquiror and Merger Sub and the other documents contemplated hereby by Acquiror and Merger Sub and the consummation of the transactions contemplated hereby and thereby do not and will not (a) violate or conflict with any provision of, or result in the breach of or default under the Governing Documents of Acquiror or Merger Sub, (b) violate or conflict with any provision of, or result in the breach of, or default under any applicable Law or Governmental Order applicable to Acquiror or Merger Sub, (c) violate or conflict with any provision of, or result in the breach of, result in the loss of any right or benefit, or cause acceleration, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any Contract to which Acquiror or Merger Sub is a party or by which Acquiror or Merger Sub may be bound, or terminate or result in the termination of any such Contract or (d) result in the creation of any Lien upon any of the properties or assets of Acquiror or Merger Sub, except, in the case of clauses (b) through (d), to the extent that the occurrence of the foregoing would not (i) have, or would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the ability of Acquiror or Merger Sub to enter into and perform their obligations under this Agreement or (ii) be material to Acquiror.

 

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Section 5.4. Litigation and Proceedings. There are no pending or, to the knowledge of Acquiror, threatened Legal Proceedings against Acquiror or Merger Sub, their respective properties or assets, or, to the knowledge of Acquiror, any of their respective directors, managers, officers or employees (in their capacity as such) that, if adversely decided or resolved, would, individually or in the aggregate, be material to Acquiror, or which in any manner challenges or seeks to prevent the transactions contemplated hereby. There are no investigations or other inquiries pending or, to the knowledge of Acquiror, threatened by any Governmental Authority, against Acquiror or Merger Sub, their respective properties or assets, or, to the knowledge of Acquiror, any of their respective directors, managers, officers or employees (in their capacity as such). There is no outstanding Governmental Order imposed upon Acquiror or Merger Sub, nor are any assets of Acquiror’s or Merger Sub’s respective businesses bound or subject to any Governmental Order the violation of which would, individually or in the aggregate, be material to Acquiror. As of the date hereof, each of Acquiror and Merger Sub is in compliance with all applicable Laws in all material respects.

Section 5.5. SEC Filings. Acquiror has timely filed or furnished all statements, prospectuses, registration statements, forms, reports and documents required to be filed by it with the SEC since March 23, 2021, pursuant to the Exchange Act or the Securities Act (collectively, as they have been amended since the time of their filing through the date hereof, the “Acquiror SEC Filings”), except as otherwise disclosed in such Acquiror SEC Filings. Each of the Acquiror SEC Filings, as of the respective date of its filing, and as of the date of any amendment, complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act, the Sarbanes-Oxley Act and any rules and regulations promulgated thereunder applicable to the Acquiror SEC Filings. As of the respective date of its filing (or if amended or superseded by a filing prior to the date of this Agreement or the Closing Date, then on the date of such filing), the Acquiror SEC Filings did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. As of the date hereof, there are no outstanding or unresolved comments in comment letters received from the SEC with respect to the Acquiror SEC Filings. To the knowledge of Acquiror, none of the Acquiror SEC Filings filed on or prior to the date hereof is subject to ongoing SEC review or investigation as of the date hereof.

Section 5.6. Internal Controls; Listing; Financial Statements.

(a) Except as is not required in reliance on exemptions from various reporting requirements by virtue of Acquiror’s status as an “emerging growth company” within the meaning of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), Acquiror has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act). Such disclosure controls and procedures are designed to ensure that material information relating to Acquiror is made known to Acquiror’s principal executive officer and its principal financial officer by others within those entities, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared. To Acquiror’s knowledge, such disclosure controls and procedures are effective in timely alerting Acquiror’s principal executive officer and principal financial officer to material information required to be included in Acquiror’s periodic reports required under the Exchange Act. Since March 23, 2021, Acquiror has established and maintained a system of internal controls over financial reporting (as defined in Rule 13a-15 under the Exchange Act) sufficient to provide reasonable assurance regarding the reliability of Acquiror’s financial reporting and the preparation of Acquiror Financial Statements for external purposes in accordance with GAAP.

 

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(b) Each director and executive officer of Acquiror has filed with the SEC on a timely basis all statements required by Section 16(a) of the Exchange Act and the rules and regulations promulgated thereunder. There are no outstanding loans or other extensions of credit made by Acquiror to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of Acquiror. Acquiror has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.

(c) The Acquiror SEC Filings contain true and complete copies of the audited balance sheet as of February 1, 2021, and statement of operations, cash flow and stockholders’ equity of Acquiror for the period from January 29, 2021 (inception) through February 1, 2021, together with the auditor’s reports thereon (the “Acquiror Financial Statements”). Except as disclosed in the Acquiror SEC Filings, the Acquiror Financial Statements (i) fairly present in all material respects the financial position of Acquiror, as at the respective dates thereof, and the results of operations and consolidated cash flows for the respective periods then ended, (ii) were prepared in conformity with GAAP applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto), and (iii) comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act in effect as of the respective dates thereof. The books and records of Acquiror have been, and are being, maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements.

(d) As of the date hereof, neither Acquiror (including any employee thereof) nor, to Acquiror’s knowledge, Acquiror’s independent auditors has identified or been made aware of (i) any significant deficiency or material weakness in the system of internal accounting controls utilized by Acquiror, (ii) any fraud, whether or not material, that involves Acquiror’s management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by Acquiror or (iii) any claim or allegation regarding any of the foregoing.

Section 5.7. Governmental Authorities; Consents. Except for the approvals, filings and notification of or with Governmental Authorities that are set forth in Section 4.5 or the Company Disclosure Letter, no consent, waiver, approval or authorization of, or designation, declaration or filing with, or notification to, any Governmental Authority or other Person is required on the part of Acquiror or Merger Sub with respect to Acquiror’s or Merger Sub’s execution or delivery of this Agreement or the consummation of the transactions contemplated hereby, except for (i) applicable requirements of the HSR Act, the Exchange Act and the Securities Act (and any other applicable U.S. state or federal securities Laws); (ii) any consents, approvals, authorizations, designations, declarations, waivers or filings, the absence of which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Acquiror or Merger Sub to perform or comply with on a timely basis any material obligation of Acquiror or Merger Sub under this Agreement or to consummate the transactions contemplated hereby; and (iii) the filing of the Merger Certificate in accordance with the DGCL.

Section 5.8. Trust Account. As of the date of this Agreement, Acquiror has at least $416,344,118 in the Trust Account (including, if applicable, an aggregate of approximately $14,344,118 of deferred underwriting commissions and other fees being held in the Trust Account), such monies invested in United States government securities or money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act pursuant to the Investment Management Trust Agreement, dated as of March 23, 2021, between Acquiror and Continental Stock Transfer & Trust Company, as trustee (the “Trustee”) (the “Trust Agreement”). The Trust Agreement is in full force and effect and is a legal, and binding obligation of Acquiror and, to the knowledge of Acquiror, the Trustee, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity. The Trust Agreement has not been terminated, repudiated, rescinded, amended, supplemented or modified, in any respect, and, to the knowledge of Acquiror, no such termination, repudiation, rescission, amendment, supplement, or modification is contemplated by Acquiror or, to the knowledge of Acquiror, the Trustee. There are no separate Contracts, side letters or other arrangements or

 

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understandings (whether written or unwritten, express or implied) that would cause the description of the Trust Agreement in the Acquiror SEC Filings to be inaccurate or that would entitle any Person (other than stockholders of Acquiror holding shares of Acquiror Class A Common Stock sold in Acquiror’s initial public offering who shall have elected to redeem their shares of Acquiror Class A Common Stock pursuant to Acquiror’s Governing Documents and the underwriters of Acquiror’s initial public offering with respect to deferred underwriting commissions) to any portion of the proceeds in the Trust Account. Prior to the Closing, none of the funds held in the Trust Account may be released other than to pay Taxes and payments with respect to all Acquiror Stockholder Redemptions. There are no claims or proceedings pending or, to the knowledge of Acquiror, threatened with respect to the Trust Account. Acquiror has performed all material obligations required to be performed by it to date under, and is not in default, breach or delinquent in performance or any other respect (claimed or actual) in connection with, the Trust Agreement, and no event has occurred which, with due notice or lapse of time or both, would constitute such a default or breach thereunder. As of the Effective Time, the obligations of Acquiror to dissolve or liquidate pursuant to Acquiror’s Governing Documents shall terminate, and as of the Effective Time, Acquiror shall have no obligation whatsoever pursuant to Acquiror’s Governing Documents to dissolve and liquidate the assets of Acquiror by reason of the consummation of the transactions contemplated hereby. To Acquiror’s knowledge, as of the date hereof, following the Effective Time, no Acquiror Stockholder shall be entitled to receive any amount from the Trust Account except to the extent such Acquiror Stockholder is exercising an Acquiror Stockholder Redemption. As of the date hereof, assuming the accuracy of the representations and warranties of the Company contained herein and the compliance by Company with its obligations hereunder, neither Acquiror or Merger Sub have any reason to believe that any of the conditions to the use of funds in the Trust Account will not be satisfied or funds available in the Trust Account will not be available to Acquiror and Merger Sub on the Closing Date.

Section 5.9. Investment Company Act; JOBS Act. Acquiror is not an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company”, in each case within the meaning of the Investment Company Act. Acquiror constitutes an “emerging growth company” within the meaning of the JOBS Act.

Section 5.10. Absence of Changes. Since February 1, 2021, (a) there has not been any event or occurrence that has had, or would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Acquiror or Merger Sub or their ability to enter into and perform their obligations under this Agreement, and (b) Acquiror and Merger Sub have, in all material respects, conducted their business and operated their properties in the ordinary course of business.

Section 5.11. No Undisclosed Liabilities. Except for any fees and expenses payable by Acquiror or Merger Sub as a result of or in connection with the consummation of the transactions contemplated hereby, there is no material liability, debt or obligation of or claim or judgment against Acquiror or Merger Sub (whether direct or indirect, absolute or contingent, accrued or unaccrued, known or unknown, liquidated or unliquidated, or due or to become due), except for liabilities and obligations (i) reflected or reserved for on the financial statements or disclosed in the notes thereto included in Acquiror SEC Filings, (ii) that have arisen since the date of the most recent balance sheet included in the Acquiror SEC Filings in the ordinary course of business of Acquiror and Merger Sub, or (iii) which would not be, or would not reasonably be expected to be, material to Acquiror.

Section 5.12. Capitalization of Acquiror.

(a) As of the date hereof, the authorized capital stock of Acquiror consists of 261,000,000 shares, including (i) 200,000,000 shares of Acquiror Class A Common Stock, 42,734,412 shares of which are issued and outstanding as of the date of this Agreement, (ii) 30,000,000 shares of Acquiror Class B Common Stock, 5,000,000 shares of which are issued and outstanding as of the date of

 

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this Agreement, (iii) 30,000,000 shares of Acquiror Class K Common Stock, 5,000,000 shares of which are issued and outstanding as of the date of this Agreement, and (iv) 1,000,000 shares of preferred stock, par value $0.0001 per share, of which no shares are issued and outstanding as of the date of this Agreement ((i), (ii), (iii) and (iv) collectively, the “Acquiror Securities”). The foregoing represents all of the issued and outstanding Acquiror Securities as of the date of this Agreement. All issued and outstanding Acquiror Securities (i) have been duly authorized and validly issued and are fully paid and non-assessable; (ii) have been offered, sold and issued in compliance in all material respects with applicable Law, including federal and state securities Laws, and all requirements set forth in (A) Acquiror’s Governing Documents, and (B) any other applicable Contracts governing the issuance of such securities; and (iii) are not subject to, nor have they been issued in violation of, any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, Acquiror’s Governing Documents or any Contract to which Acquiror is a party or otherwise bound.

(b) Pursuant to the Sponsor Support Agreement, the requisite holders of shares of Acquiror Class B Common Stock and shares of Acquiror Class K Common Stock will have irrevocably waived any anti-dilution adjustment as to the ratio by which such shares convert into shares of Acquiror Class A Common Stock or any other measure with an anti-dilutive effect, in any case, that results from or is related to the transaction contemplated by this Agreement.

(c) Except for the Subscription Agreements, the Forward Purchase Agreement, Acquiror’s Governing Documents and this Agreement, there are no outstanding Contracts of Acquiror to repurchase, redeem or otherwise acquire any Acquiror Securities. Except as set forth in this Section 5.12 or as contemplated by this Agreement, the other documents contemplated hereby or the Forward Purchase Agreement, and other than in connection with the PIPE Investment, Acquiror has not granted any outstanding options, stock appreciation rights, warrants, rights or other securities convertible into or exchangeable or exercisable for Acquiror Securities, or any other commitments or agreements providing for the issuance of additional shares, the sale of treasury shares, for the repurchase or redemption of any Acquiror Securities or the value of which is determined by reference to the Acquiror Securities, and there are no Contracts of any kind which may obligate Acquiror to issue, purchase, redeem or otherwise acquire any of its Acquiror Securities.

(d) The Aggregate Merger Consideration and the shares of Acquiror Post-Merger Class B Common Stock, when issued in accordance with the terms hereof, shall be duly authorized and validly issued, fully paid and non-assessable and issued in compliance in all material respects with all applicable state and federal securities Laws and not subject to, and not issued in violation of, any Lien, purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of applicable Law, Acquiror’s Governing Documents, or any Contract to which Acquiror is a party or otherwise bound.

(e) On or prior to the date of this Agreement, Acquiror has entered into Subscription Agreements with PIPE Investors, true and correct copies of which have been provided to the Company on or prior to the date of this Agreement, pursuant to which, and on the terms and subject to the conditions of which, such PIPE Investors have agreed, in connection with the transactions contemplated hereby, to purchase from Acquiror, shares of Acquiror Post-Merger Class A Common Stock for a PIPE Investment Amount of at least $270,000,000 (such amount, the “Minimum PIPE Investment Amount”). As of the date of this Agreement, there are no other agreements, side letters, or arrangements between Acquiror and any PIPE Investors relating to the Subscription Agreement and, as of the date hereof, to the knowledge of Acquiror, there are no facts or circumstances that may reasonably be expected to result in any of the conditions set forth in any of the Subscription Agreements not being satisfied, or the PIPE Investment Amount not being available to Acquiror, on the Closing Date. On or prior to the date of this Agreement, Acquiror has identified to the Company each of the PIPE Investors that, to its knowledge, are also existing

 

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holders of Company Capital Stock (or has caused the identification of each such PIPE Investor to the Company) and, to the knowledge of Acquiror, the Company has not exercised its right to reasonably object to any such PIPE Investor as of the date of this Agreement. Such Subscription Agreements are in full force and effect with respect to, and binding on, Acquiror and, to the knowledge of Acquiror, on each PIPE Investor party thereto, in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity, and has not been withdrawn or terminated, or otherwise amended or modified in any respect, and no withdrawal, termination, amendment or modification is contemplated by Acquiror. As of the date hereof, no event has occurred that, with or without notice, lapse of time or both, would constitute a default or breach on the part of Acquiror under any material term or condition of any Subscription Agreement and Acquiror has no reason to believe that it will be unable to satisfy in all material respects on a timely basis any term or condition of closing to be satisfied by it contained in any Subscription Agreement. The Subscription Agreements contain all of the conditions precedent (other than the conditions contained in the other Ancillary Agreements and this Agreement) to the obligations of the PIPE Investors to purchase the shares of Acquiror Post-Merger Class A Common Stock in the private placement in the commitment amount set forth in the Subscription Agreements on the terms therein. As of the date of this Agreement, no fees, cash consideration or other discounts are payable or have been agreed to be paid by Acquiror or any of its Subsidiaries (including, from and after the Closing, the Company and its Subsidiaries) to any PIPE Investor in respect of any PIPE Investment Amount.

(f) Acquiror has provided to the Company a true, correct and complete copy of the Forward Purchase Agreement entered into by Acquiror with the Sponsor, pursuant to which the Sponsor has committed, subject to the terms thereof, to provide equity financing to Acquiror solely for purposes of consummating the Business Combination in the aggregate amount of up to $10.0 million (the “Forward Purchase Amount”). As of the date hereof, to the knowledge of Acquiror, with respect to the Sponsor, the Forward Purchase Agreement is in full force and effect and has not been withdrawn or terminated, or otherwise amended or modified, in any respect, and no withdrawal, termination, amendment or modification is contemplated by Acquiror. The Forward Purchase Agreement is a legal, valid and binding obligation of Acquiror and, to the knowledge of Acquiror, the Sponsor, and neither the execution or delivery by any party thereto nor the performance of any party’s obligations under the Forward Purchase Agreement violates or will violate any Laws. There are no other agreements, side letters, or arrangements between Acquiror and the Sponsor that could affect the obligation of the Sponsor to contribute to Acquiror the Forward Purchase Amount in accordance with the Forward Purchase Agreement, and, as of the date hereof, Acquiror does not know of any facts or circumstances that may reasonably be expected to result in any of the conditions set forth in the Forward Purchase Agreement not being satisfied, or the Forward Purchase Amount not being available to Acquiror, on the Closing Date. As of the date hereof, no event has occurred that, with or without notice, lapse of time or both, would constitute a default or breach on the part of Acquiror under any material term or condition of the Forward Purchase Agreement. The Forward Purchase Agreement contains all of the conditions precedent (other than the conditions contained in this Agreement) to the obligations of the Sponsor to contribute to Acquiror the applicable portion of the Forward Purchase Amount set forth in the Forward Purchase Agreement on the terms therein.

(g) Acquiror has no Subsidiaries apart from Merger Sub, and does not own, directly or indirectly, any equity interests or other interests or investments (whether equity or debt) in any Person, whether incorporated or unincorporated. Acquiror is not party to any Contract that obligates Acquiror to invest money in, loan money to or make any capital contribution to any other Person.

Section 5.13. Brokers Fees. Except for the deferred underwriting commissions described in Section 5.8, and fees payable to Morgan Stanley & Co. LLC and Evercore Group L.L.C. in connection with the PIPE Investment, no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated hereby based upon arrangements made by Acquiror or any of its Affiliates.

 

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Section 5.14. Indebtedness. Except for Working Capital Loans, neither Acquiror nor Merger Sub have any Indebtedness.

Section 5.15. Taxes.

(a) All material Tax Returns required to be filed by or with respect to Acquiror or Merger Sub have been timely filed (taking into account any applicable extensions), all such Tax Returns are true, complete and accurate in all material respects and all material Taxes due and payable (whether or not shown on any Tax Return) have been paid.

(b) The Acquiror and its Subsidiaries have withheld from amounts owing to any employee, creditor or other Person all material Taxes required by Law to be withheld, paid over to the proper Governmental Authority in a timely manner all such withheld amounts required to have been so paid over and otherwise complied in all material respects with all applicable withholding and related reporting requirements.

(c) There are no Liens for any material Taxes (other than Permitted Liens) upon the property or assets of Acquiror or Merger Sub.

(d) No claim, assessment, deficiency or proposed adjustment for any material amount of Tax has been asserted or assessed by any Governmental Authority against Acquiror or Merger Sub that remains unpaid.

(e) There are no ongoing or pending Legal Proceedings with respect to any material Taxes of Acquiror or Merger Sub and there are no waivers, extensions or requests for any waivers or extensions of any statute of limitations currently in effect with respect to any material Taxes of Acquiror or Merger Sub.

(f) No written claim has been made by any Governmental Authority where the Acquiror or Merger Sub does not file Tax Returns that it is or may be subject to taxation in that jurisdiction.

(g) Neither the Acquiror nor Merger Sub is a party to any Tax indemnification or Tax sharing or similar agreement (other than any agreement (i) solely between the Acquiror and/or Merger Sub or (ii) commercial Contracts the principal purpose of which is not Taxes).

(h) During the past three years, neither the Acquiror nor Merger Sub was a distributing corporation or a controlled corporation in a transaction purported or intended to be governed by Section 355 of the Code.

(i) Neither the Acquiror nor Merger Sub is liable for Taxes of any other Person (other than the Acquiror or Merger Sub) under Treasury Regulation Section 1.1502-6 or any similar provision of state, local or foreign Tax Law or as a transferee or successor or by Contract (other than commercial Contracts the principal purpose of which is not Taxes).

(j) Neither Acquiror nor Merger Sub has participated in a “listed transaction” within the meaning of Treasury Regulations 1.6011-4(b)(2).

 

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(k) Neither the Acquiror nor Merger Sub will be required to include any material amount in taxable income, exclude any material item of deduction or loss from taxable income, or make any adjustment under Section 481 of the Code (or any similar provision of state, local or foreign Law) for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) installment sale, intercompany transaction described in the Treasury Regulations under Section 1502 of the Code (or any similar provision of state, local or foreign Law) or open transaction disposition made on or prior to the Closing Date, (ii) prepaid amount received or deferred revenue recognized prior to the Closing outside the ordinary course of business, (iii) change in method of accounting for a taxable period ending on or prior to the Closing Date, (iv) “closing agreement” as described in Section 7121 of the Code (or any similar provision of state, local or foreign Law) executed prior to the Closing, (v) by reason of Section 965(a) of the Code or election pursuant to Section 965(h) of the Code (or any similar provision of state, local or foreign Law), and to the knowledge of Acquiror, the IRS has not proposed any such adjustment or change in accounting method.

(l) Acquiror and Merger Sub have not taken any action, nor to the knowledge of Acquiror are there any facts or circumstances, that would reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.

Section 5.16. Business Activities.

(a) Since formation, neither Acquiror or Merger Sub have conducted any business activities other than activities related to Acquiror’s initial public offering, the filing of Acquiror SEC Filings or directed toward the accomplishment of a Business Combination. Except as set forth in Acquiror’s Governing Documents or as otherwise contemplated by this Agreement or the Ancillary Agreements and the transactions contemplated hereby and thereby, there is no agreement, commitment, or Governmental Order binding upon Acquiror or Merger Sub or to which Acquiror or Merger Sub is a party which has or would reasonably be expected to have the effect of prohibiting or impairing any business practice of Acquiror or Merger Sub or any acquisition of property by Acquiror or Merger Sub or the conduct of business by Acquiror or Merger Sub as currently conducted or as contemplated to be conducted as of the Closing, other than such effects, individually or in the aggregate, which have not been and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Acquiror or Merger Sub or the ability of Acquiror or Merger Sub to enter into and perform their obligations under this Agreement.

(b) Except for Merger Sub and the transactions contemplated by this Agreement and the Ancillary Agreements, Acquiror does not own or have a right to acquire, directly or indirectly, any interest or investment (whether equity or debt) in any corporation, partnership, joint venture, business, trust or other entity. Except for this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby, Acquiror has no material interests, rights, obligations or liabilities with respect to, and is not party to, bound by or has its assets or property subject to, in each case whether directly or indirectly, any Contract or transaction which is, or would reasonably be interpreted as constituting, a Business Combination. Except for the transactions contemplated by this Agreement and the Ancillary Agreements, Merger Sub does not own or have a right to acquire, directly or indirectly, any interest or investment (whether equity or debt) in any corporation, partnership, joint venture, business, trust or other entity.

(c) Merger Sub was formed solely for the purpose of effecting the transactions contemplated by this Agreement and has not engaged in any business activities or conducted any operations other than in connection with the transactions contemplated hereby and has no, and at all times prior to the Effective Time, except as expressly contemplated by this Agreement, the Ancillary Agreements and the other documents and transactions contemplated hereby and thereby, will have no, assets, liabilities or obligations of any kind or nature whatsoever other than those incident to its formation.

 

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(d) As of the date hereof and except for this Agreement, the Ancillary Agreements and the other documents and transactions contemplated hereby and thereby (including with respect to expenses and fees incurred in connection therewith) or any Contracts that are exhibits to the Acquiror SEC Filings, neither Acquiror nor Merger Sub are party to any Contract with any other Person that (i) would require payments by Acquiror or any of its Subsidiaries after the date hereof in excess of $100,000 in the aggregate or could reasonably be expected to result in the payment by Acquiror or any of its Subsidiaries of more than $100,000, (ii) may not be canceled by Acquiror on less than 60 days’ prior written notice without payment of a material penalty or termination fee, (iii) could prohibit, prevent, restrict or impair in any material respect any business practice of the Company as its business is currently conducted or the Company from competing with any other Person or (iv) is otherwise material to Acquiror with respect to any individual Contract, other than Acquiror Transaction Expenses and Working Capital Loans. As of the date hereof, there are no amounts outstanding under any Working Capital Loans.

Section 5.17. Stock Market Quotation. The Acquiror Class A Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is listed for trading on the Stock Exchange under the symbol “KVSB” (or if applicable, “KIND”). Acquiror is in compliance in all material respects with the rules of the Stock Exchange and, as of the date hereof, there is no Action or proceeding pending or, to the knowledge of Acquiror, threatened against Acquiror by the Stock Exchange or the SEC with respect to any intention by such entity to deregister the Acquiror Class A Common Stock or terminate the listing of Acquiror Class A Common Stock on the Stock Exchange. None of Acquiror, Merger Sub or their respective Affiliates has taken any action in an attempt to terminate the registration of the Acquiror Class A Common Stock under the Exchange Act except as contemplated by this Agreement.

Section 5.18. Registration Statement, Proxy Statement and Proxy Statement/Registration Statement. On the effective date of the Registration Statement, the Registration Statement, and when first filed in accordance with Rule 424(b) and/or filed pursuant to Section 14A, the Proxy Statement and the Proxy Statement/Registration Statement (or any amendment or supplement thereto), shall comply in all material respects with the applicable requirements of the Securities Act and the Exchange Act. On the effective date of the Registration Statement, the Registration Statement will not contain any untrue statement of a material fact or omit to state any 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/or Section 14A, the date the Proxy Statement/Registration Statement and the Proxy Statement, as applicable, is first mailed to the Acquiror Stockholders and certain of the Company’s stockholders, as applicable, and at the time of the Acquiror Stockholders’ Meeting, the Proxy Statement/Registration Statement and the Proxy Statement, as applicable (together with any amendments or supplements 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; provided, however, that Acquiror makes no representations or warranties as to the information contained in or omitted from the Registration Statement, Proxy Statement or the Proxy Statement/Registration Statement in reliance upon and in conformity with information furnished in writing to Acquiror by or on behalf of the Company specifically for inclusion in the Registration Statement, Proxy Statement or the Proxy Statement/Registration Statement.

Section 5.19. No Outside Reliance. Notwithstanding anything contained in this Article V or any other provision hereof, each of Acquiror and Merger Sub, and any of their respective directors, managers, officers, employees, equityholders, partners, members or representatives, acknowledge and agree that Acquiror has made its own investigation of the Company and that none of the Company or any of its Affiliates, agents or representatives is making any representation or warranty whatsoever, express or implied, beyond those expressly given by the Company in Article IV and in the Ancillary Agreements to which the Company is or will be a party, including any implied warranty or representation as to condition, merchantability, suitability or fitness for a particular purpose or trade as to any of the assets of the Company

 

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or its Subsidiaries. Without limiting the generality of the foregoing, it is understood that any cost estimates, financial or other projections or other predictions that may be contained or referred to in the Company Disclosure Letter or elsewhere, as well as any information, documents or other materials (including any such materials contained in any “data room” (whether or not accessed by Acquiror or its representatives) or reviewed by Acquiror pursuant to the Confidentiality Agreement) or management presentations that have been or shall hereafter be provided to Acquiror or any of its Affiliates, agents or representatives are not and will not be deemed to be representations or warranties of the Company, and no representation or warranty is made as to the accuracy or completeness of any of the foregoing except as may be expressly set forth in Article IV or any Ancillary Agreement to which the Company is or will be a party.

Section 5.20. No Additional Representation or Warranties. Except as provided in this Article V and in the Ancillary Agreements to which Acquiror or Merger Sub are party, neither Acquiror nor Merger Sub nor any their respective Affiliates, nor any of their respective directors, managers, officers, employees, stockholders, partners, members or representatives has made, or is making, any representation or warranty whatsoever to the Company or its Affiliates and no such party shall be liable in respect of the accuracy or completeness of any information provided to the Company or its Affiliates.

ARTICLE VI

COVENANTS OF THE COMPANY

Section 6.1. Conduct of Business. From the date of this Agreement through the earlier of the Closing or valid termination of this Agreement pursuant to Article X (the “Interim Period”), the Company shall, and shall cause its Subsidiaries to, except (i) as required by this Agreement or the Ancillary Agreements, (ii) as required by Law (including COVID-19 Measures), or (iii) as consented to by Acquiror in writing (which consent shall not be unreasonably conditioned, withheld, delayed or denied), operate the business of the Company in the ordinary course consistent with past practice and use commercially reasonable efforts to (A) preserve intact the current business organization and ongoing businesses of the Company and its Subsidiaries, (B) maintain the existing material business relations of the Company and its Subsidiaries, and (C) keep available the services of their present officers and other key employees; provided, that, notwithstanding anything to the contrary in this Agreement, the Company and its Subsidiaries may take any COVID-19 Response Measures; provided further, that the Company shall, to the extent practicable, inform Acquiror of any such actions prior to the taking thereof and shall consider in good faith any suggestions or modifications from Acquiror with respect thereto. Without limiting the generality of the foregoing, except as set forth on Section 6.1 of the Company Disclosure Letter or as consented to by Acquiror in writing (which consent shall not be unreasonably conditioned, withheld, delayed or denied) the Company shall not, and shall cause its Subsidiaries not to, except as required by this Agreement or the Ancillary Agreements or required by Law (including COVID-19 Measures) or in connection with any COVID-19 Response Measures:

(a) change, waive or amend the Governing Documents of the Company or any of its Subsidiaries or form or cause to be formed any new Subsidiary of the Company;

(b) make, declare, set aside, establish a record date for or pay any dividend or distribution to the equityholders of the Company or make any other distributions in respect of any of the equity interests of the Company;

(c) split, combine, reclassify, recapitalize or otherwise amend any terms of any shares or series of the Company’s or any of its Subsidiaries’ capital stock or equity interests, except for any such transaction by a wholly owned Subsidiary of the Company that remains a wholly owned Subsidiary of the Company after consummation of such transaction;

 

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(d) purchase, repurchase, redeem or otherwise acquire any issued and outstanding share capital, outstanding shares of capital stock, membership interests or other equity interests of the Company or any of its Subsidiaries, except for (i) the acquisition by the Company or any of its Subsidiaries of any shares of capital stock, membership interests or other equity interests (other than shares subject to Company Awards) of the Company or its Subsidiaries in connection with the forfeiture or cancellation of such interests, (ii) transactions between the Company and any wholly-owned Subsidiary of the Company or between wholly-owned Subsidiaries of the Company and (iii) the repurchase by the Company of any restricted shares of Company Common Stock from former employees, non-employee directors and consultants in accordance with Contracts in effect as of the date hereof and providing for the repurchase of such shares in connection with any termination of service;

(e) enter into, amend, modify or terminate (other than expiration or renewal in accordance with its terms) any Contract of a type required to be listed on Section 4.12(a) of the Company Disclosure Letter, or any Real Property Lease, in each case, other than in the ordinary course of business or as required by Law;

(f) sell, assign, transfer, convey, lease or otherwise dispose of, or subject to a Lien, any material tangible assets or properties of the Company or its Subsidiaries, except for (i) dispositions of obsolete or worthless equipment (ii) transactions between or among the Company and its wholly-owned Subsidiaries and (iii) transactions in the ordinary course of business;

(g) acquire any ownership interest in any real property;

(h) except as otherwise required by Law or existing Company Benefit Plans, (i) grant or pay any severance, retention, special bonus, change in control or termination or similar pay to any director, manager, officer, employee or other individual service provider of the Company or its Subsidiaries, (ii) terminate, furlough or hire any director, executive officer or employee with an annual base salary of at least $250,000 (each, a “Specified Service Provider”) (other than terminations for cause), (iii) terminate, adopt, enter into or materially amend any Company Benefit Plan, (iv) increase the compensation or benefits of any Specified Service Provider, (v) establish any trust or take any other action to secure the payment of any compensation payable by the Company or any of its Subsidiaries or (vi) take any action to amend or waive any performance or vesting criteria or to accelerate the time of payment or vesting of any compensation or benefit payable by the Company or any of its Subsidiaries;

(i) acquire by merger or consolidation with, or merge or consolidate with, or purchase substantially all or a material portion of the assets of, any corporation, partnership, association, joint venture or other business organization or division thereof;

(j) (i) issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or any Subsidiary or otherwise incur or assume any Indebtedness, or (ii) guarantee any Indebtedness of another Person;

(k) (i) make (except on an originally filed Tax Return) or change any material election in respect of material Taxes, (ii) materially amend or modify any filed material Tax Return, (iii) change or request permission of any taxing authority to change any accounting method in respect of material Taxes, (iv) enter into any closing agreement in respect of material Taxes executed on or prior to the Closing Date or enter into any Tax sharing or similar agreement, (v) settle any claim or assessment in respect of material Taxes, (vi) surrender or allow to expire any right to claim a refund of material Taxes or (vii) consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of material Taxes or in respect to any material Tax attribute that would give rise to any claim or assessment of Taxes;

 

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(l) take any action where such action could reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code;

(m) (i) issue, deliver, sell, transfer, pledge, dispose of or place any Lien (other than a Permitted Lien) on, or enter into any Contract with respect to the voting of, any equity securities of the Company or any of its Subsidiaries, or securities exercisable for or convertible into any equity securities of the Company or any of its Subsidiaries (including Company Awards), other than: (A) the issuance of shares of Company Common Stock pursuant to the exercise of Company Options that are outstanding as of the date of this Agreement in accordance with their current terms and which are vested at the time of exercise, and (B) the issuance of Company Common Stock upon conversion of Company Preferred Stock outstanding on the date of this Agreement or (ii) grant any additional Company Awards or other equity or equity-based compensation, other than to new hires in the ordinary course of business consistent with past practice or to existing employees in connection with refresh grants in the ordinary course of business consistent with past practice;

(n) adopt a plan of, or otherwise enter into or effect a, complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or its Subsidiaries (other than the Merger);

(o) waive, release, settle, compromise or otherwise resolve any inquiry, investigation, claim, Action, litigation or other Legal Proceedings, except in the ordinary course of business or where such waivers, releases, settlements or compromises involve only the payment of monetary damages in an amount less than $1,000,000 in the aggregate;

(p) grant to, or agree to grant to, any Person rights to any Intellectual Property that is material to the Company and its Subsidiaries, or dispose of, abandon or permit to lapse any rights to any Intellectual Property that is material to the Company and its Subsidiaries except for the expiration of Company Registered Intellectual Property in accordance with the applicable statutory term (or in the case of domain names, applicable registration period) or in the reasonable exercise of the Company’s or any of its Subsidiaries’ business judgment as to the costs and benefits of maintaining the item;

(q) disclose or agree to disclose to any Person (other than Acquiror or any of its representatives) any trade secret or any other material confidential or proprietary information, know-how or process of the Company or any of its Subsidiaries other than in the ordinary course of business and pursuant to obligations to maintain the confidentiality thereof;

(r) make or commit to make capital expenditures other than in an amount not in excess of the amount set forth on Section 6.1(r) of the Company Disclosure Letter, in the aggregate;

(s) enter into any Contract with any broker, finder, investment banker or other Person under which such Person is or will be entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement;

(t) enter into or extend any collective bargaining agreement or similar labor agreement or recognize or certify any labor union, labor organization, or group of employees of any of the Company or its Subsidiaries as the bargaining representative for any employees of any of the Company or its Subsidiaries;

(u) terminate without replacement or fail to use reasonable efforts to maintain any License material to the conduct of the business of the Company and its Subsidiaries, taken as a whole;

 

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(v) waive the restrictive covenant obligations of any current or former director, manager, officer, employee or other service provider of the Company or any of its Subsidiaries;

(w) make any change in financial accounting methods, principles or practices of the Company and its Subsidiaries, except insofar as may have been required by a change in GAAP or applicable Law or to comply with SEC guidance;

(x) (i) limit the right of the Company or any of its Subsidiaries to engage in any line of business or in any geographic area, to develop, market or sell products or services, or to compete with any Person or (ii) grant any exclusive or similar rights to any Person, in each case, except where such limitation or grant does not, and would not be reasonably likely to, individually or in the aggregate, materially and adversely affect, or materially disrupt, the ordinary course operation of the businesses of the Company and its Subsidiaries, taken as a whole;

(y) terminate without replacement or amend in a manner materially detrimental to the Company and its Subsidiaries, taken as a whole, any insurance policy insuring the business of the Company or any of its Subsidiaries; or

(z) enter into any agreement to do any action prohibited under this Section 6.1.

Section 6.2. Inspection. Subject to confidentiality obligations that may be applicable to information furnished to the Company or any of its Subsidiaries by third parties that may be in the Company’s or any of its Subsidiaries’ possession from time to time, and except for any information that is, in the opinion of legal counsel to the Company, subject to attorney-client privilege (provided that, to the extent possible, the parties shall cooperate in good faith to permit disclosure of such information in a manner that preserves such privilege or compliance with such confidentiality obligation), and to the extent permitted by applicable Law (including COVID-19 Measures), (a) the Company shall, and shall cause its Subsidiaries to, afford to Acquiror and its accountants, counsel and other representatives reasonable access during the Interim Period (including for the purpose of coordinating transition planning for employees), during normal business hours and with reasonable advance notice, in such manner as to not materially interfere with the ordinary course of business of the Company and its Subsidiaries, to all of their respective properties, books, Contracts, commitments, Tax Returns, records and appropriate officers and employees of the Company and its Subsidiaries, and shall furnish such representatives with all financial and operating data and other information concerning the affairs of the Company and its Subsidiaries as such representatives may reasonably request; provided, that such access shall not include any unreasonably invasive or intrusive investigations or other testing, sampling or analysis of any properties, facilities or equipment of the Company or its Subsidiaries without the prior written consent of the Company, and (b) the Company shall, and shall cause its Subsidiaries to, provide to Acquiror and, if applicable, its accountants, counsel or other representatives, (x) such information and such other materials and resources relating to any Legal Proceeding initiated, pending or threatened during the Interim Period, or to the compliance and risk management operations and activities of the Company and its Subsidiaries during the Interim Period, in each case, as Acquiror or such representative may reasonably request, (y) prompt written notice of any material status updates in connection with any such Legal Proceedings or otherwise relating to any compliance and risk management matters or decisions of the Company or its Subsidiaries, and (z) copies of any communications sent or received by the Company or its Subsidiaries in connection with such Legal Proceedings, matters and decisions (and, if any such communications occurred orally, the Company shall, and shall cause its Subsidiaries to, memorialize such communications in writing to Acquiror). All information obtained by Acquiror, Merger Sub or their respective representatives pursuant to this Section 6.2 shall be subject to the Confidentiality Agreement.

 

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Section 6.3. Preparation and Delivery of Additional Company Financial Statements

(a) If the Effective Time has not occurred prior to August 12, 2021, as soon as reasonably practicable following such date, the Company shall deliver to Acquiror the unaudited condensed consolidated balance sheets and statements of operations and comprehensive loss, stockholders’ (deficit) earnings and cash flows of the Company and its Subsidiaries as of and for the three- and six-month period ended June 30, 2021 (the “Q2 Financial Statements”), which comply with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act applicable to a registrant; provided, that upon delivery of such Q2 Financial Statements, the representations and warranties set forth in Section 4.8 shall be deemed to apply to the Q2 Financial Statements in the same manner as the Unaudited Financial Statements, mutatis mutandis, with the same force and effect as if made as of the date of this Agreement.

(b) If the Effective Time has not occurred prior to November 12, 2021, and this Agreement has not been earlier terminated pursuant to Section 10.1(d) or Section 10.1(f), then as soon as reasonably practicable following such date, the Company shall deliver to Acquiror the unaudited consolidated balance sheets and statements of operations and comprehensive loss, stockholders’ (deficit) earnings and cash flows of the Company and its Subsidiaries as of and for the three- and nine-month period ended September 30, 2021 (the “Q3 Financial Statements”); provided, that upon delivery of such Q3 Financial Statements, the representation and warranties set forth in Section 4.8 shall be deemed to apply to the Q3 Financial Statements in the same manner as the Unaudited Financial Statements, mutatis mutandis, with the same force and effect as if made as of the date of this Agreement.

(c) The Company shall use their reasonable best efforts (i) to assist, upon advance written notice, during normal business hours and in a manner such as to not unreasonably interfere with the normal operation of the Company or Subsidiary of the Company, Acquiror in causing to be prepared in a timely manner any other financial information or statements (including customary pro forma financial statements) that are required to be included in the Proxy Statement / Registration Statement and any other filings to be made by Acquiror with the SEC in connection with the transactions contemplated by this Agreement or any Ancillary Agreement and (ii) to obtain the consents of its auditors with respect thereto as may be required by applicable Law or requested by the SEC.

Section 6.4. Affiliate Agreements. The Company shall use its reasonable best efforts to terminate or settle all Affiliate Agreements set forth on Section 6.4 of the Company Disclosure Letter at or prior to the Closing without further liability to Acquiror, the Company or any of its Subsidiaries.

Section 6.5. Acquisition Proposals. From the date hereof until the Closing Date or, if earlier, the termination of this Agreement in accordance with Article X, the Company and its Subsidiaries shall not, and shall cause their representatives not to, directly or indirectly (i) initiate any negotiations with any Person with respect to, or provide any non-public information or data concerning the Company or any of its Subsidiaries to any Person relating to, an Acquisition Proposal or afford to any Person access to the business, properties, assets or personnel of the Company or any of its Subsidiaries in connection with an Acquisition Proposal, (ii) enter into any acquisition agreement, merger agreement or similar definitive agreement, or any letter of intent, memorandum of understanding or agreement in principle, or any other agreement relating to an Acquisition Proposal, (iii) grant any waiver, amendment or release under any confidentiality agreement or the anti-takeover laws of any state, or (iv) otherwise knowingly facilitate any such inquiries, proposals, discussions, or negotiations or any effort or attempt by any Person to make an Acquisition Proposal. The Company also agrees that immediately following the execution of this Agreement they shall, and shall cause their representatives acting on their behalf, to cease any solicitations, discussions or negotiations with any Person (other than the parties hereto and their respective representatives) conducted heretofore in connection with an Acquisition Proposal. The Company also agrees that within three Business

 

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Days of the execution of this Agreement, the Company shall request each Person (other than the parties hereto and their respective representatives) that has prior to the date hereof executed a confidentiality agreement in connection with its consideration of acquiring the Company or any of its Subsidiaries (and with whom the Company has had contact in the 12 months prior to the date of this Agreement regarding the acquisition of the Company or any of its Subsidiaries) to return or destroy all confidential information furnished to such Person by or on behalf of it prior to the date hereof and terminate access to any physical or electronic data room maintained by or on behalf of the Company.

ARTICLE VII

COVENANTS OF ACQUIROR

Section 7.1. Equity Plans. Prior to the Closing Date, Acquiror shall approve and adopt (i) an incentive equity plan in substantially the form attached hereto as Exhibit D and with any changes or modifications thereto as the Company and Acquiror may mutually agree (such agreement not to be unreasonably withheld, conditioned or delayed by either the Company or Acquiror, as applicable) (the “Incentive Equity Plan”) and (y) an employee stock purchase plan in substantially the form attached hereto as Exhibit E and with any changes or modifications thereto as the Company and Acquiror may mutually agree (such agreement not to be unreasonably withheld, conditioned or delayed by either the Company or Acquiror, as applicable) (the “ESPP”), in each case, in a form mutually agreed upon by Acquiror and the Company. Following the Effective Time, Acquiror shall file an effective registration statement on Form S-8 (or other applicable form, including Form S-3) with respect to the Acquiror Post-Merger Class B Common Stock issuable under the Incentive Equity Plan and/or the ESPP, and Acquiror shall use commercially reasonable efforts to maintain the effectiveness of such registration statement(s) for so long as awards granted pursuant to the Incentive Equity Plan or acquired under the ESPP remain outstanding.

Section 7.2. Trust Account Proceeds and Related Available Equity. Upon satisfaction or waiver of the conditions set forth in Article IX and provision of notice thereof to the Trustee (which notice Acquiror shall provide to the Trustee in accordance with the terms of the Trust Agreement), (i) in accordance with and pursuant to the Trust Agreement, at the Closing, Acquiror (A) shall cause any documents, opinions and notices required to be delivered to the Trustee pursuant to the Trust Agreement to be so delivered and (B) shall use its reasonable best efforts to cause the Trustee to, and the Trustee shall thereupon be obligated to (1) pay as and when due all amounts payable to Acquiror Stockholders pursuant to the Acquiror Stockholder Redemptions, and (2) pay all remaining amounts then available in the Trust Account to Acquiror for immediate use, subject to this Agreement and the Trust Agreement, and (ii) thereafter, the Trust Account shall terminate, except as otherwise provided therein.

Section 7.3. Listing. From the date hereof through the Effective Time, Acquiror shall use reasonable best efforts to ensure Acquiror remains listed as a public company on the Stock Exchange, and shall prepare and submit to the Stock Exchange a listing application, if required under the Stock Exchange rules, covering the shares of Acquiror Post-Merger Class A Common Stock issuable upon conversion of the Acquiror Post-Merger Class B Common Stock issuable in the Merger, and shall obtain approval for the listing of such shares of Acquiror Post-Merger Class A Common Stock and the Company shall reasonably cooperate with Acquiror with respect to such listing.

Section 7.4. No Solicitation by Acquiror. From the date hereof until the Closing Date or, if earlier, the termination of this Agreement in accordance with Article X, Acquiror shall not, and shall cause its Subsidiaries not to, and Acquiror shall instruct its and their representatives, not to, (i) make any proposal or offer that constitutes a Business Combination Proposal, (ii) initiate any discussions or negotiations with any Person with respect to a Business Combination Proposal or (iii) enter into any acquisition agreement, business combination, merger agreement or similar definitive agreement, or any letter of intent,

 

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memorandum of understanding or agreement in principle, or any other agreement relating to a Business Combination Proposal, in each case, other than to or with the Company and its respective representatives. From and after the date hereof, Acquiror shall, and shall instruct its officers and directors to, and Acquiror shall instruct and cause its representatives, its Subsidiaries and their respective representatives to, immediately cease and terminate all discussions and negotiations with any Persons that may be ongoing with respect to a Business Combination Proposal (other than the Company and its representatives). For certainty, this Section 7.4 shall not restrict or prevent any Affiliate of Acquiror or Sponsor from taking any of the foregoing actions with respect to any proposed transaction unrelated to Acquiror.

Section 7.5. Acquiror Conduct of Business.

(a) During the Interim Period, Acquiror shall, and shall cause Merger Sub to, except (i) as contemplated by this Agreement (including as contemplated by the PIPE Investment) or the Ancillary Agreements, (ii) as required by Law (including COVID-19 Measures), or (iii) as consented to by the Company in writing (which consent shall not be unreasonably conditioned, withheld, delayed or denied), use its reasonable best efforts to operate its business in the ordinary course and consistent with past practice. Without limiting the generality of the foregoing, except as consented to by the Company in writing (which consent shall not be unreasonably conditioned, withheld, delayed or denied), Acquiror shall not, and Acquiror shall cause Merger Sub not to, except as otherwise contemplated by this Agreement (including as contemplated by the PIPE Investment), the Ancillary Agreements or the Forward Purchase Agreement or as required by Law (including COVID-19 Measures):

(i) seek any approval from the Acquiror Stockholders, to change, modify or amend the Trust Agreement or the Governing Documents of Acquiror or Merger Sub, except as contemplated by the Transaction Proposals;

(ii) (A) make, declare, set aside, establish a record date for or pay any dividend or distribution to the stockholders of Acquiror or make any other distributions in respect of any of Acquiror’s or Merger Sub Capital Stock, share capital or equity interests, (B) split, combine, reclassify or otherwise amend any terms of any shares or series of Acquiror’s or Merger Sub Capital Stock or equity interests, or (C) purchase, repurchase, redeem or otherwise acquire any issued and outstanding share capital, outstanding shares of capital stock, share capital or membership interests, warrants or other equity interests of Acquiror or Merger Sub, other than a redemption of shares of Acquiror Class A Common Stock made as part of the Acquiror Stockholder Redemptions;

(iii) (A) make (except on an originally filed Tax Return) or change any material election in respect of material Taxes, (B) amend, or modify any filed material Tax Return, (C) change or request permission of any taxing authority to change any accounting method in respect of material Taxes, (D) enter into any closing agreement in respect of material Taxes or enter into any Tax sharing or similar agreement, (E) settle any claim or assessment in respect of material Taxes, (F) surrender or allow to expire any right to claim a refund of material Taxes; or (G) consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of material Taxes or in respect to any material Tax attribute that would give rise to any claim or assessment of Taxes;

(iv) take any action where such action could reasonably be expected to prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code;

(v) other than as expressly required by the Sponsor Support Agreement or the Forward Purchase Agreement, enter into, renew or amend in any material respect, any transaction or Contract with an Affiliate of Acquiror or Merger Sub (including, for the avoidance of doubt, (x) the Sponsor and (y) any Person in which the Sponsor has a direct or indirect legal, contractual or beneficial ownership interest of 5% or greater);

 

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(vi) enter into, amend, modify or terminate (other than expiration in accordance with its terms) any material Contract to which Acquiror or Merger Sub is a party, including any Contract with any broker, finder, investment banker or other Person under which such Person is or will be entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement;

(vii) sell, assign, transfer, convey, lease or otherwise dispose of, or subject to a Lien, any material tangible assets or properties of Acquiror or its Subsidiaries or acquire (whether by merger or consolidation or the purchase of a substantial portion of the equity in or assets of or otherwise) any other Person;

(viii) hire any employees or adopt any benefit plans other than as contemplated by this Agreement;

(ix) incur or assume any Indebtedness or guarantee any Indebtedness of another Person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or any of its Subsidiaries or guaranty any debt securities of another Person, other than any indebtedness for borrowed money or guarantee (w) incurred in the ordinary course of business consistent with past practice and in an aggregate amount not to exceed $250,000, (x) incurred between Acquiror and Merger Sub, (y) pursuant to any Working Capital Loans or (z) in respect of any Acquiror Transaction Expenses;

(x) engage in any activities or business, other than activities or business (i) in connection with or incident or related to such Person’s incorporation or continuing corporate existence, (ii) contemplated by, or incident or related to, this Agreement, any Ancillary Agreement, the performance of covenants or agreements hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby or (iii) those that are administrative or ministerial;

(xi) waive, release, compromise, settle or satisfy any (A) pending or threatened material claim (which shall include, but not be limited to, any pending or threatened Action) or (B) any other Legal Proceeding;

(xii) authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution;

(xiii) change its methods of accounting in any material respect, except insofar as may have been required by a change in GAAP or applicable Law or to comply with SEC guidance;

(xiv) incur, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any Indebtedness or otherwise knowingly and purposefully incur, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any other material liabilities, debts or obligations, other than in support of the transactions contemplated by this Agreement and the Ancillary Agreements or the ordinary course operations of Acquiror (which the parties agree shall include any Indebtedness in respect of any Working Capital Loan incurred in the ordinary course of business);

 

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(xv) (A) issue any Acquiror Securities or securities exercisable for or convertible into Acquiror Securities, other than the issuance of the Aggregate Merger Consideration and issuances pursuant to the PIPE Investment and Forward Purchase Agreement, or (B) grant any options, warrants or other equity-based awards with respect to Acquiror Securities not outstanding on the date hereof; or

(xvi) enter into any agreement to do any action prohibited under this Section 7.5.

(b) During the Interim Period, Acquiror shall, and shall cause its Subsidiaries (including Merger Sub) to comply with, and continue performing under, as applicable, Acquiror’s Governing Documents and the Trust Agreement.

Section 7.6. Post-Closing Directors and Officers of Acquiror. Subject to the terms of the Acquiror’s Governing Documents, Acquiror shall take all such action within its power as may be necessary or appropriate such that immediately following the Effective Time:

(a) the Board of Directors of Acquiror shall consist of individuals to be designated by the Company as directors, subject to requirements of the Stock Exchange, pursuant to written notice to Acquiror as soon as reasonably practicable following the date of this Agreement;

(b) the Board of Directors of Acquiror shall have a majority of “independent” directors for the purposes of the Stock Exchange, each of whom shall serve in such capacity in accordance with the terms of the Acquiror’s Governing Documents following the Effective Time; and

(c) the initial officers of Acquiror shall be as set forth on Section 2.6(b) of the Company Disclosure Letter, who shall serve in such capacity in accordance with the terms of Acquiror’s Governing Documents following the Effective Time.

(d) the initial directors and officers of the Surviving Corporation shall be as set forth Section 2.6(a) of the Company Disclosure Letter, who shall serve in such capacity in accordance with the terms of Acquiror’s Governing Documents following the Effective Time.

Section 7.7. Indemnification and Insurance.

(a) From and after the Effective Time, Acquiror agrees that it shall indemnify and hold harmless each present and former director, manager and officer of the (x) the Company and each of its Subsidiaries (in each case, solely to the extent acting in their capacity as such and to the extent such activities are related to the business of the Company being acquired under this Agreement) (the “Company Indemnified Parties”) and (y) Acquiror and each of its Subsidiaries (the “Acquiror Indemnified Parties” together with the Company Indemnified Parties, the “D&O Indemnified Parties”) against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any Legal Proceeding, whether civil, criminal, administrative or investigative, arising out of or pertaining to matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent that the Company, Acquiror or their respective Subsidiaries, as the case may be, would have been permitted under applicable Law and its respective certificate of incorporation, certificate of formation, bylaws, limited liability company agreement or other organizational documents in effect on the date of this Agreement to indemnify such D&O Indemnified Parties (including the advancing of expenses as incurred to the fullest extent permitted under applicable Law). Without limiting the foregoing, Acquiror shall, and shall cause its Subsidiaries to (i) maintain for a period of not less than six years from the Effective Time provisions in its Governing Documents concerning the indemnification and exoneration (including provisions relating to expense

 

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advancement) of Acquiror’s and its Subsidiaries’ former and current officers, directors, employees, and agents that are no less favorable to those Persons than the provisions of the Governing Documents of the Company, Acquiror or their respective Subsidiaries, as applicable, in each case, as of the date of this Agreement, and (ii) not amend, repeal or otherwise modify such provisions in any respect that would adversely affect the rights of those Persons thereunder, in each case, except as required by Law. Acquiror shall assume, and be liable for, each of the covenants in this Section 7.7.

(b) For a period of six years from the Effective Time, Acquiror shall maintain in effect directors’ and officers’ liability insurance covering those Persons who are currently covered by Acquiror’s, the Company’s or their respective Subsidiaries’ directors’ and officers’ liability insurance policies (true, correct and complete copies of which have been heretofore made available to Acquiror or its agents or representatives) on terms not less favorable than the terms of such current insurance coverage; provided, however, that (i) Acquiror may cause coverage to be extended under the current directors’ and officers’ liability insurance by obtaining a six year “tail” policy containing terms not materially less favorable than the terms of such current insurance coverage with respect to claims existing or occurring at or prior to the Effective Time and (ii) if any claim is asserted or made within such six year period, any insurance required to be maintained under this Section 7.7 shall be continued in respect of such claim until the final disposition thereof.

(c) Notwithstanding anything contained in this Agreement to the contrary, this Section 7.7 shall survive the consummation of the Merger indefinitely and shall be binding, jointly and severally, on Acquiror and all successors and assigns of Acquiror. In the event that Acquiror or any of its successors or assigns consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case, Acquiror shall ensure that proper provision shall be made so that the successors and assigns of Acquiror shall succeed to the obligations set forth in this Section 7.7.

(d) On the Closing Date, Acquiror shall enter into customary indemnification agreements reasonably satisfactory to each of the Company and Acquiror with the post-Closing directors and officers of Acquiror, which indemnification agreements shall continue to be effective following the Closing.

Section 7.8. Acquiror Public Filings; Qualification as an Emerging Growth Company. From the date hereof through the Effective Time, Acquiror shall use reasonable best efforts to keep current and timely file all reports required to be filed or furnished with the SEC and otherwise comply in all material respects with its reporting obligations under applicable Laws. Acquiror shall use commercially reasonable efforts, at all times during the period from the date hereof through the Effective Time, to: (a) take all actions necessary to continue to qualify as an “emerging growth company” within the meaning of the Jumpstart Our Business Startups Act of 2012; and (b) not take any action that would cause Acquiror to not qualify as an “emerging growth company” within the meaning of such act.

Section 7.9. PIPE Subscriptions; Forward Purchase Agreement. Unless otherwise approved in writing by the Company (which approval shall not be unreasonably withheld, conditioned or delayed), and except for any of the following actions that would not increase conditionality or impose any new obligation on the Company or Acquiror, reduce the Minimum PIPE Investment Amount or the subscription amount under any Subscription Agreement or reduce or impair the rights of Acquiror under any Subscription Agreement, Acquiror shall not permit any amendment, modification or termination to be made to, any waiver (in whole or in part) of, or provide consent to modify (including consent to terminate), any provision or remedy under, or any replacements of, any of the Subscription Agreements or the Forward Purchase Agreement, in each case, other than any assignment or transfer contemplated therein or expressly permitted

 

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thereby (without any further amendment, modification or waiver to such assignment or transfer provision); provided, that, in the case of any such assignment or transfer, the initial party to such Subscription Agreement or Forward Purchase Agreement, as applicable, remains bound by its obligations with respect thereto in the event that the transferee or assignee, as applicable, does not comply with its obligations to consummate the purchase of shares of Acquiror Post-Merger Class A Common Stock contemplated thereby. Subject to the immediately preceding sentence and in the event that all conditions in the Subscription Agreements and the Forward Purchase Agreement, as applicable, have been satisfied, Acquiror shall use its reasonable best efforts to take, or to cause to be taken, all actions required, necessary or that it otherwise deems to be proper or advisable to consummate the transactions contemplated by the Subscription Agreements and the Forward Purchase Agreement on the terms described therein, including using its reasonable best efforts to enforce its rights (a) under the Subscription Agreements to cause the PIPE Investors to pay to (or as directed by) Acquiror the applicable purchase price under each PIPE Investor’s applicable Subscription Agreement in accordance with its terms and (b) under the Forward Purchase Agreement to cause the Sponsor to pay (or as directed by) Acquiror the applicable purchase price under the Forward Purchase Agreement in accordance with its terms. Without limiting the generality of the foregoing, Acquiror shall give the Company prompt written notice: (i) of the receipt of any request from a PIPE Investor for an amendment to any Subscription Agreement or from the Sponsor for any amendment to the Forward Purchase Agreement (other than changes to a Subscription Agreement or the Forward Purchase Agreement that are solely ministerial and non-economic de minimis changes); (ii) of any breach or default to the knowledge of Acquiror (or any event or circumstance that, to the knowledge of the Acquiror, with or without notice, lapse of time or both, would give rise to any breach or default) by any party to any Subscription Agreement or Forward Purchase Agreement; (iii) of the receipt by Acquiror of any written notice or other written communication with respect to any actual or potential threatened or claimed expiration, lapse, withdrawal, breach, default, termination or repudiation of the Subscription Agreement or the Forward Purchase Agreement; and (iv) if Acquiror does not expect to receive all or any portion of the applicable purchase price under any PIPE Investor’s Subscription Agreement or Forward Purchase Agreement in accordance with its terms.

Section 7.10. Transfer of Listing. If reasonably requested in writing by the Company, Acquiror shall use commercially reasonable efforts to cause the listing of shares of Acquiror Common Stock, including the shares of Acquiror Common Stock to be issued in connection with the Merger, to be transferred, prior to the Effective Time but effective as of the beginning of the first Business Day following the Effective Time, to the NYSE under the symbol “KIND” (or another symbol determined by the Company in advance of submitting a listing application with the NYSE), subject to official notice of issuance.

ARTICLE VIII

JOINT COVENANTS

Section 8.1. HSR Act; Other Filings.

(a) In connection with the transactions contemplated hereby, each of the Company and Acquiror shall (and, to the extent required, shall cause its Affiliates to) comply promptly but in no event later than ten Business Days after the date hereof with the notification and reporting requirements of the HSR Act. Each of the Company and Acquiror shall substantially comply with any Antitrust Information or Document Requests.

(b) Each of the Company and Acquiror shall (and, to the extent required, shall cause its Affiliates to) request early termination of any waiting period under the HSR Act and exercise its reasonable best efforts to (i) obtain termination or expiration of the waiting period under the HSR Act and (ii) prevent the entry, in any Legal Proceeding brought by an Antitrust Authority or any other Person, of any Governmental Order which would prohibit, make unlawful or delay the consummation of the transactions contemplated hereby.

 

 

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(c) With respect to each of the above filings, and any other requests, inquiries, Actions or other proceedings by or from Governmental Authorities, each of the Company and Acquiror shall (and, to the extent required, shall cause its controlled Affiliates to) (i) diligently and expeditiously defend and use reasonable best efforts to obtain any necessary clearance, approval, consent, or Governmental Authorization under Laws prescribed or enforceable by any Governmental Authority for the transactions contemplated by this Agreement and to resolve any objections as may be asserted by any Governmental Authority with respect to the transactions contemplated by this Agreement; and (ii) cooperate fully with each other in the defense of such matters. To the extent not prohibited by Law, the Company shall promptly furnish to Acquiror, and Acquiror shall promptly furnish to the Company, copies of any notices or written communications received by such party or any of its Affiliates from any third party or any Governmental Authority with respect to the transactions contemplated hereby, and each party shall permit counsel to the other parties an opportunity to review in advance, and each party shall consider in good faith the views of such counsel in connection with, any proposed written communications by such party and/or its Affiliates to any Governmental Authority concerning the transactions contemplated hereby; provided, that none of the parties shall extend any waiting period or comparable period under the HSR Act or enter into any agreement with any Governmental Authority without the written consent of the other parties. To the extent not prohibited by Law, the Company agrees to provide Acquiror and its counsel, and Acquiror agrees to provide the Company and its counsel, the opportunity, on reasonable advance notice, to participate in any substantive meetings or discussions, either in person or by telephone, between such party and/or any of its Affiliates, agents or advisors, on the one hand, and any Governmental Authority, on the other hand, concerning or in connection with the transactions contemplated hereby.

(d) Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall require Acquiror or Merger Sub to (i) take, or cause to be taken, any action with respect to the Sponsor or any of its Affiliates, including any affiliated investment funds or any portfolio company (as such term is commonly understood in the private equity industry) of the Sponsor or any of its Affiliates, including selling, divesting or otherwise disposing of, or conveying, licensing, holding separate or otherwise restricting or limiting its freedom of action with respect to, any assets, business, products, rights, licenses or investments, or interests therein, in each case other than with respect to the Acquiror and its Subsidiaries, or (ii) provide, or cause to be provided, nonpublic or other confidential financial or sensitive personally identifiable information of Sponsor, its Affiliates or its or their respective directors, officers, employees, managers or partners, or its or their respective control persons’ or direct or indirect equityholders’ and their respective directors’, officers’, employees’, managers’ or partners’ nonpublic or other confidential financial or sensitive personally identifiable information (in each case, other than such information which may be provided to a Governmental Authority on a confidential basis or in connection with the Registration Statement to the extent requested by the SEC).

(e) Each of the Company, on the one hand, and Acquiror, on the other, shall be responsible for and pay 50% of the filing fees payable to the Antitrust Authorities in connection with the transactions contemplated hereby.

Section 8.2. Preparation of Proxy Statement/Registration Statement; Stockholders Meeting and Approvals.

(a) Registration Statement and Prospectus.

 

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(i) As promptly as practicable after the execution of this Agreement, (x) Acquiror and the Company shall jointly prepare and Acquiror shall file with the SEC, mutually acceptable materials which shall include the proxy statement to be filed with the SEC as part of the Registration Statement and sent to the Acquiror Stockholders relating to the Acquiror Stockholders’ Meeting (such proxy statement, together with any amendments or supplements thereto, the “Proxy Statement”), and (y) Acquiror shall prepare (with the Company’s reasonable cooperation (including causing its Subsidiaries and representatives to cooperate)) and file with the SEC the Registration Statement, in which the Proxy Statement will be included as a prospectus (the “Proxy Statement/Registration Statement”), in connection with the registration under the Securities Act of the shares of Acquiror Post-Merger Class B Common Stock that constitute the Aggregate Merger Consideration (collectively, the “Registration Statement Securities”). Each of Acquiror and the Company shall use its reasonable best efforts to cause the Proxy Statement/Registration Statement to comply with the rules and regulations promulgated by the SEC, to have the Registration Statement declared effective under the Securities Act as promptly as practicable after such filing and to keep the Registration Statement effective as long as is necessary to consummate the transactions contemplated hereby. Acquiror also agrees to use its reasonable best efforts to obtain all necessary state securities law or “Blue Sky” permits and approvals required to carry out the transactions contemplated hereby, and the Company shall furnish all information concerning the Company, its Subsidiaries and any of their respective members or stockholders as may be reasonably requested in connection with any such action. Each of Acquiror and the Company agrees to furnish to the other party all information concerning itself, its Subsidiaries, officers, directors, managers, stockholders, and other equityholders and information regarding such other matters as may be reasonably necessary or advisable or as may be reasonably requested in connection with the Proxy Statement/Registration Statement, any Current Report on Form 8-K pursuant to the Exchange Act in connection with the transactions contemplated by this Agreement, or any other statement, filing, notice or application made by or on behalf of Acquiror, the Company or their respective Subsidiaries to any regulatory authority (including the Stock Exchange) in connection with the Merger and the other transactions contemplated hereby (the “Offer Documents”). Acquiror will cause the Proxy Statement/Registration Statement to be mailed to the Acquiror Stockholders in each case promptly after the Registration Statement is declared effective under the Securities Act and the Proxy Statement is cleared of any comments under the Exchange Act.

(ii) To the extent not prohibited by Law, Acquiror will advise the Company, reasonably promptly after Acquiror receives notice thereof, of the time when the Proxy Statement/Registration Statement has become effective or any supplement or amendment has been filed, of the issuance of any stop order or the suspension of the qualification of the Acquiror Common Stock for offering or sale in any jurisdiction, of the initiation or written threat of any proceeding for any such purpose, or of any request by the SEC for the amendment or supplement of the Proxy Statement/Registration Statement or for additional information. To the extent not prohibited by Law, the Company and its counsel shall be given a reasonable opportunity to review and comment on the Proxy Statement/Registration Statement and any Offer Document each time before any such document is filed with the SEC, and Acquiror shall give reasonable and good faith consideration to any comments made by the Company and its counsel. To the extent not prohibited by Law, Acquiror shall provide the Company and its counsel with (A) any comments or other communications, whether written or oral, that Acquiror or its counsel may receive from time to time from the SEC or its staff with respect to the Proxy Statement/Registration Statement or Offer Documents promptly after receipt of those comments or other communications and (B) a reasonable opportunity to participate in the response of Acquiror to those comments and to provide comments on that response (to which reasonable and good faith consideration shall be given), including, if practicable, by participating with the Company or its counsel in any discussions or meetings with the SEC.

 

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(iii) Each of Acquiror and the Company shall use its reasonable best efforts to ensure that none of the information supplied by or on its behalf for inclusion or incorporation by reference in (A) the Registration Statement will, at the time the Registration Statement is filed with the SEC, at each time at which it is amended and at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, not misleading or (B) the Proxy Statement will, at the date it is first mailed to the Acquiror Stockholders and at the time of the Acquiror Stockholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.

(iv) If at any time prior to the Effective Time any information relating to the Company, Acquiror or any of their respective Subsidiaries, Affiliates, directors or officers is discovered by the Company or Acquiror, which is required or is otherwise reasonably desirable to be set forth in an amendment or supplement to the Proxy Statement or the Registration Statement, so that neither of such documents would include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, with respect to the Proxy Statement, in light of the circumstances under which they were made, not misleading, the party which discovers such information shall promptly notify the other parties and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by Law, disseminated to the Acquiror Stockholders.

(v) The Registration Statement, to the extent permitted by applicable rules and regulations of the SEC, also will register the resale of the shares of Acquiror Post-Merger Class B Common Stock that constitute the Aggregate Merger Consideration, excluding, for clarity, equity securities issuable under the Incentive Equity Plan or ESPP, which shall instead be registered pursuant to an effective registration statement on Form S-8 (or other applicable form, including Form S-1 or Form S-3) in accordance with Section 7.10.

(vi) Each of the Company, on the one hand, and Acquiror, on the other, shall be responsible for and pay 50% of all fees and expenses incurred in connection with the preparation and filing of the Offer Documents, other than the fees and expenses of advisors (which will be borne by the party incurring such fees).

(b) Acquiror Stockholder Approval. Acquiror shall (a) as promptly as practicable after the Registration Statement is declared effective under the Securities Act, (i) cause the Proxy Statement to be disseminated to Acquiror Stockholders in compliance with applicable Law, (ii) solely with respect to the Transaction Proposals, duly give notice of and convene and hold a meeting of its stockholders (the “Acquiror Stockholders’ Meeting”) in accordance with Acquiror’s Governing Documents and Nasdaq Listing Rule 5620(b), for a date no later than 30 Business Days following the date the Registration Statement is declared effective, and (iii) solicit proxies from the holders of Acquiror Common Stock to vote in favor of each of the Transaction Proposals, and (b) provide its stockholders with the opportunity to elect to effect an Acquiror Stockholder Redemption. Acquiror shall, through its Board of Directors, recommend to its stockholders the (A) the amendment and restatement of Acquiror’s certificate of incorporation, in substantially the form attached as Exhibit A to this Agreement, (B) the adoption and approval of this Agreement and the Merger in accordance with applicable Law and exchange rules and regulations, (C) approval of the issuance of shares of Acquiror Post-Merger Class A Common Stock and Acquiror Post-Merger Class B Common Stock in connection with the Merger, PIPE Investment and Forward Purchase Agreement, as applicable, (D) approval of the adoption by Acquiror of the Incentive Equity Plan and the ESPP described in Section 7.1, (E) adoption and approval of any other proposals as the SEC (or staff member thereof) may indicate are necessary in its comments to the Registration Statement or

 

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correspondence related thereto, (F) adoption and approval of any other proposals as reasonably agreed by Acquiror and the Company to be necessary or appropriate in connection with the transactions contemplated hereby, and (G) adjournment of the Acquiror Stockholders’ Meeting, if necessary, to permit further solicitation of proxies because there are not sufficient votes to approve and adopt any of the foregoing(such proposals in (A) through (G), together, the “Transaction Proposals”), and include such recommendation in the Proxy Statement. The Board of Directors of Acquiror shall not withdraw, amend, qualify or modify its recommendation to the Acquiror Stockholders that they vote in favor of the Transaction Proposals (a “Modification in Recommendation”). Notwithstanding anything in this Section 8.2(b) to the contrary, if, at any time prior to obtaining the Acquiror Stockholder Approval, the Board of Directors of Acquiror determines in good faith, after consultation with its outside legal counsel, that in response to an Intervening Event, the failure to make a Modification in Recommendation would be inconsistent with its fiduciary duties under applicable Law, the Board of Directors of Acquiror may, prior to obtaining the Acquiror Stockholder Approval, make a Modification in Recommendation; provided, however, that Acquiror shall not be entitled to make, or agree or resolve to make, a Modification in Recommendation unless (i) Acquiror delivers to the Company a written notice (an “Intervening Event Notice”) advising the Company that the Board of Directors of Acquiror proposes to take such action and containing the material facts underlying the Board of Director’s determination that an Intervening Event has occurred (it being acknowledged that such Intervening Event Notice shall not itself constitute a breach of this Agreement), and (ii) at or after 5:00 p.m., Pacific time, on the third Business Day immediately following the day on which Acquiror delivered the Intervening Event Notice (such period from the time the Intervening Event Notice is provided until 5:00 p.m. Pacific time on the third Business Day immediately following the day on which Acquiror delivered the Intervening Event Notice, the “Intervening Event Notice Period”), the Board of Directors of Acquiror reaffirms in good faith (after consultation with its outside legal counsel) that the failure to make a Modification in Recommendation would be inconsistent with its fiduciary duties under applicable Law. If requested by the Company, Acquiror will, and will use its reasonable best efforts to cause its representatives to, during the Intervening Event Notice Period, engage in good faith negotiations with the Company and its representatives to make such adjustments in the terms and conditions of this Agreement so as to obviate the need for a Modification in Recommendation. Acquiror agrees to establish a record date for, duly call, give notice of, convene and hold the Acquiror Stockholders’ Meeting and submit for approval the Transaction Proposals, in each case in accordance with this Agreement. Notwithstanding anything to the contrary contained in this Agreement, Acquiror shall be entitled to postpone or adjourn the Acquiror Stockholders’ Meeting (i) to solicit additional proxies for the purpose of obtaining the Acquiror Stockholder Approval, (ii) for the absence of a quorum and (iii) to allow reasonable additional time for the filing or mailing of any supplemental or amended disclosure that Acquiror has determined in good faith after consultation with outside legal counsel is required under applicable Law and for such supplemental or amended disclosure to be disseminated and reviewed by Acquiror Stockholders prior to the Acquiror Stockholders’ Meeting; provided, that the Acquiror Stockholders’ Meeting (x) may not be adjourned to a date that is more than 15 days after the date for which the Acquiror Stockholders’ Meeting was originally scheduled (excluding any adjournments required by applicable Law) and (y) shall not be held later than three Business Days prior to the Agreement End Date. Acquiror agrees that it shall provide the holders of shares of Acquiror Class A Common Stock the opportunity to elect redemption of such shares of Acquiror Class A Common Stock in connection with the Acquiror Stockholders’ Meeting, as required by Acquiror’s Governing Documents.

(c) Company Stockholder Approvals. Upon the terms set forth in this Agreement, the Company shall (i) obtain and deliver to Acquiror the Company Stockholder Approvals (x) in the form of an irrevocable written consent (the “Written Consent”) executed by each of the Requisite Stockholders (pursuant to the Company Stockholder Support Agreement) promptly following the time at which the Registration Statement shall have been declared effective under the Securities Act and delivered or otherwise made available to stockholders (and in any event within three Business Days after the Registration Statement is declared effective under the Securities Act and delivered or otherwise made available to stockholders), and (y) in accordance with the terms and subject to the conditions of the

 

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Company’s Governing Documents, and (ii) take all other action necessary or advisable to secure the Company Stockholder Approvals as soon as practicable after the Registration Statement is declared effective (and in any event within three Business Days after the Registration Statement is declared effective under the Securities Act and delivered or otherwise made available to stockholders) and, if applicable, any additional consents or approvals of its stockholders related thereto, including enforcing the Company Stockholder Support Agreement.

Section 8.3. Support of Transaction. Without limiting any covenant contained in Article VI or Article VII, Acquiror and the Company shall each, and each shall cause its Subsidiaries to (a) use reasonable best efforts to obtain all material consents and approvals of third parties (including any Governmental Authority) that any of Acquiror, the Company or their respective Affiliates are required to obtain in order to consummate the Merger, and (b) take such other action as may be reasonably necessary or as another party hereto may reasonably request to satisfy the conditions of Article IX or otherwise to comply with this Agreement and to consummate the transactions contemplated hereby as soon as practicable and in accordance with all applicable Law.

Section 8.4. Section 16 Matters. Prior to the Effective Time, each of the Company and Acquiror shall take all reasonable steps as may be required (to the extent permitted under applicable Law) to cause any dispositions of shares of the Company Capital Stock or acquisitions of shares of Acquiror Common Stock (including, in each case, securities deliverable upon exercise, vesting or settlement of any derivative securities) resulting from the transactions contemplated hereby by each individual who may become subject to the reporting requirements of Section 16(a) of the Exchange Act in connection with the transactions contemplated hereby to be exempt under Rule 16b-3 promulgated under the Exchange Act.

Section 8.5. Cooperation; Consultation.

(a) Prior to Closing, each of the Company and Acquiror shall, and each of them shall cause its respective Subsidiaries (as applicable) and its and their officers, directors, managers, employees, consultants, counsel, accounts, agents and other representatives to, reasonably cooperate in a timely manner in connection with any financing arrangement the parties mutually agree to seek in connection with the transactions contemplated by this Agreement (it being understood and agreed that the consummation of any such financing by the Company or Acquiror shall be subject to the parties’ mutual agreement), including (if mutually agreed by the parties and subject to COVID-19 Measures) (a) by providing such information and assistance as the other party may reasonably request, (b) granting such access to the other party and its representatives as may be reasonably necessary for their due diligence, and (c) participating in a reasonable number of meetings, presentations, road shows, drafting sessions, due diligence sessions with respect to such financing efforts (including direct contact between senior management and other representatives of the Company and its Subsidiaries at reasonable times and locations). All such cooperation, assistance and access shall be granted during normal business hours and shall be granted under conditions that shall not unreasonably interfere with the business and operations of the Company, Acquiror, or their respective auditors.

(b) From the date of the announcement of this Agreement and the transactions contemplated hereby (pursuant to any applicable public communication made in compliance with Section 11.12), until the Closing Date, Acquiror shall use its reasonable best efforts to, and shall instruct its financial advisors to, keep the Company and their financial advisors reasonably informed with respect to the PIPE Investment during such period and consider in good faith any feedback from the Company or their financial advisors with respect to such matters.

 

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Section 8.6. Stockholder Litigation. From and after the date of this Agreement until the earlier of the Closing or termination of this Agreement in accordance with its terms, Acquiror, on the one hand, and the Company, on the other hand, shall each notify the other promptly after learning of any stockholder demand (or threat thereof) or other stockholder or equityholder claim, action, suit, audit, examination, arbitration, mediation, inquiry, Legal Proceeding, or investigation, whether or not before any Governmental Authority (including derivative claims), relating to this Agreement, or any of the transactions contemplated hereby (collectively, “Transaction Litigation”) commenced or to the knowledge of Acquiror or the Company, as applicable, threatened in writing against (a) in the case of Acquiror, Acquiror, any of Acquiror’s controlled Affiliates or any of their respective officers, directors, employees or stockholders (in their capacity as such) or (b) in the case of the Company, the Company, any of its Subsidiaries or controlled Affiliates or any of their respective officers, directors, employees or stockholders (in their capacity as such). Acquiror and the Company shall each (w) keep the other reasonably informed regarding any Transaction Litigation, (x) give the other the opportunity to, at its own cost and expense, participate in the defense, settlement and compromise of any such Transaction Litigation and reasonably cooperate with the other in connection with the defense, settlement and compromise of any such Transaction Litigation, (y) consider in good faith the other’s advice with respect to any such Transaction Litigation and (z) reasonably cooperate with each other with respect to any Transaction Litigation; provided, however, that in no event shall (A) the Company, its Affiliates or any of their respective officers, directors or employees settle or compromise any Transaction Litigation without the prior written consent of Acquiror (not to be unreasonably withheld, conditioned or delayed) or (B) Acquiror, any of Acquiror’s Affiliates or any of their respective officers, directors or employees settle or compromise any Transaction Litigation without the Company’s prior written consent (not to be unreasonably withheld, conditioned or delayed).

ARTICLE IX

CONDITIONS TO OBLIGATIONS

Section 9.1. Conditions to Obligations of Acquiror, Merger Sub, and the Company. The obligations of Acquiror, Merger Sub and the Company to consummate, or cause to be consummated, the Merger is subject to the satisfaction of the following conditions, any one or more of which may be waived in writing by all of such parties:

(a) The Acquiror Stockholder Approval shall have been obtained;

(b) The Company Stockholder Approvals shall have been obtained;

(c) The Registration Statement shall have become effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC and not withdrawn;

(d) The waiting period or periods under the HSR Act applicable to the transactions contemplated by this Agreement and the Ancillary Agreements shall have expired or been terminated;

(e) There shall not be in force any Governmental Order, statute, rule or regulation enjoining or prohibiting the consummation of the Merger; provided, that the Governmental Authority issuing such Governmental Order has jurisdiction over the parties hereto with respect to the transactions contemplated hereby;

(f) Acquiror shall have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act); and

(g) The shares of Acquiror Post-Merger Class A Common Stock issuable upon conversion of the Acquiror Post-Merger Class B Common Stock to be issued in connection with the Merger shall have been approved for listing on the Stock Exchange, and, immediately following the Effective Time, Acquiror shall satisfy any applicable continuing listing requirements of the Stock Exchange, and Acquiror shall not have received any notice of non-compliance therewith that has not been cured or would not be cured at or immediately following the Effective Time.

Section 9.2. Conditions to Obligations of Acquiror and Merger Sub. The obligations of Acquiror and Merger Sub to consummate, or cause to be consummated, the Merger are subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by Acquiror and Merger Sub:

 

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(a) (i) The Company Fundamental Representations shall be true and correct in all material respects, in each case as of the Closing Date, except with respect to such representations and warranties which speak as to an earlier date, which representations and warranties shall be true and correct in all material respects at and as of such date, except for changes after the date of this Agreement which are contemplated or expressly permitted by this Agreement or the Ancillary Agreements, and (ii) each of the representations and warranties of the Company contained in this Agreement other than the Company Fundamental Representations (disregarding any qualifications and exceptions contained therein relating to materiality, material adverse effect and Company Material Adverse Effect or any similar qualification or exception) shall be true and correct as of the Closing Date, except with respect to such representations and warranties which speak as to an earlier date, which representations and warranties shall be true and correct at and as of such date, except for, in each case in this clause (ii), inaccuracies or omissions that have not had, and would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect;

(b) Each of the covenants of the Company to be performed as of or prior to the Closing shall have been performed in all material respects; and

(c) The Company shall have delivered, or caused to be delivered, to Acquiror the documents set forth in Section 2.4(a).

Section 9.3. Conditions to the Obligations of the Company. The obligation of the Company to consummate, or cause to be consummated, the Merger is subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by the Company:

(a) (i) The representations and warranties of Acquiror and Merger Sub contained in Section 5.1, Section 5.2, Section 5.3(a), Section 5.3(b), Section 5.12 and Section 5.13 shall be true and correct in all material respects as of the Closing Date, except with respect to such representations and warranties that speak as of an earlier date, which representations and warranties shall be true in all material respects at and as of such date, and (ii) each of the representations and warranties of Acquiror contained in this Agreement (disregarding any qualifications and exceptions contained therein relating to materiality, material adverse effect or any similar qualification or exception) shall be true and correct in all material respects, in each case as of the Closing Date, except with respect to such representations and warranties which speak as to an earlier date, which representations and warranties shall be true and correct in all material respects at and as of such date, except for in each case in this clause (ii), inaccuracies or omissions that have not had, and would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on Acquiror;

(b) Each of the covenants of Acquiror to be performed as of or prior to the Closing shall have been performed in all material respects;

 

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(c) The certificate of incorporation of Acquiror and bylaws of Acquiror shall have been amended and restated to be substantially in the forms of Exhibit A and Exhibit B, respectively, attached hereto;

(d) Acquiror shall have delivered, or caused to be delivered, to the Company the documents set forth in Section 2.4(b); and

(e) (i) The amount of cash available in the Trust Account following the Acquiror Stockholders’ Meeting, after deducting (x) the amount required to satisfy the Acquiror Stockholder Redemption Amount, (y) any Company Transaction Expenses or Acquiror Transaction Expenses, as contemplated by Section 11.6 and (z) any amounts outstanding under any Working Capital Loans, plus (ii) the PIPE Investment Amount actually received by Acquiror prior to or substantially concurrently with the Closing, plus (iii) the aggregate amount of cash that has been funded to and remains with Acquiror pursuant to the Forward Purchase Agreement, as applicable, shall be equal to or greater than $400,000,000.

ARTICLE X

TERMINATION/EFFECTIVENESS

Section 10.1. Termination. This Agreement may be terminated and the transactions contemplated hereby abandoned:

(a) by written consent of the Company and Acquiror;

(b) by written notice by either the Company or Acquiror if any Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which has become final and nonappealable and has the effect of making consummation of the Merger illegal or otherwise preventing or prohibiting consummation of the Merger;

(c) by written notice by either the Company or Acquiror if the Acquiror Stockholder Approval shall not have been obtained by reason of the failure to obtain the required vote at the Acquiror Stockholders’ Meeting duly convened therefor or at any adjournment or postponement thereof;

(d) by written notice to the Company from Acquiror if (i) there is any breach of any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement, such that the conditions specified in Section 9.2(a) or Section 9.2(b) would not be satisfied at the Closing (a “Terminating Company Breach”), except that, if such Terminating Company Breach is curable by the Company through the exercise of its reasonable best efforts, then, for a period of up to 30 days (or such shorter period of time that remains between the date Acquiror provides written notice of such breach and the Agreement End Date) after receipt by the Company of notice from Acquiror of such breach, but only as long as the Company continues to use its reasonable best efforts to cure such Terminating Company Breach (the “Company Cure Period”), such termination shall not be effective, and such termination shall become effective only if the Terminating Company Breach is not cured within the Company Cure Period, or (ii) the Closing has not occurred on or before nine (9) months after the date of this Agreement (the “Agreement End Date”), unless Acquiror is in material breach hereof so as to prevent the conditions specified in Section 9.3(a) and Section 9.3(b) from being satisfied;

(e) by written notice to the Company from Acquiror if the Company Stockholder Approvals shall not have been obtained and delivered to Acquiror within five Business Days after the Registration Statement has been declared effective by the SEC and delivered or otherwise made available to stockholders;

 

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(f) by written notice to Acquiror from the Company if (i) there is any breach of any representation, warranty, covenant or agreement on the part of Acquiror or Merger Sub set forth in this Agreement, such that the conditions specified in Section 9.3(a) and Section 9.3(b) would not be satisfied at the Closing (a “Terminating Acquiror Breach”), except that, if any such Terminating Acquiror Breach is curable by Acquiror through the exercise of its reasonable best efforts, then, for a period of up to 30 days (or such shorter period of time that remains between the date the Company provides written notice of such breach and the Agreement End Date) after receipt by Acquiror of notice from the Company of such breach, but only as long as Acquiror continues to exercise such reasonable best efforts to cure such Terminating Acquiror Breach (the “Acquiror Cure Period”), such termination shall not be effective, and such termination shall become effective only if the Terminating Acquiror Breach is not cured within the Acquiror Cure Period or (ii) the Closing has not occurred on or before the Agreement End Date, unless the Company is in material breach hereof so as to prevent the conditions specified in Section 9.2(a) or Section 9.2(b) from being satisfied; or

(g) by written notice to Acquiror from the Company following a Modification in Recommendation.

Section 10.2. Effect of Termination. In the event of the termination of this Agreement pursuant to Section 10.1, this Agreement shall forthwith become void and have no effect, without any liability on the part of any party hereto or its respective Affiliates, officers, directors or stockholders, other than liability of the Company, Acquiror or Merger Sub, as the case may be, for any actual fraud or willful and material breach of this Agreement occurring prior to such termination, except that the provisions of this Section 10.2 and Article XI and the Confidentiality Agreement shall survive any termination of this Agreement.

ARTICLE XI

MISCELLANEOUS

Section 11.1. Trust Account Waiver. The Company acknowledges that (a) Acquiror is a blank check company with the powers and privileges to effect a Business Combination and (b) they have read the Acquiror SEC Filings (including Acquiror’s final prospectus dated March 23, 2021 (the “Prospectus”)), the Acquiror’s Governing Documents, and the Trust Agreement. The Company further acknowledges that, as described in the Prospectus, substantially all of Acquiror’s assets consist of the cash proceeds of Acquiror’s initial public offering and private placements of its securities and substantially all of those proceeds have been deposited in a the trust account for the benefit of Acquiror, certain of its public stockholders and the underwriters of Acquiror’s initial public offering (the “Trust Account”). The Company acknowledges that it has been advised by Acquiror that, except with respect to interest earned on the funds held in the Trust Account that may be released to Acquiror to pay its franchise Tax, income Tax and similar obligations, the Trust Agreement provides that cash in the Trust Account may be disbursed only in limited circumstances set forth in the Trust Agreement. The Company further acknowledges that, if the transactions contemplated by this Agreement, or, in the event of a termination of this Agreement, another Business Combination, are not consummated by March 23, 2023, or June 23, 2023 if a definitive agreement for another Business Combination is entered into before March 23, 2023, or such later date, or such later date as approved by the stockholders of Acquiror to complete a Business Combination, Acquiror will be obligated to return to its stockholders the amounts being held in the Trust Account. Accordingly, for and in consideration of Acquiror entering into this Agreement, the receipt and sufficiency of which are hereby acknowledged, the Company hereby irrevocably waives any right, title, interest or claim of any kind they have or may have in the future in or to any monies in the Trust Account and agree not to seek recourse against the Trust Account or any funds distributed therefrom as a result of, or arising out of, this Agreement and any negotiations, Contracts or agreements with Acquiror, including, without limitation, in connection with any willful and material breach by Acquiror of this Agreement, other than for the release of proceeds from the Trust

 

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Account upon the consummation of the Merger; provided, that (x) nothing herein shall serve to limit or prohibit the Company or its Subsidiaries right to pursue a claim against Acquiror for legal relief (a) against monies or other assets held outside the Trust Account, for specific performance or other equitable relief in connection with the consummation of the transactions (including a claim for Acquiror to specifically perform its obligations under this Agreement and cause the disbursement of the balance of the cash remaining in the Trust Account (after giving effect to the Acquiror Stockholder Redemption) in accordance with the terms of this Agreement and the Trust Agreement) so long as such claim would not affect Acquiror ability to fulfil its obligations to effectuate the Acquiror Stockholder Redemption and (y) nothing herein shall serve to limit or prohibit any claims that the Company or its Subsidiaries may have in the future against Acquiror’s assets or funds that are not held in the Trust Account (including any funds that have been released from the Trust Account and any assets that have been purchased or acquired with any such funds). This Section 11.1 shall survive the termination of this Agreement for any reason. In the event that the Company, any of its Subsidiaries, any of their Affiliates or any of their respective representatives commences any Action against or involving the Trust Account, Acquiror shall be entitled to recover from such Person its legal fees and costs in connection with any such Action.

Section 11.2. Waiver. Any party to this Agreement may, at any time prior to the Closing, by action taken by its Board of Directors or other officers or Persons thereunto duly authorized, (a) extend the time for the performance of the obligations or acts of the other parties hereto, (b) waive any inaccuracies in the representations and warranties (of another party hereto) that are contained in this Agreement or (c) waive compliance by the other parties hereto with any of the agreements or conditions contained in this Agreement, but such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party granting such extension or waiver.

Section 11.3. Notices. All notices and other communications among the parties shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid, (iii) when delivered by FedEx or other nationally recognized overnight delivery service, or (iv) when delivered by email (in each case in this clause (iv), solely if receipt is confirmed, but excluding any automated reply, such as an out-of-office notification), addressed as follows:

(a) If to Acquiror or Merger Sub, to:

 

Khosla Ventures Acquisition Co. II
2128 Sand Hill Rd.
Menlo Park, CA 94025
Attention:    Samir Kaul
   Peter Buckland
Email:    sk@khoslaventures.com
   pb@khoslaventures.com

with copies to (which shall not constitute notice):

 

Latham & Watkins LLP
505 Montgomery Street, Suite 2000
San Francisco, California 94111
Attention:    Jim Morrone
   Luke J. Bergstrom
Email:    jim.morrone@lw.com
   luke.bergstrom@lw.com

 

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(b) If to the Company or the Surviving Corporation, to:

Nextdoor, Inc.   
420 Taylor Street
San Francisco, California 94102
Attention:    John Orta
   Sophia Contreras Schwartz
Email:    john@nextdoor.com
   sophia@nextdoor.com
with copies to (which shall not constitute notice):
Fenwick & West LLP
Silicon Valley Center
801 California Street
Mountain View, California 94041
Attention:    Cynthia Clarfield Hess
   Ethan Skerry
Email:    chess@fenwick.com
   eskerry@fenwick.com

or to such other address or addresses as the parties may from time to time designate in writing. Copies delivered solely to outside counsel shall not constitute notice.

Section 11.4. Assignment. No party hereto shall assign this Agreement or any part hereof without the prior written consent of the other parties and any such transfer without prior written consent shall be void. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns.

Section 11.5. Rights of Third Parties. Except as expressly provided in Section 7.7, nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any Person, other than the parties hereto, any right or remedies under or by reason of this Agreement; provided, however, that the D&O Indemnified Parties and the past, present and future directors, managers, officers, employees, incorporators, members, partners, stockholders, Affiliates, agents, attorneys, advisors and representatives of the parties, and any Affiliate of any of the foregoing (and their successors, heirs and representatives), are intended third-party beneficiaries of, and may enforce, Section 11.16.

Section 11.6. Expenses. Except as otherwise set forth in this Agreement, each party hereto shall be responsible for and pay its own expenses incurred in connection with this Agreement and the transactions contemplated hereby, including all fees of its legal counsel, financial advisers and accountants; provided, that if the Closing shall occur, Acquiror shall (x) pay or cause to be paid, the Company Transaction Expenses, and (y) pay or cause to be paid, the Acquiror Transaction Expenses, in each of case (x) and (y), in accordance with Section 2.4(c). For the avoidance of doubt, any payments to be made (or to cause to be made) by Acquiror pursuant to this Section 11.6 shall be paid upon consummation of the Merger and release of proceeds from the Trust Account.

Section 11.7. Governing Law. This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to principles or rules of conflict of Laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction.

 

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Section 11.8. Headings; Counterparts. The headings in this Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The exchange of a fully executed Agreement (in counterparts or otherwise) by electronic transmission in .pdf format or by facsimile shall be sufficient to bind the parties to the terms and conditions of this Agreement. Signatures to this Agreement transmitted by electronic mail in .pdf form, or by any other electronic means designed to preserve the original graphic and pictorial appearance of a document (including DocuSign), will be deemed to have the same effect as physical delivery of the paper document bearing the original signatures.

Section 11.9. Company Disclosure Letter. The Company Disclosure Letter (including any section thereof) referenced herein are a part of this Agreement as if fully set forth herein. All references herein to the Company Disclosure Letter (including any section thereof) shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. Any disclosure made by the Company in the Company Disclosure Letter, or any section thereof, with reference to any section of this Agreement or section of the Company Disclosure Letter shall be deemed to be a disclosure with respect to such other applicable sections of this Agreement or sections of the Company Disclosure Letter if it is reasonably apparent on the face of such disclosure that such disclosure is responsive to such other section of this Agreement or section of the Company Disclosure Letter. Certain information set forth in the Company Disclosure Letter is included solely for informational purposes and may not be required to be disclosed pursuant to this Agreement. The disclosure of any information shall not be deemed to constitute an acknowledgment that such information is required to be disclosed in connection with the representations and warranties made in this Agreement, nor shall such information be deemed to establish a standard of materiality.

Section 11.10. Entire Agreement. (a) This Agreement (together with the Company Disclosure Letter) and the Ancillary Agreements constitute the entire agreement among the parties to this Agreement relating to the transactions contemplated hereby and supersede any other agreements, whether written or oral, that may have been made or entered into by or among any of the parties hereto or any of their respective Subsidiaries relating to the transactions contemplated hereby. No representations, warranties, covenants, understandings, agreements, oral or otherwise, relating to the transactions contemplated hereby exist between such parties except as expressly set forth in this Agreement and the Ancillary Agreements.

Section 11.11. Amendments. This Agreement may be amended or modified in whole or in part, only by a duly authorized agreement in writing executed in the same manner as this Agreement and which makes reference to this Agreement, authorized by the Board of Directors of each of the parties hereto, whether before or after the adoption of this Agreement by the stockholders of the Company or Merger Sub; provided however that after any such stockholder adoption of this Agreement, no amendment shall be made to this Agreement that by law requires further approval or authorization by the stockholders of the Company or Merger Sub without such further approval or authorization.

Section 11.12. Publicity.

(a) All press releases or other public communications relating to the transactions contemplated hereby, and the method of the release for publication thereof, shall prior to the Closing be subject to the prior mutual approval of Acquiror and the Company, which approval shall not be unreasonably withheld by any party; provided, that no party shall be required to obtain consent pursuant to this Section 11.12(a) to the extent any proposed release or statement is substantially equivalent to the information that has previously been made public without breach of the obligation under this Section 11.12(a).

 

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(b) The restriction in Section 11.12(a) shall not apply to the extent the public announcement is required by applicable securities Law, any Governmental Authority or stock exchange rule; provided, however, that in such an event, the party making the announcement shall use its commercially reasonable efforts to consult with the other party in advance as to its form, content and timing. Disclosures resulting from the parties’ efforts to obtain approval or early termination under the HSR Act and to make any relating filing shall be deemed not to violate this Section 11.12.

(c) The initial press release concerning this Agreement and the transaction contemplated hereby shall be a joint press release in the form mutually agreed by The Company and Acquiror prior to the execution of this Agreement, and such initial press release shall be released as promptly as practicable after the execution of this Agreement.

Section 11.13. Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. The parties further agree that if any provision contained herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by Law and, to the extent necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the parties.

Section 11.14. Jurisdiction; Waiver of Jury Trial.

(a) Any proceeding or Action based upon, arising out of or related to this Agreement or the transactions contemplated hereby must be brought in the Court of Chancery of the State of Delaware (or, to the extent such court does not have subject matter jurisdiction, the Superior Court of the State of Delaware), or, if it has or can acquire jurisdiction, in the United States District Court for the District of Delaware, and each of the parties irrevocably (i) submits to the exclusive jurisdiction of each such court in any such proceeding or Action, (ii) waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, (iii) agrees that all claims in respect of the proceeding or Action shall be heard and determined only in any such court, and (iv) agrees not to bring any proceeding or Action arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by Law or to commence Legal Proceedings or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any Action, suit or proceeding brought pursuant to this Section 11.14.

(b) EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY, UNCONDITIONALLY AND VOLUNTARILY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

 

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Section 11.15. Enforcement. The parties hereto agree that irreparable damage could occur in the event that any of the provisions of this Agreement or any of the Ancillary Agreements were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or any Ancillary Agreement and to specific enforcement of the terms and provisions of this Agreement and the Ancillary Agreements, in addition to any other remedy to which any party is entitled at law or in equity. In the event that any Action shall be brought in equity to enforce the provisions of this Agreement, no party shall allege, and each party hereby waives the defense, that there is an adequate remedy at law, and each party agrees to waive any requirement for the securing or posting of any bond in connection therewith.

Section 11.16. Non-Recourse. Except (x) as otherwise contemplated by Article XI and (y) in the case of claims against a Person in respect of such Person’s actual fraud:

(a) this Agreement may only be enforced against, and any claim or cause of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby may only be brought against the Company, Acquiror and Merger Sub as named parties hereto; and

(b) except to the extent a party hereto (and then only to the extent of the specific obligations undertaken by such party hereto), (i) no past, present or future director, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney, advisor or representative or Affiliate of the Company, Acquiror or Merger Sub and (ii) no past, present or future director, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney, advisor or representative or Affiliate of any of the foregoing shall have any liability (whether in Contract, tort, equity or otherwise) for any one or more of the representations, warranties, covenants, agreements or other obligations or liabilities of any one or more of the Company, Acquiror or Merger Sub under this Agreement for any claim based on, arising out of, or related to this Agreement or the transactions contemplated hereby.

Section 11.17. Non-Survival of Representations, Warranties and Covenants. Except (x) as otherwise contemplated by Section 10.2, or (y) in the case of claims against a Person in respect of such Person’s actual fraud, none of the representations, warranties, covenants, obligations or other agreements in this Agreement or in any certificate, statement or instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants, obligations, agreements and other provisions, shall survive the Closing and shall terminate and expire upon the occurrence of the Effective Time (and there shall be no liability after the Closing in respect thereof), except for (a) those covenants and agreements contained herein that by their terms expressly apply in whole or in part after the Closing and then only with respect to any breaches occurring after the Closing and (b) this Article XI.

Section 11.18. Conflicts and Privilege.

(a) Acquiror and the Company, on behalf of their respective successors and assigns (including, after the Closing, the Surviving Corporation), hereby agree that, in the event a dispute with respect to this Agreement or the transactions contemplated hereby arises after the Closing between or among (x) the Sponsor, the stockholders or holders of other equity interests of Acquiror or the Sponsor and/or any of their respective directors, members, partners, officers, employees or Affiliates (other than the Surviving Corporation) (collectively, the “KVSB Group”), on the one hand, and (y) the Surviving Corporation and/or any member of the Company Group, on the other hand, any legal counsel, including Latham & Watkins LLP (“Latham”), that represented Acquiror and/or the Sponsor prior to the Closing may represent the Sponsor and/or any other member of the KVSB Group, in such dispute even though the interests of such Persons may be directly adverse to the Surviving Corporation, and even though such counsel may have represented Acquiror in a matter substantially related to such dispute, or may be handling ongoing matters for the Surviving Corporation and/or the Sponsor. Acquiror and the Company, on behalf of their respective successors and assigns (including, after the Closing, the Surviving Corporation), further

 

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agree that, as to all legally privileged communications prior to the Closing (made in connection with the negotiation, preparation, execution, delivery and performance under, or any dispute or Action arising out of or relating to, this Agreement, any Ancillary Agreements or the transactions contemplated hereby or thereby) between or among Acquiror, the Sponsor and/or any other member of the KVSB Group, on the one hand, and Latham, on the other hand (the “Latham Privileged Communications”), the attorney/client privilege and the expectation of client confidence shall survive the Merger and belong to the KVSB Group after the Closing, and shall not pass to or be claimed or controlled by the Surviving Corporation. Notwithstanding the foregoing, any privileged communications or information shared by the Company prior to the Closing with Acquiror or the Sponsor under a common interest agreement shall remain the privileged communications or information of the Surviving Corporation. Acquiror and the Company, together with any of their respective Affiliates, Subsidiaries, successors or assigns, agree that no Person may use or rely on any of the Latham Privileged Communications, whether located in the records or email server of the Acquiror, Surviving Corporation or their respective Subsidiaries, in any Action against or involving any of the parties after the Closing, and Acquiror and the Company agree not to assert that any privilege has been waived as to the Latham Privileged Communications, by virtue of the Mergers. Notwithstanding the foregoing, if a dispute arises after the Closing between or among the Surviving Corporation or any of its Subsidiaries or its or their respective directors, members, partners, officers, employees or Affiliates (other than the KVSB Group), on the one hand, and a third party other than (and unaffiliated with) the KVSB Group, on the other hand, then the Surviving Corporation and/or any member of the Company Group may assert the attorney-client privilege to prevent disclosure to such third party of Latham Privileged Communications.

(b) Acquiror and the Company, on behalf of their respective successors and assigns (including, after the Closing, the Surviving Corporation), hereby agree that, in the event a dispute with respect to this Agreement or the transactions contemplated hereby arises after the Closing between or among (x) the stockholders or holders of other equity interests of the Company and any of their respective directors, members, partners, officers, employees or Affiliates (other than the Surviving Corporation) (collectively, the “Company Group”), on the one hand, and (y) the Surviving Corporation and/or any member of the KVSB Group, on the other hand, any legal counsel, including Fenwick & West LLP (“Fenwick”) that represented the Company prior to the Closing may represent any member of the Company Group in such dispute even though the interests of such Persons may be directly adverse to the Surviving Corporation, and even though such counsel may have represented Acquiror and/or the Company in a matter substantially related to such dispute, or may be handling ongoing matters for the Surviving Corporation, further agree that, as to all legally privileged communications prior to the Closing (made in connection with the negotiation, preparation, execution, delivery and performance under, or any dispute or Action arising out of or relating to, this Agreement, any Ancillary Agreements or the transactions contemplated hereby or thereby) between or among the Company and/or any member of the Company Group, on the one hand, and Fenwick, on the other hand (the “Fenwick Privileged Communications”), the attorney/client privilege and the expectation of client confidence shall survive the Merger and belong to the Company Group after the Closing, and shall not pass to or be claimed or controlled by the Surviving Corporation. Notwithstanding the foregoing, any privileged communications or information shared by Acquiror prior to the Closing with the Company under a common interest agreement shall remain the privileged communications or information of the Surviving Corporation. Acquiror and the Company, together with any of their respective Affiliates, Subsidiaries, successors or assigns, agree that no Person may use or rely on any of the Fenwick Privileged Communications, whether located in the records or email server of the Acquiror, Surviving Corporation or their respective Subsidiaries, in any Action against or involving any of the parties after the Closing, and Acquiror and the Company agree not to assert that any privilege has been waived as to the Fenwick Privileged Communications, by virtue of the Mergers.

 

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IN WITNESS WHEREOF the parties have hereunto caused this Agreement to be duly executed as of the date first above written.

 

KHOSLA VENTURES ACQUISITION CO. II
By:  

/s/ Samir Kaul

  Name: Samir Kaul
  Title: Chief Executive Officer
LORELEI MERGER SUB INC.
By:  

/s/ Samir Kaul

  Name: Samir Kaul
  Title: President
NEXTDOOR, INC.
By:  

/s/ Sarah Friar

  Name: Sarah Friar
  Title: Chief Executive Officer

Exhibit 10.1

SUBSCRIPTION AGREEMENT

This SUBSCRIPTION AGREEMENT (this “Subscription Agreement”) is entered into on July 6, 2021, by and between Khosla Ventures Acquisition Co. II, a Delaware corporation (“KVSB”), and the undersigned subscriber (the “Investor”).

WHEREAS, this Subscription Agreement is being entered into in connection with the Agreement and Plan of Merger, dated as of the date hereof (as may be amended, supplemented or otherwise modified from time to time, the “Transaction Agreement”), by and among KVSB, Nextdoor, Inc., a Delaware corporation (the “Company”), Lorelei Merger Sub, Inc., a Delaware corporation (“KVSB Merger Sub”), and the other parties thereto, in substantially the form provided to the Investor prior to the date hereof, pursuant to which, among other things, KVSB Merger Sub will merge with and into the Company, with the Company as the surviving company in the merger and, after giving effect to such merger, becoming a wholly owned subsidiary of KVSB, and KVSB will change its name to “Nextdoor Holdings, Inc.” (or such other name agreed to by KVSB and Company), on the terms and subject to the conditions therein (the “Transaction”);

WHEREAS, in connection with the Transaction, KVSB is seeking commitments from interested investors to purchase, prior to the closing of the Transaction, shares of KVSB’s Class A common stock, par value $0.001 per share, as such shares will exist as Class A common stock following the Transaction (the “Shares”), in a private placement for a purchase price of $10.00 per share (the “Per Share Subscription Price”);

WHEREAS, the aggregate purchase price to be paid by the Investor for the subscribed Shares (as set forth on the signature page hereto) is referred to herein as the “Subscription Amount;” and

WHEREAS, substantially concurrently with the execution of this Subscription Agreement, KVSB is entering into separate subscription agreements (the “Other Subscription Agreements”) with certain other investors (the “Other Investors”) with an aggregate purchase price of $270,000,000.00 (inclusive of the Subscription Amount) (the “PIPE Investment”).

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions, set forth herein, and intending to be legally bound hereby, each of the Investor and KVSB acknowledges and agrees as follows:

1. Subscription. (a) The Investor hereby subscribes for and agrees to purchase from KVSB, and (b) KVSB hereby agrees to issue and sell to the Investor, in each case, the number of Shares set forth on the signature page of this Subscription Agreement on the terms and subject to the conditions provided for herein.

2. Closing. The closing of the sale, purchase and issuance of the Shares contemplated hereby (the “Closing”) shall occur on the closing date of (the “Closing Date”), and be conditioned upon the prior or substantially concurrent consummation of, the Transaction and the conditions set forth in Section 3. Upon (a) satisfaction or waiver in writing of the conditions set forth in Section 3 below and (b) delivery of written notice from (or on behalf of) KVSB to the Investor (the “Closing Notice”), that KVSB reasonably expects all conditions to the closing of the Transaction to be satisfied or waived on an expected closing date that is not less than five (5) business days from the date on which the Closing Notice is delivered to the Investor, the Investor shall deliver to KVSB, two (2) business days prior to the expected closing date specified in the Closing Notice, the Subscription Amount by wire transfer of United States dollars in immediately available funds to the account(s) specified by KVSB in the Closing Notice, to be held in escrow until the Closing. On or prior to the Closing Date, KVSB shall issue the Shares to the Investor, free and clear of any and all liens or other restrictions (other than those under applicable securities laws), and cause the Shares to be registered in book entry form in the name of the Investor (or its nominee in accordance with the delivery instructions), or to a custodian designated by the Investor, as applicable, on KVSB’s share register, which book entry records shall contain the restrictive legend referred to in Section 6(b). For purposes of this Subscription Agreement, “business day” shall mean a day, other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close. Prior to or at the Closing, the Investor shall deliver to KVSB a duly completed and executed Internal Revenue Service Form W-9 or appropriate Form W-8. In the event the Closing Date

 

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does not occur within five (5) business days after the expected closing date specified in the Closing Notice, KVSB shall promptly (but not later than one (1) business day thereafter) return the Subscription Amount to the Investor by wire transfer of U.S. dollars in immediately available funds to the account specified by the Investor, and any book-entries for the Shares shall be deemed cancelled; provided that, unless this Subscription Agreement has been terminated pursuant to Section 8 hereof, such return of funds shall not terminate this Subscription Agreement or relieve the Investor of its obligation (A) to redeliver funds to KVSB in accordance with Section 2 following KVSB’s delivery to the Investor of a new Closing Notice and (B) to consummate the Closing upon satisfaction of the conditions set forth in Section 3 immediately prior to or substantially concurrently with the consummation of the Transaction.

In place of the above, the below will be included for mutual funds, 40 Act funds, advised funds and other regulated entities (or if the investor’s internal compliance policies require it):

[The closing of the sale of the Shares contemplated hereby (the “Closing”) shall occur on the closing date of (the “Closing Date”), and be conditioned upon the substantially concurrent consummation, of the Transaction and the conditions set forth in Section 3. Following the delivery of written notice from (or on behalf of) KVSB to the Investor (the “Closing Notice”), that KVSB reasonably expects all conditions to the closing of the Transaction to be satisfied or waived on an expected closing date that is not less than five (5) business days from the date on which the Closing Notice is delivered to the Investor, on the Closing Date (i) the Investor shall deliver to KVSB the Subscription Amount by wire transfer of United States dollars in immediately available funds to the account(s) specified by KVSB in the Closing Notice against delivery of the subscribed Shares (it being understood and agreed that delivery of the Subscription Amount will occur and only be required as promptly as possible following receipt by the Investor of the evidence of issuance of such Shares pursuant to the following clause (ii)) and (ii) KVSB shall issue the Shares to the Investor, free and clear of any and all liens or other restrictions (other than those under applicable securities laws) and cause the Shares to be registered in book entry form in the name of the Investor (or its nominee in accordance with its delivery instructions) on KVSB’s share register, which book entry records shall contain the restrictive legend referred to in Section 6(b). For purposes of this Subscription Agreement, “business day” shall mean a day, other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close. Prior to or at the Closing, the Investor shall deliver to KVSB a duly completed and executed Internal Revenue Service Form W-9 or appropriate Form W-8. In the event the Closing Date does not occur within two (2) business days after the expected closing date specified in the Closing Notice, KVSB shall promptly (but not later than one (1) business day thereafter) return the Subscription Amount without deduction to the Investor by wire transfer of U.S. dollars in immediately available funds to the account specified by the Investor, and any book-entries for the Shares shall be deemed cancelled; provided that, unless this Subscription Agreement has been terminated pursuant to Section 8 hereof, such return of funds shall not terminate this Subscription Agreement or relieve the Investor of its obligation (A) to redeliver funds to KVSB in accordance with this Section 2 following KVSB’s delivery to the Investor of a new Closing Notice and (B) to consummate the Closing upon satisfaction of the conditions set forth in Section 3 immediately prior to or substantially concurrently with the consummation of the Transaction.]

3. Closing Conditions. The obligations of the parties hereto to consummate the purchase, sale and issuance of the Shares pursuant to this Subscription Agreement are subject to the satisfaction or waiver in writing of the following conditions: (a) no governmental authority shall have issued, enforced or entered any judgment, order, law, rule or regulation (whether temporary, preliminary or permanent) which is then in effect and has the effect of making the consummation of the transactions contemplated hereby illegal or otherwise restraining or prohibiting consummation of the transactions contemplated hereby; and no such governmental authority shall have instituted or threatened in writing a proceeding seeking to impose any such restraint or prohibition; (b) all conditions precedent to the closing of the Transaction set forth in the Transaction Agreement, including all necessary approvals of KVSB’s and the Company’s stockholders and regulatory approvals, if any, shall have been satisfied (as determined by the parties to the Transaction Agreement) or waived (other than those conditions which, by their nature, are to be satisfied at the closing of the Transaction pursuant to the Transaction Agreement), and the closing of the Transaction shall be scheduled to occur substantially concurrently with or immediately following the Closing; (c) the terms of the Transaction Agreement as it exists on the date hereof shall not have been amended or modified, or any condition waived, in a manner that would be reasonably expected to be materially adverse to the economic benefits that the Investor (in its capacity as such) would reasonably expect to receive under this Subscription Agreement, (d) there shall be no amendment, waiver or modification to the Other Subscription Agreements (including via a side letter or other agreement) that materially benefits the other investors thereunder unless the Investor has been offered the same benefits in writing, (e) all representations and warranties of the parties hereto contained in this Subscription Agreement

 

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shall be true and correct in all material respects as of the date hereof and at and as of the Closing Date (unless they specifically speak as of another date, in which case they shall be true and correct in all material respects as of such date) (other than representations and warranties that are qualified as to materiality, KVSB Material Adverse Effect or Investor Material Adverse Effect (each, as defined below), as applicable, which shall be true and correct in all respects at and as of the Closing Date (unless they specifically speak as of another date, in which case they shall be true and correct in all respects as of such date)), (f) each party shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Subscription Agreement to be performed, satisfied or complied with by it at or prior to the Closing, (g) no suspension of the qualification of the Shares for offering or sale or trading in any jurisdiction, or initiation or threatening of any proceedings for any of such purposes, shall have occurred, and the subscribed Shares shall have been approved for listing on the Stock Exchange (as defined below), subject to official notice of issuance and (h) solely in the case the of Investor, if requested by an Investor, a cross receipt executed by KVSB and delivered to the Investor certifying that it has received the Subscription Amount from the Investor as of the Closing Date.

4. Further Assurances. At or prior to the Closing, the parties hereto shall use commercially reasonable efforts to execute and deliver such additional documents and take such additional actions as the parties reasonably may deem to be practical and necessary in order to consummate the subscription as contemplated by this Subscription Agreement.

5. KVSB Representations, Warranties and Covenants. KVSB represents and warrants to the Investor, as of the date hereof and as of the Closing Date, and covenants that:

(a) KVSB is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. KVSB has all power (corporate or otherwise) and authority to own, lease and operate its properties and conduct its business as presently conducted and to enter into, deliver and perform its obligations under this Subscription Agreement.

(b) As of the Closing Date, the Shares will be duly authorized and, when issued and delivered to the Investor against full payment therefor in accordance with the terms of this Subscription Agreement, the Shares will be validly issued, fully paid and non-assessable, free and clear of all liens and other restrictions (other than those under applicable securities laws), and will not have been issued in violation of or subject to any preemptive or similar rights created under KVSB’s certificate of incorporation or bylaws (as in effect at such time of issuance) or under the Delaware General Corporation Law.

(c) This Subscription Agreement has been duly authorized, executed and delivered by KVSB and, assuming that this Subscription Agreement constitutes the valid and binding agreement of the Investor, this Subscription Agreement is the legal, valid and binding obligation of KVSB, enforceable against KVSB in accordance with its terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, or (ii) principles of equity, whether considered at law or equity.

(d) The execution and delivery of this Subscription Agreement, and the performance by KVSB of its obligations hereunder, including the issuance and sale by KVSB of the Shares pursuant to this Subscription Agreement, and the consummation of the transactions contemplated herein will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of KVSB or any of its subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which KVSB or any of its subsidiaries is a party or by which KVSB or any of its subsidiaries is bound or to which any of the property or assets of KVSB is subject that would reasonably be expected to (A) have, individually or in the aggregate, a material adverse effect on the business, financial condition, stockholders’ equity or results of operations of KVSB and its subsidiaries, taken as a whole (a “KVSB Material Adverse Effect”), materially affect the validity of the Shares or materially affect the legal authority of KVSB to comply in all material respects with its obligations under this Subscription Agreement; (ii) result in any violation of the provisions of the organizational documents of KVSB; or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over KVSB or any of its properties that would reasonably be expected to have a KVSB Material Adverse Effect, materially affect the validity of the Shares or materially affect the legal authority of KVSB to comply in all material respects with its obligations under this Subscription Agreement.

 

 

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(e) As of their respective filing dates, all filings, registration statements, proxy statements, reports and other documents (the “SEC Reports”) required to be filed by KVSB with the U.S. Securities and Exchange Commission (the “SEC”) complied in all material respects with the applicable requirements of the Securities Act of 1933, as amended (the “Securities Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the SEC promulgated thereunder. There are no material outstanding or unresolved comments in comment letters received by KVSB from the staff of the Division of Corporation Finance of the SEC with respect to any of the SEC Reports. None of the SEC Reports filed under the Exchange Act, contained, when filed or, if amended prior to the date of this Subscription Agreement, as of the date of such amendment with respect to those disclosures that are amended, any untrue statement of a material fact or omitted to state a 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; provided that (i) KVSB makes no such representation or warranty with respect to any information relating to the Company or any of its affiliates included in any SEC Report or filed as an exhibit thereto and (ii) KVSB’s Quarterly Report on 10-Q for the quarterly period ended March 31, 2021 on file with the SEC as of the date hereof contains certain errors relating to, among other things, the amount held in the Trust Account (as defined below) as of March 31, 2021 (which is $416,344,418), the number of shares of KVSB Class A common stock outstanding as of March 31, 2021 (which is 42,767,100), the number of private placement shares (which is 1,132,688) and other amounts derived therefrom, which such errors will be corrected in a Form 10-Q/A to be filed promptly after the date hereof.

(f) KVSB is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority, self-regulatory organization or other person in connection with the issuance of the Shares pursuant to this Subscription Agreement, other than (i) filings with the SEC, (ii) filings required by applicable state securities laws, (iii) the filings required in accordance with Section 13 of this Subscription Agreement, (iv) those required by Nasdaq or such other applicable stock exchange on which KVSB’s common stock is then listed (the “Stock Exchange”), including with respect to obtaining approval of KVSB’s stockholders, and (v) those the failure of which to obtain would not be reasonably be expected to have, individually or in the aggregate, a KVSB Material Adverse Effect.

(g) As of the date of this Subscription Agreement, the authorized capital stock of KVSB consists of: 200,000,000 Shares of which 42,767,100 are outstanding; 30,000,000 shares of Class B common stock, par value $0.0001 per share of which 5,000,000 are issued and outstanding (“Class B Shares”); 30,000,000 shares of Class K common stock, par value $0.0001 per share of which 5,000,000 are issued and outstanding (“Class K Shares”); and 1,000,000 shares of preferred stock, par value $0.0001 per share, none of which are issued and outstanding. All Class B Shares and Class K Shares will be converted, exchanged and/or reclassified at the Closing into an aggregate of 10,408,603 Class B common stock, par value $0.001 per share, as such shares will exist as Class B common stock following the Transaction. No other shares of capital stock or other voting securities of KVSB are issued, reserved for issuance or outstanding. All issued and outstanding Shares, Class B Shares and Class K Shares are duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights. Except as set forth in KVSB’s organizational documents, there are no outstanding contractual obligations of KVSB to repurchase, redeem or otherwise acquire any Shares or any capital equity of KVSB. Except as set forth in KVSB’s certificate of incorporation, there are no securities or instruments issued by or to which KVSB is a party containing anti-dilution or similar provisions that will be triggered by the issuance of (i) the Shares pursuant to this Subscription Agreement or (ii) the shares to be issued pursuant to any Other Subscription Agreement.

(h) KVSB is in compliance with all applicable law, and KVSB has not received any written communication from a governmental authority that alleges that KVSB is not in compliance with or is in default or violation of any applicable law, except where such non-compliance, default or violation would not reasonably be expected to be, individually or in the aggregate, material to KVSB.

(i) Assuming the accuracy of the Investor’s representations and warranties set forth in Section 6 of this Subscription Agreement, no registration under the Securities Act is required for the offer and sale of the Shares by KVSB to the Investor.

 

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(j) Neither KVSB nor any person acting on its behalf has offered or sold the Shares by any form of general solicitation or general advertising in violation of the Securities Act and neither KVSB, nor any person acting on its behalf has offered any of the Shares in a manner involving a public offering under, or in a distribution in violation of, the Securities Act or any state securities laws. Neither KVSB, nor any person acting on its behalf has, directly or indirectly, made any offers or sales of any security of KVSB nor solicited any offers to buy any security under circumstances that would adversely affect reliance by KVSB on Section 4(a)(2) of the Securities Act for the exemption from registration for the transactions contemplated hereby or would require registration of the issuance of the Shares under the Securities Act.

(k) The shares of Class A common stock of KVSB are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on the Stock Exchange. There is no suit, action, proceeding, or investigation pending, or, to the knowledge of KVSB, threatened against KVSB, including, but not limited to, any suit, action, proceeding or investigation by the Stock Exchange or the SEC, respectively, to prohibit or terminate the listing of, or suspend the trading of, the shares of Class A common stock of KVSB or to deregister the shares of Class A common stock of KVSB under the Exchange Act or the Stock Exchange. KVSB has taken no action that is designed to terminate the registration of, or suspend the trading of, the shares of Class A common stock under the Exchange Act or the Stock Exchange.

(l) KVSB is not under any obligation to pay any broker’s fee or commission in connection with the sale of the Shares to the Investor other than to Evercore Group LLC, Morgan Stanley & Co., LLC or any other placement agent (that may be appointed by KVSB) or any of their respective affiliates (collectively, the “Placement Agents”). KVSB and/or the Company is responsible for the payment of any fees or commissions of the Placement Agents.

(m) The Other Subscription Agreements reflect the same Per Share Subscription Price and other terms with respect to the purchase of the Shares that are no more favorable in any material respect to such Other Investor thereunder than the terms of this Subscription Agreement, other than terms particular to the regulatory requirements of such Other Investor or its affiliates or related funds. KVSB has not, and to its knowledge, no affiliate of KVSB has, entered into any side letter or similar arrangement with any Other Investor or any other investor in connection with such Other Investor’s or other investor’s direct or indirect investment in KVSB, other than the Other Subscription Agreements and the Transaction Agreement.

(n) None of KVSB, any of its officers, directors, managers, managing members, general partners or any other person acting in a similar capacity or carrying out a similar function, is (i) named on the Specially Designated Nationals and Blocked Persons List, the Foreign Sanctions Evaders List, the Sectoral Sanctions Identification List, or any other similar list of sanctioned persons administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), or any similar list of sanctioned persons administered by the United Kingdom, the European Union or any individual European Union member state (collectively, “Sanctions Lists”); (ii) directly or indirectly owned or controlled by, or acting on behalf of, one or more persons on a Sanctions List; (iii) organized, incorporated, established, located, resident or born in, or a citizen, national, or the government, including any political subdivision, agency, or instrumentality thereof, of, Cuba, Iran, North Korea, Syria, Venezuela, the Crimea region of Ukraine, or any other country or territory embargoed or subject to substantial trade restrictions by the United States, the United Kingdom, the European Union or any individual European Union member state; (iv) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515; or (v) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank (collectively, “Sanctions”). KVSB represents and covenants that if it is or becomes subject to the Bank Secrecy Act (31 U.S.C. Section 5311 et seq.) (the “BSA”), as amended by the USA PATRIOT Act of 2001 (the “PATRIOT Act”), and its implementing regulations (collectively, the “BSA/PATRIOT Act”), that KVSB maintains or will maintain policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act. KVSB also represents and covenants that it maintains and will maintain policies and procedures reasonably designed to ensure compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, and sanctions administered by the United States, the United Kingdom, the European Union, or any individual European Union member state, to the extent applicable to it. KVSB further covenants that it will not directly or indirectly use the proceeds of the PIPE Investment hereunder; lend, contribute or otherwise make available such proceeds to a subsidiary, joint venture partner or other person or entity; or otherwise conduct its business (i) to fund or facilitate any activities of or business with any person that, at the time of such funding or facilitation, is the subject

 

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of or target of any Sanctions, (ii) to fund or facilitate any activities of or business in any country or territory that is the subject or target of Sanctions or (iii) in any other manner that will result in a violation by any person (including any person participating in the transaction, whether as placement agent, advisor, investor or otherwise) of Sanctions or to otherwise cause any such person to be deemed to violate or be noncompliant with any sanctions program or anti-money laundering laws.

(o) Neither KVSB nor the Company is a U.S. business that (i) produces, designs, tests, manufactures, fabricates, or develops one or more “critical technologies”; (ii) performs the functions as set forth in column 2 of Appendix A to 31 C.F.R. Part 800 with respect to “covered investment critical infrastructure”; or (iii) maintains or collects, directly or indirectly, “sensitive personal data” of U.S. citizens, in each case as such terms in quotation marks are defined in the Defense Production Act of 1950, as amended, including all implementing regulations thereof.

(p) There are no pending or, to the knowledge of KVSB, threatened, suits, claims, actions, or proceedings, which, if determined adversely, would, individually or in the aggregate, reasonably be expected to have a KVSB Material Adverse Effect. There is no unsatisfied judgment or any open injunction binding upon KVSB, which would, individually or in the aggregate, reasonably be expected to have a KVSB Material Adverse Effect.

(q) KVSB is not, and immediately after receipt of payment for the Shares will not be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended (the “Investment Company Act”), or (ii) a “business development company” (as defined in Section 2(a)(48) of the Investment Company Act).

6. Investor Representations and Warranties. The Investor represents and warrants to KVSB, as of the date hereof and as of the Closing Date, that:

(a) The Investor (i) is (A) a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act), (B) an “accredited investor” (within the meaning of Rule 501(a)(1), (2), (3), (5), (7) or (8) under the Securities Act), in each case, satisfying the applicable requirements set forth on Schedule A (and in each case the Investor understands that the offering meets the exemptions for filing under FINRA Rule 5123(b)(1)(C) or (J)) or (C) an Institutional Account as defined in FINRA Rule 4512(c) (in which case the Investor understands that the offering (i) meets the exemptions for filing under FINRA Rule 5123(b)(1)(A) and (ii) the institutional customer exemption under FINRA Rule 2111(b)), (ii) is acquiring the Shares only for his, her or its own account and not for the account of others, or if the Investor is subscribing for the Shares as a fiduciary or agent for one or more investor accounts, each owner of each such account is independently a qualified institutional buyer, the Investor has full investment discretion with respect to each such account, and the full power and authority to make the acknowledgements, representations and agreements herein on behalf of each owner of each such account and (iii) is not acquiring the Shares with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or the securities law of any other jurisdiction (and shall provide the requested information set forth on Schedule A). The Investor is not an entity formed for the specific purpose of acquiring the Shares.

(b) The Investor acknowledges and agrees that the Shares are being offered in a transaction not involving any public offering within the meaning of the Securities Act, that the Shares have not been registered under the Securities Act and that KVSB is not required to register the Shares except as set forth in Section 7 of this Subscription Agreement. The Investor acknowledges and agrees that the Shares may not be offered, resold, transferred, pledged or otherwise disposed of by the Investor absent an effective registration statement under the Securities Act except (i) to KVSB or a subsidiary thereof, (ii) to non-U.S. persons pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act or (iii) pursuant to another applicable exemption from the registration requirements of the Securities Act, and, in each case, in accordance with any applicable securities laws of the states of the United States and other applicable jurisdictions, and that any certificates or book entry records representing the Shares shall contain a restrictive legend to such effect. The Investor acknowledges and agrees that the Shares will be subject to the foregoing securities law transfer restrictions and, as a result of these transfer restrictions, the Investor may not be able to readily offer, resell, transfer, pledge or otherwise dispose of the Shares and may be required to bear the financial risk of an investment in the Shares for an indefinite period of time. The Investor acknowledges and agrees that the Shares will not immediately be eligible for offer, resale, transfer, pledge or disposition pursuant to Rule 144 promulgated under the Securities Act, and that the provisions of

 

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Rule 144(i) will apply to the Shares. The Investor acknowledges and agrees that it has been advised to consult legal, tax and accounting prior to making any offer, resale, transfer, pledge or disposition of any of the Shares. The Investor has determined based on its own independent review and such professional advice as it deems appropriate that the Shares are a suitable investment for the Investor, notwithstanding the substantial risks inherent in investing in or holding the Shares.

(c) The Investor acknowledges and agrees that the Investor is purchasing the Shares from KVSB. The Investor further acknowledges that there have been no representations, warranties, covenants and agreements made to the Investor by or on behalf of KVSB, the Company, any of their respective affiliates or any control persons, officers, directors, employees, agents or representatives of any of the foregoing or any other person or entity, expressly or by implication, in each case other than the SEC Reports and those representations, warranties, covenants and agreements of KVSB expressly set forth in this Subscription Agreement.

(d) The Investor acknowledges and agrees that the Investor has received such information as the Investor deems necessary in order to make an investment decision with respect to the Shares, including, without limitation, with respect to KVSB, the Transaction and the business of the Company and its subsidiaries. Without limiting the generality of the foregoing, the Investor acknowledges that he, she or it has received access to and has had an adequate opportunity to review the SEC Reports, financial and other such information as the Investor deems necessary in order to make an investment decision with respect to the Shares, including with respect to KVSB, the Company and the Transaction. The Investor acknowledges and agrees that the Investor and the Investor’s legal, accounting, regulatory, tax and other professional advisor(s), if any, have had the opportunity to ask such questions, receive such answers and obtain such information as the Investor and such Investor’s legal, accounting, regulatory, tax and other professional advisor(s), if any, have deemed necessary to make an investment decision with respect to the Shares. In making its decision to purchase the Shares, the Investor represents that it has relied solely upon independent investigation made by the Investor, the Investor’s own sources of information, investment analysis and due diligence (including professional advice the Investor deems appropriate) and the representations, warranties and covenants of KVSB contained in this Subscription Agreement with respect to the Transaction, the Shares and the business, condition (financial and otherwise), management, operations, properties and prospects of KVSB and the Company including but not limited to all business, legal, regulatory, accounting, credit, tax and other economic matters. Without limiting the generality of the foregoing, the Investor has not relied on any statements or other information provided by or on behalf of anyone (including Evercore Group L.L.C. and Morgan Stanley & Co., LLC or any of their respective affiliates or any control persons, officers, directors, employees, agents or representatives of either of the foregoing), other than KVSB and its representatives concerning KVSB, the Company, the Transaction, the Transaction Agreement, this Subscription Agreement or the transactions contemplated hereby or thereby, the Shares or the offer and sale of the Shares. The Investor further acknowledges that the Investor has not relied upon the Placement Agents in connection with the Investor’s due diligence review of the offering of the Shares and KVSB. The Investor acknowledges and agrees that (a) it has been informed that each of the Placement Agents is acting solely as placement agent in connection with the Transaction and is not acting as an underwriter or in any other capacity in connection with the Subscription and is not and shall not be construed as a fiduciary for the Investor in connection with the Transaction, (b) the Placement Agents have not made and will not make any representation or warranty, whether express or implied, of any kind or character and have not provided any advice, including without limitation financial advice, or recommendation in connection with the Transaction, in each case, to the Investor, (c) the Placement Agents have not solicited any action from the Investor with respect to the offer and sale of the Shares, (d) the Placement Agents will have no responsibility to the Investor with respect to (i) any representations, warranties or agreements made by any person or entity under or in connection with the Transaction or any of the documents furnished pursuant thereto or in connection therewith, or the execution, legality, validity or enforceability (with respect to any person) or any thereof, or (ii) the business, condition (financial and otherwise), management, operations, properties or prospects of, KVSB, the Company or the Transaction and (e) the Placement Agents shall have no liability or obligation (including without limitation, for or with respect to any losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses or disbursements incurred by Investor), whether in contract, tort or otherwise, to the Investor, or to any person claiming through the Investor, in respect of the Transaction. The Investor further acknowledges that Evercore Group L.L.C. and Morgan Stanley & Co., LLC are acting as financial advisor to the Company in connection with the Transaction, and that the Placement Agents may receive fees both for their placement agent services and financial advisory services.

 

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(e) The Investor became aware of this offering of the Shares solely by means of direct contact between the Investor and KVSB, the Company or a representative of KVSB or the Company, and the Shares were offered to the Investor solely by direct contact between the Investor and KVSB, the Company or a representative of KVSB or the Company. The Investor did not become aware of this offering of the Shares, nor were the Shares offered to the Investor, by any other means. The Investor acknowledges that the Shares (i) were not offered to it by any form of general solicitation or general advertising and (ii) to its knowledge, are not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act, or any state securities laws. The Investor acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, KVSB, the Company, the Placement Agents, any of their respective affiliates or any control persons, officers, directors, employees, agents or representatives of any of the foregoing), other than the SEC Reports and the representations and warranties of KVSB contained in this Subscription Agreement, in making its investment or decision to invest in KVSB.

(f) The Investor acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Shares, including those set forth in the SEC Reports. The Investor has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares, and the Investor has sought such accounting, legal and tax advice as the Investor has considered necessary to make an informed investment decision and the Investor has made its own assessment and has satisfied itself concerning relevant tax or other economic considerations relative to its purchase of the Shares. The Investor acknowledges that Investor shall be responsible for any of the Investor’s tax liabilities that may arise as a result of the transactions contemplated by this Subscription Agreement, and that neither KVSB nor the Company has provided any tax advice or any other representation or guarantee regarding the tax consequences of the transactions contemplated by the Subscription Agreement.

(g) Alone, or together with any professional advisor(s), the Investor has analyzed and considered the risks of an investment in the Shares and that the Investor is able at this time and in the foreseeable future to bear the economic risk of a total loss of the Investor’s investment in KVSB. The Investor acknowledges specifically that a possibility of total loss exists.

(h) The Investor acknowledges that no federal or state agency has passed upon or endorsed the merits of the offering of the Shares or made any findings or determination as to the fairness of an investment in the Shares.

(i) The Investor, if not a natural person, has been duly formed or incorporated and is validly existing and in good standing under the laws of its jurisdiction of formation or incorporation (to the extent such concept exists in such jurisdiction), with power and authority to enter into, deliver and perform its obligations under this Subscription Agreement.

(j) The execution, delivery and performance by the Investor of this Subscription Agreement are within the powers of the Investor, have been duly authorized and will not constitute or result in a breach or default under or conflict with any order, ruling or regulation of any court or other tribunal or of any governmental commission or agency, or any agreement or other undertaking, to which the Investor is a party or by which the Investor is bound, that would reasonably be expected to have a material adverse effect on the Investor’s ability to consummate the transactions contemplated hereby (an “Investor Material Adverse Effect”), and, if the Investor is not a natural person, will not conflict with or violate any provisions of the Investor’s organizational documents, including, without limitation, its incorporation or formation papers, bylaws, indenture of trust or partnership or operating agreement, as may be applicable. The signature of the Investor on this Subscription Agreement is genuine, and the signatory, if the Investor is a natural person, has legal competence and capacity to execute the same or, if the Investor is not a natural person, the signatory has been duly authorized to execute the same, and, this Subscription Agreement has been duly executed and delivered by the Investor and, assuming that this Subscription Agreement constitutes the valid and binding agreement of KVSB, this Subscription Agreement constitutes a legal, valid and binding obligation of the Investor, enforceable against the Investor in accordance with its terms except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, and (ii) principles of equity, whether considered at law or equity.

 

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(k) Neither the Investor nor, if the Investor is not a natural person, any of its officers, directors, managers, managing members, general partners or any other person acting in a similar capacity or carrying out a similar function, is (i) a person or entity named on a Sanctions List; (ii) directly or indirectly owned or controlled by, or acting on behalf of, one or more persons on a Sanctions List; (iii) organized, incorporated, established, located, resident or born in, or a citizen, national, or the government, including any political subdivision, agency, or instrumentality thereof, of, Cuba, Iran, North Korea, Syria, Venezuela, the Crimea region of Ukraine, or any other country or territory embargoed or subject to substantial trade restrictions by the United States, the United Kingdom, the European Union or any individual European Union member state; (iv) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515; or (v) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank (each, a “Prohibited Investor”). The Investor also represents, if the Investor is not a natural person, that it maintains policies and procedures reasonably designed to ensure compliance with sanctions administered by the United States, the United Kingdom, the European Union or any individual European Union member state. The Investor further represents that the Investor maintains policies and procedures reasonably designed to ensure that the funds held by the Investor and used to purchase the Shares were legally derived and were not obtained, directly or indirectly, from a Prohibited Investor.

(l) If the Investor is or is acting on behalf of (i) an employee benefit plan that is subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), (ii) a plan, an individual retirement account or other arrangement that is subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), (iii) an entity whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement described in clauses (i) and (ii) (each, an “ERISA Plan”), or (iv) an employee benefit plan that is a governmental plan (as defined in Section 3(32) of ERISA), a church plan (as defined in Section 3(33) of ERISA), a non-U.S. plan (as described in Section 4(b)(4) of ERISA) or other plan that is not subject to the foregoing clauses (i), (ii) or (iii) but may be subject to provisions under any other federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code (collectively, “Similar Laws,” and together with ERISA Plans, “Plans”), the Investor represents and warrants that (A) neither KVSB, the Company nor any of their respective affiliates (the “Transaction Parties”) has provided investment advice or has otherwise acted as the Plan’s fiduciary, or has been relied on for advice, with respect to its decision to acquire and hold the Shares, and none of the Transaction Parties is or shall at any time be the Plan’s fiduciary with respect to any decision in connection with the Investor’s investment in the Shares; and (B) its purchase of the Shares will not result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code, or any applicable Similar Law.

(m) No disclosure or offering document has been prepared by the Placement Agents in connection with the offer and sale of the Shares.

(n) The Investor acknowledges that none of the Placement Agents, nor any of their respective affiliates, nor any control persons, officers, directors, employees, agents or representatives of any of the foregoing has made any independent investigation with respect to KVSB, the Company or any of their subsidiaries or any of their respective businesses, or the Shares or the accuracy, completeness or adequacy of any information supplied to the Investor by KVSB, and do not make any representation or warranty with respect to KVSB, the Company, the Shares or the accuracy, completeness or adequacy of any information supplied to the Investor by KVSB or the Company.

(o) The Investor acknowledges that in connection with the issue and purchase of the Shares, none of the Placement Agents has acted as the Investor’s underwriter, initial purchaser, dealer, financial advisor, fiduciary or in any other such capacity.

(p) The Investor has or has commitments to have, and when required to deliver payment to KVSB pursuant to Section 2 above, will have, sufficient funds to pay the Subscription Amount and consummate the purchase and sale of the Shares pursuant to this Subscription Agreement.

(q) The Investor acknowledges that (i) the Placement Agents may have acquired, or may acquire, nonpublic information with respect to KVSB that is not known to the Investor and that may be material to a decision to enter into this transaction to purchase Shares (“Excluded Information”), and (ii) the Investor has determined to enter into the transaction to purchase the Shares notwithstanding its lack of knowledge of the Excluded Information.

 

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(r) The Investor acknowledges and agrees that it is not an underwriter within the meaning of Section 2(a)(11) of the Securities Act and that the purchase and sale of Shares hereunder meets the exemptions from filing under FINRA Rule 5123(b)(1).

(s) No foreign person (as defined in 31 C.F.R. Part 800.224) in which the national or subnational governments of a single foreign state have a substantial interest (as defined in 31 C.F.R. Part 800.244) will acquire a substantial interest in KVSB as a result of the purchase and sale of Shares hereunder such that a declaration to the Committee on Foreign Investment in the United States would be mandatory under 31 C.F.R. Part 800.401, and no foreign person will have control (as defined in 31 C.F.R. Part 800.208) over KVSB from and after the Closing as a result of the purchase and sale of Shares hereunder.

7. Registration Rights.

(a) KVSB agrees that, within thirty (30) calendar days following the Closing Date (such deadline, the “Filing Deadline”), KVSB will submit to or file with the SEC (at its sole cost and expense) a registration statement for a shelf registration on Form S-1 or Form S-3 (if KVSB is then eligible to use a Form S-3 shelf registration) (the “Registration Statement”), in each case, covering the resale of the Shares acquired by the Investor pursuant to this Subscription Agreement (the “Registrable Shares”) and KVSB shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable after the filing thereof, but no later than the earlier of (i) the ninetieth (90th) calendar day following the Closing Date if the SEC notifies KVSB that it will “review” the Registration Statement and (ii) the fifth (5th) business day after the date KVSB is notified (orally or in writing, whichever is earlier) by the SEC that the Registration Statement will not be “reviewed” or will not be subject to further review (such earlier date, the “Effectiveness Deadline”); provided, however, that if the Effectiveness Deadline falls on a Saturday, Sunday or other day that the SEC is closed for business, the Effectiveness Deadline shall be extended to the next business day on which the SEC is open for business; and provided, further, that (x) KVSB shall use its commercially reasonable efforts to provide a draft of the initial Registration Statement to the Investor for review at least three (3) business days in advance of the filing of the initial Registration Statement, so long as KVSB shall not be required to delay or postpone the filing of such initial Registration Statement as a result of or in connection with the Investor’s review; and (y) KVSB’s obligations to include the Registrable Shares in the Registration Statement are contingent upon the Investor furnishing in writing to KVSB such information regarding the Investor, the securities of KVSB held by the Investor and the intended method of disposition of the Registrable Shares (which shall be limited to non-underwritten public offerings) as shall be reasonably requested by KVSB to effect the registration of the Registrable Shares, and the Investor shall execute such documents in connection with such registration as KVSB may reasonably request that are customary of a selling stockholder in similar situations; provided that the Investor shall not in connection with the foregoing be required to execute any lock-up or similar agreement or otherwise be subject to any contractual restriction on the ability to transfer the Registrable Shares. The Registration Statement shall include a “plan of distribution” that permits all lawful means of disposition of the Registrable Shares by the Investor, including block sales, agented transactions, sales directly into the market and other customary provisions (but, excluding for the avoidance of doubt, underwritten offerings). Notwithstanding the foregoing, if the SEC prevents KVSB from including any or all of the shares proposed to be registered under the Registration Statement due to limitations on the use of Rule 415 of the Securities Act for the resale of the Shares by the applicable shareholders or otherwise, such Registration Statement shall register for resale such number of Shares which is equal to the maximum number of Shares as is permitted by the SEC. In such event, the number of Shares to be registered for each selling shareholder named in the Registration Statement shall be reduced pro rata among all such selling shareholders, and as promptly as practicable after being permitted to register additional shares under Rule 415 under the Securities Act, KVSB shall amend the Registration Statement or file one or more new Registration Statement(s) (such new Registration Statement shall also be deemed to be “Registration Statement” hereunder) to register such additional subscribed Shares and cause such amendment or Registration Statement(s) to become effective as promptly as practicable after the filing thereof. Unless otherwise agreed to in writing by the Investor, the Investor shall not be identified as a statutory underwriter in the Registration Statement unless requested by the SEC; provided, that if the SEC requests that Investor be identified as a statutory underwriter in the Registration Statement, Investor will have the opportunity to withdraw from the Registration Statement upon its prompt written request to KVSB. For as long as the Investor holds Shares, KVSB will use commercially reasonable efforts to file all reports for so long as the condition in Rule 144(c)(1) (or Rule 144(i)(2), if applicable) is required to be satisfied, and provide all customary and reasonable cooperation, necessary to enable the undersigned to resell the Shares acquired hereunder pursuant to Rule 144 of the Securities Act (in each case, when Rule 144 of the Securities Act becomes available to the Investors), including providing customary and

 

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reasonable legal opinions to KVSB’s transfer agent. Any failure by KVSB to file the Registration Statement by the Filing Deadline or to effect such Registration Statement by the Effectiveness Deadline shall not otherwise relieve KVSB of its obligations to file or effect the Registration Statement as set forth above in this Section 7.

(b) In the case of the registration effected by KVSB pursuant to this Subscription Agreement, KVSB shall, upon reasonable request, inform the Investor as to the status of such registration. At its expense, KVSB shall:

(i) except for such times as KVSB is permitted hereunder to suspend the use of the prospectus forming part of a Registration Statement, use its commercially reasonable efforts to keep such registration, and any qualification, exemption or compliance under state securities laws which KVSB determines to obtain, continuously effective with respect to Investor, and to keep the applicable Registration Statement or any subsequent shelf registration statement free of any material misstatements or omissions, until the earlier of the following: (A) the Investor ceases to hold any Registrable Shares, (B) the date all Registrable Shares held by the Investor may be sold without restriction under Rule 144 and without the requirement for KVSB to be in compliance with the current public information required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable), including without limitation, any volume and manner of sale restrictions which may be applicable to affiliates under Rule 144, and (C) two (2) years from the date of effectiveness of the Registration Statement. The period of time during which KVSB is required hereunder to keep a Registration Statement effective is referred to herein as the “Registration Period”;

(ii) during the Registration Period, advise the Investor, as expeditiously as possible:

(1) when a Registration Statement or any amendment thereto has been filed with the SEC;

(2) after it shall receive notice or obtain knowledge thereof, of the issuance by the SEC of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for such purpose;

(3) of the receipt by KVSB of any notification with respect to the suspension of the qualification of the Registrable Shares included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

(4) subject to the provisions in this Subscription Agreement, of the occurrence of any event that requires the making of any changes in any Registration Statement or prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading.

Notwithstanding anything to the contrary set forth herein, KVSB shall not, when so advising the Investor of such events, provide the Investor with any material, nonpublic information regarding KVSB other than to the extent that providing notice to the Investor of the occurrence of the events listed in (1) through (4) above may constitute material, nonpublic information regarding KVSB;

(iii) during the Registration Period, use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement as soon as reasonably practicable;

(iv) during the Registration Period, upon the occurrence of any event contemplated in Section 7(b)(ii)(4) above, except for such times as KVSB is permitted hereunder to suspend, and has suspended, the use of a prospectus forming part of a Registration Statement, KVSB shall use its commercially reasonable efforts to as soon as reasonably practicable prepare a post-effective

 

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amendment to such Registration Statement or a supplement to the related prospectus, or file any other required document so that, as thereafter delivered to purchasers of the Registrable Shares included therein, such prospectus will not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

(v) during the Registration Period, use its commercially reasonable efforts to cause all Registrable Shares to be listed on each securities exchange or market, if any, on which the Shares have been listed;

(vi) during the Registration Period, use its commercially reasonable efforts to allow the Investor to review disclosure regarding the Investor in the Registration Statement; and

(vii) otherwise, in good faith, during the Registration Period, cooperate reasonably with, and take such customary actions as may reasonably be requested by the Investor, consistent with the terms of this Subscription Agreement, in connection with the registration of the Registrable Shares.

(c) Notwithstanding anything to the contrary in this Subscription Agreement, KVSB shall be entitled to delay the filing or effectiveness of, or suspend the use of, the Registration Statement if it determines that in order for the Registration Statement not to contain a material misstatement or omission, (i) an amendment thereto would be needed to include information that would at that time not otherwise be required in a current, quarterly, or annual report under the Exchange Act, or (ii) the negotiation or consummation of a transaction by KVSB or its subsidiaries is pending or an event has occurred, which negotiation, consummation or event KVSB’s board of directors reasonably believes, upon advice of legal counsel, would require additional disclosure by KVSB in the Registration Statement of material information that KVSB has a bona fide business purpose for keeping confidential and the non-disclosure of which in the Registration Statement would be expected, in the reasonable determination of KVSB’s board of directors, upon advice of legal counsel, to cause the Registration Statement to fail to comply with applicable disclosure requirement (each such circumstance, a “Suspension Event”); provided, however, that KVSB may not delay or suspend the Registration Statement on more than two occasions or for more than sixty (60) consecutive calendar days, or more than ninety (90) total calendar days, in each case, during any twelve-month period. Upon receipt of any written notice from KVSB of the happening of any Suspension Event during the period that the Registration Statement is effective or if as a result of a Suspension Event the Registration Statement or related prospectus contains 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 light of the circumstances under which they were made, in the case of the prospectus) not misleading, the Investor agrees that (i) it will immediately discontinue offers and sales of the Registrable Shares under the Registration Statement (excluding, for the avoidance of doubt, sales conducted pursuant to Rule 144) until the Investor receives copies of a supplemental or amended prospectus (which KVSB agrees to promptly prepare) that corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective or unless otherwise notified by KVSB that it may resume such offers and sales, and (ii) it will maintain the confidentiality of any information included in such written notice delivered by KVSB unless otherwise required by law or subpoena; provided that, for the avoidance of doubt, such written notice shall not include any material non-public information with respect to KVSB. If so directed by KVSB, the Investor will deliver to KVSB or, in the Investor’s sole discretion destroy, all copies of the prospectus covering the Registrable Shares in Investor’s possession; provided, however, that this obligation to deliver or destroy all copies of the prospectus covering the Registrable Shares shall not apply (A) to the extent the Investor is required to retain a copy of such prospectus (1) in order to comply with applicable legal, regulatory, self-regulatory or professional requirements or (2) in accordance with a bona fide pre-existing document retention policy or (B) to copies stored electronically on archival servers as a result of automatic data back-up. The Investor may deliver written notice (an “Opt-Out Notice”) to KVSB requesting that the Investor not receive notices from KVSB regarding the suspension of the Registration Statement; provided, however, that the Investor may later revoke any such Opt-Out Notice in writing. Following receipt of an Opt-Out Notice from the Investor (unless subsequently revoked), (i) KVSB shall not deliver any such notices to the Investor and the Investor shall no longer be entitled to the rights associated with any such notice and (ii) each time prior to the Investor’s intended use of an effective Registration Statement, the Investor will notify KVSB in writing at least two (2) business days in advance of such intended use, and if a notice of a suspension was previously delivered (or would have been delivered but for the provisions of this Section 7(c) and the related suspension period remains in effect), KVSB will so notify the Investor, within one (1) business day after the Investor’s notification to KVSB, by delivering to the Investor a copy of such previous notice of suspension, and thereafter will provide the Investor with the related notice of the conclusion of such suspension promptly following its availability.

 

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(d) Indemnification.

(i) KVSB agrees to indemnify, to the extent permitted by law, the Investor (to the extent a seller under the Registration Statement), its directors, officers, employees, advisers and agents, and each person or entity who controls the Investor (within the meaning of the Securities Act), to the extent not prohibited by law, against all losses, claims, damages, liabilities and reasonable and documented out of pocket expenses (including, without limitation, reasonable and documented outside attorneys’) as incurred caused by any untrue or alleged untrue statement of material fact contained in any Registration Statement, prospectus included in any Registration Statement or preliminary prospectus or any amendment thereof or supplement thereto or document incorporated by reference therein or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading, except insofar as the same are solely caused by or contained in any information or affidavit so furnished in writing to KVSB by or on behalf of the Investor expressly for use therein.

(ii) In connection with any Registration Statement in which the Investor is participating, the Investor shall furnish (or cause to be furnished) to KVSB in writing such information and affidavits as KVSB reasonably requests for use in connection with any such Registration Statement or prospectus and, to the extent not prohibited by law, shall indemnify KVSB, its directors, officers, employees, advisers and agents, and each person or entity who controls KVSB (within the meaning of the Securities Act), to the extent not prohibited by law, against all losses, claims, damages, liabilities and expenses (including, without limitation, reasonable and documented outside attorneys’ fees) actually incurred as a result of any untrue or alleged untrue statement of material fact contained or incorporated by reference in any Registration Statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or document incorporated by reference therein or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading, but only to the extent that such untrue statement or omission is contained (or not contained in, in the case of an omission) in any information or affidavit so furnished in writing by on behalf of the Investor expressly for use therein; provided, however, that the liability of the Investor shall be several and not joint and shall be in proportion to and limited to the net proceeds received by the Investor from the sale of Registrable Shares giving rise to such indemnification obligation.

(iii) Any person or entity entitled to indemnification herein shall (A) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s or entity’s right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (B) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party (which consent shall not be unreasonably withheld, conditioned or delayed), consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is

 

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so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement includes a statement or admission of fault and culpability on the part of such indemnified party or which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

(iv) The indemnification provided for under this Subscription Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person or entity of such indemnified party and shall survive the transfer of the Shares.

(v) If the indemnification provided under this Section 7(d) from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations; provided, however, the aggregate liability of the Investor under this Section 7 shall be limited to the net proceeds received by the Investor from the sale of Registrable Shares giving rise to such indemnification obligation. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by (or not made by, in the case of an omission), or relates to information supplied by (or not supplied by, in the case of an omission), such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in Sections 7(d)(i), (ii) and (iii) above, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 7(d)(v) from any person or entity who was not guilty of such fraudulent misrepresentation.

(e) For purposes of this Section 7, “Shares” shall mean, as of any date of determination, the subscribed Shares (as defined in the recitals to this Subscription Agreement) and any other equity security issued or issuable with respect to the subscribed Shares by way of share split, dividend, distribution, recapitalization, merger, exchange, replacement or similar event, and “Investor” shall include any affiliate of the Investor to which the rights under this Section 7 shall have been duly assigned.

(f) In connection with any sale, assignment, transfer or other disposition of the subscribed Shares by the Investor pursuant to Rule 144 or pursuant to any other exemption under the Securities Act such that the Shares held by the Investor become freely tradable and upon compliance by the Investor with the requirements of this Section 7(f), if requested by the Investor, KVSB shall cause the transfer agent for the Shares (the “Transfer Agent”) to remove any restrictive legends related to the book entry account holding such shares and make a new, unlegended entry for such book entry shares sold or disposed of without restrictive legends within three (3) trading days of any such request therefor from the Investor, provided that KVSB and the Transfer Agent have timely received from the Investor customary representations and other documentation reasonably acceptable to KVSB and the Transfer Agent in connection therewith. Subject to receipt from the Investor by KVSB and the Transfer Agent of customary representations (including a representation that Investor will only sell the Shares in accordance with an effective registration statement or Rule 144) and other documentation reasonably acceptable to KVSB and the Transfer Agent in connection therewith, the Investor may request that KVSB remove any legend from the book entry position evidencing its subscribed Shares and KVSB will, if required by the Transfer Agent, cause an opinion of KVSB’s counsel be provided, in a form reasonably acceptable to the Transfer Agent, to the effect that the removal of such restrictive legends in such circumstances may be effected under the Securities Act, following the earliest of such time as such Shares (i) (x) are subject to or (y) have been or are about to be sold or transferred pursuant to an effective registration statement, (ii) have been sold pursuant to Rule 144, or (iii) are eligible for resale under Rule 144(b)(1) or

 

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any successor provision without the requirement for KVSB to be in compliance with the current public information requirement under Rule 144 and without volume or manner-of-sale restrictions applicable to the sale or transfer of such shares. If restrictive legends are no longer required for such Shares pursuant to the foregoing, KVSB shall, in accordance with the provisions of this section and within three (3) trading days of any request therefor from the Investor accompanied by such customary and reasonably acceptable representations and other documentation referred to above establishing that restrictive legends are no longer required, deliver to the Transfer Agent irrevocable instructions that the Transfer Agent shall make a new, unlegended entry for such book entry shares. KVSB shall be responsible for the fees of its Transfer Agent, its legal counsel and all DTC fees associated with such issuance and the Investor shall be responsible for all other fees and expenses (including, without limitation, any applicable broker fees, fees and disbursements of their legal counsel and any applicable transfer taxes).

8. Termination. This Subscription Agreement shall terminate and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, upon the earliest to occur of (i) such date and time as the Transaction Agreement is terminated in accordance with its terms, (ii) upon the mutual written agreement of each of the parties hereto to terminate this Subscription Agreement, (iii) if the conditions to Closing set forth in Section 3 of this Subscription Agreement are not satisfied, or are not capable of being satisfied, on or prior to the Closing and, as a result thereof, the transactions contemplated by this Subscription Agreement will not be or are not consummated at the Closing and (iv) on or after the date that is 270 days after the date hereof if the Closing has not occurred on or prior to such date; provided that nothing herein will relieve any party from liability for any willful breach hereof prior to the time of termination, and each party will be entitled to any remedies at law or in equity to recover losses, liabilities or damages arising from any such willful breach. KVSB shall notify the Investor of the termination of the Transaction Agreement promptly after the termination of such agreement. Upon the termination of this Subscription Agreement in accordance with this Section 8, any monies paid by the Investor to KVSB in connection herewith shall be promptly (and in any event within one (1) business day after such termination) returned to the Investor without any deduction.

9. Investor Covenant. The Investor hereby agrees that, from the date of this Subscription Agreement, none of the Investor, its controlled affiliates, or any person or entity acting on behalf of the Investor or any of its controlled affiliates or pursuant to any understanding with the Investor or any of its controlled affiliates will engage in any Short Sales with respect to securities of KVSB prior to the Closing. For purposes of this Section 9, “Short Sales” shall include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act, and all types of direct and indirect stock pledges (other than pledges in the ordinary course of business as part of prime brokerage arrangements), forward sale contracts, options, puts, calls, swaps and similar arrangements (including on a total return basis), and other similar transactions through non-U.S. broker dealers or foreign regulated brokers. Notwithstanding the foregoing, (i) nothing herein shall prohibit other entities under common management with the Investor that have no knowledge of this Subscription Agreement or of the Investor’s participation in the Transaction or PIPE Investment (including the Investor’s controlled affiliates and/or affiliates) from entering into any Short Sales and (ii) in the case of an Investor that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Investor’s assets and the portfolio managers have no knowledge of the investment decisions made by the portfolio managers managing other portions of such Investor’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Shares covered by this Subscription Agreement. KVSB acknowledges and agrees that, notwithstanding anything herein to the contrary, (i) this Section 9 shall not apply to (x) any sale (including the exercise of any redemption right) of securities of KVSB held by the Investor, its controlled affiliates or any person or entity acting on behalf of the Investor or any of its controlled affiliates prior to the execution of this Subscription Agreement, (y) any securities purchased by the Investor, its controlled affiliates or any person or entity acting on behalf of the Investor or any of its controlled affiliates in open market transactions after the execution of this Subscription Agreement or (z) ordinary course, non-speculative hedging transactions and (ii) the Shares may be pledged by the Investor in connection with a bona fide margin agreement, provided that such pledge shall be (x) pursuant to an available exemption from the registration requirements of the Securities Act or (y) pursuant to, and in accordance with, a registration statement that is effective under the Securities Act at the time of such pledge, and the Investor effecting a pledge of the Shares shall not be required to provide KVSB with any notice thereof; provided, however, that neither KVSB nor its counsel shall be required to take any action (or refrain from taking any action) in connection with any such pledge, other than providing any such lender of such margin agreement with an acknowledgment that the Shares are not subject to any contractual lock up or prohibition on pledging, the form of such acknowledgment to be subject to review and comment by KVSB.

 

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10. Trust Account Waiver. The Investor acknowledges that KVSB is a blank check company with the powers and privileges to effect a merger, asset acquisition, reorganization or similar business combination involving KVSB and one or more businesses or assets. The Investor further acknowledges that, as described in KVSB’s prospectus relating to its initial public offering dated March 23, 2021 (the “Prospectus”) available at www.sec.gov, substantially all of KVSB’s assets consist of the cash proceeds of KVSB’s initial public offering and private placement of its securities, and substantially all of those proceeds have been deposited in a trust account (the “Trust Account”) for the benefit of KVSB, its public stockholders and the underwriter of KVSB’s initial public offering. Except with respect to interest earned on the funds held in the Trust Account that may be released to KVSB to pay its tax obligations, if any, the cash in the Trust Account may be disbursed only for the purposes set forth in the Prospectus. For and in consideration of KVSB entering into this Subscription Agreement, the receipt and sufficiency of which are hereby acknowledged, the Investor hereby irrevocably waives any and all right, title and interest, or any claim of any kind it has or may have in the future, in or to any monies held in the Trust Account, as a result of, in connection with or relating in any way to, this Subscription Agreement, regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability, and irrevocably agrees not to seek recourse against the Trust Account as a result of, or arising out of, this Subscription Agreement; provided however, that nothing in this Section 10 shall serve to limit or prohibit the Investor’s right to pursue a claim against KVSB for legal relief against assets held outside the Trust Account, for specific performance or other equitable relief. The Investor agrees and acknowledges that such irrevocable waiver is material to this Subscription Agreement and specifically relied upon by KVSB and its affiliates to induce KVSB to enter in this Subscription Agreement, and each such party further intends and understands such waiver to be valid, binding and enforceable against the Investor and its affiliates under applicable law. To the extent the Investor commences any action or proceeding based upon, in connection with, relating to or arising out of any matter relating to KVSB or its affiliates, which proceeding seeks, in whole or in part, monetary relief against KVSB or its affiliates, the Investor hereby acknowledges and agrees that the Investor’s sole remedy shall be against funds held outside of the Trust Account and that such claim shall not permit the Investor (or any person claiming on its behalf or in lieu of the Investor) to have any claim against the Trust Account (including any distributions therefrom) or any amounts contained therein. Notwithstanding anything else in this Section 10 to the contrary, nothing herein shall be deemed to waive or limit the Investor or its affiliates’ right, title, interest or claim to the Trust Account by virtue of the Investor’s record or beneficial ownership of Shares or other equity interests of KVSB acquired by any means other than pursuant to this Subscription Agreement, including but not limited to any redemption right with respect to any such securities of KVSB.

11. Miscellaneous.

(a) Neither this Subscription Agreement nor any rights that may accrue to the Investor hereunder (other than the Shares acquired hereunder, if any) may be transferred or assigned, other than an assignment to any fund or other entity or account managed by the same investment manager or investment advisor as the Investor or an affiliate thereof, or, with the prior written consent of KVSB, another person, provided that, if such transfer or assignment is prior to the Closing, such transferee or assignee, as applicable, executes a joinder to this Subscription Agreement or a separate subscription agreement in substantially the same form as this Subscription Agreement, including with respect to the Subscription Amount and other terms and conditions, provided, that, in the case of any such transfer or assignment made without the prior written consent of KVSB, as applicable, the initial party to this Subscription Agreement shall remain bound by its obligations under this Subscription Agreement in the event that the transferee or assignee, as applicable, does not comply with its obligations to consummate the purchase of Shares contemplated hereby. Neither this Subscription Agreement nor any rights that may accrue to KVSB hereunder or any of KVSB’s obligations may be transferred or assigned other than pursuant to the Transaction.

(b) KVSB may request from the Investor such additional information as KVSB may deem reasonably necessary to evaluate the eligibility of the Investor to acquire the Shares and in connection with the inclusion of the Shares in the Registration Statement, and the Investor shall reasonably promptly provide such information as may reasonably be requested, to the extent readily available and to the extent consistent with its internal policies and procedures; provided, that, KVSB agrees to keep any such information provided by the Investor confidential other than as necessary to include in any registration statement KVSB is required to file hereunder. The Investor acknowledges and agrees that if it does not provide KVSB with such requested information, KVSB may not be able to register the Shares acquired by the Investor pursuant to this Subscription Agreement for resale pursuant to Section 7 hereof. The Investor hereby agrees that its identity and the Subscription Agreement, as well as the nature of the Investor’s obligations hereunder, may be disclosed in any public disclosure required by the SEC and in any registration statement, proxy statement, consent solicitation statement or any other SEC filing to be filed by KVSB in connection with the issuance of Shares contemplated by this Subscription Agreement and/or the Transaction.

 

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(c) The Investor acknowledges that (i) KVSB and, after the Closing, the Company will rely on the acknowledgments, understandings, agreements, representations and warranties of the Investor contained in this Subscription Agreement and (ii) the Placement Agents (as third-party beneficiaries with rights of enforcement on their own behalf and not, for the avoidance of doubt, on behalf of KVSB or the Company) will rely on the acknowledgments, understandings, agreements, representations and warranties of the Investor contained in Section 6 and Section 12 of this Subscription Agreement. Prior to the Closing, the Investor agrees to promptly notify KVSB and the Placement Agents if any of the acknowledgments, understandings, agreements, representations and warranties of the Investor set forth herein are no longer accurate. The Investor acknowledges and agrees that the purchase by the Investor of Shares under this Subscription Agreement from KVSB will constitute a reaffirmation of the acknowledgments, understandings, agreements, representations and warranties herein (as modified by any such notification) by the Investor as of the time of such purchase. KVSB acknowledges that the Investor and the Placement Agents will rely on the acknowledgments, understandings, agreements, representations and warranties of KVSB contained in this Subscription Agreement. Prior to the Closing, KVSB agrees to promptly notify the Investor and the Placement Agents if any of the acknowledgments, understandings, agreements, representations and warranties of KVSB set forth herein are no longer accurate.

(d) KVSB, the Placement Agents and the Investor each is irrevocably authorized to produce this Subscription Agreement or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

(e) All of the representations and warranties contained in this Subscription Agreement shall survive the Closing. All of the covenants and agreements made by each party hereto in this Subscription Agreement shall survive the Closing.

(f) This Subscription Agreement may not be modified, waived or terminated (other than pursuant to the terms of Section 8 above) except by an instrument in writing, signed by each of the parties hereto and, with respect to any modification or waiver, to the extent required by the Transaction Agreement, the Company; provided that the Investor may waive any rights hereunder without obtaining written consent from KVSB or the Company. No failure or delay of either party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties and third-party beneficiaries hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have hereunder.

(g) This Subscription Agreement (including the schedule hereto) constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof. Except as set forth in Section 7(d), Section 9, Section 11(c), Section 11(d) and Section 12 with respect to the persons referenced therein, this Subscription Agreement shall not confer any rights or remedies upon any person other than the parties hereto, and their respective successor and assigns.

(h) Except as otherwise provided herein, this Subscription Agreement shall be binding upon, and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives, and permitted assigns, and the agreements, representations, warranties, covenants and acknowledgments contained herein shall be deemed to be made by, and be binding upon, such heirs, executors, administrators, successors, legal representatives and permitted assigns.

(i) If any provision of this Subscription Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Subscription Agreement shall not in any way be affected or impaired thereby and shall continue in full force and effect. The parties hereto shall endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

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(j) This Subscription Agreement may be executed in one or more counterparts (including by electronic mail or in .pdf) and by different parties in separate counterparts, with the same effect as if all parties hereto had signed the same document. Counterparts may be delivered via facsimile, electronic mail (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. All counterparts so executed and delivered shall be construed together and shall constitute one and the same agreement.

(k) The parties hereto acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Subscription Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Subscription Agreement, without posting a bond or undertaking and without proof of damages, to enforce specifically the terms and provisions of this Subscription Agreement, this being in addition to any other remedy to which such party is entitled at law, in equity, in contract, in tort or otherwise.

(l) This Subscription Agreement, and any claim or cause of action hereunder based upon, arising out of or related to this Subscription Agreement (whether based on law, in equity, in contract, in tort or any other theory) or the negotiation, execution, performance or enforcement of this Subscription Agreement, shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof.

(m) THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURT OF CHANCERY OF THE STATE OF DELAWARE (OR, TO THE EXTENT SUCH COURT DOES NOT HAVE SUBJECT MATTER JURISDICTION, THE SUPERIOR COURT OF THE STATE OF DELAWARE, OR THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE) IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS SUBSCRIPTION AGREEMENT AND THE DOCUMENTS REFERRED TO IN THIS SUBSCRIPTION AGREEMENT AND IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR INTERPRETATION OR ENFORCEMENT HEREOF OR ANY SUCH DOCUMENT THAT IS NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS SUBSCRIPTION AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION, SUIT OR PROCEEDING SHALL BE HEARD AND DETERMINED BY SUCH A DELAWARE STATE OR FEDERAL COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH SUCH ACTION, SUIT OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 14 OF THIS SUBSCRIPTION AGREEMENT OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW SHALL BE VALID AND SUFFICIENT SERVICE THEREOF.

(n) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (II) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THE FOREGOING WAIVER; (III) SUCH PARTY MAKES THE FOREGOING WAIVER VOLUNTARILY AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS SUBSCRIPTION AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 11(n).

 

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(o) Each of the Investor and KVSB acknowledges and agrees that for U.S. federal income tax purposes, the Investor shall be deemed to be the owner of any funds transferred by the Investor to KVSB unless and until the Closing is fully completed in accordance with the terms of this Subscription Agreement.

(p) During the period from the date of this Subscription Agreement through the Closing Date, if KVSB shall enter into any additional, or modify any existing, agreements with any Other Investors (whether through Other Subscription Agreements or otherwise) that have the effect of establishing rights or otherwise benefiting any such Other Investor in a manner more favorable in any material respect to such Other Investor than the rights and benefits established in favor of the Investor by this Subscription Agreement (other than terms particular to the regulatory requirements of such Other Investor or its affiliates or related funds), in any such case, the Investor shall be provided with such rights and benefits.

12. Non-Reliance and Exculpation. The Investor acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, KVSB, the Company, the Placement Agents, any of their respective affiliates or any control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing), other than the SEC Reports and the statements, representations and warranties of KVSB expressly contained in this Subscription Agreement, in making its investment or decision to invest in KVSB. The Investor acknowledges and agrees that none of (i) any other investor pursuant to any Other Subscription Agreements relating to the PIPE Investment (including such other investor’s affiliates or any control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing), (ii) the Placement Agents, their respective affiliates or any control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing, (iii) any party to the Transaction Agreement (other than KVSB), or (iv) any affiliates, or any control persons, officers, directors, employees, partners, agents or representatives of any of the Company or any other party to the Transaction Agreement (other than KVSB) shall be liable to the Investor pursuant to this Subscription Agreement, the negotiation hereof or the subject matter hereof, or the transactions contemplated hereby, for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Shares, including, without limitation, with respect to any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Shares or with respect to any claim (whether in tort, contract or otherwise) for breach of this Subscription Agreement or in respect of any written or oral representations made or alleged to be made in connection herewith, as expressly provided herein, or for any actual or alleged inaccuracies, misstatements or omissions with respect to any information or materials of any kind furnished by KVSB, the Company, the Placement Agents or any Non-Party Affiliate concerning KVSB, the Company, the Placement Agents, any of their affiliates, this Subscription Agreement or the transactions contemplated hereby. For purposes of this Subscription Agreement, “Non-Party Affiliates” means each former, current or future officer, director, employee, partner, member, manager, direct or indirect equityholder or affiliate of KVSB, the Company, the Placement Agent or any of their respective affiliates or any family member of the foregoing.

13. Press Releases. KVSB shall, by 9:00 a.m., New York City time, on the first (1st) business day immediately following the date of this Subscription Agreement, issue one or more press releases or furnish or file with the SEC a Current Report on Form 8-K (collectively, the “Disclosure Document”) disclosing, to the extent not previously publicly disclosed, the PIPE Investment, all material terms of the Transaction and any other material, nonpublic information (whether written or oral) that KVSB or its directors, officers, employees, agents or representatives have provided to the Investor or any of its affiliates, or their respective directors, officers, employees, agents or representatives, at any time prior to the filing of the Disclosure Document. From and after the disclosure of the Disclosure Document, to the knowledge of KVSB, the Investor and its affiliates and their respective directors, officers, employees, agents or representatives shall not be in possession of any material, nonpublic information received from KVSB or any of its officers, directors, employees, agents or representatives, and Investor shall no longer be subject to any confidentiality or similar obligations under any current agreement, whether written or oral with KVSB, the Placement Agents, or any of their affiliates in connection with the Transaction. Any press releases or non-internal communications of the Investor relating to the transactions contemplated hereby between KVSB and the Investor, and the method of the release for publication thereof, shall be subject to the prior approval of KVSB. Notwithstanding anything in this Subscription Agreement to the contrary, KVSB shall not publicly disclose the name, or any trademark or logo of, Investor or any of its affiliates, investment managers, general partners, managing

 

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members, other related parties or its investment advisers, without the prior written consent of Investor (i) in any press release, marketing or similar materials or (ii) in any filing with the SEC or with any regulatory agency or trading market, except as required by the federal securities laws, rules or regulations or to the extent such disclosure is required by other laws, rules or regulations, at the request of the staff of the SEC or regulatory agency or under the regulations of the Stock Exchange; provided, that in such an event, KVSB shall consult with the Investor in advance as to the form, content and timing of such disclosure. Notwithstanding anything in this Subscription Agreement to the contrary, KVSB shall use reasonable efforts to not, and shall use reasonable efforts to cause each of its directors, officers, employees, agents and representatives to not, provide the Investor with any material nonpublic information (whether written or oral) regarding KVSB from and after the filing of the Disclosure Document with the SEC without the express prior written consent of the Investor. KVSB understands and confirms that the Investor and the Investor’s affiliates, attorneys, agents or representatives will rely on the foregoing representations and covenants in effecting transactions of securities in KVSB.

14. Notices. All notices and other communications among the parties shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid, (iii) when delivered by FedEx or other nationally recognized overnight delivery service, or (iv) when delivered by email (in each case in this clause (iv), solely if receipt is confirmed, but excluding any automated reply, such as an out-of-office notification), addressed as follows:

If to the Investor, to the address provided on the Investor’s signature page hereto.

 

If to KVSB, to:

  Khosla Ventures Acquisition Co. II   
  2128 Sand Hill Road   
  Menlo Park, California 94025   
  Attention: General Counsel (SPAC)   
  Email:       jd@khoslaventures.com   

with copies to (which shall not constitute notice), to:

  Latham & Watkins LLP   
  505 Montgomery Street, Suite 2000   
  San Francisco, California 94111   
  Attention: Jim Morrone   
                   Luke Bergstrom   
                   Brian Paulson   
  Email:      jim.morrone@lw.com   
                   luke.bergstrom@lw.com   
                   brian.paulson@lw.com   
  and   
  Nextdoor, Inc.   
  420 Taylor Street,   
  San Francisco, California 94102   
  Attention: John Orta and Sophia Contreras Schwartz

with copies to (which shall not constitute notice), to:

  Fenwick & West LLP   
  801 California Street   
  Mountain View, California 94041   
  Attention: Cynthia Hess   

 

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              Katherine Duncan   
              Ethan Skerry   
              Ran Ben-Tzur   
              Michael Pilo   
  Email: chess@fenwick.com   
              kduncan@fenwick.com   
              eskerry@fenwick.com   
              rbentzur@fenwick.com   
              mpilo@fenwick.com   

or to such other address or addresses as the parties may from time to time designate in writing. Copies delivered solely to outside counsel shall not constitute notice.

15. Stock Splits, etc. If any change in the shares of KVSB common stock shall occur between the date hereof and immediately prior to the Closing by reason of any reclassification, recapitalization, stock split (including reverse stock split) or combination, exchange or readjustment of shares, or any stock dividend, the number and type of Shares issued to the Investor and the Subscription Amount and Per Share Subscription Price shall be appropriately adjusted to reflect such change.

16. Separate Obligations. The obligations of the Investor under this Subscription Agreement are several and not joint with the obligations of any Other Investor or any other investor under the Other Subscription Agreements, and Investor shall not be responsible in any way for the performance of the obligations of any Other Investor under any Other Investor or other investor under the Other Subscription Agreements. The decision of Investor to purchase Shares pursuant to this Subscription Agreement has been made by Investor independently of any Other Investor or any other investor and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the KVSB, the Company, or any of its subsidiaries which may have been made or given by any Other Investor or investor or by any agent or employee of any Other Investor or investor, and neither Investor nor any of its agents or employees shall have any liability to any Other Investor or investor (or any other person) relating to or arising from any such information, materials, statements or opinions. Nothing contained herein or in any Other Subscription Agreement, and no action taken by Investor pursuant hereto or by an Other Investor thereto, shall be deemed to constitute Investor and Other Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that Investor and Other Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Subscription Agreement and the Other Subscription Agreements. Investor acknowledges that no Other Investor has acted as agent for Investor in connection with making its investment hereunder and no Other Investor will be acting as agent of Investor in connection with monitoring its investment in the Shares or enforcing its rights under this Subscription Agreement. Investor shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Subscription Agreement, and it shall not be necessary for any Other Investor to be joined as an additional party in any proceeding for such purpose.

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the Investor has executed or caused this Subscription Agreement to be executed by its duly authorized representative as of the date set forth below.

 

Name of Investor:              State/Country of Formation or Domicile:
By:  

            

     
Name:  

 

     
Title:  

 

     
Name in which Shares are to be registered (if different):     Date:                 , 2021
Investor’s EIN:      
Business Address-Street:     Mailing Address-Street (if different):
City, State, Zip:     City, State, Zip:
Attn:  

 

    Attn:  

        

Telephone No.:     Telephone No.:

Facsimile No.:

 

Email:

    Facsimile No.:
Number of Shares subscribed for:      
Aggregate Subscription Amount: $     Price Per Share: $10.00

You must pay the Subscription Amount by wire transfer of United States dollars in immediately available funds to the account specified by KVSB in the Closing Notice.

[Signature Page to Subscription Agreement]


IN WITNESS WHEREOF, KVSB has accepted this Subscription Agreement as of the date set forth below.

 

KHOSLA VENTURES ACQUISITION CO. II
By:  

        

  Name: Peter Buckland
  Title: Chief Financial Officer

Date:                , 2021

[Signature Page to Subscription Agreement]


SCHEDULE A

ELIGIBILITY REPRESENTATIONS OF THE INVESTOR

 

A.

QUALIFIED INSTITUTIONAL BUYER STATUS

(Please check the applicable subparagraphs):

 

We are a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act), and have marked and initialed the appropriate box below indicating the provision under which we qualify as a qualified institutional buyer.

Rule 144A, in relevant part, states that an “qualified institutional buyer” shall mean any person who comes within any of the below listed categories, or who the issuer reasonably believes comes within any of the below listed categories, at the time of the sale of the securities to that person. The Investor has indicated, by marking and initialing the appropriate box below, the provision(s) below which apply to the Investor and under which the Investor accordingly qualifies as an “qualified institutional buyer.”

 

The Investor is an entity that, acting for its own account or the accounts of other qualified institutional buyers, in the aggregate owns and invests on a discretionary basis at least $100 million in securities of issuers that are not affiliated with the Investor and:

 

 

The Investor is an insurance company.

 

 

The Investor is an investment company registered under the Investment Company Act or any business development company as defined in section 2(a)(48) of that Act.

 

 

The Investor is a Small Business Investment Company licensed by the US Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958.

 

 

The Investor is a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees.

 

 

The Investor is a trust fund whose trustee is a bank or trust company and whose participants are exclusively plans established for the benefit of state employees or employee benefit plans, except trust funds that include as participants individual retirement accounts or H.R. 10 plans.

 

 

The Investor is a business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940.

 

 

The Investor is an organization described in section 501(c)(3) of the Internal Revenue Code, corporation (other than a bank as defined in section 3(a)(2) of the Act, a savings and loan association or other institution referenced in section 3(a)(5)(A) of the Act, a foreign bank or savings and loan association, or equivalent institution), partnership, or Massachusetts or similar business trust.

 

 

The Investor is an investment adviser registered under the Investment Advisers Act.

 

The Investor is registered dealer, acting for its own account or the accounts of other qualified institutional buyers, that in the aggregate owns and invests on a discretionary basis at least $10 million of securities of issuers that are not affiliated with the Investor.

 

The Investor is a registered dealer acting in a riskless principal transaction on behalf of a qualified institutional buyer.

 

The Investor is an investment company registered under the Investment Company Act, acting for its own account or for the accounts of other qualified institutional buyers, that is part of a family of investment companies which own in the aggregate at least $100 million in securities of issuers, other than issuers that are affiliated with Investor or are part of such family of investment companies.

 

The Investor is an entity, all of the equity owners of which are qualified institutional buyers, acting for its own account or the accounts of other qualified institutional buyers.

[Schedule A to Subscription Agreement]


The Investor is a bank or any savings and loan association or other institution, acting for its own account or the accounts of other qualified institutional buyers, that in the aggregate owns and invests on a discretionary basis at least $100 million in securities of issuers that are not affiliated with it and that has an audited net worth of at least $25 million as demonstrated in its latest annual financial statements, as of a date not more than 16 months preceding the date of sale under Rule 144A in the case of a US bank or savings and loan association, and not more than 18 months preceding the date of sale for a foreign bank or savings and loan association or equivalent institution.

** OR **

 

B.

ACCREDITED INVESTOR STATUS

(Please check the applicable subparagraphs):

 

1.

☐ We are an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) or an entity in which all of the equity holders are accredited investors within the meaning of Rule 501(a) under the Securities Act, and have marked and initialed the appropriate box on the following page indicating the provision under which we qualify as an “accredited investor.”

 

2.

☐ We are not a natural person.

Rule 501(a), in relevant part, states that an “accredited investor” shall mean any person who comes within any of the below listed categories, or who the issuer reasonably believes comes within any of the below listed categories, at the time of the sale of the securities to that person. The Investor has indicated, by marking and initialing the appropriate box below, the provision(s) below which apply to the Investor and under which the Investor accordingly qualifies as an “accredited investor.”

 

Any bank, registered broker or dealer, insurance company, registered investment company, business development company, or small business investment company;

 

Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000;

 

Any employee benefit plan, within the meaning of the Employee Retirement Income Security Act of 1974, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5,000,000;

 

Any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000. For purposes of calculating a natural person’s net worth: (a) the person’s primary residence shall not be included as an asset; (b) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (c) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability;

 

Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;

 

Any trust with assets in excess of $5,000,000, not formed to acquire the securities offered, whose purchase is directed by a sophisticated person; or

 

Any entity in which all of the equity owners are accredited investors meeting one or more of the above tests.

** OR **

[Schedule A to Subscription Agreement]


C.

INSTITUTIONAL ACCOUNT STATUS

 

We are an “institutional account” (as defined in FINRA Rule 4512).

This page and the preceding page should be completed by the Investor

and constitute a part of the Subscription Agreement.

[Schedule A to Subscription Agreement]

Exhibit 10.2

SPONSOR SUPPORT AGREEMENT

This Sponsor Support Agreement (this “Sponsor Agreement”) is dated as of July 6, 2021, by and among Khosla Ventures SPAC Sponsor II LLC, a Delaware limited liability company (the “Sponsor Holdco”), the Persons set forth on Schedule I hereto (together with the Sponsor Holdco, each, a “Sponsor” and, together, the “Sponsors”), Khosla Ventures Acquisition Co. II, a Delaware corporation (“Acquiror”), and Nextdoor, Inc., a Delaware corporation (the “Company”). Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement.

RECITALS

WHEREAS, as of the date hereof, the Sponsors collectively are the holders of record and the “beneficial owners” (within the meaning of Rule 13d-3 under the Exchange Act) of 1,226,605 shares of Acquiror Class A Common Stock, 5,000,000 shares of Acquiror Class B Common Stock and 5,000,000 shares of Acquiror Class K Common Stock in the aggregate as set forth on Schedule I attached hereto;

WHEREAS, contemporaneously with the execution and delivery of this Sponsor Agreement, Acquiror, Lorelei Merger Sub Inc., a Delaware corporation (“Merger Sub”) and the Company, have entered into an Agreement and Plan of Merger (as amended or modified from time to time, the “Merger Agreement”), dated as of the date hereof, pursuant to which, among other transactions, Merger Sub will be merged with and into the Company (the “Merger”), with the Company continuing on as the surviving corporation and a wholly owned subsidiary of Acquiror, on the terms and conditions set forth therein;

WHEREAS, (i) immediately following the Merger, all outstanding shares of Acquiror Class B Common Stock, all of which are held by the Sponsors, will be converted pursuant to the terms of Acquiror’s certificate of incorporation into shares of Acquiror Class A Common Stock (which shares, following the effectiveness of the Acquiror Post-Merger Charter, shall be shares of Acquiror Post-Merger Class A Common Stock) and (ii) it is proposed that following the Merger (A) all outstanding shares of Acquiror Class K Common Stock, all of which are held by the Sponsors, shall be reclassified into shares of Acquiror Post-Merger Class B Common Stock pursuant to the Acquiror Post-Merger Charter, (B) the shares of Acquiror Post-Merger Class A Common Stock referred to in clause (i) of this recital (the “Sponsor Exchange Shares”) and (C) the Private Placement Shares (as defined below) shall be exchanged by the Sponsors for shares of Acquiror Post-Merger Class B Common Stock pursuant to the terms of this Sponsor Agreement (collectively, the “Sponsor Share Conversion”);

WHEREAS, the Sponsor Share Conversion is intended to qualify as a “reorganization” pursuant to Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended (the “Code”) and this Agreement is hereby adopted as a “plan of reorganization” within the meaning of Treasury Regulations Section 1.368-2(g)l and

WHEREAS, as an inducement to Acquiror and the Company to enter into the Merger Agreement and to consummate the transactions contemplated therein, the parties hereto desire to agree to certain matters as set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and intending to be legally bound hereby, the parties hereto hereby agree as follows:


ARTICLE I

SPONSOR SUPPORT AGREEMENT; COVENANTS

Section 1.1 Binding Effect of Merger Agreement. Each Sponsor hereby acknowledges that it has read the Merger Agreement and this Sponsor Agreement and has had the opportunity to consult with its tax and legal advisors. Each Sponsor shall be bound by and comply with Sections 7.4 (No Solicitation by Acquiror) and 11.12 (Publicity) of the Merger Agreement (and any relevant definitions contained in any such Sections) to the same extent as such provisions apply to Acquiror as if such Sponsor was an original signatory to the Merger Agreement with respect to such provisions.

Section 1.2 No Transfer. During the period commencing on the date hereof and ending on the earliest of (a) the Effective Time, (b) such date and time as the Merger Agreement shall be terminated in accordance with Section 10.1 thereof (the earlier of (a) and (b), the “Expiration Time”) and (c) the liquidation of Acquiror, each Sponsor shall not (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, file (or participate in the filing of) a registration statement with the SEC (other than the Proxy Statement/Registration Statement) or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, with respect to any shares of Acquiror Common Stock owned by such Sponsor, (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 shares of Acquiror Common Stock owned by such Sponsor or (iii) take any action in furtherance of any of the matters described in the foregoing clauses (i) and (ii).

Section 1.3 New Shares. In the event that (a) any shares of Acquiror Common Stock or other equity securities of Acquiror are issued to a Sponsor after the date of this Sponsor Agreement pursuant to any stock dividend, stock split, recapitalization, reclassification, combination or exchange of shares of Acquiror Common Stock of, on or affecting the shares of Acquiror Common Stock owned by such Sponsor or otherwise, (b) a Sponsor purchases or otherwise acquires beneficial ownership of any shares of Acquiror Common Stock or other equity securities of Acquiror after the date of this Sponsor Agreement, or (c) a Sponsor acquires the right to vote or share in the voting of any shares of Acquiror Common Stock or other equity securities of Acquiror after the date of this Sponsor Agreement (such shares of Acquiror Common Stock or other equity securities of Acquiror, collectively the “New Securities”), then such New Securities acquired or purchased by such Sponsor shall be subject to the terms of this Sponsor Agreement to the same extent as if they constituted the shares of Acquiror Common Stock owned by such Sponsor as of the date hereof.

Section 1.4 Closing Date Deliverables. On the Closing Date, Sponsor Holdco and the KVSB Holders (as defined below) shall deliver to Acquiror and the Company a duly executed copy of that certain Amended and Restated Registration Rights Agreement, by and among Acquiror, Sponsor Holdco, the KVSB Holders (as defined therein) and the Target Holders (as defined therein), in substantially the form attached as Exhibit C to the Merger Agreement.

Section 1.5 Exchange of Certain Shares of Acquiror Stock. On the Closing Date, subject to the terms and conditions herein set forth, Acquiror and the Sponsors hereby agree that, immediately following the effectiveness of the Acquiror Post-Merger Charter, the Sponsors shall exchange all of (a) the Sponsor Exchange Shares for an aggregate of 7,347,249 shares and (b) the shares of Acquiror Class A Common Stock acquired pursuant to that certain Private Placement Shares Purchase Agreement, dated March 23, 2021, between Acquiror and Sponsor Holdco (the “Private Placement Shares”) for an aggregate of 1,132,688 shares of Acquiror Post-Merger Class B Common Stock to be issued by Acquiror to Sponsors. On or before the Closing, the Sponsors shall cause to be surrendered to Acquiror any certificates representing the Sponsor Exchange Shares, duly endorsed for transfer or accompanied by a duly executed stock transfer instrument reasonably acceptable to the parties hereto. Acquiror shall, as soon as practicable following the Closing, issue to the Sponsors stock certificates representing the shares of Acquiror Post-Merger Class B Common Stock issued in exchange for the Sponsor Exchange Shares (or, if such shares are uncertificated, record an appropriate book entry for such shares).

 

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Section 1.6 Sponsor Agreements.

(a) At any meeting of the stockholders of Acquiror, however called, or at any adjournment thereof, or in any other circumstance in which the vote, consent or other approval of the stockholders of Acquiror is sought, each Sponsor shall (i) appear at each such meeting or otherwise cause all of its shares of Acquiror Common Stock to be counted as present thereat for purposes of calculating a quorum and (ii) vote (or cause to be voted), or execute and deliver a written consent (or cause a written consent to be executed and delivered) covering, all of its shares of Acquiror Common Stock:

(i) in favor of each Transaction Proposal;

(ii) in any other circumstances upon which a consent or other approval is required under the certificate of incorporation of Acquiror, as amended from time to time, or otherwise sought with respect to the Merger Agreement or the Transactions, to vote, consent or approve (or cause to be voted, consented or approved) all shares of Acquiror Common Stock held at such time in favor thereof, including any Anti-Dilution Waiver;

(iii) against any Business Combination Proposal or any proposal relating to a Business Combination Proposal (in each case, other than the Transaction Proposals);

(iv) against any merger agreement or merger (other than the Merger Agreement and the Merger), consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by Acquiror;

(v) against any change in the business, management or Board of Directors of Acquiror (other than in connection with the Transaction Proposals); and

(vi) against any and all other proposals that could reasonably be expected to (A) delay or impair the ability of Acquiror or Merger Sub to consummate the Transactions or (B) except as contemplated by the Merger Agreement and Transaction Proposals, change in any manner the dividend policy or capitalization of, including the voting rights of any class of capital stock of, Acquiror.

Each Sponsor hereby agrees that it shall not commit or agree to take any action inconsistent with the foregoing.

(b) Each Sponsor shall comply with, and fully perform all of its obligations, covenants and agreements set forth in, that certain (i) Letter Agreement, dated as of March 23, 2021, by and among the Sponsors and Acquiror (the “Voting Letter Agreement”), including the obligations of the Sponsors pursuant to Section 1 therein to not redeem any shares of Acquiror Common Stock owned by such Sponsor in connection with the transactions contemplated by the Merger Agreement and (ii) Forward Purchase Agreement entered into as of March 23, 2021 between Acquiror and Sponsor Holdco (the “Forward Purchase Agreement”). Each Sponsor and Acquiror agrees not to amend, modify, waive, or terminate, or assign any of its rights, interests or obligations under, such agreements without the prior written consent of the Company.

 

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(c) During the period commencing on the date hereof and ending on the earlier of the consummation of the Closing and the termination of the Merger Agreement pursuant to Article X thereof, each Sponsor shall not modify or amend any Contract between or among such Sponsor, anyone related by blood, marriage or adoption to such Sponsor or any Affiliate of such Sponsor (other than Acquiror or any of its Subsidiaries), on the one hand, and Acquiror or any of Acquiror’s Subsidiaries, on the other hand, including, for the avoidance of doubt, the Voting Letter Agreement.

Section 1.7 Further Assurances. Each Sponsor shall execute and deliver, or cause to be delivered, such additional documents, and take, or cause to be taken, all such further actions and do, or cause to be done, all things reasonably necessary (including under applicable Laws), in each case as reasonably mutually requested by Acquiror and the Company, to effect the transactions contemplated by this Agreement on the terms and subject to the conditions set forth herein.

Section 1.8 No Inconsistent Agreement. Each Sponsor hereby represents and covenants that such Sponsor has not entered into, and shall not enter into, any agreement that would in any material respect restrict, limit or interfere with the performance of such Sponsor’s obligations hereunder.

Section 1.9 Lock-Up Agreement. Each Sponsor will deliver to Acquiror, substantially simultaneously with the Effective Time, a duly executed copy of the Lock-Up Agreement, in the form attached as Exhibit A.

Section 1.10 Sponsor Share Conversion. Sponsor Holdco and each Sponsor hereby (but subject to the consummation of the Merger): (i) waives (for itself, for its successors, heirs and assigns), to the fullest extent permitted by law and the Amended and Restated Certificate of Incorporation of Acquiror (as may be amended from time to time, the “Certificate of Incorporation”), the provisions of Section 4.3(b) of the Certificate of Incorporation to have the Acquiror Class B Common Stock convert to Acquiror Class A Common Stock at a ratio of greater than 1.4694498 shares of Acquiror Class A Common Stock to be issued for each share of Acquiror Class B Common Stock converted and (ii) acknowledges and agrees (for itself, for its successors, heirs and assigns) that the Certificate of Incorporation that will be filed and in effect immediately after the Effective Time will provide that all shares of Acquiror Class K Common Stock will be reclassified into an aggregate of 3,061,354 shares of Acquiror Post-Merger Class B Common Stock effective upon the filing of such Certificate of Incorporation. As a result of the foregoing (i) all shares of Acquiror Class B Common Stock would in connection with the Closing convert to an aggregate of 7,347,249 shares of Acquiror Class A Common Stock, which shares would then be exchanged pursuant to Section 1.5 for the same number of shares of Acquiror Post-Merger Class B Common Stock and (ii) all shares of Acquiror Class K Common Stock would in connection with the Closing be reclassified into an aggregate of 3,061,354 shares of Acquiror Post-Merger Class B Common Stock, and (iii) following each of (i) and (ii), the Sponsors would hold an aggregate of 10,408,603 shares of Acquiror Post-Merger Class B Common Stock. The foregoing shall be applicable only in connection with the transactions contemplated by the Merger Agreement and this Agreement (and any shares of Acquiror Class A Common Stock or equity-linked securities issued in connection with the transactions contemplated by the Merger Agreement and this Agreement) and shall be void and of no force and effect if the Merger Agreement shall be terminated for any reason.

 

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ARTICLE II

REPRESENTATIONS AND WARRANTIES

Section 2.1 Representations and Warranties of the Sponsors. Each Sponsor represents and warrants as of the date hereof to Acquiror and the Company (solely with respect to itself, himself or herself and not with respect to any other Sponsor) as follows:

(a) Organization; Due Authorization. If such Sponsor is not an individual, it is duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated, formed, organized or constituted, and the execution, delivery and performance of this Sponsor Agreement and the consummation of the transactions contemplated hereby are within such Sponsor’s corporate, limited liability company or organizational powers and have been duly authorized by all necessary corporate, limited liability company or organizational actions on the part of such Sponsor. If such Sponsor is an individual, such Sponsor has full legal capacity, right and authority to execute and deliver this Sponsor Agreement and to perform his or her obligations hereunder. This Sponsor Agreement has been duly executed and delivered by such Sponsor and, assuming due authorization, execution and delivery by the other parties to this Sponsor Agreement, this Sponsor Agreement constitutes a legally valid and binding obligation of such Sponsor, enforceable against such Sponsor in accordance with the terms hereof (except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies). If this Sponsor Agreement is being executed in a representative or fiduciary capacity, the Person signing this Sponsor Agreement has full power and authority to enter into this Sponsor Agreement on behalf of the applicable Sponsor.

(b) Ownership. Such Sponsor is the record and beneficial owner (as defined in Rule 13d-3 of the Exchange Act) of, and has good title to, all of such Sponsor’s shares of Acquiror Common Stock, and there exist no Liens or any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such shares of Acquiror Common Stock (other than transfer restrictions under the Securities Act)) affecting any such shares of Acquiror Common Stock, other than Liens pursuant to (i) this Sponsor Agreement, (ii) the Acquiror Governing Documents, (iii) the Merger Agreement, (iv) the Voting Letter Agreement or (v) any applicable securities Laws. Such Sponsor’s shares of Acquiror Common Stock are the only equity securities in Acquiror owned of record or beneficially by such Sponsor on the date of this Sponsor Agreement, and none of such Sponsor’s shares of Acquiror Common Stock are subject to any proxy, voting trust or other agreement or arrangement with respect to the voting of such shares of Acquiror Common Stock, except as provided hereunder, under the Voting Letter Agreement. Other than pursuant to the Forward Purchase Agreement and for shares of Acquiror Class B Common Stock and shares of Acquiror Class K Common Stock, as applicable, such Sponsor does not hold or own any rights to acquire (directly or indirectly) any equity securities of Acquiror or any equity securities convertible into, or which can be exchanged for, equity securities of Acquiror.

(c) No Conflicts. The execution and delivery of this Sponsor Agreement by such Sponsor does not, and the performance by such Sponsor of his, her or its obligations hereunder will not, (i) if such Sponsor is not an individual, conflict with or result in a violation of the organizational documents of such Sponsor or (ii) require any consent or approval that has not been given or other action that has not been taken by any Person (including under any Contract binding upon such Sponsor or such Sponsor’s shares of Acquiror Common Stock), in each case, to the extent such consent, approval or other action would prevent, enjoin or materially delay the performance by such Sponsor of its, his or her obligations under this Sponsor Agreement.

(d) Litigation. There are no Actions pending against such Sponsor, or to the knowledge of such Sponsor threatened against such Sponsor, before (or, in the case of threatened Actions, that would be before) any arbitrator or any Governmental Authority, which in any manner challenges or seeks to prevent, enjoin or materially delay the performance by such Sponsor of its, his or her obligations under this Sponsor Agreement.

(e) Brokerage Fees. Except for the deferred underwriting commissions and other fees being held in the Trust Account and for fees payable pursuant to the letter agreement with Evercore Group L.L.C. and Morgan Stanley & Co. LLC dated June 11, 2021 in connection with the PIPE Investment, no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by the Merger Agreement based upon arrangements made by such Sponsor, for which Acquiror or any of its Affiliates may become liable.

 

5


(f) Affiliate Agreements. Except as set forth on Schedule II attached hereto, neither such Sponsor nor any anyone related by blood, marriage or adoption to such Sponsor or, to the knowledge of such Sponsor, any Person in which such Sponsor has a direct or indirect legal, contractual or beneficial ownership of 5% or greater is party to, or has any rights with respect to or arising from, any Contract with Acquiror or its Subsidiaries.

(g) Acknowledgment. Such Sponsor understands and acknowledges that each of Acquiror and the Company is entering into the Merger Agreement in reliance upon such Sponsor’s execution and delivery of this Sponsor Agreement.

ARTICLE III

MISCELLANEOUS

Section 3.1 Termination. This Sponsor Agreement and all of its provisions shall terminate and be of no further force or effect upon the earliest of (a) the Expiration Time, (b) the liquidation of Acquiror and (c) the written agreement of the Sponsor, Acquiror and the Company. Upon such termination of this Sponsor Agreement, all obligations of the parties under this Sponsor Agreement will terminate, without any liability or other obligation on the part of any party hereto to any Person in respect hereof or the transactions contemplated hereby, and no party hereto shall have any claim against another (and no person shall have any rights against such party), whether under contract, tort or otherwise, with respect to the subject matter hereof; provided, however, that the termination of this Sponsor Agreement shall not relieve any party hereto from liability arising in respect of any willful breach of this Sponsor Agreement prior to such termination. This ARTICLE III shall survive the termination of this Agreement.

Section 3.2 Miscellaneous. Sections 11.7 (Governing Law), 11.13 (Severability) 11.14 (Jurisdiction; Waiver of Jury Trial), and 11.15 (Enforcement) of the Merger Agreement are incorporated herein by reference and shall apply to this Agreement, mutatis mutandis.

Section 3.3 Assignment. This Sponsor Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. Neither this Sponsor Agreement nor any of the rights, interests or obligations hereunder will be assigned (including by operation of law) without the prior written consent of the parties hereto.

Section 3.4 Amendment; Waiver. This Sponsor Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by Acquiror, the Sponsor Holdco and the Company.

Section 3.5 Notices. All notices and other communications among the parties hereto shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid, (c) when delivered by FedEx or other nationally recognized overnight delivery service or (d) when e-mailed during normal business hours (and otherwise as of the immediately following Business Day), addressed as follows:

 

6


If to Acquiror:
Khosla Ventures Acquisition Co.
2128 Sand Hill Rd.
Menlo Park, CA 94025
Attention:    Samir Kaul
   Peter Buckland
Email:    sk@khoslaventures.com
   pb@khoslaventures.com
with a copy to (which will not constitute notice):
Latham & Watkins LLP
505 Montgomery Street
Suite 2000   
San Francisco, California 94111
Attention:    Jim Morrone
   Luke J. Bergstrom
   Andrew Tremble
Email:    jim.morrone@lw.com
   luke.bergstrom@lw.com
   andrew.tremble@lw.com
If to the Company:
Nextdoor, Inc.   
420 Taylor Street
San Francisco, California 94102
Attention:    John Orta
   Sophia Contreras Schwartz
Email:    jorta@nextdoor.com
   sophia@nextdoor.com
with a copy to (which shall not constitute notice):
Fenwick & West LLP
801 California Street
Mountain View, California 94041
Attention:    Cynthia Clarfield Hess
   Ethan Skerry
Email:    chess@fenwick.com
   eskerry@fenwick.com

 

7


If to a Sponsor:
To such Sponsor’s address set forth in Schedule I
with a copy to (which will not constitute notice):
Latham & Watkins LLP
505 Montgomery Street
Suite 2000
San Francisco, California 94111
Attention:    Jim Morrone
   Luke J. Bergstrom
   Andrew Tremble
Email:    jim.morrone@lw.com
   luke.bergstrom@lw.com
   andrew.tremble@lw.com

Notwithstanding the foregoing, in the event notice is delivered pursuant to this Section 3.5 by a means other than email, such party shall email such notice within one (1) Business Day of delivery of such notice by such other means.

Section 3.6 Counterparts. This Sponsor Agreement may be executed in two or more counterparts (any of which may be delivered by electronic transmission), each of which shall constitute an original, and all of which taken together shall constitute one and the same instrument.

Section 3.7 Entire Agreement. This Sponsor Agreement and the agreements referenced herein constitute the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersede all prior understandings, agreements or representations by or among the parties hereto to the extent they relate in any way to the subject matter hereof.

Section 3.8 Tax Treatment. Each of the Company and the Sponsor shall treat the Sponsor Share Conversion as a “reorganization” pursuant to Section 368(a)(1)(E) of the Code and shall file their tax returns consistent with the foregoing (including attaching the statement described in Treasury Regulation Section 1.368-3(a) on or with the U.S. federal income tax return of the Company), and none of the Parties hereto shall take any action, or fail to take any action, inconsistent with the foregoing unless otherwise required by a “determination” within the meaning of Section 1313(a)(1) of the Code.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]

 

8


IN WITNESS WHEREOF, the Sponsors, Acquiror and the Company have each caused this Sponsor Support Agreement to be duly executed as of the date first written above.

 

SPONSORS:
KHOSLA VENTURES SPAC SPONSOR II LLC
By:  

/s/ Samir Kaul

  Name:   Samir Kaul
  Title:   President and Chief Executive Officer

/s/ Vinod Khosla

Name:   Vinod Khosla

/s/ Samir Kaul

Name:   Samir Kaul

/s/ Peter Buckland

Name:   Peter Buckland

/s/ Anita Sands

Name:   Anita Sands

/s/ Enrico Gaglioti

Name:   Enrico Gaglioti

/s/ Dmitri Shklovsky

Name:   Dmitri Shklovsky

[Signature Page to Sponsor Support Agreement]


ACQUIROR:
KHOSLA VENTURES ACQUISITION CO. II
By:  

/s/ Peter Buckland

  Name:   Peter Buckland
  Title:   Chief Operating Officer, Chief Financial
    Officer, Treasurer and Secretary

[Signature Page to Sponsor Support Agreement]


COMPANY:
NEXTDOOR, INC.
By:  

/s/ Sarah Friar

  Name: Sarah Friar
  Title: Chief Executive Officer

[Signature Page to Sponsor Support Agreement]


Schedule I

Sponsor Acquiror Common Stock

 

Sponsor

   Acquiror Class A
Common Stock
    Acquiror Class B
Common Stock
    Acquiror Class K
Common Stock
 

Khosla Ventures SPAC Sponsor II LLC

 

c/o Khosla Ventures Acquisition Co.

2128 Sand Hill Rd.

Menlo Park, CA 94025

     1,226,605       4,880,000       5,000,000  

Vinod Khosla

 

c/o Khosla Ventures Acquisition Co.

2128 Sand Hill Rd.

Menlo Park, CA 94025

     —   (1)       —   (1)      —   (1) 

Samir Kaul

 

c/o Khosla Ventures Acquisition Co.

2128 Sand Hill Rd.

Menlo Park, CA 94025

     —   (1)      —   (1)      —   (1) 

Peter Buckland

 

c/o Khosla Ventures Acquisition Co.

2128 Sand Hill Rd.

Menlo Park, CA 94025

     —         —         —    

Anita Sands

 

c/o Khosla Ventures Acquisition Co.

2128 Sand Hill Rd.

Menlo Park, CA 94025

     —         40,000       —    

Enrico Gaglioti

 

c/o Khosla Ventures Acquisition Co.

2128 Sand Hill Rd.

Menlo Park, CA 94025

     —         40,000       —    

Dmitri Shklovsky

 

c/o Khosla Ventures Acquisition Co.

2128 Sand Hill Rd.

Menlo Park, CA 94025

     —         40,000       —    

 

(1)

Messrs. Khosla and Kaul may be deemed to beneficially own securities held by Khosla Ventures SPAC Sponsor II LLC by virtue of their shared control over Khosla Ventures SPAC Sponsor II LLC. Each of Messrs. Khosla and Kaul disclaims beneficial ownership of securities held by Khosla Ventures SPAC Sponsor II LLC.

[Schedule I to Sponsor Support Agreement]


Schedule II

Affiliate Agreements

 

1.

Registration Rights Agreement, dated March 23, 2021, between Acquiror, Sponsor Holdco and certain other security holders named therein.

 

2.

Letter Agreement, dated March 23, 2021, between Acquiror and the Sponsors.

 

3.

Private Placement Shares Purchase Agreement, dated March 23, 2021, between Acquiror and Sponsor Holdco.

 

4.

Forward Purchase Agreement, dated March 23, 2021, between Acquiror and Sponsor Holdco.

 

5.

Indemnity Agreement, dated March 23, 2021, between Acquiror and Peter Buckland.

 

6.

Indemnity Agreement, dated March 23, 2021, between Acquiror and Dmitri Shklovsky.

 

7.

Indemnity Agreement, dated March 23, 2021, between Acquiror and Samir Kaul.

 

8.

Indemnity Agreement, dated March 23, 2021, between Acquiror and Anita Sands.

 

9.

Indemnity Agreement, dated March 23, 2021, between Acquiror and Enrico Gaglioti.

 

10.

Subscription Agreement, dated January 22, 2021, between Acquiror and an affiliate of certain of the Sponsors.

 

[Schedule II to Sponsor Support Agreement]


Exhibit A

Lock-Up Agreement

Exhibit 10.3

STOCKHOLDER SUPPORT AGREEMENT

This Stockholder Support Agreement (this “Agreement”) is dated as of July 6, 2021, by and among Khosla Ventures Acquisition Co. II, a Delaware corporation (“Acquiror”), the Persons set forth on Schedule I hereto (each, a “Stockholder” and, collectively, the “Stockholders”) and Nextdoor, Inc., a Delaware corporation (the “Company”). Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement (as defined below).

RECITALS

WHEREAS, as of the date hereof, the Stockholders are the holders of record and “beneficial owners” (within the meaning of Rule 13d-3 of the Exchange Act) of such number and type of equity securities of the Company (including shares of Company Common Stock and Company Preferred Stock) as are indicated opposite each of their names on Schedule I attached hereto (all such equity securities, together with any equity securities of the Company of which ownership of record or the power to vote (including, without limitation, by proxy or power of attorney) is hereafter acquired by any such Stockholder during the period from the date hereof through the Expiration Time (as defined below) are referred to herein as the “Subject Securities”);

WHEREAS, contemporaneously with the execution and delivery of this Agreement, Acquiror, [Lorelei] Merger Sub Inc., a Delaware corporation (“Merger Sub”) and the Company, have entered into an Agreement and Plan of Merger (as amended or modified from time to time, the “Merger Agreement”), dated as of the date hereof, pursuant to which, among other transactions, Merger Sub will be merged with and into the Company, with the Company continuing on as the surviving corporation and a wholly owned subsidiary of Acquiror, on the terms and conditions set forth therein (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Transactions”);

WHEREAS, upon the Effective Time and except as otherwise set forth in the Merger Agreement, each share of Company Common Stock that is issued and outstanding immediately prior to the Effective Time, after giving effect to the conversion of all shares of Company Preferred Stock to Company Common Stock immediately prior to the Effective Time (including the Subject Securities) will be converted into the right to receive a portion of the Aggregate Merger Consideration, in each case, on the terms and subject to the conditions set forth in the Merger Agreement;

WHEREAS, upon consummation of the Merger, each of the agreements set forth on Schedule II attached hereto (collectively, the “Investment Agreements”) will automatically terminate without any further action on the part of the parties thereto pursuant to their respective terms; and

WHEREAS, as an inducement to Acquiror and the Company to enter into the Merger Agreement and to consummate the transactions contemplated therein, the parties hereto desire to agree to certain matters as set forth herein.


AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

ARTICLE I

STOCKHOLDER SUPPORT AGREEMENT; COVENANTS

Section 1.1 Compliance with Merger Agreement. Each Stockholder hereby acknowledges that it has read the Merger Agreement and this Agreement and has had the opportunity to consult with its tax and legal advisors. Each Stockholder shall be bound by and comply with Sections 6.5 (Acquisition Proposals) and 11.12 (Publicity) of the Merger Agreement (and any relevant definitions contained in any such Sections) to the same extent as such provisions apply to the Company as if such Stockholder was an original signatory to the Merger Agreement with respect to such provisions.

Section 1.2 No Transfer. During the period commencing on the date hereof and ending on the earlier to occur of (a) the Effective Time, and (b) such date and time as the Merger Agreement shall be terminated in accordance with Section 10.1 thereof (the earlier of clause (a) and (b) being the “Expiration Time”), except as expressly contemplated by the Merger Agreement or with the prior written consent of Acquiror, each Stockholder shall not (i) sell, offer to sell, contract or agree to sell, transfer (including by operation of law), hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, any Subject Securities or (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 Subject Securities (clauses (i) and (ii) collectively, a “Transfer”) or (iii) take any action in furtherance of any of the matters described in the foregoing clauses (i) and (ii); provided, however, that the foregoing shall not apply to (x) any Transfer to a Stockholder’s Affiliates, provided that such transferee agrees in a written agreement to be bound by this Agreement prior to the occurrence of such Transfer or (y) any other Stockholder that is party to this Agreement.

Section 1.3 New Shares. In the event that, during the period commencing on the date hereof and ending at the Expiration Time, (a) any Subject Securities are issued to a Stockholder after the date of this Agreement pursuant to any stock dividend, stock split, recapitalization, reclassification, combination or exchange of Subject Securities or otherwise, (b) a Stockholder purchases or otherwise acquires beneficial ownership of any Subject Securities or (c) a Stockholder acquires the right to vote or share in the voting of any Subject Securities (collectively the “New Securities”), then such New Securities acquired or purchased by such Stockholder shall be subject to the terms of this Agreement to the same extent as if they constituted the Subject Securities owned by such Stockholder as of the date hereof.

Section 1.4 Stockholder Agreements. Hereafter until the Expiration Time, each Stockholder hereby unconditionally and irrevocably agrees that, at any meeting of the stockholders of the Company (in each case, including any adjournment or postponement thereof), and in any action by written consent of the stockholders of Company, requested by the Board of Directors of the Company or otherwise undertaken as contemplated by the Transactions, including in the form attached as Exhibit A (which written consent shall be delivered as promptly as reasonably practicable, and in any event within three (3) Business Days, after the Registration Statement (as contemplated by the Merger Agreement) has been declared effective under the Securities Act and has been delivered or otherwise made available to the stockholders of Acquiror and the stockholders of the Company), such Stockholder shall, if a meeting is held, appear at the meeting, in person or by proxy, or otherwise cause its Subject Securities to be counted as present thereat for purposes of establishing a quorum, and such Stockholder shall vote or provide consent (or cause to be voted or consented), in person or by proxy, all of its Subject Securities:

(a) to approve and adopt the Merger Agreement and the Transactions;

(b) to authorize and approve, with respect to any and all shares of Company Preferred Stock held by such Stockholder, the conversion of all outstanding shares of Company Preferred Stock into Company Common Stock as of immediately prior to the Effective Time in accordance with Article VI, Section 6.2(a)(ii) of the certificate of incorporation of the Company;

 

2


(c) in any other circumstances upon which a consent or other approval is required under the certificate of incorporation or bylaws of the Company or the Investment Agreements, or a consent or other approval is otherwise sought with respect to the Merger Agreement or the Transactions, to vote, consent or approve (or cause to be voted, consented or approved) all of such Stockholder’s Subject Securities held at such time in favor thereof;

(d) against and withhold consent with respect to any Acquisition Proposal; and

(e) against any and all other proposals that could reasonably be expected to delay or impair the ability of the Company to consummate the Transactions.

Each Stockholder hereby agrees that it shall not commit or agree to take any action inconsistent with the foregoing.

Section 1.5 Proxy.

(a) Without limiting any other rights or remedies of the Company, each Stockholder hereby irrevocably appoints the Company or any individual designated by the Company as the Stockholder’s agent, attorney-in-fact and proxy (with full power of substitution and resubstituting), for and in the name, place and stead of the Stockholder, to attend on behalf of the Stockholder any meeting of the stockholders of the Company with respect to the matters described in Section 1.4, to include the Subject Securities in any computation for purposes of establishing a quorum at any such meeting of the stockholders of the Company, to vote (or cause to be voted) the Subject Securities or consent (or withhold consent) with respect to any of the matters described in Section 1.4 in connection with any meeting of the stockholders of the Company or any action by written consent by the stockholders of the Company (including the Written Consent), in each case, in the event that the Stockholder fails to perform or otherwise comply with the covenants, agreements or obligations set forth in Section 1.4.

(b) The proxy granted by the Stockholder pursuant to Section 1.5(a) is coupled with an interest sufficient in Law to support an irrevocable proxy and is granted in consideration for the Company entering into the Merger Agreement and agreeing to consummate the transactions contemplated thereby. The proxy granted by the Stockholder pursuant to Section 1.5(a) is also a durable proxy and shall survive the bankruptcy, dissolution, death, incapacity or other inability to act by the Stockholder and shall revoke any and all prior proxies granted by the Stockholder with respect to the Subject Securities. The vote or consent of the proxyholder in accordance with Section 1.5(a) and with respect to the matters in Section 1.4 shall control in the event of any conflict between such vote or consent by the proxyholder of the Subject Securities and a vote or consent by the Stockholder of the Subject Securities (or any other Person with the power to vote the Subject Securities) with respect to the matters in Section 1.4. The proxyholder may not exercise the proxy granted pursuant to Section 1.5(a) on any matter except those provided in Section 1.4. For the avoidance of doubt, the Stockholder may vote the Subject Securities on all other matters, subject to, for the avoidance of doubt, the other applicable covenants, agreements and obligations set forth in this Agreement.

Section 1.6 No Challenges. Each Stockholder agrees not to commence, join in, facilitate, assist or encourage, and agrees to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against Acquiror, Merger Sub, the Company or any of their respective successors or directors (a) challenging the validity of, or seeking to enjoin the operation of, any provision of this Agreement or (b) alleging a breach of any fiduciary duty of any person in connection with the evaluation, negotiation or entry into this Agreement, the Merger Agreement or the Transactions (including the Pre-Closing Restructuring).

 

3


Section 1.7 Appraisal Rights. Each Stockholder hereby waives and agrees not to exercise any rights of appraisal or rights to dissent from the transactions contemplated by the Merger Agreement that he, she or it may have with respect to the Subject Securities under applicable Law.

Section 1.8 Affiliate Agreements. Each Stockholder hereby agrees and consents to the termination of each Contract between such Stockholder or its Affiliates, on the one hand, and the Company or its Affiliates, on the other hand, providing for management rights, notice rights, information or examination rights or other similar rights in such Stockholder’s capacity as a securityholder of the Company, including all Affiliate Agreements set forth on Schedule II attached hereto to which such Stockholder is party, in each case effective as of the Effective Time and without any further liability or obligation to the Company, the Company’s Subsidiaries or Acquiror.

Section 1.9 Registration Rights Agreement. Each of the Stockholders that is a Major Company Stockholder will deliver, substantially simultaneously with the Effective Time, a duly executed copy of the Amended and Restated Registration Rights Agreement, by and among Acquiror, the KVSB Holders (as defined therein) and the Target Holders (as defined therein) and, in substantially in the form attached as Exhibit C to the Merger Agreement.

Section 1.10 Further Assurances. Each Stockholder shall execute and deliver, or cause to be delivered, such additional documents, and take, or cause to be taken, all such further actions and do, or cause to be done, all things reasonably necessary (including under applicable Laws), in each case as reasonably mutually requested by Acquiror and the Company, to effect the transactions contemplated by this Agreement on the terms and subject to the conditions set forth herein.

Section 1.11 No Inconsistent Agreement. Each Stockholder hereby represents and covenants that such Stockholder has not entered into, and shall not enter into, any agreement that would in any material respect restrict, limit or interfere with the performance of such Stockholder’s obligations hereunder.

Section 1.12 Consent to Disclosure. Each Stockholder hereby consents to the publication and disclosure in the Registration Statement (and, as and to the extent otherwise required by applicable securities Laws or the SEC or any other securities authorities, any other documents or communications provided by Acquiror or the Company to any Governmental Authority or to securityholders of Acquiror) of such Stockholder’s identity and beneficial ownership of Subject Securities and the nature of such Stockholder’s commitments, arrangements and understandings under and relating to this Agreement and, if deemed appropriate by Acquiror or the Company, a copy of this Agreement. Each Stockholder will promptly provide any information reasonably requested by Acquiror or the Company that is necessary for any regulatory application or filing made or approval sought in connection with the Transactions (including filings with the SEC).

 

4


ARTICLE II

REPRESENTATIONS AND WARRANTIES

Section 2.1 Representations and Warranties of the Stockholders. Each Stockholder represents and warrants as of the date hereof to Acquiror and the Company (solely with respect to itself, himself or herself and not with respect to any other Stockholder) as follows:

(a) Organization; Due Authorization. If such Stockholder is not an individual, it is duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated, formed, organized or constituted, and the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby are within such Stockholder’s corporate, limited liability company or organizational powers and have been duly authorized by all necessary corporate, limited liability company or organizational actions on the part of such Stockholder. If such Stockholder is an individual, such Stockholder has full legal capacity, right and authority to execute and deliver this Agreement and to perform his or her obligations hereunder. This Agreement has been duly executed and delivered by such Stockholder and, assuming due authorization, execution and delivery by the other parties to this Agreement, this Agreement constitutes a legally valid and binding obligation of such Stockholder, enforceable against such Stockholder in accordance with the terms hereof (except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies). If this Agreement is being executed in a representative or fiduciary capacity, the Person signing this Agreement has full power and authority to enter into this Agreement on behalf of the applicable Stockholder.

(b) Ownership. Such Stockholder is the record and beneficial owner (as defined in Rule 13d-3 of the Exchange Act) of, and has good title to, all of such Stockholder’s Subject Securities, and there exist no Liens or any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such Subject Securities (other than transfer restrictions under the Securities Act)) affecting any such Subject Securities, other than Liens pursuant to (i) this Agreement, (ii) the certificate of incorporation of the Company, (iii) the Investment Agreements, (iv) the Merger Agreement, or (v) any applicable securities Laws. Such Stockholder’s Subject Securities are the only equity securities in the Company owned of record or beneficially by such Stockholder on the date of this Agreement, and none of such Stockholder’s Subject Securities are subject to any proxy, voting trust or other agreement or arrangement with respect to the voting of such Subject Securities, except as provided hereunder and under the certificate of incorporation of the Company and the Investment Agreements. Such Stockholder does not hold or own any rights to acquire (directly or indirectly) any equity securities of the Company or any equity securities convertible into, or which can be exchanged for, equity securities of the Company.

(c) No Conflicts. The execution and delivery of this Agreement by such Stockholder does not, and the performance by such Stockholder of his, her or its obligations hereunder will not, (i) if such Stockholder is not an individual, conflict with or result in a violation of the organizational documents of such Stockholder or (ii) require any consent or approval that has not been given or other action that has not been taken by any Person (including under any Contract binding upon such Stockholder or such Stockholder’s Subject Securities) to the extent such consent, approval or other action would prevent, enjoin or materially delay the performance by such Stockholder of its, his or her obligations under this Agreement.

(d) Litigation. There are no Actions pending against such Stockholder, or to the knowledge of such Stockholder threatened against such Stockholder, before (or, in the case of threatened Actions, that would be before) any arbitrator or any Governmental Authority, which in any manner challenges or seeks to prevent, enjoin or materially delay the performance by such Stockholder of its, his or her obligations under this Agreement.

 

5


(e) Adequate Information. Such Stockholder has been furnished or given access to adequate information concerning the business and financial condition of Acquiror and the Company to make an informed decision regarding this Agreement and the Transactions and has independently and without reliance upon Acquiror or the Company and based on such information as such Stockholder has deemed appropriate, made its own analysis and decision to enter into this Agreement. Such Stockholder acknowledges that Acquiror and the Company have not made and do not make any representation or warranty, whether express or implied, of any kind or character except as expressly set forth in this Agreement. Such Stockholder acknowledges that the agreements contained herein with respect to the Subject Securities held by such Stockholder are irrevocable and result in the waiver of any right of the undersigned to demand appraisal in connection with the Merger under Section 262 of the General Corporation Law of the State of Delaware or any other Law.

(f) Brokerage Fees. No broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by the Merger Agreement based upon arrangements made by such Stockholder, for which the Company or any of its Affiliates may become liable.

(g) Acknowledgment. Such Stockholder understands and acknowledges that each of Acquiror and the Company is entering into the Merger Agreement in reliance upon such Stockholder’s execution and delivery of this Agreement.

ARTICLE III

MISCELLANEOUS

Section 3.1 Termination. This Agreement and all of its provisions shall terminate and be of no further force or effect upon the earlier of (a) the Expiration Time and (b) as to each Stockholder, the written agreement of Acquiror, the Company and such Stockholder. Upon such termination of this Agreement, all obligations of the parties under this Agreement will terminate, without any liability or other obligation on the part of any party hereto to any Person in respect hereof or the transactions contemplated hereby, and no party hereto shall have any claim against another (and no person shall have any rights against such party), whether under contract, tort or otherwise, with respect to the subject matter hereof; provided, however, that the termination of this Agreement shall not relieve any party hereto from liability arising in respect of any willful breach of this Agreement prior to such termination. This ARTICLE III shall survive the termination of this Agreement.

Section 3.2 Miscellaneous. Sections 11.7 (Governing Law), 11.13 (Severability) 11.14 (Jurisdiction; Waiver of Jury Trial) and 11.15 (Enforcement) of the Merger Agreement are incorporated herein by reference and shall apply to this Agreement, mutatis mutandis.

Section 3.3 Assignment. This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. Except by a Stockholder in connection with a transfer of Subject Securities permitted by Section 2.1 herein, neither this Agreement nor any of the rights, interests or obligations hereunder will be assigned (including by operation of Law) without the prior written consent of the parties hereto.

Section 3.4 Amendment; Waiver. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by Acquiror, the Stockholders and the Company.

 

6


Section 3.5 Notices. All notices and other communications among the parties hereto shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid, (c) when delivered by FedEx or other nationally recognized overnight delivery service or (d) when e-mailed during normal business hours (and otherwise as of the immediately following Business Day), addressed as follows:

If to Acquiror:

Khosla Ventures Acquisition Co. II

2128 Sand Hill Rd.

Menlo Park, CA 94025

Attention: Samir Kaul; Peter Buckland

Email: sk@khoslaventures.com; pb@khoslaventures.com

with a copy to (which will not constitute notice):

Latham & Watkins LLP

505 Montgomery Street

Suite 2000

San Francisco, California 94111

Attention: Jim Morrone; Luke J. Bergstrom

Email: jim.morrone@lw.com; luke.bergstrom@lw.com

If to the Company:

Nextdoor, Inc.

420 Taylor Street

San Francisco, California 94102

Attention: John Orta, Sophia Contreras Schwartz

Email: jorta@nextdoor.com; sophia@nextdoor.com

with a copy to (which shall not constitute notice):

Fenwick & West LLP

801 California Street

Mountain View, CA 94041

Attention: Cynthia Clarfield Hess; Ethan Skerry

Email: chess@fenwick.com; eskerry@fenwick.com

If to a Stockholder:

To such Stockholder’s address set forth in Schedule I

with a copy to (which will not constitute notice):

Fenwick & West LLP

801 California Street

Mountain View, CA 94041

Attention: Cynthia Clarfield Hess; Ethan Skerry

Email: chess@fenwick.com; eskerry@fenwick.com

Notwithstanding the foregoing, in the event notice is delivered pursuant to this Section 3.5 by a means other than email, such party shall email such notice within one (1) Business Day of delivery of such notice by such other means.

 

7


Section 3.6 Counterparts. This Agreement may be executed in two or more counterparts (any of which may be delivered by electronic transmission), each of which shall constitute an original, and all of which taken together shall constitute one and the same instrument.

Section 3.7 Entire Agreement. This Agreement and the agreements referenced herein constitute the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersede all prior understandings, agreements or representations by or among the parties hereto to the extent they relate in any way to the subject matter hereof.

Section 3.8 Interpretation. The parties hereto each hereby agree that covenant, agreement, promise, representation and/or warranty contained in this Agreement shall be made on a several, and not joint, basis by each party hereto.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]

 

8


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

Benchmark Capital Partners VI, L.P.

as nominee for Benchmark Capital Partners VI, L.P., Benchmark Founders’ Fund VI, L.P., Benchmark Founders’ Fund VI-B, L.P., and related individuals

By:  Benchmark Capital Management Co. VI, L.L.C.,     general partner

By:   /s/ An-Yen Hu
 

Name:  An-Yen Hu

 

Title:    Authorized Signatory

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

Benchmark Capital Partners VIII, L.P.

as nominee for Benchmark Capital Partners VIII, L.P., Benchmark Founders’ Fund VIII, L.P., Benchmark Founders’ Fund VIII-B, L.P.

By:  Benchmark Capital Management Co. VIII, L.L.C.,

        general partner

By:   /s/ An-Yen Hu
 

Name:  An-Yen Hu

 

Title:    Authorized Signatory

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

Bond Capital Fund, L.P., as nominee

By:  Bond Capital Associates, LLC

Its:   General Partner

By:   /s/ Paul Vronsky
 

Name:  Paul Vronsky

 

Title:    Chief Operating Officer

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

Greylock XIII-A Limited Partnership

By:  Greylock XIII GP LLC, its General Partner

By:   /s/ Don Sullivan
 

Name:  Don Sullivan

 

Title:    Senior Managing Member

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

Greylock XIII Limited Partnership

By: Greylock XIII GP LLC, its General Partner

By:   /s/ Don Sullivan
 

Name: Don Sullivan

 

Title: Senior Managing Member

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

Greylock XIII Principals LLC

By: Greylock Management Corporation, Sole Member

By:   /s/ Don Sullivan
 

Name: Don Sullivan

 

Title: Senior Managing Member

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

JLK Revocable Trust dtd October 13, 2003
By:   /s/ Leslie Kilgore
 

Name: Leslie Kilgore

 

Title: Trustee

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

The JLK Family Legacy Trust
By:   /s/ Leslie Kilgore
 

Name: Leslie Kilgore

 

Title: Grantor

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

Nirav Tolia
By:   /s/ Nirav Tolia

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

Niran N. Tolia Grantor Retained Annuity Trust
By:   /s/ Nirav Tolia
 

Name: Nirav Tolia

 

Title: Grantor

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

Prakash Janakiraman
By:   /s/ Prakash Janakiraman

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

Riverwood Capital Partners II (Parallel-B) L.P.

 

By: Riverwood Capital II L.P., its general partner

By: Riverwood Capital II GP Ltd., its general partner

By:   /s/ Chris Varelas
 

Name: Chris Varelas

 

Title: Co-founding Partner, Managing Partner

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

Riverwood Capital Partners II L.P.

By: Riverwood Capital II L.P., its general partner

By: Riverwood Capital II GP Ltd., its general partner

By:   /s/ Chris Varelas
 

Name: Chris Varelas

 

Title: Co-founding Partner, Managing Partner

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

Sarah Friar

By:   /s/ Sarah Friar

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

Sarah Friar 2019 NXTDR Grantor Retained

Annuity Trust dated November 20, 2019

By:   /s/ Sarah Friar
 

Name: Sarah Friar

 

Title: Trustee

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

Sarah Leary

By:   /s/ Sarah Leary

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

Shasta Ventures II, L.P.

By: Shasta Ventures II GP, LLC, its General Partner

By:   /s/ Jason Pressman
 

Name: Jason Pressman

 

Title: Managing Director

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

Tiger Global PIP VII Holdings, L.P.
By:   /s/ Stephen Boyd
 

Name: Stephen Boyd

 

Title: General Counsel

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

Tiger Global Private Investment Partners VII, L.P.

 

By: Tiger Global PIP Performance VII, L.P.

Its: General Partner

By: Tiger Global PIP Management VII, Ltd.

Its: General Partner

By:   /s/ Stephen Boyd
 

Name: Stephen Boyd

 

Title: General Counsel

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

ACQUIROR:

KHOSLA VENTURES ACQUISITION CO. II

By:   /s/ Samir Kaul            
 

Name: Samir Kaul

 

Title: Chief Executive Officer

[Signature Page to Stockholder Support Agreement]


IN WITNESS WHEREOF, the Stockholders, Acquiror and the Company have each caused this Stockholder Support Agreement to be duly executed as of the date first written above.

 

COMPANY:

NEXTDOOR, INC.

By:   /s/ Sarah Friar
 

Name: Sarah Friar

 

Title: Chief Executive Officer

[Signature Page to Stockholder Support Agreement]


Schedule I

Stockholder Subject Securities

 

Stockholder

   Series A
Preferred
     Series B
Preferred
     Series C
Preferred
     Series D
Preferred
     Series E
Preferred
     Series F
Preferred
     Series G
Preferred
     Series H
Preferred
     Common
Stock
     Notice Information  
                             
                             
                             
                             
                             
                             
                             


Schedule II

Investment Agreements

1. Seventh Amended and Restated Investors’ Rights Agreement, dated May 8, 2019, by and among the Company and the Persons listed on Exhibit A thereto.

2. Seventh Amended and Restated Right of First Refusal and Co-Sale Agreement, dated May 8, 2019, by and among the Company and the Persons listed on Exhibit A and Exhibit B thereto.

3. Seventh Amended and Restated Voting and Drag-Along Agreement, dated May 8, 2019, as amended by that certain Amendment to Seventh Amended and Restated Voting and Drag-Along Agreement dated September 3, 2019, as further amended by that certain Second Amendment to Seventh Amended and Restated Voting and Drag-Along Agreement dated September 29, 2020, by and among the Company and the other Persons party thereto.

4. Management Rights Letter dated January 25, 2008 by and between the Company and Benchmark Capital Partners VI, L.P.

5. Management Rights Letter dated September 18, 2009 by and between the Company and Shasta Ventures.

6. Management Rights Letter dated October 5, 2012 by and between the Company and Google Ventures 2012, L.P.

7. Management Rights Letter dated October 5, 2012 by and between the Company and DAG Ventures V-QP, L.P.

8. Management Rights Letter dated October 22, 2013 by and between the Company and KPCB Holdings, Inc.

9. Management Rights Letter dated October 23, 2013 by and between the Company and Tiger Global Private Investment Partners VII, L.P.

10. Management Rights Letter dated August 29, 2014 by and between the Company and Insight Venture Partners Coinvestment Fund III, L.P.

11. Management Rights Letter dated August 29, 2014 by and between the Company and Insight Venture Partners Coinvestment Fund (Delaware) III, L.P.

12. Management Rights Letter dated August 29, 2014 by and between the Company and Insight Venture Partners (Delaware) III, L.P.

13. Management Rights Letter dated August 29, 2014 by and between the Company and Insight Venture Partners VIII (Co-Investors), L.P.

14. Management Rights Letter dated August 29, 2014 by and between the Company and Insight Venture Partners (Cayman) VIII, L.P.


15. Management Rights Letter dated August 29, 2014 by and between the Company and Insight Venture Partners VIII, L.P.

16. Management Rights Letter dated August 29, 2014 by and between the Company and Coatue Private Fund I LP.

17. Management Rights Letter dated September 5, 2014 by and between the Company and Meritech Capital Partners V, L.P.

18. Management Rights Letter dated May 8, 2019 by and among the Company, Riverwood Capital Partners II, L.P. and Riverwood Capital Partners II (Parallel-B) L.P.

19. Management Rights Letter dated August 29, 2014 by and between the Company and Redpoint Omega II, L.P.

20. Letter Agreement, dated May 8, 2019, by and between the Company and SMALLCAP World Fund, Inc.

21. Letter Agreement, dated January 11, 2018, by and among the Company, Hedosophia Group Limited, HS Investments NA6 Limited and HS Investments 1 Limited.

22. Letter Agreement, dated August 18, 2017, by and between the Company and Axel Springer Digital Ventures US II GmbH.

23. Letter Agreement, dated September 1, 2019, by and between the Company and Institutional Venture Partners XVI, L.P.

24. Letter Agreement, dated February 1, 2012, by and between the Company and Allen & Company LLC.

25. Letter Agreement, dated August 18, 2017, by and among the Company, Comcast Ventures, LP and Comcast Holdings Corporation.


Exhibit A

Written Consent

See attached.

Exhibit 10.4

FORM OF LOCK-UP AGREEMENT

THIS LOCK-UP AGREEMENT (this “Lock-Up Agreement”) is made and entered into as of [        ], 2021 by and between (a) Nextdoor, Inc., a Delaware corporation (formerly known as Khosla Ventures Acquisition Co. II, a Delaware corporation (the “Acquiror”)) (the “Company”), and (b) the person or entity identified under the heading “Holder” on the signature page hereto (“Holder”). Capitalized terms used but not otherwise defined in this Agreement will have the meanings ascribed to such terms in the Agreement and Plan of Merger, dated as of July 6, 2021, by and among Acquiror, Lorelei Merger Sub Inc., a Delaware corporation and a direct wholly owned subsidiary of Acquiror and Company (as it may be amended or supplemented from time to time, the “Merger Agreement”).

WHEREAS, in connection with the Merger Agreement, and in view of the valuable consideration to be received by the parties thereunder, the parties desire to enter into this Agreement, pursuant to which (i) any shares of Acquiror Class A Common Stock held by the Holder prior to the Effective Time, excluding, for the avoidance of doubt, any shares of Acquiror Post-Merger Class A Common Stock (“Class A Common”) or other securities acquired as part of the PIPE Investment or pursuant to the Forward Purchase Agreement, (ii) any shares of Class A Common held by the Holder that were issued upon the reclassification, exchange and/or conversion of Acquiror Class B Common Stock and/or Acquiror Class K Common Stock into Class A Common and/or Acquiror Post-Merger Class B Common Stock (“Class B Common”) in connection with the Closing and (iii) any Sponsor Exchange Shares (as defined in the Sponsor Support Agreement) to be issued to the Sponsor pursuant to the Sponsor Support Agreement (collectively, the “Restricted Securities”) shall become subject to limitations on disposition as set forth herein.

NOW, THEREFORE, in consideration of the premises set forth above, which are incorporated in this Agreement as if fully set forth below, and intending to be legally bound hereby, the parties hereby agree as follows:

1. Lock-Up Provisions.

(a) The Holder hereby agrees not to, during the period commencing from the Closing and through [DATE]1 (the “Lock-Up Period”): (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase, make any short sale 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 Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the Securities and Exchange Commission (the “SEC”) promulgated thereunder, with respect to any Restricted Securities or (ii) enter into any swap or hedging or other arrangement (including, without limitation, any short sale or the purchase or sale of, or entry into, any put or call option, or combination thereof, forward or any other derivative transaction or instrument, however described or defined, or other transaction) which is designed or intended to or which reasonably could be expected to lead to or result in a sale or disposition of the Restricted Securities, or that transfers to


another, in whole or in part, any of the economic consequences of ownership of any Restricted Securities, even if any such sale or disposition transaction or transactions would be made or executed by or on behalf of someone other than the Holder, whether any such transaction described in clauses (i) or (ii) above is to be settled by delivery of such securities, in cash or otherwise; or (iii) otherwise publicly announce any intention to engage in any of the following (any of the foregoing described in clauses (i) through (iii), a “Prohibited Transfer”); provided, for the avoidance of doubt, that nothing in this Agreement shall restrict any Holder’s right to cause the Company to file and cause to become effective a registration statement with the SEC naming such Holder as a selling securityholder (and to make any required disclosures on Schedule 13D in respect thereof) pursuant to the Registration Rights Agreement. Notwithstanding the foregoing, the Lock-Up Period and restrictions set forth in this Section 1 shall not apply:

(A) to transactions relating to shares of Class A Common or other securities acquired in open market transactions after the Closing; provided that such transfers are not required to be reported with the SEC on Form 4 in accordance with Section 16 under the Exchange Act and no other public announcement shall be voluntarily made in connection with subsequent sales of Class A Common or other securities acquired in such open market transactions (other than Form 13F filings filed with the SEC);

(B) to transfers of Restricted Securities as a bona fide gift, or to a charitable organization or educational institution in a transaction not involving a disposition for value that is approved by the Board of Directors of the Company;

(C) to transfers or dispositions of Restricted Securities or other securities to any member of the immediate family of the Holder or any trust for the direct or indirect benefit of the Holder or the immediate family of the Holder in a transaction not involving a disposition for value;

(D) to transfers or dispositions of Restricted Securities to any corporation, partnership, limited liability company, investment fund or other entity all of the beneficial ownership interests of which are held, controlled or managed by the Holder or the immediate family of the Holder in a transaction not involving a disposition for value;

(E) to transfers or dispositions of Restricted Securities (x) by will, other testamentary document or intestate succession to the legal representative, heir, beneficiary or a member of the immediate family of the Holder upon the death of the Holder, or (y) by operation of law pursuant to orders of a court or regulatory agency, a domestic order or negotiated divorce settlement;

(F) if the Holder is an entity, to (x) transfers or dispositions of Restricted Securities to another corporation, member, partnership, limited liability company, trust or other entity that is a direct or indirect affiliate (as defined under Rule 12b-2 of the Exchange Act) of the Holder, or to an investment fund or other entity that controls or manages, or is under common control with, the Holder, or (y) distributions of Restricted Securities to partners, members, stockholders, beneficiaries or other equity holders of the Holder or to an investment fund or other entity that controls or manages, or is under common control with, the Holder;

 

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(G) by virtue of the laws of the State of Delaware or of the Sponsor’s limited partnership agreements or applicable organizational documents upon liquidation or dissolution of the Sponsor;

provided that in the case of any transfer, disposition or distribution pursuant to clauses (B), (C), (D), (E), (F) or (G), (i) each transferee, donee or distributee shall sign and deliver to the Company an agreement substantially in the form of this Agreement applicable to such holder, and (ii) such transfer, disposition or distribution is not required to be reported with the SEC on Form 4 in accordance with Section 16 under the Exchange Act and no other public announcement shall be voluntarily made during the Lock-Up Period (other than (1) Schedule 13 filings filed with the SEC, (2) in the case of a transfer or other disposition pursuant to clause (E) above, any Form 4 or Form 5 required to be filed under the Exchange Act if the Holder is subject to Section 16 reporting with respect to the Company under the Exchange Act and indicating by footnote disclosure or otherwise the nature of the transfer or disposition, and (3) any required filings on Form 13F, or Schedule 13G under the Exchange Act);

(H) to transfers or dispositions of Restricted Securities to the Company pursuant to any contractual arrangement in effect on the date of this Agreement that provides for the repurchase of the Restricted Securities by the Company, provided that such transfers or dispositions are not required to be reported with the SEC on Form 4 in accordance with Section 16 under the Exchange Act and no other public announcement shall be voluntarily made during the Lock-Up Period in connection with any such transfers or dispositions (other than (1) Form 13F filings filed with the SEC, and (2) any Form 4 or Form 5 required to be filed under the Exchange Act if the Holder is subject to Section 16 reporting with respect to the Company under the Exchange Act and indicating by footnote disclosure or otherwise the nature of the transfer or disposition);

(I) to transfers or dispositions of Restricted Securities in connection with the conversion of any convertible security into, or the exercise of any option or warrant for, shares of Class A Common; provided that (i) any such shares of Class A Common received by the Holder shall be subject to the terms of this Agreement and (ii) such transfers or dispositions are not required to be reported with the SEC on Form 4 in accordance with Section 16 under the Exchange Act and no other public announcement shall be voluntarily made during the Lock-Up Period (other than Form 13F and Schedule 13 filings filed with the SEC);

(J) to transfers or dispositions of Restricted Securities to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under clauses (A) through (I) above;

(K) to the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of Class A Common, provided that (i) such plan does not provide for the transfer of Class A Common during the Lock-Up Period and (ii) no filing under the Exchange Act or other public announcement shall be required or shall be voluntarily made during the Lock-Up Period;

 

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(L) to transfers or dispositions of Class A Common or such other securities pursuant to a bona fide tender offer for shares of the Company’s capital stock, merger, consolidation or other similar transaction made to all holders of the Company’s securities involving a Change of Control (as defined below) of the Company (including without limitation, the entering into of any lock-up, voting or similar agreement pursuant to which the Holder may agree to transfer, sell, tender or otherwise dispose of shares of Class A Common or other securities in connection with such transaction) that has been approved by the Board of Directors of the Company; provided that, in the event that such Change of Control transaction is not consummated, this clause (L) shall not be applicable and the Holder’s shares and other securities shall remain subject to the restrictions contained in this Agreement;

(M) any reclassification, exchange and/or conversion of Acquiror Class B Common Stock and Acquiror Class K Common Stock into Acquiror Class A Common and/or Class B Common in connection with the Closing; or

(N) any conversion of Class B Common to Class A Common in accordance with the Company’s Certificate of Incorporation, provided that the shares of Class A Common shall remain subject to the restrictions contained in this Agreement.

The Holder further agrees to execute such agreements as may be reasonably requested by the Company that are consistent with the foregoing or that are necessary to give further effect thereto.

For purposes of this Agreement, “immediate family shall mean any relationship by blood, marriage, domestic partnership or adoption, not more remote than first cousin, and “Change of Control” shall mean the transfer (whether by tender offer, merger, consolidation or other similar transaction), in one transactions or a series of related transactions following the Closing Date, to a person or group of affiliated persons, of the Company’s voting securities if, after such transfer, such person or group of affiliated persons would hold at least 50% of the outstanding voting securities of the Company (or the surviving entity), provided that, for the avoidance of doubt, the Business Combination shall not constitute a Change of Control.

(b) If any Prohibited Transfer is made or attempted contrary to the provisions of this Agreement, such purported Prohibited Transfer shall be null and void ab initio, and the Company shall refuse to recognize any such purported transferee of the Restricted Securities as one of its equity holders for any purpose. In order to enforce this Section 1, the Company may impose stop-transfer instructions with respect to the Restricted Securities (and permitted transferees and assigns thereof) until the end of the Lock-Up Period.

(c) During the Lock-Up Period, each certificate or book-entry position evidencing any Restricted Securities shall be marked with a legend in substantially the following form, in addition to any other applicable legends:

 

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“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN A LOCK-UP AGREEMENT BY AND BETWEEN THE ISSUER OF SUCH SECURITIES AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SECURITIES). A COPY OF SUCH LOCK-UP AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

(d) For the avoidance of doubt, the Holder shall retain all of its rights as a stockholder of the Company with respect to the Restricted Securities during the Lock-Up Period, including the right to vote any Restricted Securities that are entitled to vote. The Company agrees to (i) instruct its transfer agent to remove the legend in clause (c) immediately above upon the expiration of the Lock-Up Period and (ii) if requested by the transfer agent, cause its legal counsel to deliver the necessary legal opinions, if any, to the transfer agent in connection with the instruction under subclause (i).

(e) In the event that a release is granted to any Major Holder (as defined below), other than the Holder, relating to the lock-up restrictions set forth above or in any other lock-up agreement entered into on or about the date hereof by such Major Holder for shares of Class A Common or Class B Common, the same percentage of shares of the Class A Common or Class B Common held by the Holder (the “Pro-rata Release”) shall be immediately and fully released on the same terms from any remaining lock-up restrictions set forth herein; provided, however, that such Pro-rata Release shall not be applied in the event of releases granted from such lockup restrictions (i) to any individual party or parties (other than shareholders subject to Section 16 reporting with respect to the Company under the Exchange Act) to sell or otherwise transfer or dispose of shares of Class A Common or other securities in an amount having a fair market value up to an aggregate of $7,500,000 (whether in one of multiple releases) or (ii) in the case of any underwritten public offering of the Company’s Class A Common Stock. In the event that any percentage of such Class A Common released from the lock-up restrictions are subject to any restrictions of the type set forth in clause (i) or (ii) of Section 1(a) of this Agreement, the same restrictions shall be applicable to the release of the same percentage of Class A Common held by the Holder. In the event that the Holder is released from any of its obligations under this Agreement or, by virtue of this Agreement, becomes entitled to offer, pledge, sell, contract to sell, or otherwise dispose of any Restricted Securities prior to the expiration of the Lock-Up Period, the Company shall use its commercially reasonable efforts to provide notification of such to the Holder within three business days thereof; provided that the failure to provide such notice shall not give rise to any claim or liability against the Company. For purposes of this Agreement, each of the following persons is a “Major Holder”: each officer and director of the Company and each record or beneficial owner, as of the date hereof, of more than 2% of the outstanding shares of securities of the Company (for purposes of determining record or beneficial ownership of a stockholder, all shares of securities held by investment funds affiliated with such stockholder shall be aggregated).

(f) The provisions in this Section 1 shall supersede any lock-up agreement previously entered into between Acquiror and the undersigned Holder, which shall be deemed terminated and of no further force and effect (with respect to any agreement, only to the extent thereof). Notwithstanding anything herein to the contrary, nothing in this Agreement shall be deemed to modify or supersede any terms or provisions of the Sponsor Vesting Agreement and any transfer restrictions contained herein shall supplement, and shall not limit, the transfer restrictions set forth in the Sponsor Vesting Agreement.

 

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2. Miscellaneous.

(a) Binding Effect; Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. This Agreement and the rights and obligations hereunder shall not be assignable or transferable by any of the parties, in whole or in part (including by operation of law), without the prior written consent of the other parties hereto, which any such party may withhold in its absolute discretion.

(b) No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing in this Agreement expressed or implied shall give or be construed to give to any person or entity, other than the parties hereto and such successors and permitted assigns, any legal or equitable rights under this Agreement.

(c) Governing Law; Jurisdiction.

(A) This Agreement and all disputes, claims or controversies relating to, arising out of, or in connection with this Agreement shall be governed by and construed in accordance with the internal Laws of the State of Delaware applicable to contracts executed in and to be performed in the State of Delaware, without giving effect to any choice of Law or conflict of Laws rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware.

(B) Each party irrevocably agrees that any Action arising out of or relating to this Agreement brought by any other party or its successors or assigns shall be brought and determined in the Court of Chancery of the State of Delaware (or, solely if such courts decline jurisdiction, in any federal court located in the State of Delaware), and each party hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such Action arising out of or relating to this Agreement and the transactions contemplated hereby. Each party agrees not to commence any Action relating thereto except in the courts described above in Delaware, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in Delaware as described herein. Each party further agrees that notice as provided herein shall constitute sufficient service of process and each party further waives any argument that such service is insufficient. Each party hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any Action arising out of or relating to this Agreement or the transactions contemplated hereby, (i) any claim that it is not personally subject to the jurisdiction of the courts in Delaware as described herein for any reason, (ii) that it or its property is exempt or immune from the jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) that (1) the Action in any such court is brought in an inconvenient forum, (2) the venue of such Action is improper or (3) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. Each party agrees that a final, non-appealable judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by Law.

 

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(d) WAIVER OF JURY TRIAL. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (iii) IT MAKES SUCH WAIVER VOLUNTARILY AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 2(D).

(e) Interpretation. The headings, titles and subtitles set forth in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Except when the context requires otherwise, any reference in this Agreement to any Section or clause shall be to the Sections and clauses of this Agreement. The words “herein,” “hereto,” “hereof” and “hereby” and other words of similar import in this Agreement shall be deemed in each case to refer to this Agreement as a whole and not to any particular section or other subdivision of this Agreement. The term “or” means “and/or”. The words “include,” “includes” and “including” are deemed to be followed by the phrase “without limitation”. Reference to any person includes such person’s successors and assigns to the extent such successors and assigns are permitted by the terms of any applicable agreement, and reference to a person in a particular capacity excludes such person in any other capacity or individually. Reference to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof. Reference to any Law means such Law as amended, modified, codified, replaced or re-enacted, in whole or in part, including rules, regulations, enforcement procedures and any interpretations promulgated thereunder, all as in effect on the date of this Agreement. Any reference to the masculine, feminine or neuter gender shall include such other genders and any reference to the singular or plural shall include the other, in each case unless the context otherwise requires.

(f) No Presumption Against Drafting Party. Each of the parties acknowledges that it has participated jointly in the negotiation and drafting of this Agreement and has been represented by counsel in connection with this Agreement and the transactions contemplated hereby. Accordingly, any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the drafting party has no application and is expressly waived.

 

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(g) Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or electronic mail or postage prepaid mail (registered or certified) or nationally recognized overnight courier service and shall be deemed given when so delivered by hand or electronic mail, or if mailed, three (3) days after mailing (one Business Day in the case of overnight courier service), as follows:

If to the Company, to:

Nextdoor, Inc.

420 Taylor Street

San Francisco, California 94120

Attention:         John Orta

                          Sophia Contreras Schwartz

Email:              jorta@nextdoor.com

                          sophia@nextdoor.com

with a copy (which shall not constitute notice) to:

Fenwick & West LLP

801 California Street

Mountain View, California 94041

Attention:         Cynthia Clarfield Hess

                          Ethan Skerry

                          Ran Ben-Tzur

                          Katherine Duncan

E-mail:              chess@fenwick.com

                          eskerry@fenwick.com

                          rbentzur@fenwick.com

                          kduncan@fenwick.com

If to the Holder, to the address set forth on the Holder’s signature page hereto.

Notices or other communications to any other Holder that becomes a party hereto pursuant to Section 1 shall be delivered to the address set forth in the applicable joinder agreement or other instrument executed by such Holder and binding such Holder to the terms of this Agreement.

(h) Amendments and Waivers. Only upon the approval by a majority of the members of the Board of Directors of the Company then in office that qualify as “independent” for purposes of audit committee membership under Section 10A-3 under the Exchange Act (the “Representatives”), compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived by the Company, or any of such provisions, covenants or conditions may be amended or modified; provided, however, that notwithstanding the foregoing, any amendment hereto or waiver hereof that adversely affects the Holder, solely in its capacity as a holder of Restricted Securities, shall require the consent of the Holder. No provision of this Agreement may be waived unless such waiver is in writing and signed by the party or parties

 

8


against whom such waiver is to be effective. No failure or delay of any party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have hereunder.

(i) Severability. It is the desire and intent of the parties that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

(j) Specific Performance. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Company shall be entitled to an injunction or injunctions to prevent breaches of this Agreement by a Holder and to enforce specifically the terms and provisions hereof.

(k) Entire Agreement. This Agreement constitutes the full and entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings relating to such subject matter; provided, that, for the avoidance of doubt, the foregoing shall not affect the rights and obligations of the parties under the Merger Agreement or any documents related thereto or referred to therein. Notwithstanding the foregoing, nothing in this Agreement shall limit any of the rights or remedies of the Company or any of the obligations of the Holder under any other agreement between the Holder and the Company or any certificate or instrument executed by the Holder in favor of the Company, and nothing in any other agreement, certificate or instrument shall limit any of the rights or remedies of the Company or any of the obligations of the Holder under this Agreement.

(l) Further Assurances. From time to time, at another party’s request and without further consideration (but at the requesting party’s reasonable cost and expense), each party shall execute and deliver such additional documents and take all such further action as may be reasonably necessary to consummate the transactions contemplated by this Agreement.

(m) Execution of Agreement. This Agreement may be executed in one (1) or more counterparts, all of which shall be considered one (1) and the same agreement, and shall become effective when one (1) or more such counterparts have been signed by each of the parties and delivered to the other party. Facsimile or electronic mail transmission of counterpart signatures to this Agreement shall be acceptable and binding.

 

9


[Remainder of Page Intentionally Left Blank; Signature Pages Follow]

 

 

10


IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

COMPANY:
NEXTDOOR, INC.
By:  

 

Name:
Title:

[Signature Page to Lock-Up Agreement]


HOLDER:
By:  

 

Name:
Title:
Address for Notice:

[Signature Page to Lock-Up Agreement]

Exhibit 99.1

Nextdoor, the neighborhood network, to become a publicly-traded company through merger with Khosla Ventures Acquisition Co. II

 

 

Nextdoor connects neighbors to those nearby — neighbors, businesses, and public services, creating a highly engaged, hyperlocal network, building meaningful connections both online and offline

 

 

Transaction to result in approximately $686 million in gross proceeds, including a $270 million fully committed PIPE with participation from institutional investors including funds and accounts advised by T. Rowe Price Associates, Inc., Baron Capital Group, Dragoneer, Soroban Capital, accounts advised by ARK Invest, and ION Asset Management, in addition to existing Nextdoor investors Tiger Global and Hedosophia. Nextdoor CEO Sarah Friar and Khosla Ventures affiliates each participated in the PIPE financing

 

 

The transaction accelerates Nextdoor’s growth plans to develop products that create stronger neighborhoods, increase hiring, and expand into new territories

 

 

Nextdoor announces the founding of the Nextdoor Kind Foundation, a nonprofit that will invest in neighborhoods to help them thrive

 

 

Expected pro forma equity value of approximately $4.3 billion

SAN FRANCISCO and MENLO PARK, California – July 6, 2021 – Nextdoor, Inc. (“Nextdoor”), the neighborhood network, and Khosla Ventures Acquisition Co. II (Nasdaq:KVSB) (“KVSB”), a special purpose acquisition company sponsored by an affiliate of Khosla Ventures, LLC (“Khosla Ventures”), today announced that they have entered into a definitive agreement under which Nextdoor would become a publicly listed company. Upon closing of the proposed transaction, the combined company will be listed under the ticker symbol “KIND”.

Nextdoor’s purpose is to cultivate a kinder world where everyone has a neighborhood they can rely on. When Nextdoor was founded, it was apparent that despite technology’s ability to connect people and communities virtually across the globe, in actuality people had become more disconnected, especially in real life. Nextdoor was founded to leverage technology to enable real-world connection.

Today, Nextdoor is in more than 275,000 neighborhoods around the world. In the United States, nearly 1 in 3 households turn to Nextdoor to access trusted information, give and get help, and build real-world connections with those nearby — neighbors, businesses, and public services. Nextdoor is the neighborhood network that brings all of these stakeholders together to get things done locally and build thriving communities.

Nextdoor offers organizations of all sizes distinct and differentiated products that allow them to connect to neighbors that are receptive to their offerings as a valuable part of the neighborhood ecosystem. Additionally, Nextdoor enables businesses to reach customers locally, at scale. Nextdoor’s audience is unique and, in many cases, is not active on other social media and commerce platforms.

We believe that Nextdoor’s business will strengthen as it scales, benefitting from network effects across the ecosystem. We are driving growth by:

 

 

increasing neighbors in our network by introducing new products and expanding in markets around the globe;

 

 

increasing engagement on our platform by making it easier to engage, share interests, and create meaningful connections; and

 

 

increasing monetization on our platform by scaling our proprietary advertising platform that can service clients from the largest advertisers in the world to small local businesses and neighbors for hire.

Nextdoor’s business combination with KVSB will provide access to new capital, which will be used to accelerate Nextdoor’s growth plans including hiring, expanding monetization, and continuing to develop products to build stronger, more vibrant, and resilient neighborhoods.

“Nextdoor has been at the forefront of cultivating ‘hyperlocal’ communities and neighborhoods since its inception, allowing neighbors to create meaningful connections – both online and offline,” said Sarah Friar, Chief Executive Officer of Nextdoor. “Our business strengthens as we scale, benefiting from strong network effects, and we believe the proposed transaction with KVSB accelerates the growth potential of our platform. We remain focused on optimizing our strategy and investing in products to drive continued neighbor and organization acquisition and engagement.”

 


“We have long focused on partnering with cutting-edge, category-defining companies with tremendous growth potential, strong management teams and, importantly, clearly defined missions. Nextdoor exhibits all of these qualities and more, and we look forward to continuing our partnership and accelerating Nextdoor’s growth as a public company,” said Vinod Khosla, Founder of KVSB and Managing Director of Khosla Ventures.

Following the merger, Nextdoor CEO Sarah Friar, Co-Founders Nirav Tolia, Sarah Leary and Prakash Janakiraman, and founding investor Bill Gurley will each contribute a portion of their personal ownership in Nextdoor to form and sustainably fund the Nextdoor Kind Foundation, a nonprofit foundation dedicated to helping neighbors rejuvenate their neighborhoods through targeted grants.

Key Transaction Terms

Concurrently with the consummation of the transaction, additional investors have committed to purchase shares of Class A common stock of KVSB at $10.00 per share in a private placement (the “PIPE”) to occur concurrently with the proposed business combination. The upsized $270 million PIPE investment includes participation from institutional investors, including funds and accounts advised by T. Rowe Price Associates, Inc., Baron Capital Group, Dragoneer, Soroban Capital, accounts advised by ARK Invest, and ION Asset Management, in addition to existing Nextdoor investors Tiger Global and Hedosophia. Nextdoor CEO Sarah Friar and Khosla Ventures affiliates each participated in the PIPE financing. Approximately $416 million in cash held in the KVSB trust account, together with the approximately $270 million in PIPE proceeds, excluding transaction expenses, will be used to support new and existing growth initiatives. All references to cash on the balance sheet, available cash from the trust account and retained transaction proceeds are subject to any redemptions by public stockholders of KVSB and payment of transaction expenses.

Nextdoor’s management team, led by CEO Sarah Friar and CFO Mike Doyle will continue to lead Nextdoor following the transaction.

The transaction, which has been unanimously approved by the Boards of Directors of Nextdoor and KVSB, is subject to approval by KVSB stockholders and other customary closing conditions. The transaction is expected to close in the fourth quarter of 2021.

A more detailed description of the transaction terms and a copy of the Agreement and Plan of Merger will be included in a current report on Form 8-K to be filed by KVSB with the U.S. Securities and Exchange Commission (the “SEC”). KVSB will file a registration statement (which will contain a proxy statement/prospectus) with the SEC in connection with the transaction.

Advisors

Morgan Stanley & Co. LLC (“Morgan Stanley”) and Evercore Group L.L.C. (“Evercore”) are serving as joint-lead financial advisors to Nextdoor and placement agents to institutional investors for the PIPE to KVSB. Goldman Sachs & Co. LLC is serving as exclusive financial advisor to KVSB. Fenwick & West LLP is serving as legal counsel to Nextdoor. Latham & Watkins LLP is acting as legal counsel to KVSB. Simpson Thacher & Bartlett LLP is acting as legal counsel to Morgan Stanley and Evercore as placement agents to institutional investors to KVSB.

Management Presentation

Nextdoor and KVSB management will host a conference call on July 6, 2021 at 8:00 AM Eastern Time to review an investor presentation. The conference call can be accessed at investors.nextdoor.com. The presentation will also be filed with the SEC by KVSB as an exhibit to a Current Report on Form 8-K, which can be viewed on the SEC’s website at www.sec.gov.

About Nextdoor

Nextdoor is the app where you connect to the neighborhoods that matter to you. Nextdoor’s purpose is to cultivate a kinder world where everyone has a neighborhood they can rely on. Neighbors around the world turn to Nextdoor daily to receive trusted information, give and get help, and build real-world connections with those nearby — neighbors, businesses, and public services. Today, neighbors rely on Nextdoor in more than 275,000 neighborhoods across 11 countries. In the U.S., nearly 1 in 3 households use Nextdoor. Nextdoor is based in San Francisco. For additional information and images: nextdoor.com/newsroom.

About KVSB

KVSB is a special purpose acquisition company sponsored by affiliates of Khosla Ventures. Khosla Ventures manages a series of venture capital funds that make early-stage venture capital investments and provide strategic advice to entrepreneurs building companies with lasting significance. The firm was founded in 2004 by Vinod Khosla, co-founder of Sun Microsystems. Khosla Ventures has over $14 billion dollars of assets under management and focuses on a broad range of sectors including artificial intelligence, agriculture/food, consumer, enterprise, financial services, health, space, sustainable energy, robotics, VR/AR and 3D printing. Collectively, Khosla Ventures portfolio of investments has created nearly half a trillion dollars in market value.

 


Additional Information and Where to Find It / Non-Solicitation

In connection with the proposed transaction, KVSB intends to file a proxy statement with the SEC. The proxy statement will be sent to the stockholders of KVSB. KVSB and Nextdoor also will file other documents regarding the proposed transaction with the SEC. Before making any voting decision, investors and security holders of KVSB are urged to read the proxy statement and all other relevant documents filed or that will be filed with the SEC in connection with the proposed transaction as they become available because they will contain important information about the proposed transaction. Investors and security holders will be able to obtain free copies of the proxy statement and all other relevant documents filed or that will be filed with the SEC by KVSB and Nextdoor through the website maintained by the SEC at www.sec.gov.

Participants in Solicitation

KVSB and Nextdoor and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from KVSB’s stockholders in connection with the proposed transaction. Information about KVSB’s directors and executive officers and their ownership of KVSB’s securities is set forth in KVSB’s filings with the SEC. To the extent that holdings of KVSB’s securities have changed since the amounts printed in KVSB’s Registration Statement on Form S-1, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. A list of the names of such directors and executive officers and information regarding their interests in the business combination will be contained in the proxy statement/prospectus when available. You may obtain free copies of these documents as described in the preceding paragraph.

No Offer or Solicitation

These communications do not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act, or an exemption therefrom.

Forward-Looking Statements

This communication contains certain forward-looking statements within the meaning of the federal securities laws with respect to the proposed transaction between Nextdoor and KVSB. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this communication. You should carefully consider the risks and uncertainties described in the “Risk Factors” section of KVSB’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, the registration statement on Form S-4, and other documents filed by KVSB from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Nextdoor and KVSB assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Neither Nextdoor nor KVSB gives any assurance that either Nextdoor or KVSB will achieve its expectations.

Contacts

Nextdoor Media Relations

press@nextdoor.com

Nextdoor Investor Relations

ir@nextdoor.com

Khosla Ventures

information@khoslaventures.com

Exhibit 99.2 July 2021Exhibit 99.2 July 2021


Confidential 2 Disclaimer This Presentation (together with oral statements made in connection herewith, the “Presentation”) is for informational purposes only to assist prospective purchasers in a private placement in making their own evaluation with respect to the proposed business combination (the “Business Combination”) between Khosla Ventures Acquisition Co. II (“Khosla”) and Nextdoor, Inc. (“Nextdoor”), and the proposed private placement of securities of Khosla in connection with the Business Combination. This Presentation does not constitute an offer, or a solicitation of an offer, to buy or sell any securities, investment or other specific product, or a solicitation of any vote or approval, nor shall there be any sale of securities, investment or other specific product in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. By accepting this Presentation, you acknowledge and agree that all of the information contained herein or disclosed orally during this Presentation is confidential, that you will not distribute, reproduce, disclose or use such information for any purpose other than for the purpose of evaluating your firm’s participation in the potential financing, that you will not distribute, reproduce, disclose or use such information in any way detrimental to Khosla or Nextdoor, and that you will return to Khosla and Nextdoor, delete or destroy this Presentation upon request. Further, by accepting this Presentation, the recipient agrees to maintain all such information in strict confidence, including in strict accordance with any other contractual obligations applicable to the recipient and all applicable laws, until such information becomes publicly available not as a result of any breach of such confidentiality obligation. You are also being advised that the United States securities laws restrict persons with material non-public information about a company obtained directly or indirectly from that company from purchasing or selling securities of such company, or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities on the basis of such information. The information contained herein does not purport to be all-inclusive and none of Khosla, Nextdoor, Morgan Stanley & Co. LLC, and Evercore Group L.L.C. (Morgan Stanley & Co., LLC and Evercore Group L.L.C., together, the “Placement Agents”) nor any of their respective subsidiaries, stockholders, affiliates, representatives, control persons, partners, members, managers, directors, officers, employees, advisers or agents make any representation or warranty, express or implied, as to the accuracy, completeness or reliability of the information contained in this Presentation. Prospective investors in the proposed private placement should consult with their own counsel and tax and financial advisors as to legal and related matters concerning the matters described herein, and, by accepting this Presentation, you confirm that you are not relying solely upon the information contained herein to make any investment decision. The recipient shall not rely upon any statement, representation or warranty made by any other person, firm or corporation (including, without limitation, the Placement Agents or any of their respective affiliates or control persons, officers, managers, directors and employees) in making its investment decision to subscribe for securities of Khosla in connection with the Business Combination. To the fullest extent permitted by law, in no circumstances will Khosla, Nextdoor or any of their respective subsidiaries, stockholders, affiliates, representatives, control persons, partners, members, managers, directors, officers, employees, advisers or agents be responsible or liable for any direct, indirect or consequential loss or loss of profit arising from the use of this Presentation, its contents, its omissions, reliance on the information contained within it, or on opinions communicated in relation thereto or otherwise arising in connection therewith. In addition, this Presentation does not purport to be all-inclusive or to contain all of the information that may be required to make a full analysis of Khosla, Nextdoor, the proposed private placement or the Business Combination. The general explanations included in this Presentation cannot address, and are not intended to address, your specific investment objectives, financial situations or financial needs. Forward-Looking Statements Certain statements in this Presentation may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements herein generally relate to future events or the future financial or operating performance of Khosla, Nextdoor or the combined company expected to result from the Business Combination (the “Combined Company”). For example, projections of future financial performance of Nextdoor and the Combined Company, the Combined Company’s business plan, other projections concerning key performance metrics, the proceeds of the Business Combination and the Combined Company’s expected cash runway, and the potential effects of the Business Combination on Khosla and the Combined Company, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “ may,”“ should,”“ expect,”“ intend,”“ will,” “estimate,”“ anticipate,”“ believe,”“ predict,” “project,” “target,” “plan,” or “potentially” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Khosla, Nextdoor and its management, as the case may be, are inherently uncertain and subject to material change. New risks and uncertainties may emerge from time to time, and it is not possible to predict all risk and uncertainties. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, various factors beyond management’s control, including general economic conditions and other risks, uncertainties and factors set forth in the section entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in Khosla’s final prospectus relating to its initial public offering, dated March 23, 2021, other filings with the Securities and Exchange Commission (“SEC”), as well as factors associated with companies, such as Nextdoor, including anticipated trends, growth rates, and challenges in those businesses and in the markets in which they operate, including the factors described in the summary risk factors that accompany this Presentation; macroeconomic conditions related to the global COVID-19 pandemic; the failure to realize the anticipated benefits of the Business Combination; the amount of redemption requests made by Khosla’s public stockholders; Khosla’s ability to procure private placement subscriptions in connection with the Business Combination sufficient to satisfy Nextdoor’s business objectives. Nothing in this Presentation should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this Presentation, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein. Nothing in this Presentation should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this Presentation, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein and the risk factors of Khosla and Nextdoor described above. Neither Khosla nor Nextdoor undertakes any duty to update these forward-looking statements. Use of Projections This Presentation contains projected financial information with respect to Nextdoor. Such projected financial information constitutes forward-looking information, is for illustrative purposes only and should not be relied upon as being predictive of future results. The assumptions and estimates underlying such financial forecast information are inherently uncertain and are subject to a wide variety of significant business, economic, competitive and other risks and uncertainties that could cause actual results to differ materially from those contained in such prospective financial information, including without limitation, assumptions regarding Khosla’s and Nextdoor’s ability to consummate the Business Combination, the failure of which to materialize could cause actual results to differ materially from those contained in the prospective financial information. Khosla and Nextdoor caution that their assumptions may not materialize and that current economic conditions render such assumptions, although believed reasonable at the time they were made, subject to greater uncertainty. See the section above titled “Forward-Looking Statements”. The inclusion of financial forecast information in this Presentation should not be regarded as a representation by any person that the results reflected in such forecasts will be achieved. Neither Khosla’s nor Nextdoor’s independent auditors have audited, reviewed, compiled or performed any procedures with respect to the projections for the purpose of their inclusion in this Presentation or any other purpose, and accordingly, none of such independent auditors has expressed any opinion or provided any other form of assurance with respect to such projections. Confidential 2 Disclaimer This Presentation (together with oral statements made in connection herewith, the “Presentation”) is for informational purposes only to assist prospective purchasers in a private placement in making their own evaluation with respect to the proposed business combination (the “Business Combination”) between Khosla Ventures Acquisition Co. II (“Khosla”) and Nextdoor, Inc. (“Nextdoor”), and the proposed private placement of securities of Khosla in connection with the Business Combination. This Presentation does not constitute an offer, or a solicitation of an offer, to buy or sell any securities, investment or other specific product, or a solicitation of any vote or approval, nor shall there be any sale of securities, investment or other specific product in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. By accepting this Presentation, you acknowledge and agree that all of the information contained herein or disclosed orally during this Presentation is confidential, that you will not distribute, reproduce, disclose or use such information for any purpose other than for the purpose of evaluating your firm’s participation in the potential financing, that you will not distribute, reproduce, disclose or use such information in any way detrimental to Khosla or Nextdoor, and that you will return to Khosla and Nextdoor, delete or destroy this Presentation upon request. Further, by accepting this Presentation, the recipient agrees to maintain all such information in strict confidence, including in strict accordance with any other contractual obligations applicable to the recipient and all applicable laws, until such information becomes publicly available not as a result of any breach of such confidentiality obligation. You are also being advised that the United States securities laws restrict persons with material non-public information about a company obtained directly or indirectly from that company from purchasing or selling securities of such company, or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities on the basis of such information. The information contained herein does not purport to be all-inclusive and none of Khosla, Nextdoor, Morgan Stanley & Co. LLC, and Evercore Group L.L.C. (Morgan Stanley & Co., LLC and Evercore Group L.L.C., together, the “Placement Agents”) nor any of their respective subsidiaries, stockholders, affiliates, representatives, control persons, partners, members, managers, directors, officers, employees, advisers or agents make any representation or warranty, express or implied, as to the accuracy, completeness or reliability of the information contained in this Presentation. Prospective investors in the proposed private placement should consult with their own counsel and tax and financial advisors as to legal and related matters concerning the matters described herein, and, by accepting this Presentation, you confirm that you are not relying solely upon the information contained herein to make any investment decision. The recipient shall not rely upon any statement, representation or warranty made by any other person, firm or corporation (including, without limitation, the Placement Agents or any of their respective affiliates or control persons, officers, managers, directors and employees) in making its investment decision to subscribe for securities of Khosla in connection with the Business Combination. To the fullest extent permitted by law, in no circumstances will Khosla, Nextdoor or any of their respective subsidiaries, stockholders, affiliates, representatives, control persons, partners, members, managers, directors, officers, employees, advisers or agents be responsible or liable for any direct, indirect or consequential loss or loss of profit arising from the use of this Presentation, its contents, its omissions, reliance on the information contained within it, or on opinions communicated in relation thereto or otherwise arising in connection therewith. In addition, this Presentation does not purport to be all-inclusive or to contain all of the information that may be required to make a full analysis of Khosla, Nextdoor, the proposed private placement or the Business Combination. The general explanations included in this Presentation cannot address, and are not intended to address, your specific investment objectives, financial situations or financial needs. Forward-Looking Statements Certain statements in this Presentation may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements herein generally relate to future events or the future financial or operating performance of Khosla, Nextdoor or the combined company expected to result from the Business Combination (the “Combined Company”). For example, projections of future financial performance of Nextdoor and the Combined Company, the Combined Company’s business plan, other projections concerning key performance metrics, the proceeds of the Business Combination and the Combined Company’s expected cash runway, and the potential effects of the Business Combination on Khosla and the Combined Company, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “ may,”“ should,”“ expect,”“ intend,”“ will,” “estimate,”“ anticipate,”“ believe,”“ predict,” “project,” “target,” “plan,” or “potentially” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Khosla, Nextdoor and its management, as the case may be, are inherently uncertain and subject to material change. New risks and uncertainties may emerge from time to time, and it is not possible to predict all risk and uncertainties. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, various factors beyond management’s control, including general economic conditions and other risks, uncertainties and factors set forth in the section entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in Khosla’s final prospectus relating to its initial public offering, dated March 23, 2021, other filings with the Securities and Exchange Commission (“SEC”), as well as factors associated with companies, such as Nextdoor, including anticipated trends, growth rates, and challenges in those businesses and in the markets in which they operate, including the factors described in the summary risk factors that accompany this Presentation; macroeconomic conditions related to the global COVID-19 pandemic; the failure to realize the anticipated benefits of the Business Combination; the amount of redemption requests made by Khosla’s public stockholders; Khosla’s ability to procure private placement subscriptions in connection with the Business Combination sufficient to satisfy Nextdoor’s business objectives. Nothing in this Presentation should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this Presentation, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein. Nothing in this Presentation should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this Presentation, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein and the risk factors of Khosla and Nextdoor described above. Neither Khosla nor Nextdoor undertakes any duty to update these forward-looking statements. Use of Projections This Presentation contains projected financial information with respect to Nextdoor. Such projected financial information constitutes forward-looking information, is for illustrative purposes only and should not be relied upon as being predictive of future results. The assumptions and estimates underlying such financial forecast information are inherently uncertain and are subject to a wide variety of significant business, economic, competitive and other risks and uncertainties that could cause actual results to differ materially from those contained in such prospective financial information, including without limitation, assumptions regarding Khosla’s and Nextdoor’s ability to consummate the Business Combination, the failure of which to materialize could cause actual results to differ materially from those contained in the prospective financial information. Khosla and Nextdoor caution that their assumptions may not materialize and that current economic conditions render such assumptions, although believed reasonable at the time they were made, subject to greater uncertainty. See the section above titled “Forward-Looking Statements”. The inclusion of financial forecast information in this Presentation should not be regarded as a representation by any person that the results reflected in such forecasts will be achieved. Neither Khosla’s nor Nextdoor’s independent auditors have audited, reviewed, compiled or performed any procedures with respect to the projections for the purpose of their inclusion in this Presentation or any other purpose, and accordingly, none of such independent auditors has expressed any opinion or provided any other form of assurance with respect to such projections.


Confidential 3 Disclaimer Financial Information and Use of Non-GAAP Financial Measures The financial information contained in this Presentation has been taken from or prepared based on the historical financial statements of Nextdoor for the periods presented. An audit of these financial statements is in process. Accordingly, such financial information and data may not be included in, may be adjusted in or may be presented differently in any registration statement to be filed with the SEC by Khosla in connection with the Business Combination. Nextdoor has not yet completed its closing procedures for the fiscal year ended December 31, 2020 or the three months ended March 31, 2021. This Presentation contains certain estimated preliminary financial results and key operating metrics for the fiscal year ended December 31, 2020 and the three months ended March 31, 2021. This information is preliminary and subject to change. As such, our actual results may differ from the estimated preliminary results presented here and will not be finalized until we complete of our year-end accounting procedures. This presentation includes certain non-GAAP financial measures (including on a forward-looking basis). These non-GAAP measures are an addition, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to their nearest GAAP equivalent or any other performance measures derived in accordance with GAAP. A reconciliation of the non-GAAP financial measures used in this Presentation to their nearest GAAP equivalent is included in the appendix to this Presentation. Nextdoor believes that these non-GAAP measures of financial results (including on a forward-looking basis) provide useful supplemental information to investors about Nextdoor. Nextdoor’s management uses forward-looking non-GAAP measures to evaluate Nextdoor’s projected financials and operating performance. However, there are a number of limitations related to the use of these non-GAAP measures and their nearest GAAP equivalents, including that they exclude significant expenses that are required by GAAP to be recorded in Nextdoor’s financial measures. In addition, other companies may calculate non-GAAP measures differently, or may use other measures to calculate their financial performance, and therefore, Nextdoor’s non-GAAP measures may not be directly comparable to similarly titled measures of other companies. Additionally, to the extent that forward-looking non-GAAP financial measures are provided, they are presented on a non-GAAP basis without reconciliations of such forward-looking non-GAAP measures due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations. Additional Information In connection with the proposed Business Combination, Khosla intends to file with the SEC a registration statement on Form S-4 containing a preliminary proxy statement/prospectus of Khosla and consent solicitation statement of Nextdoor, and after the registration statement is declared effective, Khosla and Nextdoor will mail a definitive proxy statement/prospectus/consent solicitation statement relating to the proposed Business Combination to their respective stockholders. This Presentation does not contain any information that should be considered by Khosla’s or Nextdoor’s stockholders concerning the proposed Business Combination and is not intended to constitute the basis of any voting or investment decision in respect of the Business Combination or the securities of Khosla. Khosla’s and Nextdoor’s stockholders and other interested persons are advised to read, when available, the preliminary proxy statement/prospectus/consent solicitation statement and the amendments thereto and the definitive proxy statement/prospectus/consent solicitation statement and other documents filed in connection with the proposed Business Combination, as these materials will contain important information about Khosla, Nextdoor and the Business Combination. When available, the definitive proxy statement/prospectus/consent solicitation statement and other relevant materials for the proposed Business Combination will be mailed to stockholders of Khosla and Nextdoor as of a record date to be established for voting on the proposed Business Combination. Stockholders will also be able to obtain copies of the preliminary proxy statement/prospectus/consent solicitation statement, the definitive proxy statement/ prospectus/consent solicitation statement and other documents filed with the SEC, without charge, once available, at the SEC’s website at www.sec.gov, or by directing a request to: Khosla Ventures Acquisition Co. II, 2128 Sand Hill Road, Menlo Park, CA 94025. Participants in the Solicitation Khosla, Nextdoor and their respective directors and executive officers may be deemed participants in the solicitation of proxies from Khosla’s stockholders with respect to the proposed Business Combination. A list of the names of Khosla’s directors and executive officers and a description of their interests in Khosla is contained in Khosla’s final prospectus relating to its initial public offering, dated March 23, 2021, which was filed with the SEC and is available free of charge at the SEC’s web site at www.sec.gov, or by directing a request to Khosla Ventures Acquisition Co. II, 2128 Sand Hill Road, Menlo Park, CA 94025. Additional information regarding the interests of the participants in the solicitation of proxies from Khosla’s stockholders with respect to the proposed Business Combination will be contained in the proxy statement/prospectus for the proposed Business Combination when available. No Offer or Solicitation This Presentation shall not constitute a “solicitation” as defined in Section 14 of the Securities Exchange Act of 1934, as amended. This Presentation does not constitute an offer, or a solicitation of an offer, to buy or sell any securities, investment or other specific product, or a solicitation of any vote or approval, nor shall there be any sale of securities, investment or other specific product in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Any private offering of securities in connection with the Business Combination (the “Securities”) will not be registered under the Securities Act of 1933, as amended (“Securities Act”), and will be offered as a private placement to a limited number of “qualified institutional buyers” (as defined in Rule 144A under the Securities Act) or institutional “accredited investors” (within the meaning of Rule 501(a) under the Securities Act). Accordingly, until registered for resale, the Securities must continue to be held until a subsequent disposition is exempt from the registration requirements of the Securities Act. Investors should consult with their counsel as to the applicable requirements for a purchaser to avail itself of any exemption from registration under the Securities Act. The transfer of the Securities may also be subject to conditions set forth in an agreement under which they are to be issued. Investors should be aware that they might be required to bear the final risk of their investment for an indefinite period of time. Neither Nextdoor nor Khosla is making an offer of the Securities in any state or jurisdiction where the offer is not permitted. NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR DETERMINED IF THIS PRESENTATION IS TRUTHFUL OR COMPLETE. Industry and Market Data Certain information contained in this Presentation relates to or is based on studies, publications, surveys and Nextdoor’s own internal estimates and research. In addition, all of the market data included in this Presentation involves a number of assumptions and limitations, and there can be no guarantee as to the accuracy or reliability of such assumptions. Finally, while Nextdoor believes its internal research is reliable, such research has not been verified by any independent source and none of Nextdoor, nor any of its affiliates nor any of its control persons, officers, directors, employees or representatives make any representation or warranty with respect to the accuracy of such information. Trademarks This Presentation may contain trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners. Solely for convenience, some of the trademarks, service marks, trade names and copyrights referred to in this Presentation may be listed without the TM, SM © or ® symbols, but Khosla and Nextdoor will assert, to the fullest extent under applicable law, the rights of the applicable owners, if any, to these trademarks, service marks, trade names and copyrights. No Relationship or Joint Venture Nothing contained in this Presentation will be deemed or construed to create the relationship of partnership, association, principal and agent or joint venture. This Presentation does not create any obligation on the part of either Nextdoor, Khosla or the recipient to enter into any further agreement or arrangement. Unless and until a definitive agreement has been fully executed and delivered, no contract or agreement providing for a transaction will be deemed to exist and none of Khosla, Nextdoor or the recipient will be under any legal obligation of any kind whatsoever. Accordingly, this Presentation is not intended to create for any party a right of specific performance or a right to seek any payment or damages for failure, for any reason, to complete the proposed transactions contemplated herein. Confidential 3 Disclaimer Financial Information and Use of Non-GAAP Financial Measures The financial information contained in this Presentation has been taken from or prepared based on the historical financial statements of Nextdoor for the periods presented. An audit of these financial statements is in process. Accordingly, such financial information and data may not be included in, may be adjusted in or may be presented differently in any registration statement to be filed with the SEC by Khosla in connection with the Business Combination. Nextdoor has not yet completed its closing procedures for the fiscal year ended December 31, 2020 or the three months ended March 31, 2021. This Presentation contains certain estimated preliminary financial results and key operating metrics for the fiscal year ended December 31, 2020 and the three months ended March 31, 2021. This information is preliminary and subject to change. As such, our actual results may differ from the estimated preliminary results presented here and will not be finalized until we complete of our year-end accounting procedures. This presentation includes certain non-GAAP financial measures (including on a forward-looking basis). These non-GAAP measures are an addition, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to their nearest GAAP equivalent or any other performance measures derived in accordance with GAAP. A reconciliation of the non-GAAP financial measures used in this Presentation to their nearest GAAP equivalent is included in the appendix to this Presentation. Nextdoor believes that these non-GAAP measures of financial results (including on a forward-looking basis) provide useful supplemental information to investors about Nextdoor. Nextdoor’s management uses forward-looking non-GAAP measures to evaluate Nextdoor’s projected financials and operating performance. However, there are a number of limitations related to the use of these non-GAAP measures and their nearest GAAP equivalents, including that they exclude significant expenses that are required by GAAP to be recorded in Nextdoor’s financial measures. In addition, other companies may calculate non-GAAP measures differently, or may use other measures to calculate their financial performance, and therefore, Nextdoor’s non-GAAP measures may not be directly comparable to similarly titled measures of other companies. Additionally, to the extent that forward-looking non-GAAP financial measures are provided, they are presented on a non-GAAP basis without reconciliations of such forward-looking non-GAAP measures due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations. Additional Information In connection with the proposed Business Combination, Khosla intends to file with the SEC a registration statement on Form S-4 containing a preliminary proxy statement/prospectus of Khosla and consent solicitation statement of Nextdoor, and after the registration statement is declared effective, Khosla and Nextdoor will mail a definitive proxy statement/prospectus/consent solicitation statement relating to the proposed Business Combination to their respective stockholders. This Presentation does not contain any information that should be considered by Khosla’s or Nextdoor’s stockholders concerning the proposed Business Combination and is not intended to constitute the basis of any voting or investment decision in respect of the Business Combination or the securities of Khosla. Khosla’s and Nextdoor’s stockholders and other interested persons are advised to read, when available, the preliminary proxy statement/prospectus/consent solicitation statement and the amendments thereto and the definitive proxy statement/prospectus/consent solicitation statement and other documents filed in connection with the proposed Business Combination, as these materials will contain important information about Khosla, Nextdoor and the Business Combination. When available, the definitive proxy statement/prospectus/consent solicitation statement and other relevant materials for the proposed Business Combination will be mailed to stockholders of Khosla and Nextdoor as of a record date to be established for voting on the proposed Business Combination. Stockholders will also be able to obtain copies of the preliminary proxy statement/prospectus/consent solicitation statement, the definitive proxy statement/ prospectus/consent solicitation statement and other documents filed with the SEC, without charge, once available, at the SEC’s website at www.sec.gov, or by directing a request to: Khosla Ventures Acquisition Co. II, 2128 Sand Hill Road, Menlo Park, CA 94025. Participants in the Solicitation Khosla, Nextdoor and their respective directors and executive officers may be deemed participants in the solicitation of proxies from Khosla’s stockholders with respect to the proposed Business Combination. A list of the names of Khosla’s directors and executive officers and a description of their interests in Khosla is contained in Khosla’s final prospectus relating to its initial public offering, dated March 23, 2021, which was filed with the SEC and is available free of charge at the SEC’s web site at www.sec.gov, or by directing a request to Khosla Ventures Acquisition Co. II, 2128 Sand Hill Road, Menlo Park, CA 94025. Additional information regarding the interests of the participants in the solicitation of proxies from Khosla’s stockholders with respect to the proposed Business Combination will be contained in the proxy statement/prospectus for the proposed Business Combination when available. No Offer or Solicitation This Presentation shall not constitute a “solicitation” as defined in Section 14 of the Securities Exchange Act of 1934, as amended. This Presentation does not constitute an offer, or a solicitation of an offer, to buy or sell any securities, investment or other specific product, or a solicitation of any vote or approval, nor shall there be any sale of securities, investment or other specific product in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Any private offering of securities in connection with the Business Combination (the “Securities”) will not be registered under the Securities Act of 1933, as amended (“Securities Act”), and will be offered as a private placement to a limited number of “qualified institutional buyers” (as defined in Rule 144A under the Securities Act) or institutional “accredited investors” (within the meaning of Rule 501(a) under the Securities Act). Accordingly, until registered for resale, the Securities must continue to be held until a subsequent disposition is exempt from the registration requirements of the Securities Act. Investors should consult with their counsel as to the applicable requirements for a purchaser to avail itself of any exemption from registration under the Securities Act. The transfer of the Securities may also be subject to conditions set forth in an agreement under which they are to be issued. Investors should be aware that they might be required to bear the final risk of their investment for an indefinite period of time. Neither Nextdoor nor Khosla is making an offer of the Securities in any state or jurisdiction where the offer is not permitted. NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR DETERMINED IF THIS PRESENTATION IS TRUTHFUL OR COMPLETE. Industry and Market Data Certain information contained in this Presentation relates to or is based on studies, publications, surveys and Nextdoor’s own internal estimates and research. In addition, all of the market data included in this Presentation involves a number of assumptions and limitations, and there can be no guarantee as to the accuracy or reliability of such assumptions. Finally, while Nextdoor believes its internal research is reliable, such research has not been verified by any independent source and none of Nextdoor, nor any of its affiliates nor any of its control persons, officers, directors, employees or representatives make any representation or warranty with respect to the accuracy of such information. Trademarks This Presentation may contain trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners. Solely for convenience, some of the trademarks, service marks, trade names and copyrights referred to in this Presentation may be listed without the TM, SM © or ® symbols, but Khosla and Nextdoor will assert, to the fullest extent under applicable law, the rights of the applicable owners, if any, to these trademarks, service marks, trade names and copyrights. No Relationship or Joint Venture Nothing contained in this Presentation will be deemed or construed to create the relationship of partnership, association, principal and agent or joint venture. This Presentation does not create any obligation on the part of either Nextdoor, Khosla or the recipient to enter into any further agreement or arrangement. Unless and until a definitive agreement has been fully executed and delivered, no contract or agreement providing for a transaction will be deemed to exist and none of Khosla, Nextdoor or the recipient will be under any legal obligation of any kind whatsoever. Accordingly, this Presentation is not intended to create for any party a right of specific performance or a right to seek any payment or damages for failure, for any reason, to complete the proposed transactions contemplated herein.


Confidential 4 Nextdoor Sarah Friar Mike Doyle Chief Executive Officer Chief Financial Officer Khosla Ventures Acquisition Co. II Welcome to the Vinod Khosla David Weiden Founder Founding Partner and Neighborhood Managing DirectorConfidential 4 Nextdoor Sarah Friar Mike Doyle Chief Executive Officer Chief Financial Officer Khosla Ventures Acquisition Co. II Welcome to the Vinod Khosla David Weiden Founder Founding Partner and Neighborhood Managing Director


Confidential 5 Connecting neighborhoods one neighbor at a time Confidential 5 Connecting neighborhoods one neighbor at a time


Confidential 7 Nextdoor is the neighborhood network Network effects with online & offline connection is unique Each social link is highly valuable because most commerce is local ~1 in 3 U.S. Households Robust current digital advertising market, future new revenue models Many vectors for sustained revenue growth 60M+ High barrier to entry: network difficult & time consuming to build Verified Neighbors Only digital neighborhood network: purpose-driven & authentic 27M+ Proven team: set up for acceleration & execution Weekly Active Neighbors (WAUs) U.S. household and Verified Neighbor data as of 3/31/21. WAUs reflect the average for the quarter ended 3/31/21. Confidential 7 Nextdoor is the neighborhood network Network effects with online & offline connection is unique Each social link is highly valuable because most commerce is local ~1 in 3 U.S. Households Robust current digital advertising market, future new revenue models Many vectors for sustained revenue growth 60M+ High barrier to entry: network difficult & time consuming to build Verified Neighbors Only digital neighborhood network: purpose-driven & authentic 27M+ Proven team: set up for acceleration & execution Weekly Active Neighbors (WAUs) U.S. household and Verified Neighbor data as of 3/31/21. WAUs reflect the average for the quarter ended 3/31/21.


8 Confidential Building back community 73% say neighbors are one of the most important (1) communities in their lives Knowing at least 6 neighbors (2) can reduce loneliness (3) 75% plan to shop more locally 80% expect to work from home at least 3x (4) per week (5) 2x expected growth of sharing economy (1) Open Mind Strategy 2020; (2) Nextdoor Global Loneliness Study (3) Brightpearl, 2021; (4) Owl Labs October, 2020; (5) Statista, 2021.8 Confidential Building back community 73% say neighbors are one of the most important (1) communities in their lives Knowing at least 6 neighbors (2) can reduce loneliness (3) 75% plan to shop more locally 80% expect to work from home at least 3x (4) per week (5) 2x expected growth of sharing economy (1) Open Mind Strategy 2020; (2) Nextdoor Global Loneliness Study (3) Brightpearl, 2021; (4) Owl Labs October, 2020; (5) Statista, 2021.


Our purpose To cultivate a kinder world where everyone has a neighborhood they can rely on 9 9 Our purpose To cultivate a kinder world where everyone has a neighborhood they can rely on 9 9


Confidential 10 People interact with and rely on their neighborhoods every day... Local Perspectives Groups Recommendations Connections Businesses Toddler/baby playground meetup community. Hey Neighbourhood, We are new here and seeking community! We have two small children  3 and 1 and would love to meet other families in the neighbourhood. Is anyone interested? BTW  also looking for a pack and play if anyone has one that their kids have outgrown... Hello all! My name is Jonathan and I am a commercial fisherman out of Cape Cod! I created this group to notify everyone when I will be going Jericho, Oxford, UK fishing and when we will have crab or fish for sale! We are bringing fresh I... Posted in General to 26 neighbourhoods Cape CodConfidential 10 People interact with and rely on their neighborhoods every day... Local Perspectives Groups Recommendations Connections Businesses Toddler/baby playground meetup community. Hey Neighbourhood, We are new here and seeking community! We have two small children  3 and 1 and would love to meet other families in the neighbourhood. Is anyone interested? BTW  also looking for a pack and play if anyone has one that their kids have outgrown... Hello all! My name is Jonathan and I am a commercial fisherman out of Cape Cod! I created this group to notify everyone when I will be going Jericho, Oxford, UK fishing and when we will have crab or fish for sale! We are bringing fresh I... Posted in General to 26 neighbourhoods Cape Cod


Confidential 11 A day in the life of a parent: meet Abraham Kingstowne Thompson Center, VA Reaches out to neighbors for a pasta machine, to make his Hosts 30 coffees in favorite chef’s 24-layer lasagna 30 days to meet people nearby Borrows neighbor’s 7AM 12PM 6PM pasta machine Meets neighbors for coffee Searches for Hosts Recommends a 4PM school tutor Dads group local restaurant 10AM Drops kids off at school, Schedules Zoom Session Gives rave review for the remembers to search to connect with local local burger place where for an after-school tutor parents he had lunch 11 Confidential 11 A day in the life of a parent: meet Abraham Kingstowne Thompson Center, VA Reaches out to neighbors for a pasta machine, to make his Hosts 30 coffees in favorite chef’s 24-layer lasagna 30 days to meet people nearby Borrows neighbor’s 7AM 12PM 6PM pasta machine Meets neighbors for coffee Searches for Hosts Recommends a 4PM school tutor Dads group local restaurant 10AM Drops kids off at school, Schedules Zoom Session Gives rave review for the remembers to search to connect with local local burger place where for an after-school tutor parents he had lunch 11


Confidential 12 A week in the life of a small business owner: meet Dawn Grant Park, GA Responds to a question about Checks her Local Deal payroll software from her local dashboard to see how its small business owner group performing and re-ups for another month Checks in with her MON THU SAT Checks her business group dashboard Updates her Promotes new Responds to FRI business page job listing neighbors TUE Updates with new Looks to hire a new social Notices new recommendations spring time hours, and media expert and creates from neighbors and quickly replies adds a few new photos an ad for the job to thank them for their support Confidential 12 A week in the life of a small business owner: meet Dawn Grant Park, GA Responds to a question about Checks her Local Deal payroll software from her local dashboard to see how its small business owner group performing and re-ups for another month Checks in with her MON THU SAT Checks her business group dashboard Updates her Promotes new Responds to FRI business page job listing neighbors TUE Updates with new Looks to hire a new social Notices new recommendations spring time hours, and media expert and creates from neighbors and quickly replies adds a few new photos an ad for the job to thank them for their support


Confidential 13 A week in the life of fire information mgr: meet Cecile San Mateo-Santa Cruz, CA Posts real time update on evacuation procedures for Checks the post metrics to the immediate area make sure messages are MON WED FRI getting through Updates Monitors metrics Evacuation Order Sets up wildfire Responds to Alerts neighbors THU webinar questions to local wildfire TUE Organizes and promotes Answers residents’ Pushes out a geo-targeted wildfire awareness webinar questions about the urgent alert about a fire to ahead of fire season urgent alert affected residents 13 Confidential 13 A week in the life of fire information mgr: meet Cecile San Mateo-Santa Cruz, CA Posts real time update on evacuation procedures for Checks the post metrics to the immediate area make sure messages are MON WED FRI getting through Updates Monitors metrics Evacuation Order Sets up wildfire Responds to Alerts neighbors THU webinar questions to local wildfire TUE Organizes and promotes Answers residents’ Pushes out a geo-targeted wildfire awareness webinar questions about the urgent alert about a fire to ahead of fire season urgent alert affected residents 13


Confidential 14 Strong competitive moat with viral growth loops built in Real people Local Hyperlocal proximity Businesses Word-of-Mouth Recommendations Trusted information Civic Local perspective Engagement Instant distribution Neighbors Businesses Data/ Local Targeting Help me plug in Hyperlocal at scale Recommendations Local Groups Two-way Public Agencies Channel Local Verified people & info Marketplace Instant Distribution Instant Analytics Messaging Publishing ToolsConfidential 14 Strong competitive moat with viral growth loops built in Real people Local Hyperlocal proximity Businesses Word-of-Mouth Recommendations Trusted information Civic Local perspective Engagement Instant distribution Neighbors Businesses Data/ Local Targeting Help me plug in Hyperlocal at scale Recommendations Local Groups Two-way Public Agencies Channel Local Verified people & info Marketplace Instant Distribution Instant Analytics Messaging Publishing Tools


Confidential 15 Established product-market fit: Enduring neighbor retention... 74% 65% 59% 54% After two years >50% of our audience remains engaged 3-month 6-month 12-month 24-month Monthly active users (MAU) defined as count of unique members who have started a session or opened a content email over the trailing 30 days. 3 month MAU is defined as active in the 30 days preceding day 90, 6 month is active in the 30 days preceding day 180, 12 month is active in the 30 days preceding day 360, and 24 month is active in the 30 days preceding day 720. 3-, 6- and 12-month data based on users who joined in 2020; 24-month data based on users who joined in 2019.Confidential 15 Established product-market fit: Enduring neighbor retention... 74% 65% 59% 54% After two years >50% of our audience remains engaged 3-month 6-month 12-month 24-month Monthly active users (MAU) defined as count of unique members who have started a session or opened a content email over the trailing 30 days. 3 month MAU is defined as active in the 30 days preceding day 90, 6 month is active in the 30 days preceding day 180, 12 month is active in the 30 days preceding day 360, and 24 month is active in the 30 days preceding day 720. 3-, 6- and 12-month data based on users who joined in 2020; 24-month data based on users who joined in 2019.


Confidential 16 ...Combined with strong network effects... Our path to engagement growth is proven 2.3x increase in weekly engagement as more neighbors join % of Members Active Weekly reflects U.S. WAUs divided by All time Verified Members (AVMs). Data as of 3/31/21.Confidential 16 ...Combined with strong network effects... Our path to engagement growth is proven 2.3x increase in weekly engagement as more neighbors join % of Members Active Weekly reflects U.S. WAUs divided by All time Verified Members (AVMs). Data as of 3/31/21.


Confidential 17 Increasing penetration globally, with top neighborhoods exceeding 60% daily engagement Neighborhoods with top-quartile (>65%) penetration Top 10 engaged neighborhoods (>60% daily engagement) VERNON, BC MECHANICSBURG MILLSBORO LANCASTER ELOY ORACLE MARKET HARBOROUGH WIMAUMA LAXFIELD LAKEWOOD RANCH Data as of 3/31/21.Confidential 17 Increasing penetration globally, with top neighborhoods exceeding 60% daily engagement Neighborhoods with top-quartile (>65%) penetration Top 10 engaged neighborhoods (>60% daily engagement) VERNON, BC MECHANICSBURG MILLSBORO LANCASTER ELOY ORACLE MARKET HARBOROUGH WIMAUMA LAXFIELD LAKEWOOD RANCH Data as of 3/31/21.


Confidential 18 ...With an audience that finds distinct value on Nextdoor % of people who visit Nextdoor at least once per month but do not visit this social media platform at least once per month >$1T Aggregate market cap of these other platforms Source: Comscore Media Metrix® Multi-Platform, Cross Visiting, Total Audience, % Vertical, March 2021, United States Peer market cap data as of 6/3/21 per CapitalIQ.Confidential 18 ...With an audience that finds distinct value on Nextdoor % of people who visit Nextdoor at least once per month but do not visit this social media platform at least once per month >$1T Aggregate market cap of these other platforms Source: Comscore Media Metrix® Multi-Platform, Cross Visiting, Total Audience, % Vertical, March 2021, United States Peer market cap data as of 6/3/21 per CapitalIQ.


Confidential 19 Nextdoor is one of the most frequently used consumer products Weekly Active Users (WAU) engage nearly 4 times a week Source: App Annie. Nextdoor DAU/WAU based on internal data, 2020 daily average. DAU defined as a unique Registered Neighbor who starts a session or opens a content email on a given day. WAU defined as count of unique Registered Neighbors who have started a session or engaged with a content email over the trailing 7 days. Confidential 19 Nextdoor is one of the most frequently used consumer products Weekly Active Users (WAU) engage nearly 4 times a week Source: App Annie. Nextdoor DAU/WAU based on internal data, 2020 daily average. DAU defined as a unique Registered Neighbor who starts a session or opens a content email on a given day. WAU defined as count of unique Registered Neighbors who have started a session or engaged with a content email over the trailing 7 days.


Confidential 20 A verified daily audience with significant monetization potential 1 U.S. DAU and ARPU 90M 36M Annual Reenue per DvAU U.S. Average Revenue per User (ARPU) 12M $10 $18 $59 Source: Company filings and internal data for 2020. Comparison is illustrative as each company calculates daily active users differently. Snap includes U.S., Canada, Mexico, the Caribbean and Central America. Twitter and Nextdoor include the U.S. only. 1. Snap and Twitter DAU and ARPU figures reflect data provided in their 2020 10-Ks. U.S. DAU Confidential 20 A verified daily audience with significant monetization potential 1 U.S. DAU and ARPU 90M 36M Annual Reenue per DvAU U.S. Average Revenue per User (ARPU) 12M $10 $18 $59 Source: Company filings and internal data for 2020. Comparison is illustrative as each company calculates daily active users differently. Snap includes U.S., Canada, Mexico, the Caribbean and Central America. Twitter and Nextdoor include the U.S. only. 1. Snap and Twitter DAU and ARPU figures reflect data provided in their 2020 10-Ks. U.S. DAU


Confidential 21 We have an increasing number of ways to drive acquisition and engagement Contact sync Sharing Neighborhood Guides Video tools Ask a Neighbor Multiplying friend Sharing more content Discovering more in more Making moments Engaging real networks with more people neighborhoods more shareable local insidersConfidential 21 We have an increasing number of ways to drive acquisition and engagement Contact sync Sharing Neighborhood Guides Video tools Ask a Neighbor Multiplying friend Sharing more content Discovering more in more Making moments Engaging real networks with more people neighborhoods more shareable local insiders


Confidential 22 Expanding engagement by following multiple neighborhoods Now: Follow the To come: Follow the neighborhoods where neighborhood where I want to spend I live My mum lives I own a the summer I live business I own a I used to live I want to move I volunteer vacation home Browse & follow capabilities are currently available to 50% of US neighbors.Confidential 22 Expanding engagement by following multiple neighborhoods Now: Follow the To come: Follow the neighborhoods where neighborhood where I want to spend I live My mum lives I own a the summer I live business I own a I used to live I want to move I volunteer vacation home Browse & follow capabilities are currently available to 50% of US neighbors.


Confidential 23 We can 4.5x our reach just by reaching global penetration in-line with our more mature U.S. neighborhoods 312M Households U.S. 128M International 183M +109M Households Future opportunities in existing markets 203M (U.S. / International) Households U.S. 83M International 119M +158M Households Next opportunity for additional households at 65% penetration (U.S. / International) 45M Households 45M Households U.S. 37M claimed in existing markets International 8M (U.S. / International) Source: U.S. Census, Statista and Statistics Canada. Nextdoor Q1 2021 data. U.S. only, excludes members in pilot neighborhoods. Claimed residences have at least one Current Verified Member (CVM) at the residence. Some figures may not sum due to rounding. Confidential 23 We can 4.5x our reach just by reaching global penetration in-line with our more mature U.S. neighborhoods 312M Households U.S. 128M International 183M +109M Households Future opportunities in existing markets 203M (U.S. / International) Households U.S. 83M International 119M +158M Households Next opportunity for additional households at 65% penetration (U.S. / International) 45M Households 45M Households U.S. 37M claimed in existing markets International 8M (U.S. / International) Source: U.S. Census, Statista and Statistics Canada. Nextdoor Q1 2021 data. U.S. only, excludes members in pilot neighborhoods. Claimed residences have at least one Current Verified Member (CVM) at the residence. Some figures may not sum due to rounding.


Confidential 24 Digital advertising TAM represents $600B+ opportunity Large $607B Adjacent Global Markets Home services $355B Global Local commerce Classifieds Real estate $262B U.S. $143B Local events U.S. 83% Growth 2020 TAM 2024 TAM Source: Global and US digital ad markets, eMarketer March 2021 Note: Digital advertising market is based on eMarketer U.S. ad spend and excluding B2B, which represents 6% of digital ad spend in 2020. Global advertising market includes annual ad spend across all countries world-wide and is not adjusted to Nextdoor’s existing 11 markets. For both 2020 and 2024, assumes 6% B2B share across all global markets.Confidential 24 Digital advertising TAM represents $600B+ opportunity Large $607B Adjacent Global Markets Home services $355B Global Local commerce Classifieds Real estate $262B U.S. $143B Local events U.S. 83% Growth 2020 TAM 2024 TAM Source: Global and US digital ad markets, eMarketer March 2021 Note: Digital advertising market is based on eMarketer U.S. ad spend and excluding B2B, which represents 6% of digital ad spend in 2020. Global advertising market includes annual ad spend across all countries world-wide and is not adjusted to Nextdoor’s existing 11 markets. For both 2020 and 2024, assumes 6% B2B share across all global markets.


Confidential 25 Connecting neighbors and organizations with highly relevant information Global / national brands SMBs / neighbors for hire Public agencies / utilities Hyperlocal targeting & Discovery by relevant Verified distribution with creative at scale audiences flexible targeting ~200 enterprise customers >2M local business claimed pages >5K public agencies on platform Customer data as of 12/31/20.Confidential 25 Connecting neighbors and organizations with highly relevant information Global / national brands SMBs / neighbors for hire Public agencies / utilities Hyperlocal targeting & Discovery by relevant Verified distribution with creative at scale audiences flexible targeting ~200 enterprise customers >2M local business claimed pages >5K public agencies on platform Customer data as of 12/31/20.


Confidential 26 Full funnel approach helping neighbors from awareness to action Sponsored Maps Awareness Sponsored by Posts & Discovery Local context means Nextdoor content is relevant Intent & Sponsorships Dynamic South Star Real Estate Influence Local Ads First-party data creates efficient targeting Action Local Finds Deals Opportunities to purchase and act with easeConfidential 26 Full funnel approach helping neighbors from awareness to action Sponsored Maps Awareness Sponsored by Posts & Discovery Local context means Nextdoor content is relevant Intent & Sponsorships Dynamic South Star Real Estate Influence Local Ads First-party data creates efficient targeting Action Local Finds Deals Opportunities to purchase and act with ease


Confidential 27 Why Nextdoor wins: We are the neighborhood network, strong network effects, and clear monetization upside Nextdoor = Nextdoor is where you plug into the neighborhoods that matter to you. Neighborhoods Purpose-driven brand Purpose-driven brand — promotes growth, differentiates the business, and aligns the organization. Global relevance 60M+ global Verified Neighbors today, and over 70% neighbor retention. Unique value prop Built on trusted information, physical proximity, and uniquely local perspective. Significant global Everyone is a neighbor. Near-term opportunity to add 150M+ households globally. addressable market Product innovation 10 years of singular focus on all things neighborhood provides utility that can’t be replicated. Multiple drivers of ARPU growth of 28% Y/Y in Q4 ‘20 and 31% Y/Y in Q1 ‘21. monetization Global Verified Neighbor data as of 3/31/21. Reflects 3-month retention of neighbors who joined in 2020. ARPU shown is calculated by annualizing U.S. revenue divided by the weekly active users (WAU) in the period.Confidential 27 Why Nextdoor wins: We are the neighborhood network, strong network effects, and clear monetization upside Nextdoor = Nextdoor is where you plug into the neighborhoods that matter to you. Neighborhoods Purpose-driven brand Purpose-driven brand — promotes growth, differentiates the business, and aligns the organization. Global relevance 60M+ global Verified Neighbors today, and over 70% neighbor retention. Unique value prop Built on trusted information, physical proximity, and uniquely local perspective. Significant global Everyone is a neighbor. Near-term opportunity to add 150M+ households globally. addressable market Product innovation 10 years of singular focus on all things neighborhood provides utility that can’t be replicated. Multiple drivers of ARPU growth of 28% Y/Y in Q4 ‘20 and 31% Y/Y in Q1 ‘21. monetization Global Verified Neighbor data as of 3/31/21. Reflects 3-month retention of neighbors who joined in 2020. ARPU shown is calculated by annualizing U.S. revenue divided by the weekly active users (WAU) in the period.


Confidential 28 Turbocharged leadership team in last 24 months Heidi Andersen Maryam Banikarim Mike Doyle Sarah Friar Prakash Janakiraman Head of Revenue Head of Marketing Chief Financial Officer Chief Executive Officer Co-Founder, Chief Architect Craig Lisowski John Orta Bryan Power Kiran Prasad Antonio Silveira Head of Data, Information, Chief Legal Officer & Head of People Head of Product Head of Engineering Systems and Trust Head of Corp DevConfidential 28 Turbocharged leadership team in last 24 months Heidi Andersen Maryam Banikarim Mike Doyle Sarah Friar Prakash Janakiraman Head of Revenue Head of Marketing Chief Financial Officer Chief Executive Officer Co-Founder, Chief Architect Craig Lisowski John Orta Bryan Power Kiran Prasad Antonio Silveira Head of Data, Information, Chief Legal Officer & Head of People Head of Product Head of Engineering Systems and Trust Head of Corp Dev


Confidential 29 Seasoned Board of Directors John Hope Bryant Sarah Friar Bill Gurley Leslie Kilgore Mary Meeker Entrepreneur, founder, chairman, Chief Executive Officer Benchmark Former Netflix CMO Bond CEO, author, activist Jason Pressman David Sze Nirav Tolia Chris Varelas Andrea Wishom Shasta Ventures Greylock Capital Co-Founder Riverwood Capital President, Skywalker HoldingsConfidential 29 Seasoned Board of Directors John Hope Bryant Sarah Friar Bill Gurley Leslie Kilgore Mary Meeker Entrepreneur, founder, chairman, Chief Executive Officer Benchmark Former Netflix CMO Bond CEO, author, activist Jason Pressman David Sze Nirav Tolia Chris Varelas Andrea Wishom Shasta Ventures Greylock Capital Co-Founder Riverwood Capital President, Skywalker Holdings


Monetization and Outlook Monetization and Outlook


Confidential 31 Financial highlights Differentiated products with contextual relevance enable sustainable growth High levels of neighbor retention enable consistent growth and ROI on acquisition spend Network effects increase WAU engagement as penetration increases ARPU expansion with multiple levers provides opportunity to continue to increase monetization Multiple under-monetized products creating potential for significant upside in the growth Significant opportunity to monetize in rapidly growing international marketsConfidential 31 Financial highlights Differentiated products with contextual relevance enable sustainable growth High levels of neighbor retention enable consistent growth and ROI on acquisition spend Network effects increase WAU engagement as penetration increases ARPU expansion with multiple levers provides opportunity to continue to increase monetization Multiple under-monetized products creating potential for significant upside in the growth Significant opportunity to monetize in rapidly growing international markets


Confidential 32 Growing base of engaged and monetized users Scale Engagement Monetization Ending Verified Users Avg. Weekly Active Users (WAU) Avg. Revenue Per Weekly Active User (ARPU) 60M 27.6M 58M 9M 26.7M 52M 48M 8M $4.99 24.6M 7M 51M 6M $4.62 50M $4.23 19.5M $3.86 45M 42M $3.83 33M 3M 30M 13.3M 2018 2019 2020 2018 2019 2020 2018 2019 2020 Q1 Q1 Q1 Q1 Q1 Q1 2020 2021 2020 2021 2020 2021 U.S. International ARPU shown above is calculated as total global revenue divided by the average total global weekly active users (WAU) in the period. WAU defined as the count of unique neighbors who have started a session or opened a content email over the trailing 7 days. Quarterly ARPU is annualized.Confidential 32 Growing base of engaged and monetized users Scale Engagement Monetization Ending Verified Users Avg. Weekly Active Users (WAU) Avg. Revenue Per Weekly Active User (ARPU) 60M 27.6M 58M 9M 26.7M 52M 48M 8M $4.99 24.6M 7M 51M 6M $4.62 50M $4.23 19.5M $3.86 45M 42M $3.83 33M 3M 30M 13.3M 2018 2019 2020 2018 2019 2020 2018 2019 2020 Q1 Q1 Q1 Q1 Q1 Q1 2020 2021 2020 2021 2020 2021 U.S. International ARPU shown above is calculated as total global revenue divided by the average total global weekly active users (WAU) in the period. WAU defined as the count of unique neighbors who have started a session or opened a content email over the trailing 7 days. Quarterly ARPU is annualized.


Confidential 33 Strong foundation for continued revenue growth +40% $249M +44% 49% 2018A–2022E Growth $178M +49% $123M +62% $83M $51M 2018A 2019A 2020A 2021E 2022E Forward looking estimates are subject to change. Actual figures may be materially different.Confidential 33 Strong foundation for continued revenue growth +40% $249M +44% 49% 2018A–2022E Growth $178M +49% $123M +62% $83M $51M 2018A 2019A 2020A 2021E 2022E Forward looking estimates are subject to change. Actual figures may be materially different.


Confidential 34 Multiple drivers of monetization Increased engagement, +13pts +0.6pts +17pts +31pts improved fill rates, and non-supply dependent local revenue all drive growth 31% growth Y/Y in Q1’21, accelerating from Q4’20 ARPU shown above is calculated by annualizing U.S. revenue divided by the average weekly active users (WAU) in the period.Confidential 34 Multiple drivers of monetization Increased engagement, +13pts +0.6pts +17pts +31pts improved fill rates, and non-supply dependent local revenue all drive growth 31% growth Y/Y in Q1’21, accelerating from Q4’20 ARPU shown above is calculated by annualizing U.S. revenue divided by the average weekly active users (WAU) in the period.


Confidential 35 Sustainable growth; additional capital a potential accelerant Annual Summary 2019A 2020A 2021E 2022E Total Revenue $83M $123M $178M $249M Current model does not % Growth 62% 49% 44% 40% assume additional capital Additional funding can Total ARPU $4.23 $4.62 $5.93 $6.47 significantly accelerate growth % Growth 10% 9% 28% 9% Operating Expenses $158M $200M $280M $352M % of Total Revenue 191% 162% 158% 142% % Growth 70% 27% 40% 26% Net Loss $(73M) $(75M) $(103M) $(103M) 1 Non-GAAP Operating Expenses $141M $174M $228M $294M % of Total Revenue 171% 141% 128% 118% % Growth 66% 23% 31% 29% Long Term Target Margins: Adj. EBITDA $(59M) $(50M) $(50M) $(45M) Adjusted EBITDA Margins of ~40% % Margin (71%) (41%) (28%) (18%) Y/Y Margin Improvement (3%) 31% 13% 10% Forward looking estimates are subject to change. Actual figures may be materially different. For a reconciliation of non-GAAP financial measures to GAAP, see appendix. 1. Non-GAAP Operating Expenses includes cost of revenue, sales and marketing, research and development and general and administrative expenses, excluding depreciation and amortization, stock-based compensation and acquisition-related costs. Confidential 35 Sustainable growth; additional capital a potential accelerant Annual Summary 2019A 2020A 2021E 2022E Total Revenue $83M $123M $178M $249M Current model does not % Growth 62% 49% 44% 40% assume additional capital Additional funding can Total ARPU $4.23 $4.62 $5.93 $6.47 significantly accelerate growth % Growth 10% 9% 28% 9% Operating Expenses $158M $200M $280M $352M % of Total Revenue 191% 162% 158% 142% % Growth 70% 27% 40% 26% Net Loss $(73M) $(75M) $(103M) $(103M) 1 Non-GAAP Operating Expenses $141M $174M $228M $294M % of Total Revenue 171% 141% 128% 118% % Growth 66% 23% 31% 29% Long Term Target Margins: Adj. EBITDA $(59M) $(50M) $(50M) $(45M) Adjusted EBITDA Margins of ~40% % Margin (71%) (41%) (28%) (18%) Y/Y Margin Improvement (3%) 31% 13% 10% Forward looking estimates are subject to change. Actual figures may be materially different. For a reconciliation of non-GAAP financial measures to GAAP, see appendix. 1. Non-GAAP Operating Expenses includes cost of revenue, sales and marketing, research and development and general and administrative expenses, excluding depreciation and amortization, stock-based compensation and acquisition-related costs.


Confidential 36 Viral growth loops reinforce the strength of our model Increased Scale Improved unit economics, Increased reach reinvestment for growth & & engagement product expansion Neighbors Businesses Public Agencies Improved advertiser Enhanced advertiser retention & platform performance & additional activity monetization revenue opportunitiesConfidential 36 Viral growth loops reinforce the strength of our model Increased Scale Improved unit economics, Increased reach reinvestment for growth & & engagement product expansion Neighbors Businesses Public Agencies Improved advertiser Enhanced advertiser retention & platform performance & additional activity monetization revenue opportunities


Confidential 37 Risk Factors Risks Related to Nextdoor’s Business and Industry Following the [Business Combination] 1. Nextdoor has a limited operating history at the current scale of its business and is still scaling up its monetization efforts, which makes it difficult to evaluate its current business and future prospects, and there is no assurance it will be able to scale its business for future growth. 2. Nextdoor generates substantially all of its revenue from advertising. If advertisers reduce or eliminate their spending with Nextdoor, Nextdoor’s business, operating results, and financial condition would be adversely impacted. 3. Nextdoor’s ability to attract and retain advertisers depends on its ability to collect and use data and develop products to enable it to effectively deliver and accurately measure advertisements on the Nextdoor platform. 4. If Nextdoor fails to add new neighbors or retain current neighbors, or if current neighbors engage less with Nextdoor, its business, operating results, and financial condition would be adversely impacted. 5. Nextdoor’s business is highly competitive. Competition presents an ongoing threat to the success of Nextdoor’s business. 6. Nextdoor’s business is dependent on its ability to maintain and scale its product offerings and technical infrastructure, and any significant disruption in the availability of Nextdoor’s platform could damage Nextdoor’s reputation, result in a potential loss of neighbors and engagement, and adversely affect Nextdoor’s business, operating results, and financial condition. 7. Nextdoor has experienced rapid growth and expects to invest in its growth for the foreseeable future. If Nextdoor fails to manage its growth effectively, its business, operating results, and financial condition would be adversely affected. 8. If Nextdoor does not successfully anticipate market needs and develop products and services and platform enhancements that meet those needs, or if those products, services and platform enhancements do not gain market acceptance, its business, operating results, and financial condition will be adversely impacted. 9. If Nextdoor’s efforts to build strong brand identity and reputation are not successful, it may not be able to attract or retain neighbors, and its business, operating results, and financial condition will be adversely affected. 10. Unfavorable media coverage negatively affects Nextdoor’s business from time to time. 11. Health epidemics, including the COVID-19 pandemic have had or could have an adverse impact on Nextdoor’s business, operations and the markets and communities in which Nextdoor, its partners and its customers operate. 12. Nextdoor plans to continue expanding its international operations where it has limited operating experience and may be subject to increased business and economic risks that could seriously harm its business, operating results, and financial condition. 13. If Nextdoor needs additional capital in the future, it may not be available on favorable terms, if at all. 14. Nextdoor plans to continue to make acquisitions, which could harm its financial condition or results of operations and may adversely affect the price of its Class A common stock. 15. Nextdoor’s business depends largely on its ability to attract and retain talented employees, including senior management. If Nextdoor loses the services of Sarah Friar, its Chief Executive Officer, or other members of its senior management team, Nextdoor may not be able to execute on its business strategy. 16. Nextdoor’s core values may conflict with the short-term interests of its business. 17. Nextdoor is dependent on Google Ad Manager (“GAM”) for a substantial majority of its revenue. Any failure or change in the GAM product or its terms and conditions, data usage or pricing could adversely affect Nextdoor’s business, operating results, and financial condition. 18. Nextdoor relies on third-party software and service providers, including Amazon Web Services (“AWS”), to provide systems, storage and services for its platform. Any failure or interruption experienced by such third parties, including as a result of the COVID-19 pandemic, could result in the inability of neighbors and advertisers to access or utilize Nextdoor’s platform, and adversely impact Nextdoor’s business, operating results, and financial condition. 19. Nextdoor relies on third parties, including email providers, mobile data networks, geolocation providers and the United States Postal Service (“USPS”) to verify its neighbors’ addresses. Any failure or interruption experienced by such third parties, including the USPS, could result in the inability of neighbors to join Nextdoor’s platform, resulting in harm to Nextdoor’s reputation and an adverse impact to its business, operating results, and financial condition. 20. Technologies have been developed that can block the display of advertisements on the Nextdoor platform, which could adversely impact its business, operating results, and financial condition. 21. Security breaches and improper access to or disclosure of Nextdoor’s data or its neighbors’ data, or other hacking and phishing attacks on Nextdoor’s or third-party systems, could harm its reputation and adversely affect its business. 22. Distribution and marketing of, and access to, Nextdoor’s platform depends, in significant part, on a variety of third-party publishers and platforms (including mobile app stores, third party payment providers, computer systems, and other communication systems and service providers). If these third parties limit, prohibit or otherwise interfere with or change the terms of the distribution, use or marketing of Nextdoor’s platform in any material way, it could materially adversely affect Nextdoor’s business, operating results, and financial condition. 23. Nextdoor’s platform and internal systems rely on software and hardware that is highly technical, and any errors, bugs, or vulnerabilities in these systems, or failures to address or mitigate technical limitations in Nextdoor’s systems, could adversely affect its business. Confidential 37 Risk Factors Risks Related to Nextdoor’s Business and Industry Following the [Business Combination] 1. Nextdoor has a limited operating history at the current scale of its business and is still scaling up its monetization efforts, which makes it difficult to evaluate its current business and future prospects, and there is no assurance it will be able to scale its business for future growth. 2. Nextdoor generates substantially all of its revenue from advertising. If advertisers reduce or eliminate their spending with Nextdoor, Nextdoor’s business, operating results, and financial condition would be adversely impacted. 3. Nextdoor’s ability to attract and retain advertisers depends on its ability to collect and use data and develop products to enable it to effectively deliver and accurately measure advertisements on the Nextdoor platform. 4. If Nextdoor fails to add new neighbors or retain current neighbors, or if current neighbors engage less with Nextdoor, its business, operating results, and financial condition would be adversely impacted. 5. Nextdoor’s business is highly competitive. Competition presents an ongoing threat to the success of Nextdoor’s business. 6. Nextdoor’s business is dependent on its ability to maintain and scale its product offerings and technical infrastructure, and any significant disruption in the availability of Nextdoor’s platform could damage Nextdoor’s reputation, result in a potential loss of neighbors and engagement, and adversely affect Nextdoor’s business, operating results, and financial condition. 7. Nextdoor has experienced rapid growth and expects to invest in its growth for the foreseeable future. If Nextdoor fails to manage its growth effectively, its business, operating results, and financial condition would be adversely affected. 8. If Nextdoor does not successfully anticipate market needs and develop products and services and platform enhancements that meet those needs, or if those products, services and platform enhancements do not gain market acceptance, its business, operating results, and financial condition will be adversely impacted. 9. If Nextdoor’s efforts to build strong brand identity and reputation are not successful, it may not be able to attract or retain neighbors, and its business, operating results, and financial condition will be adversely affected. 10. Unfavorable media coverage negatively affects Nextdoor’s business from time to time. 11. Health epidemics, including the COVID-19 pandemic have had or could have an adverse impact on Nextdoor’s business, operations and the markets and communities in which Nextdoor, its partners and its customers operate. 12. Nextdoor plans to continue expanding its international operations where it has limited operating experience and may be subject to increased business and economic risks that could seriously harm its business, operating results, and financial condition. 13. If Nextdoor needs additional capital in the future, it may not be available on favorable terms, if at all. 14. Nextdoor plans to continue to make acquisitions, which could harm its financial condition or results of operations and may adversely affect the price of its Class A common stock. 15. Nextdoor’s business depends largely on its ability to attract and retain talented employees, including senior management. If Nextdoor loses the services of Sarah Friar, its Chief Executive Officer, or other members of its senior management team, Nextdoor may not be able to execute on its business strategy. 16. Nextdoor’s core values may conflict with the short-term interests of its business. 17. Nextdoor is dependent on Google Ad Manager (“GAM”) for a substantial majority of its revenue. Any failure or change in the GAM product or its terms and conditions, data usage or pricing could adversely affect Nextdoor’s business, operating results, and financial condition. 18. Nextdoor relies on third-party software and service providers, including Amazon Web Services (“AWS”), to provide systems, storage and services for its platform. Any failure or interruption experienced by such third parties, including as a result of the COVID-19 pandemic, could result in the inability of neighbors and advertisers to access or utilize Nextdoor’s platform, and adversely impact Nextdoor’s business, operating results, and financial condition. 19. Nextdoor relies on third parties, including email providers, mobile data networks, geolocation providers and the United States Postal Service (“USPS”) to verify its neighbors’ addresses. Any failure or interruption experienced by such third parties, including the USPS, could result in the inability of neighbors to join Nextdoor’s platform, resulting in harm to Nextdoor’s reputation and an adverse impact to its business, operating results, and financial condition. 20. Technologies have been developed that can block the display of advertisements on the Nextdoor platform, which could adversely impact its business, operating results, and financial condition. 21. Security breaches and improper access to or disclosure of Nextdoor’s data or its neighbors’ data, or other hacking and phishing attacks on Nextdoor’s or third-party systems, could harm its reputation and adversely affect its business. 22. Distribution and marketing of, and access to, Nextdoor’s platform depends, in significant part, on a variety of third-party publishers and platforms (including mobile app stores, third party payment providers, computer systems, and other communication systems and service providers). If these third parties limit, prohibit or otherwise interfere with or change the terms of the distribution, use or marketing of Nextdoor’s platform in any material way, it could materially adversely affect Nextdoor’s business, operating results, and financial condition. 23. Nextdoor’s platform and internal systems rely on software and hardware that is highly technical, and any errors, bugs, or vulnerabilities in these systems, or failures to address or mitigate technical limitations in Nextdoor’s systems, could adversely affect its business.


Confidential 38 Risk Factors Risks Related to Financial and Accounting Matters 1. Nextdoor’s operating results may fluctuate significantly, which makes its future results difficult to predict. 2. Certain of Nextdoor’s market opportunity estimates, growth forecasts and key metrics could prove to be inaccurate, and any real or perceived inaccuracies may harm its reputation and negatively affect its business. 3. Nextdoor has a history of net losses and may experience net losses in the future and Nextdoor cannot assure you that it will achieve or sustain profitability. If Nextdoor cannot achieve and sustain profitability, its business, financial condition, and operating results will be adversely affected. 4. Nextdoor’s ability to use its U.S. federal and state net operating losses to offset future taxable income may be subject to certain limitations which could subject Nextdoor’s business to higher tax liability. 5. Nextdoor’s financial results may be adversely affected by changes in accounting principles generally accepted in the United States and its financial estimates may be different from its financial results. 6. If currency exchange rates fluctuate substantially in the future, Nextdoor’s operating results, which are reported in U.S. dollars, could be adversely affected. 7. Nextdoor may have exposure to greater-than-anticipated tax liabilities, which could seriously harm its business. 8. Taxing authorities in the U.S. and in foreign jurisdictions may successfully assert that Nextdoor should have collected or in the future should collect sales and use, gross receipts, value-added or similar taxes and may successfully impose additional obligations on Nextdoor, and any such assessments or obligations could adversely affect Nextdoor’s business, operating results, and financial condition. 9. The interpretation and application of recent U.S. tax legislation or other changes in U.S. or non-U.S. taxation of Nextdoor’s operations could harm its business, operating results, and financial condition. Risks Related to Legal and Regulatory Matters 10. Nextdoor may be liable as a result of content or information that is published or made available on its platform. 11. Actions by governments that restrict access to Nextdoor’s platform in their countries, or that otherwise impair Nextdoor’s ability to sell advertising in their countries, could substantially harm Nextdoor’s business, operating results, and financial condition. 12. Nextdoor’s business is subject to complex and evolving U.S. and foreign laws, regulations and industry standards regarding data privacy, cybersecurity, intellectual property (including copyright and patent laws), content, rights of publicity, advertising, marketing, competition, protection of minors, consumer protection, taxation, and telecommunications, and other matters, and it cannot yet determine the impact that such future laws, regulations and industry standards may have on Nextdoor’s business. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to Nextdoor’s business practices, monetary penalties, increased cost of operations, or declines in neighbor growth or engagement, or otherwise harm Nextdoor’s business, operating results, and financial condition. 13. Nextdoor could be involved in legal disputes that are expensive and time consuming, and, if resolved adversely, could harm its business, operating results, and financial condition. 14. Exposure to United Kingdom political developments, including the effect of its withdrawal from the European Union, could be costly and difficult to comply with and could adversely impact Nextdoor’s business, operations results, and financial condition. 15. The obligations associated with operating as a public company following the [Business Combination] will require significant resources and management attention and will cause Nextdoor to incur additional expenses, which will adversely affect its profitability. 16. Failure to maintain effective systems of internal control and disclosure controls could have a material adverse effect on Nextdoor’s business, operating results, and financial condition. Risks Related To Intellectual Property 17. If Nextdoor is unable to protect its intellectual property, the value of its brands and other intangible assets may be diminished, and its business, operating results, and financial condition may be adversely affected. 18. Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and proprietary information. 19. Nextdoor’s use of “open source” software could subject it to possible litigation or could prevent it from offering products that include open source software or require it to obtain licenses on unfavorable terms. Risks Related to Ownership of Nextdoor’s Class A Common Stock 20. The dual class structure of Nextdoor’s common stock may adversely affect the trading market for its Class A common stock following the closing of the transaction. 21. The dual class structure of Nextdoor’s common stock will have the effect of concentrating voting power with Nextdoor’s management and other existing stockholders, which will limit your ability to influence the outcome of important transactions, including a change in control. 22. Nextdoor does not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of Nextdoor’s Class A common stock.Confidential 38 Risk Factors Risks Related to Financial and Accounting Matters 1. Nextdoor’s operating results may fluctuate significantly, which makes its future results difficult to predict. 2. Certain of Nextdoor’s market opportunity estimates, growth forecasts and key metrics could prove to be inaccurate, and any real or perceived inaccuracies may harm its reputation and negatively affect its business. 3. Nextdoor has a history of net losses and may experience net losses in the future and Nextdoor cannot assure you that it will achieve or sustain profitability. If Nextdoor cannot achieve and sustain profitability, its business, financial condition, and operating results will be adversely affected. 4. Nextdoor’s ability to use its U.S. federal and state net operating losses to offset future taxable income may be subject to certain limitations which could subject Nextdoor’s business to higher tax liability. 5. Nextdoor’s financial results may be adversely affected by changes in accounting principles generally accepted in the United States and its financial estimates may be different from its financial results. 6. If currency exchange rates fluctuate substantially in the future, Nextdoor’s operating results, which are reported in U.S. dollars, could be adversely affected. 7. Nextdoor may have exposure to greater-than-anticipated tax liabilities, which could seriously harm its business. 8. Taxing authorities in the U.S. and in foreign jurisdictions may successfully assert that Nextdoor should have collected or in the future should collect sales and use, gross receipts, value-added or similar taxes and may successfully impose additional obligations on Nextdoor, and any such assessments or obligations could adversely affect Nextdoor’s business, operating results, and financial condition. 9. The interpretation and application of recent U.S. tax legislation or other changes in U.S. or non-U.S. taxation of Nextdoor’s operations could harm its business, operating results, and financial condition. Risks Related to Legal and Regulatory Matters 10. Nextdoor may be liable as a result of content or information that is published or made available on its platform. 11. Actions by governments that restrict access to Nextdoor’s platform in their countries, or that otherwise impair Nextdoor’s ability to sell advertising in their countries, could substantially harm Nextdoor’s business, operating results, and financial condition. 12. Nextdoor’s business is subject to complex and evolving U.S. and foreign laws, regulations and industry standards regarding data privacy, cybersecurity, intellectual property (including copyright and patent laws), content, rights of publicity, advertising, marketing, competition, protection of minors, consumer protection, taxation, and telecommunications, and other matters, and it cannot yet determine the impact that such future laws, regulations and industry standards may have on Nextdoor’s business. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to Nextdoor’s business practices, monetary penalties, increased cost of operations, or declines in neighbor growth or engagement, or otherwise harm Nextdoor’s business, operating results, and financial condition. 13. Nextdoor could be involved in legal disputes that are expensive and time consuming, and, if resolved adversely, could harm its business, operating results, and financial condition. 14. Exposure to United Kingdom political developments, including the effect of its withdrawal from the European Union, could be costly and difficult to comply with and could adversely impact Nextdoor’s business, operations results, and financial condition. 15. The obligations associated with operating as a public company following the [Business Combination] will require significant resources and management attention and will cause Nextdoor to incur additional expenses, which will adversely affect its profitability. 16. Failure to maintain effective systems of internal control and disclosure controls could have a material adverse effect on Nextdoor’s business, operating results, and financial condition. Risks Related To Intellectual Property 17. If Nextdoor is unable to protect its intellectual property, the value of its brands and other intangible assets may be diminished, and its business, operating results, and financial condition may be adversely affected. 18. Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and proprietary information. 19. Nextdoor’s use of “open source” software could subject it to possible litigation or could prevent it from offering products that include open source software or require it to obtain licenses on unfavorable terms. Risks Related to Ownership of Nextdoor’s Class A Common Stock 20. The dual class structure of Nextdoor’s common stock may adversely affect the trading market for its Class A common stock following the closing of the transaction. 21. The dual class structure of Nextdoor’s common stock will have the effect of concentrating voting power with Nextdoor’s management and other existing stockholders, which will limit your ability to influence the outcome of important transactions, including a change in control. 22. Nextdoor does not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of Nextdoor’s Class A common stock.


Appendix Appendix


Confidential 40 Attractive Valuation Advertising Community Comps Comps 2021E - 2022E Revenue Growth 2022E EV / Revenue 2022E EV / Growth Adj. Revenue 20.0x 48% 0.88x 17.6x 40% 15.7x 0.72x 33% 14.2x 14.1x 13.9x 0.61x 0.48x 23% 23% 20% 9.2x 19% 0.42x 0.40x 0.35x Nextdoor Snap Pinterest Twitter Bumble Roblox Match Nextdoor Snap Pinterest Twitter Roblox Bumble Match Nextdoor Pinterest Snap Twitter Roblox Match Bumble Source: Capital IQ Market data and Thomson consensus estimates as of 7/2/2021 Assumes $3.5B Enterprise Value for NextdoorConfidential 40 Attractive Valuation Advertising Community Comps Comps 2021E - 2022E Revenue Growth 2022E EV / Revenue 2022E EV / Growth Adj. Revenue 20.0x 48% 0.88x 17.6x 40% 15.7x 0.72x 33% 14.2x 14.1x 13.9x 0.61x 0.48x 23% 23% 20% 9.2x 19% 0.42x 0.40x 0.35x Nextdoor Snap Pinterest Twitter Bumble Roblox Match Nextdoor Snap Pinterest Twitter Roblox Bumble Match Nextdoor Pinterest Snap Twitter Roblox Match Bumble Source: Capital IQ Market data and Thomson consensus estimates as of 7/2/2021 Assumes $3.5B Enterprise Value for Nextdoor


Transaction Summary ($ in millions, except share price) Sources Pro Forma Capitalization Share Price $10.00 SPAC Cash in Trust (Assuming no Redemptions) $416 Total Shares Outstanding 430 PIPE $270 Equity Value $4,301 Existing Equity Holders’ Rollover $3,500 Net Cash $(763) Total Sources $4,186 Enterprise Value $3,538 Uses Illustrative Pro Forma Ownership Cash Proceeds to Nextdoor $642 Khosla (2.7%) PIPE Investors (6.3%) Equity Consideration to Existing Equity Holders $3,500 SPAC Public Equity Holders Estimated Transaction Expenses $44 (9.7%) Total Sources $4,186 Nextdoor Equity Holders (81.4%) Notes: 1. Assumes no shareholder redemptions. 2. Assumes $10.00 price per share. 3. Assumes existing Nextdoor net cash on balance sheet of $121.0 million as of 5/31/21. 4. Total shares include 350.0 million Nextdoor rollover shares, 41.6 million SPAC public shares, 27.0 million shares from PIPE and 11.5 million Khosla shares (including 1.1 million private placement shares and 10.4 million sponsor promote shares; excludes shares from Khosla investment in PIPE). 41 Confidential 5. Transaction expenses are estimates. 6. Pro Forma Ownership represents economic interest. Does not reflect 10:1 voting structure. Nextdoor equity holders will retain Class B shares with 10 votes per share. All other investors will hold Class A shares with one vote per share.Transaction Summary ($ in millions, except share price) Sources Pro Forma Capitalization Share Price $10.00 SPAC Cash in Trust (Assuming no Redemptions) $416 Total Shares Outstanding 430 PIPE $270 Equity Value $4,301 Existing Equity Holders’ Rollover $3,500 Net Cash $(763) Total Sources $4,186 Enterprise Value $3,538 Uses Illustrative Pro Forma Ownership Cash Proceeds to Nextdoor $642 Khosla (2.7%) PIPE Investors (6.3%) Equity Consideration to Existing Equity Holders $3,500 SPAC Public Equity Holders Estimated Transaction Expenses $44 (9.7%) Total Sources $4,186 Nextdoor Equity Holders (81.4%) Notes: 1. Assumes no shareholder redemptions. 2. Assumes $10.00 price per share. 3. Assumes existing Nextdoor net cash on balance sheet of $121.0 million as of 5/31/21. 4. Total shares include 350.0 million Nextdoor rollover shares, 41.6 million SPAC public shares, 27.0 million shares from PIPE and 11.5 million Khosla shares (including 1.1 million private placement shares and 10.4 million sponsor promote shares; excludes shares from Khosla investment in PIPE). 41 Confidential 5. Transaction expenses are estimates. 6. Pro Forma Ownership represents economic interest. Does not reflect 10:1 voting structure. Nextdoor equity holders will retain Class B shares with 10 votes per share. All other investors will hold Class A shares with one vote per share.


Confidential 42 Adjusted EBITDA Reconciliation 2019A 2020A Net Loss $(73.3M) $(75.2M) Depreciation and amortization $2.1M $3.1M Stock-based compensation 14.1M 22.6M Interest (2.5M) (0.7M) Provision for income taxes 0.2M 0.1M Acquisition-related costs 0.6M – Adjusted EBITDA $(58.8M) $(50.2M)Confidential 42 Adjusted EBITDA Reconciliation 2019A 2020A Net Loss $(73.3M) $(75.2M) Depreciation and amortization $2.1M $3.1M Stock-based compensation 14.1M 22.6M Interest (2.5M) (0.7M) Provision for income taxes 0.2M 0.1M Acquisition-related costs 0.6M – Adjusted EBITDA $(58.8M) $(50.2M)


Confidential 43 Non-GAAP Operating Expenses Reconciliation 2019A 2020A Operating Expenses Cost of revenue $13.7M $21.6M Sales and marketing 81.0M 80.3M Research and development 42.6M 69.2M General and administrative 20.7M 28.8M Total GAAP Operating Expenses $158.0M $199.9M (-) Depreciation and amortization ($2.1M) ($3.1M) (-) Stock-based compensation (14.1M) (22.6M) (-) Acquisition-related costs (0.6M) 0.0M Non-GAAP Operating Expenses $141.2M $174.2M % of Total Revenue 171% 141% % Growth 66% 23%Confidential 43 Non-GAAP Operating Expenses Reconciliation 2019A 2020A Operating Expenses Cost of revenue $13.7M $21.6M Sales and marketing 81.0M 80.3M Research and development 42.6M 69.2M General and administrative 20.7M 28.8M Total GAAP Operating Expenses $158.0M $199.9M (-) Depreciation and amortization ($2.1M) ($3.1M) (-) Stock-based compensation (14.1M) (22.6M) (-) Acquisition-related costs (0.6M) 0.0M Non-GAAP Operating Expenses $141.2M $174.2M % of Total Revenue 171% 141% % Growth 66% 23%


Confidential 44 Definitions Metrics Definition U.S. Household A single (U.S.) residence containing at least one Current Verified Neighbor The number of active Launched (10+ member) neighborhoods. A “neighborhood” is a specific geographic area with a defined Neighborhoods boundary. Neighborhoods do not overlap. The number of neighbors who are verified in a valid Launched (10+ member) or Pilot (< 10 member) neighborhood, and in good Verified Neighbors/Users standing (i.e. not deleted, deactivated, or suspended.) Daily Active Users (DAU) Count of unique neighbors who have started a session or opened a content email on a given day Weekly Active Users (WAU) Count of unique neighbors who have started a session or opened a content email over the trailing 7 days Monthly Active User (MAU) Count of unique neighbors who have started a session or opened a content email over the trailing 30 days Engagement Used to refer to neighbor activity — usually WAU unless otherwise specified 3 month MAU is defined as active in the 30 days preceding day 90, 6 month is active in the 30 days preceding day 180, 12 month is Neighbor retention active in the 30 days preceding day 360, and 24-month is active in the 30 days preceding Shown for All-time Verified Neighbors joining in 2020. Neighborhood penetration U.S. Households (see above) divided by the total number of Households (claimed or otherwise) in the neighborhood. Local Business Claimed Pages Local business pages that have been claimed by a Nextdoor partner Total Addressable Market (TAM) Digital advertising spend in the U.S. excluding B2B (not addressable by Nextdoor). Source: eMarketer Confidential 44 Definitions Metrics Definition U.S. Household A single (U.S.) residence containing at least one Current Verified Neighbor The number of active Launched (10+ member) neighborhoods. A “neighborhood” is a specific geographic area with a defined Neighborhoods boundary. Neighborhoods do not overlap. The number of neighbors who are verified in a valid Launched (10+ member) or Pilot (< 10 member) neighborhood, and in good Verified Neighbors/Users standing (i.e. not deleted, deactivated, or suspended.) Daily Active Users (DAU) Count of unique neighbors who have started a session or opened a content email on a given day Weekly Active Users (WAU) Count of unique neighbors who have started a session or opened a content email over the trailing 7 days Monthly Active User (MAU) Count of unique neighbors who have started a session or opened a content email over the trailing 30 days Engagement Used to refer to neighbor activity — usually WAU unless otherwise specified 3 month MAU is defined as active in the 30 days preceding day 90, 6 month is active in the 30 days preceding day 180, 12 month is Neighbor retention active in the 30 days preceding day 360, and 24-month is active in the 30 days preceding Shown for All-time Verified Neighbors joining in 2020. Neighborhood penetration U.S. Households (see above) divided by the total number of Households (claimed or otherwise) in the neighborhood. Local Business Claimed Pages Local business pages that have been claimed by a Nextdoor partner Total Addressable Market (TAM) Digital advertising spend in the U.S. excluding B2B (not addressable by Nextdoor). Source: eMarketer

Exhibit 99.3

RISK FACTORS

Unless the context otherwise requires, all references in this subsection to the “Company,” “we,” “us” or “our” refer to the business of Nextdoor, Inc. and its subsidiaries prior to the consummation of the Business Combination, which will be the business of New Nextdoor and its subsidiaries following the consummation of the Business Combination. The risk factors below have been prepared solely for purposes of the private placement transaction, and solely for potential private placement investors, and not for any other purpose. You should carefully consider these risks and uncertainties, together with the information in the Company’s consolidated financial statements and related notes, and should carry out your own diligence and consult with your own financial and legal advisors concerning the risks and suitability of an investment in this offering before making an investment decision. Risks relating to the business of the Company will be disclosed in future documents filed or furnished by the Company and Khosla Ventures Acquisition Co. II (“KVSB”) with the U.S. Securities and Exchange Commission (“SEC”), including the documents filed or furnished in connection with the proposed transactions between the Company and KVSB. The risks presented in such filings will be consistent with those that would be required for a public company in its SEC filings, including with respect to the business and securities of the Company and KVSB and the proposed transactions between the Company and KVSB, and may differ significantly from, and be more extensive than, those presented below.

Risks Related to Nextdoor’s Business and Industry Following the Business Combination.

Nextdoor has a limited operating history at the current scale of its business and is still scaling up its monetization efforts, which makes it difficult to evaluate its current business and future prospects, and there is no assurance it will be able to scale its business for future growth.

Nextdoor commenced operating the Nextdoor platform in 2011, and began supporting the platform with advertising in 2016. Nextdoor’s limited operating history at the current scale of its business may make it difficult to evaluate its current business and future prospects. Nextdoor has encountered, and will continue to encounter, risks and difficulties frequently experienced by growing companies in rapidly evolving industries, including challenges in accurate financial planning and forecasting, increasing competition and expenses as Nextdoor continues to grow its business, and Nextdoor’s ability to achieve market acceptance of its platform and attract, engage and retain users, who Nextdoor calls “neighbors” (which includes individuals) and organizations (which includes businesses and public services, including paying customers such as advertisers). You should consider Nextdoor’s business and prospects in light of the risks and difficulties that it may encounter as a business with a limited operating history. Nextdoor cannot ensure that it will be successful in addressing these and other challenges Nextdoor may face in the future, and Nextdoor’s business, operating results, and financial condition may be adversely affected if it does not manage these risks successfully. Nextdoor may not be able to maintain its current rate of growth, which is a risk characteristic often shared by companies with limited operating histories participating in rapidly evolving industries.

Additionally, Nextdoor is still in the early stages of monetizing its platform. Nextdoor’s growth strategy depends on, among other things, increasing neighbors on the network, increasing engagement, developing new and improving existing products for neighbors and organizations, attracting more advertisers (including expanding its sales efforts to reach advertisers in additional international markets), scaling its business with existing advertisers, and delivering targeted advertisements based on neighbors’ personal taste and interests. There can be no assurance that Nextdoor will successfully increase monetization on its platform or that it will sustain or increase the current growth rate of its revenue.


Nextdoor currently generates substantially all of its revenue from advertising. If advertisers reduce or eliminate their spending with Nextdoor, Nextdoor’s business, operating results, and financial condition would be adversely impacted.

Substantially all of Nextdoor’s revenue is currently generated from the sales of advertising on its platform in the form of online display advertisements, which include sponsored posts, local deals, and neighborhood sponsorships. Nextdoor’s advertisers typically do not have long-term advertising spend commitments with Nextdoor. Many of Nextdoor’s advertisers spend only a relatively small portion of their overall advertising budget with Nextdoor. In addition, advertisers may view some of the features on Nextdoor’s platform as experimental and unproven. Advertisers will not continue to do business with Nextdoor, or they will reduce the prices they are willing to pay to advertise with Nextdoor, if Nextdoor does not deliver advertisements in an effective manner, or if advertisers do not believe that their investment in advertising with Nextdoor will generate a competitive return relative to alternatives. Nextdoor’s ability to attract and retain advertisers, and ultimately generate revenue, may be adversely affected by a number of factors, including but not limited to:

 

   

decreases in neighbor and advertiser engagement on the platform;

 

   

slower than anticipated growth in, or lack of growth or decreases in, the number of neighbors on the platform;

 

   

platform changes (such as the migration to Nextdoor’s proprietary ad server) or inventory management decisions that change the size, format, frequency, or relative prominence of advertisements displayed on the platform;

 

   

competitors offering more attractive pricing for advertisements than Nextdoor is unable or unwilling to match;

 

   

a decrease in the quantity or quality of advertisements shown to neighbors;

 

   

changes to third-party policies or applications that limit Nextdoor’s ability to deliver, target, or measure the effectiveness of advertising, including changes by mobile operating system and browser providers such as Apple and Google;

 

   

changes to demographics of Nextdoor’s neighbors that make Nextdoor less attractive to advertisers;

 

   

neighbors that upload content or take other actions that are deemed to be hostile, inappropriate, illicit, objectionable, illegal, or otherwise not consistent with the brand of Nextdoor’s advertisers;

 

   

adverse government actions or legislative, regulatory, or other legal developments;

 

   

neighbor behavior or changes to the platform that may affect, among other things, the safety and security of other neighbors or the cultivation of a positive and inclusive online community;

 

   

adverse media reports or other negative publicity involving Nextdoor;

 

   

Nextdoor implementing or enforcing policies, such as advertising policies, community guidelines, and other terms or service that are perceived negatively by advertisers;

 

   

Nextdoor’s ability to develop and improve its products for advertisers;

 

   

limitations in, or reductions to, the availability, accuracy, utility, and security of analytics and measurement solutions offered by Nextdoor or third parties that are intended to demonstrate the value of Nextdoor’s advertisements to advertisers;

 

   

changes to Nextdoor’s data privacy practices that affect the type or manner of advertising that Nextdoor is able to provide, including as a result of changes to laws, regulations or regulatory actions, such as the European General Data Protection Regulation (“GDPR”), European ePrivacy Directive, UK General Data Protection Regulation (“UK GDPR”), UK Data Protection Act 2018, California Consumer Privacy Act (“CCPA”), the California Privacy Rights Act (“CPRA”) or changes to third-party policies; and


   

the impact of macroeconomic conditions, whether in the advertising industry in general, among specific types of advertisers or within particular geographies.

From time to time, certain of these factors have adversely affected Nextdoor’s revenue to varying degrees. For example, during the second quarter of 2020, advertisers reduced their advertising spend with Nextdoor as a result of the impact of the COVID-19 pandemic on global macroeconomic conditions and on the advertising industry in general. The occurrence of any of these or other factors in the future could result in a reduction in demand for Nextdoor’s advertisements, which may reduce the prices Nextdoor receives for its advertisements, or cause advertisers to stop or reduce their spend with Nextdoor, either of which would negatively affect Nextdoor’s business, operating results, and financial condition. Similar occurrences in the future may impair Nextdoor’s ability to maintain or increase the quantity or quality of advertisements shown to neighbors and adversely affect Nextdoor’s business, operating results, and financial condition.

Nextdoor’s ability to attract and retain advertisers depends on its ability to collect and use data and develop products to enable it to effectively deliver and accurately measure advertisements on the Nextdoor platform.

Most advertisers rely on tools that measure the effectiveness of their advertising campaigns in order to allocate their advertising spend among various formats and platforms. If Nextdoor is unable to accurately measure the effectiveness of advertising on its platform, if at all, or if Nextdoor is unable to convince advertisers that its platform should be part of a larger advertising budget, Nextdoor’s ability to increase the demand and pricing of its advertising tools and maintain or scale its revenue may be limited or decline. Nextdoor’s ability to develop and offer products that accurately measure the effectiveness of a campaign on its platform is critical to its ability to attract new advertisers and retain, and increase spend from, its existing advertisers.

Nextdoor is continually developing and improving its products for advertisers and such efforts have and are likely to continue to require significant time and resources and additional investment, and in some cases Nextdoor has relied on, and may in the future rely on, third parties to provide data and technology needed to provide certain measurement data to its advertisers. If Nextdoor cannot continue to develop and improve its products for advertisers in a timely fashion, those products are not reliable, or the measurement results are inconsistent with advertiser’s expectations or goals, Nextdoor’s revenue could be adversely affected.

In addition, web and mobile browser developers, such as Apple, Microsoft or Google, have implemented and may continue to implement changes, including requiring additional user permissions, in their browser or device operating system that impair Nextdoor’s ability to measure and improve the effectiveness of advertising on its platform. Such changes include limiting the use of first-party and third-party cookies and related tracking technologies, such as mobile advertising identifiers, and other changes that limit Nextdoor’s ability to collect information that allows it to attribute neighbors’ actions on advertisers’ websites to the effectiveness of advertising campaigns run on Nextdoor’s platform. For example, Apple launched its Intelligent Tracking Prevention (“ITP”) feature in its Safari browser. ITP blocks some or all third-party cookies by default on mobile and desktop and ITP has become increasingly restrictive over time. Apple’s related Privacy-Preserving Ad Click attribution, intended to preserve some of the functionality lost with ITP, would limit cross-site and cross-device attribution, prevent measurement outside a narrowly-defined attribution window, and prevent advertisement re-targeting and optimization. Further, Apple introduced an App Tracking Transparency framework that limits the ability of mobile applications to request an iOS device’s advertising identifier and may also affect Nextdoor’s ability to track neighbors actions off its platform and connect their interactions with on-platform advertising. Similarly, Google recently announced that it plans to stop supporting third-party cookies in its Google Chrome browser. These web and mobile browser developers have also implemented and may continue to implement changes and restrictions in browser or device functionality that limit Nextdoor’s ability to communicate with or understand the identity of its neighbors.


These restrictions and changes make it more difficult for Nextdoor to provide the most relevant advertisements to its neighbors, as well as decrease its ability to measure the effectiveness of, re-target or optimize advertising on its platform. Developers may release additional technology that further inhibits Nextdoor’s ability to collect data that allows Nextdoor to measure the effectiveness of advertising on its platform. Any other restriction, whether by law, regulation, policy (including third-party policies) or otherwise, on Nextdoor’s ability to collect and share data which its advertisers find useful or that further reduce its ability to measure the effectiveness of advertising on its platform, would impede Nextdoor’s ability to attract, grow and retain advertisers. Advertisers and other third parties who provide data that helps Nextdoor deliver personalized, relevant advertising may restrict or stop sharing this data and it therefore may not be possible for Nextdoor to collect this data within the platform or from another source.

Nextdoor relies heavily on its ability to collect and share data and metrics for its advertisers to help new and existing advertisers understand the performance of advertising campaigns. If advertisers do not perceive Nextdoor’s metrics to be accurate representations of its neighbors and neighbor engagement, or there are inaccuracies in Nextdoor’s metrics, advertisers may decrease or eliminate allocations of their budgets or resources to Nextdoor’s platform, which could harm its business, operating results, and financial condition.

If Nextdoor fails to add new neighbors or retain current neighbors, or if current neighbors engage less with Nextdoor, its business, operating results, and financial condition would be adversely impacted.

The number of neighbors that use the Nextdoor platform and their level of engagement on the platform are critical to Nextdoor’s success. Nextdoor must continue to engage and retain existing neighbors on its platform as well as attract, engage and retain new neighbors. The number of neighbors on Nextdoor may not continue to grow at the current growth rate, if at all, and it may even decline. In order to attract new neighbors, Nextdoor must engage with neighbors in existing neighborhoods on its platform and add new neighborhoods to the Nextdoor platform, both domestically and internationally. If Nextdoor’s neighbor growth rate slows or reverses, its financial performance will be adversely impacted unless Nextdoor can increase its engagement with its existing neighbors and its monetization efforts to offset any such reduction or decrease in neighborhood growth rate. Moreover, Nextdoor is unable to predict the continued impact of the COVID-19 pandemic on neighbor growth and engagement with any certainty, and Nextdoor expects these trends to continue to be subject to volatility.

If current and potential neighbors do not perceive their experience with Nextdoor’s platform to be useful, the content generated on the platform to be valuable or relevant or the social connections with fellow neighbors to be worthwhile, Nextdoor may not be able to attract new neighbors, retain existing neighbors or maintain or increase the frequency and duration of their engagement on its platform. In addition, if Nextdoor’s existing neighbors decrease the frequency or duration of their engagement or the growth rate of its neighbor base slows or reverses, Nextdoor may be required to incur significantly higher marketing expenses than it currently anticipates in order to acquire new neighbors or retain current neighbors.

There are many factors that could negatively impact Nextdoor’s ability to grow, retain and engage current and prospective neighbors, including but not limited to:

 

   

neighbors increasing their engagement with competitor’s platforms, products or services instead of, or more frequently than, Nextdoor’s platform;

 

   

changes in the amount of time neighbors spend across all applications and platforms, including Nextdoor’s platform;

 

   

Nextdoor failing to introduce platform enhancements that neighbors find engaging or if Nextdoor introduces new features, terms, policies or procedures, or make changes to its platform, that are not favorably received by current or prospective neighbors;

 

   

technical or other problems frustrating the neighbor experience, such as problems that prevent Nextdoor from delivering its service in a fast and reliable manner;


   

neighbors having difficulty installing, updating or otherwise accessing the Nextdoor platform on mobile devices through the app or web browsers;

 

   

neighbor behavior on Nextdoor’s platform changing, including a decrease in the quality and frequency of content shares on the platform;

 

   

decreases in neighbor or advertiser sentiment due to questions about the quality or usefulness of Nextdoor’s platform, concerns about the nature of content made available on the platform, concerns related to privacy, safety, security, well-being or other factors;

 

   

changes mandated by legislation, government and regulatory authorities, or litigation that adversely impact Nextdoor’s platform or neighbors;

 

   

third parties preventing their content from being displayed on the Nextdoor platform;

 

   

Nextdoor makes changes to how it promotes different features on its platform;

 

   

initiatives designed to attract and retain neighbors and engagement are unsuccessful or discontinued, whether as a result of actions by Nextdoor, third parties, or otherwise;

 

   

Nextdoor, or other partners and companies in the industry are the subject of adverse media reports or other negative publicity;

 

   

Nextdoor is unable to combat spam, harassment, cyberbullying or other hostile, inappropriate, abusive or offensive content or usage on its platform; or

 

   

Nextdoor cannot preserve and enhance its brand and reputation as a trusted neighborhood networking community.

Any decrease in neighbor growth, retention or engagement could render Nextdoor’s service less attractive to neighbors or advertisers, and could harm Nextdoor’s business, operating results, and financial condition. In addition, neighbor verification is a critical feature of Nextdoor’s platform because it demonstrates that neighbors are real people and businesses in the neighborhood they desire to join. If Nextdoor were to change its verification methods, that may adversely impact Nextdoor’s ability to add new neighbors or retain existing neighbors.

Nextdoor’s business is highly competitive. Competition presents an ongoing threat to the success of Nextdoor’s business.

Nextdoor competes in almost every aspect of its business with companies that provide a variety of internet products, services, content, and online advertising, including from Facebook, Google, Pinterest, Snap, and Twitter. In addition, aspects of Nextdoor’s platform compete with other products and services, including real estate, classifieds, and recommendation and search engines. Nextdoor competes with these companies to attract, engage, and retain users and to attract and retain advertisers. If Nextdoor introduces or acquires new products and services or evolves its platform in a way that subjects it to additional competition or as existing competitors introduce new products and services or evolve their platforms, Nextdoor may fail to engage or retain neighbors or attract new neighbors, which could harm Nextdoor’s business, operating results, and financial condition.

Some of Nextdoor’s current and potential competitors have substantially broader product or service offerings and leverage their relationships based on other products or services to gain additional share of advertising spend. They have large distributed sales forces and an increasing amount of control over mobile distribution channels. Many of these competitors’ economies of scale allow them to have access to larger volumes of data and platforms that are used on a more frequent basis than Nextdoor’s, which may enable them to better understand their member base and develop


and deliver more targeted advertising. Such competitors may not need to rely on third-party data, including data provided by advertisers, to effectively target the campaigns of advertisers, which could make their advertising products more attractive to advertisers than Nextdoor’s platform if such third-party data ceases to be available to Nextdoor, whether because of regulatory changes, privacy or cybersecurity concerns or other reasons. If Nextdoor’s advertisers do not believe that its value proposition is as compelling as those of Nextdoor’s competitors, Nextdoor may not be able to attract new advertisers or retain existing ones, and its business, operating results, and financial condition could be adversely impacted.

Nextdoor’s competitors may develop products, features, or services that are similar to Nextdoor’s platform or that achieve greater acceptance, may undertake more far-reaching and successful product development efforts or marketing campaigns, or may adopt more aggressive pricing policies. Some competitors may gain a competitive advantage relative to Nextdoor in areas where it operates, including by more effectively responding to changes to third-party products and policies or by integrating competing platforms, applications, or features into products they control such as mobile device operating systems, search engines, browsers, or e-commerce platforms. For example, Apple has introduced changes to iOS 14 that limits Nextdoor’s ability, and the ability of others in the digital advertising industry, to target and measure advertisements effectively. As a result, Nextdoor’s competitors may, and in some cases will, acquire and engage neighbors or generate advertising or other revenue at the expense of Nextdoor’s efforts, which would negatively affect Nextdoor’s business, operating results, and financial condition. In addition, from time to time, Nextdoor may take actions in response to competitive threats, but it cannot assure you that these actions will be successful or that they will not negatively affect Nextdoor’s business, operating results, and financial condition.

Nextdoor believes that its ability to compete depends upon many factors both within and beyond its control, including:

 

   

the popularity, usefulness, ease of use, performance, and reliability of its platform compared to its competitors’ products;

 

   

the size and composition of its neighbor base;

 

   

the engagement of neighbors with its platform and competing products;

 

   

first- and third-party data available to Nextdoor relative to its competitors;

 

   

Nextdoor’s ability to attract and retain advertisers who use its free or paid advertisements services;

 

   

the timing and market acceptance of developments and enhancements to Nextdoor’s platform or its competitors’ products;

 

   

Nextdoor’s safety and security efforts and its ability to protect neighbor data and to provide neighbors with control over their data;

 

   

Nextdoor’s ability to distribute its platform to new and existing neighbors;

 

   

Nextdoor’s ability to effectively monetize its platform;

 

   

the successful implementation of platform changes, such as the migration to Nextdoor’s proprietary ad server;

 

   

the frequency, size, format, quality, and relative prominence of the advertisements displayed by Nextdoor or its competitors;

 

   

customer service and support efforts;


   

marketing and selling efforts, including Nextdoor’s ability to measure the effectiveness of its advertisements and to provide advertisers with a compelling return on their investments;

 

   

Nextdoor’s ability to establish and maintain publisher interest in integrating their content with its platform;

 

   

changes mandated by legislation, regulatory authorities, or litigation, some of which may have a disproportionate effect on Nextdoor;

 

   

acquisitions or consolidation within Nextdoor’s industry, which may result in more formidable competitors;

 

   

Nextdoor’s ability to attract, retain, and motivate talented employees, particularly software engineers, designers, and managers;

 

   

Nextdoor’s ability to cost-effectively manage and grow its operations; and

 

   

Nextdoor’s reputation and brand strength relative to those of its competitors.

If Nextdoor is not able to compete effectively, its neighbor base and level of neighbor engagement may decrease, it may become less attractive to advertisers and its business, operating results, and financial condition may be adversely affected.

Nextdoor’s business is dependent on its ability to maintain and scale its product offerings and technical infrastructure, and any significant disruption in the availability of Nextdoor’s platform could damage Nextdoor’s reputation, result in a potential loss of neighbors and engagement, and adversely affect Nextdoor’s business, operating results, and financial condition.

Nextdoor’s reputation and ability to attract, retain, and serve its neighbors and to scale its product offerings is dependent upon the reliable performance of its platform and its underlying technical infrastructure. Nextdoor has in the past experienced, and may in the future experience, interruptions in the availability or performance of its platform from time to time. Nextdoor’s systems may not be adequately designed or may not operate with the reliability and redundancy necessary to avoid performance delays or outages that could be harmful to Nextdoor’s business. If Nextdoor’s platform is unavailable when neighbors attempt to access it, or if it does not load as quickly as expected, neighbors may not use Nextdoor’s platform as often in the future, or at all, and Nextdoor’s ability to serve advertisements may be disrupted, any of which could adversely affect Nextdoor’s business, operating results, and financial condition. As the amount and types of information shared on Nextdoor continues to grow and evolve, as the usage patterns of Nextdoor’s communities continues to evolve, and as Nextdoor’s internal operational demands continue to grow, Nextdoor will need an increasing amount of technical infrastructure, including network capacity and computing power, to continue to satisfy its needs. If Nextdoor fails to continue to effectively scale and grow its technical infrastructure to accommodate these increased demands, neighbor engagement and revenue growth may be adversely impacted. Moreover, as Nextdoor scales its platform and product offerings, including video and other platform features, that may place strain on its technical infrastructure and Nextdoor may also be unsuccessful in scaling its technical infrastructure to accommodate new product offerings and increased platform usage cost-effectively. In addition, Nextdoor’s business may be subject to interruptions, delays, or failures resulting from earthquakes, fires, floods, adverse weather conditions, other natural disasters, power loss, terrorism, pandemics, geopolitical conflict, other physical security threats, cyber-attacks, or other catastrophic events. If such an event were to occur, neighbors may be subject to service disruptions or outages and Nextdoor may not be able to recover its technical infrastructure and neighbor data in a timely manner to restart or provide its services, which may adversely affect Nextdoor’s financial results. In addition, the substantial majority of Nextdoor’s employees are based in its headquarters located in San Francisco, California. If there is a catastrophic failure involving Nextdoor’s systems or major disruptive event affecting Nextdoor’s headquarters or the San Francisco area in general, Nextdoor may be unable to operate its platform.


A substantial portion of Nextdoor’s network infrastructure is provided by third parties, including Amazon Web Services. Any disruption or failure in the services Nextdoor receives from these providers could impact the availability of its platform and could adversely impact Nextdoor’s business, operating results and financial condition. Any financial or other difficulties these providers face may adversely affect Nextdoor’s business, and Nextdoor exercises little control over these providers, which increases Nextdoor’s reliance on and vulnerability to problems with the services they provide.

Any of these developments may result in interruptions in the availability or performance of Nextdoor’s platform, result in neighbors ceasing to use its platform, require unfavorable changes to its platform, delay the introduction of future products, or otherwise adversely affect Nextdoor’s reputation, business, operating results, and financial condition.

Nextdoor has experienced rapid growth and expects to invest in its growth for the foreseeable future. If Nextdoor fails to manage its growth effectively, its business, operating results, and financial condition would be adversely affected.

Nextdoor has experienced rapid growth in recent periods and it expects to continue to invest broadly across its organization to support its growth. Nextdoor’s revenue has grown from $82.6 million for the year ended December 31, 2019 to $123.3 million for the year ended December 31, 2020 and from $23.7 million for the three months ended March 31, 2020 to $34.4 million for the three months ended March 31, 2021. Weekly Active Users on Nextdoor’s platform have grown from 15.5 million as of March 31, 2019 to 27.6 million as of March 31, 2021. Moreover, the number of Nextdoor’s full time employees has grown from 181 as of January 1, 2019 to 510 as of March 31, 2021. Although Nextdoor has experienced rapid growth historically, it may not sustain its current growth rates, nor can Nextdoor assure you that its investments to support its growth will be successful. The growth and expansion of Nextdoor’s business will require it to invest significant financial and operational resources and the continuous dedication of its management team.

Nextdoor plans to continue to expand its international operations into more countries in the future, which will place additional demands on its resources and operations. The growth and expansion of Nextdoor’s business has placed, and continues to place, a significant strain on its management, operations, and financial and technical infrastructure. In the event of further growth of Nextdoor’s business or in the number of Nextdoor’s third-party relationships, its information technology systems or its internal controls and procedures may not be adequate to support Nextdoor’s operations.

To manage any future growth effectively, Nextdoor must continue to improve and expand its information technology and financial infrastructure, its operating and administrative systems and controls, and its ability to manage headcount, capital, and processes in an efficient manner. Failure to manage growth effectively could result in increases in costs, difficulties in introducing new products and services or enhancing the platform, loss of neighbors and advertisers, or other operational difficulties, any of which could adversely affect Nextdoor’s business, operating results, and financial condition. For example, as Nextdoor expands its product offerings, including video, it may not be able to do so cost-effectively. Effectively managing Nextdoor’s growth may also be more difficult to accomplish the longer that Nextdoor’s employees, its advertisers, neighbors and the overall economy is impacted due to the COVID-19 pandemic.

Nextdoor may not be able to successfully implement or scale improvements to its systems, processes, and controls in an efficient or timely manner. In addition, Nextdoor’s existing systems, processes, and controls may not prevent or detect all errors, omissions, or fraud. Nextdoor may also experience difficulties in managing improvements to its systems, processes, and controls or in connection with third-party software licensed to help Nextdoor with such improvements. Any future growth will continue to add complexity to Nextdoor’s organization and require effective coordination throughout its organization. Failure to manage any future growth effectively could result in increased costs, cause difficulty or delays in attracting new neighbors or retaining or increasing the engagement of existing neighbors, cause difficulties in introducing new features, impact Nextdoor’s ability to attract and retain talent or cause other operational difficulties, and any of these difficulties would adversely impact Nextdoor’s business, operating results, and financial condition.


If Nextdoor does not successfully anticipate market needs and develop products and services and platform enhancements that meet those needs, or if those products, services and platform enhancements do not gain market acceptance, its business, operating results, and financial condition will be adversely impacted.

Nextdoor may not be able to anticipate future market needs or be able to improve its platform or to develop new products and services or platform enhancements to meet such needs on a timely basis, if at all. In addition, Nextdoor’s inability to diversify beyond its current offerings could adversely affect its business. Any new products or services or platform enhancements that Nextdoor introduces, including by way of acquisitions, may not achieve any significant degree of market acceptance from current or potential neighbors, which would adversely affect Nextdoor’s business, operating results, and financial condition. In addition, the introduction of new products or services or platform enhancements may decrease neighbor engagement with Nextdoor’s platform, thereby offsetting the benefit of even a successful product or service introduction, any of which could adversely impact Nextdoor’s business, operating results, and financial condition.

If Nextdoor’s efforts to build strong brand identity and reputation are not successful, it may not be able to attract or retain neighbors, and its business, operating results, and financial condition will be adversely affected.

Nextdoor believes that maintaining and enhancing the “Nextdoor” brand and reputation is critical to retaining and growing neighbors and advertisers on its platform. Nextdoor anticipates that maintaining and enhancing its brand and reputation will depend largely on its continued ability to provide high-quality, relevant, reliable, trustworthy and innovative features on its platform, which may require substantial investment and may not be successful. Nextdoor may need to introduce new products, services and features or updates to its platform and features that require neighbors to agree to new terms of service that its neighbors do not like, which may negatively affect Nextdoor’s brand and reputation.

Additionally, advertisements or actions of Nextdoor’s advertisers may affect Nextdoor’s brand and reputation if neighbors do not think the advertisements help them accomplish their objectives, view the advertisements as intrusive or misleading or have poor experiences with Nextdoor’s advertisers.

Nextdoor’s brand and reputation may also be negatively affected by the content or actions of neighbors that are deemed to be hostile or inappropriate to other neighbors, by the actions of neighbors acting under false or inauthentic identities, by the use of Nextdoor’s platform to disseminate misleading or false information, the use of Nextdoor’s platform for fraudulent schemes and scams, or by the use of Nextdoor’s service for illicit, illegal or objectionable ends. Nextdoor also may fail to respond expeditiously to the sharing of illegal, illicit or objectionable content on its service or objectionable practices by advertisers, or to otherwise address its neighbors’ concerns, which could erode confidence in Nextdoor’s brand and damage its reputation. Nextdoor expects that its ability to identify and respond to this content in a timely manner may decrease as the number of neighbors grows, as the amount of content on the platform increases or as Nextdoor expands its product and service offerings on its platform. Any governmental or regulatory inquiry, investigation or action, including based on the appearance of illegal, illicit or objectionable content on Nextdoor’s platform or the failure to comply with laws and regulations, could damage Nextdoor’s brand and reputation, regardless of the outcome.

Nextdoor has experienced, and expects to continue to experience, media, legislative, governmental and regulatory scrutiny of its decisions. Any scrutiny regarding Nextdoor, including regarding its data privacy, content moderation or other practices, platform changes, platform quality, litigation or regulatory action, or regarding the actions of its employees, neighbors, or advertisers or other issues, may harm Nextdoor’s brand and reputation. In addition, scrutiny of other companies in Nextdoor’s industry, including such companies’ data privacy, content


moderation or other practices, could also have a negative impact on Nextdoor’s brand and reputation. These concerns, whether actual or unfounded, may also deter neighbors or advertisers from using Nextdoor’s platform. In addition, Nextdoor may fail to adequately address the needs of neighbors and advertisers which could erode confidence in Nextdoor’s brand and damage its reputation. If Nextdoor fails to promote and maintain the “Nextdoor” brand or preserve its reputation, or if Nextdoor incurs excessive expenses in this effort, its business, operating results, and financial condition could be adversely impacted.

Unfavorable media coverage negatively affects Nextdoor’s business from time to time.

Unfavorable publicity regarding Nextdoor, for example regarding Nextdoor’s privacy or cybersecurity practices, terms of service, advertising policies, platform changes, platform quality, litigation or regulatory activity, the actions of Nextdoor’s advertisers, the use of Nextdoor’s platform for illicit or objectionable ends, the substance or enforcement of Nextdoor’s community standards, the actions of Nextdoor’s neighbors, the quality and integrity of content shared Nextdoor’s platform, or the actions of other companies that provide similar services to Nextdoor, has in the past, and could in the future, adversely affect Nextdoor’s reputation. For example, in connection with the Black Lives Matter movement and the associated social unrest in 2020, Nextdoor was criticized in certain media outlets as a platform where black neighbors did not feel safe or welcome. In addition, Nextdoor has been, and may in the future be, subject to negative publicity in connection with its handling of misinformation and other illicit or objectionable use of its platform. Any such negative publicity could have an adverse effect on the size, engagement, and loyalty of Nextdoor’s neighbor base and advertiser demand for advertising on Nextdoor’s platform, which could result in decreased revenue and adversely affect Nextdoor’s business, operating results, and financial condition, and Nextdoor has experienced such adverse effects to varying degrees from time to time.

Health epidemics, including the COVID-19 pandemic have had or could have an adverse impact on Nextdoor’s business, operations and the markets and communities in which Nextdoor, its partners and its customers operate. In addition, during the COVD-19 pandemic, Nextdoor experienced an increase in neighbor growth and engagement and there is no guarantee that Nextdoor will be able to maintain its neighbor growth and engagement as the COVID-19 pandemic subsidies.

The global COVID-19 pandemic outbreak and the various attempts to contain it have created significant volatility, uncertainty and economic disruption. It has adversely affected the broader economies, financial markets, and overall demand for advertising.

As a result of the COVID-19 pandemic, Nextdoor temporarily closed all its offices (including its corporate headquarters) globally, incurred additional lease expenses for leases that could not be terminated and implemented certain travel restrictions, all of which have disrupted and could continue to disrupt how Nextdoor operates its business, including limiting certain of Nextdoor’s sales and marketing plans and requiring Nextdoor to manage a significant majority of its workforce remotely. Moreover, as a result of the COVID-19 pandemic, the ability and willingness of advertisers to spend on Nextdoor has fluctuated. For example, during the second quarter of 2020, advertisers reduced their advertising spend with Nextdoor as a result of the impact of the COVID-19 pandemic on global macroeconomic conditions and on the advertising industry in general. Nextdoor does not know how evolving events related to the COVID-19 pandemic will continue to affect neighbor and advertiser behavior in the future. Nextdoor may not be able to recognize revenue, collect payment or generate future revenue from advertisers, including from those that have been or may be forced to close their businesses or are otherwise impacted by an economic downturn as a result of the COVID-19 pandemic. The pandemic has, and could in the future, adversely affect Nextdoor’s business, revenue growth rate, financial performance and stock price.

Further, during the COVID-19 pandemic and the related shelter-in-place order, Nextdoor saw an increase in neighbor growth and engagement on its platform. The post-pandemic period may present challenges such as neighbor growth and engagement declining or neighbor behavior changing unexpectedly and in ways that are difficult for


Nextdoor to anticipate or measure, resulting in a decrease in engagement with or reduced or different usage of its platform. Nextdoor’s neighbor and revenue growth rates may continue to be volatile in the near term as a result of the COVID-19 pandemic, although Nextdoor is unable to predict the duration or degree of such volatility with any certainty. As a result, Nextdoor’s financial and operating measures may not be indicative of results for future periods.

Nextdoor is currently unable to accurately predict the full impact that the COVID-19 pandemic will have on its business, operating results, and financial condition due to numerous uncertainties, including the severity and transmission rate of the virus, duration of the pandemic, including any resurgences, the extent and effectiveness of containment actions and other public health measures, the development, distribution and public acceptance of vaccines and treatments, and the impact of these and other factors on its employees, neighbors, advertisers. The COVID-19 pandemic, as well as any subsequent recovery period, may also have the effect of heightening many of the other risks described in this “Risk Factor” section.

Nextdoor plans to continue expanding its international operations where it has limited operating experience and may be subject to increased business, regulatory and economic risks that could seriously harm its business, operating results, and financial condition.

Nextdoor plans to continue expanding its business operations abroad by opening new and expanding within existing neighborhoods outside of the United States. As of March 31, 2021, the Nextdoor platform was accessible in 11 countries (including the United States) and had over 275,000 neighborhoods. Nextdoor plans to enter new international markets where it has limited or no experience in marketing, selling, advertising and deploying its platform and related advertising. Any of Nextdoor’s limited experience and infrastructure in such markets, individuals’ lack of familiarity with Nextdoor or its platform, the existence of alternative platforms in such jurisdictions that offer similar products and services or the lack of a critical mass of potential neighbors in such markets may make it more difficult for Nextdoor to effectively monetize any increase in neighbors in those markets, and may increase Nextdoor’s costs without a corresponding increase in revenues. If Nextdoor fails to deploy or manage its operations in international markets successfully, comply with international regulations or effectively monetize its platform in international markets to the same degree as it is able to monetize its efforts within the United States, its business, operating results and financial conditions will be adversely affected. In the future, if Nextdoor’s international operations increase, or more of its expenses are denominated in currencies other than the U.S. dollar, Nextdoor’s operating results may be more greatly affected by fluctuations in the exchange rates of the currencies in which it does business. In addition, as Nextdoor’s international operations and sales to advertisers continue to grow, it will be subject to a variety of risks inherent in doing business internationally, including:

 

   

political, social and economic instability;

 

   

risks related to the legal and regulatory environment in foreign jurisdictions, including with respect to privacy and data protection, and unexpected changes in laws, regulatory requirements, and enforcement;

 

   

potential damage to Nextdoor’s brand and reputation due to compliance with local laws, including potential censorship and requirements to provide neighbor information to local authorities;

 

   

enhanced difficulty in reviewing content on the Nextdoor platform and enforcing community standards across different languages and countries;

 

   

fluctuations in currency exchange rates;

 

   

foreign exchange controls and tax and other regulations and orders that might prevent Nextdoor from repatriating cash earned in countries outside the United States or otherwise limit Nextdoor’s ability to move cash freely, and impede its ability to invest such cash efficiently;


   

compliance with multiple U.S. and international tax jurisdictions and management of tax impact of global operations;

 

   

potentially higher levels of credit risk and payment fraud;

 

   

difficulties integrating any foreign acquisitions;

 

   

burdens of complying with a variety of foreign laws, including laws related to taxation, content removal, data localization, payments, and regulatory oversight;

 

   

reduced protection for intellectual property rights in some countries;

 

   

different regulations and practices with respect to employee/employer relationships, existence of workers’ councils and labor unions, increase in labor costs due to high wage inflation in certain international jurisdictions, and other challenges caused by distance, language and cultural differences, making it harder to do business in certain international jurisdictions; and

 

   

difficulties in staffing and managing global operations and the increased travel, infrastructure, and legal compliance costs associated with multiple international locations.

In addition, Nextdoor must manage the potential conflicts between locally accepted business practices in any given jurisdiction and its obligations to comply with laws and regulations, including anti-money laundering laws, anti-corruption laws or regulations applicable to Nextdoor, such as the U.S. Foreign Corrupt Practices Act (“FCPA”), and the U.K. Bribery Act 2010 (“Bribery Act”). Nextdoor also must manage its obligations to comply with laws and regulations related to export controls, sanctions, and embargoes, including regulations established by the U.S. Office of Foreign Assets Control. Government agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against companies for violations of anti-corruption laws or regulations, export controls, and other laws, rules, sanctions, embargoes, and regulations. Any failure by Nextdoor to comply with local business practices or the laws and regulations applicable to Nextdoor in the markets it operates may adversely affect Nextdoor’s business, operating results, and financial condition. Additionally, if Nextdoor is unable to expand internationally and manage the complexity of its global operations successfully, Nextdoor’s business, operating results, and financial condition could be adversely affected.

If Nextdoor needs additional capital in the future, it may not be available on favorable terms, if at all.

Nextdoor has historically relied on outside financing to fund its operations, capital expenditures and expansion. Nextdoor may require additional capital from equity or debt financing in the future to support its growth, fund its operations or to respond to competitive pressures or strategic opportunities. Nextdoor may not be able to secure timely additional financing on favorable terms, if at all. If Nextdoor raises additional funds through further issuances of equity, convertible debt securities or other securities convertible into equity, its existing stockholders, including you, could suffer significant dilution in their percentage ownership of Nextdoor, and any new securities that Nextdoor issues could have rights, preferences and privileges senior to those of holders of its common stock. Any debt financing that Nextdoor secures in the future could involve restrictive covenants relating to its capital raising activities and other financial and operational matters, including the ability to pay dividends. This may make it more difficult for Nextdoor to obtain additional capital and to pursue business opportunities, including potential acquisitions. If Nextdoor is unable to obtain adequate financing or financing on terms that are satisfactory to it, if and when Nextdoor requires financing, Nextdoor’s ability to grow or support its business and to respond to business challenges that it may face could be significantly limited.


Nextdoor plans to continue to make acquisitions, which could harm its financial condition or results of operations and may adversely affect the price of its Class A common stock.

As part of its business strategy, Nextdoor has made, and intends to make acquisitions to add specialized employees and complementary companies, products or technologies, and enter new geographic regions. Nextdoor’s previous and future acquisitions may not achieve Nextdoor’s goals, and it may not realize benefits from acquisitions it makes in the future. If Nextdoor fails to successfully integrate acquisitions, or the personnel or technologies associated with those acquisitions, the business, operating results, and financial condition of Nextdoor could be harmed. Any integration process will require significant time and resources, and Nextdoor may not be able to manage the process successfully. Nextdoor’s acquisition strategy may change over time and any future acquisitions it completes could be viewed negatively by neighbors, advertisers, investors or other parties with whom it does business. Nextdoor may not successfully evaluate or utilize the acquired technology and accurately forecast the financial impact of an acquisition, including accounting charges. Nextdoor may also incur unanticipated liabilities that it assumes as a result of acquiring companies. Nextdoor may have to pay cash, incur debt or issue equity securities to pay for any such acquisition, each of which could affect its financial condition or the value of its securities. In the future, Nextdoor may not be able to find other suitable acquisition candidates, and it may not be able to complete acquisitions on favorable terms, if at all. Nextdoor’s acquisition strategy could require significant management attention, disrupt its business and harm its business, operating results, and financial condition.

Nextdoor’s business depends largely on its ability to attract and retain talented employees, including senior management. If Nextdoor loses the services of Sarah Friar, its Chief Executive Officer, or other members of its senior management team, Nextdoor may not be able to execute on its business strategy.

Nextdoor’s future success depends on its continuing ability to attract, train, assimilate, and retain highly skilled personnel, including software engineers and sales personnel. Nextdoor faces intense competition for qualified individuals from numerous software and other technology companies. In addition, competition for qualified personnel, particularly software engineers, is particularly intense in the San Francisco Bay Area, where Nextdoor’s headquarters are located. Nextdoor may not be able to retain its current key employees or attract, train, assimilate, or retain other highly skilled personnel in the future. Nextdoor may incur significant costs to attract and retain highly skilled personnel, and it may lose new employees to its competitors or other technology companies before Nextdoor realizes the benefit of its investment in recruiting and training them. As Nextdoor moves into new geographies, it will need to attract and recruit skilled personnel in those areas. If Nextdoor is unable to attract and retain suitably qualified individuals who are capable of meeting its growing technical, operational, and managerial requirements, on a timely basis or at all, Nextdoor’s business, operating results, and financial condition may be adversely affected.

Nextdoor’s future success also depends in large part on the continued services of senior management and other key personnel. In particular, Nextdoor is dependent on the services of Sarah Friar, its Chief Executive Officer, who is critical to the future vision and strategic direction of Nextdoor’s business. Nextdoor relies on its leadership team and key employees in the areas of engineering, sales and product development, design, marketing, operations, strategy, security, and general and administrative functions. Nextdoor’s senior management and other key personnel are all employed on an at-will basis, which means that they could terminate their employment with Nextdoor at any time, for any reason, and without notice. Nextdoor does not currently maintain key-person life insurance policies on any of its officers or employees. If Nextdoor loses the services of senior management or other key personnel, or if it is unable to attract, train, assimilate, and retain the highly skilled personnel that it needs, Nextdoor’s business, operating results, and financial condition could be adversely affected.

Volatility or lack of appreciation in Nextdoor’s stock price may also affect its ability to attract and retain its key employees. Employees may be more likely to leave Nextdoor if the shares they own or the shares underlying their vested options have significantly appreciated in value relative to the original purchase price of the shares or the exercise price of the options, or conversely, if the exercise price of the options that they hold are significantly above the market price of Nextdoor’s Class A common stock. If Nextdoor is unable to retain its employees, or if Nextdoor needs to increase its compensation expenses to retain its employees, Nextdoor’s business, operating results, and financial condition could be adversely affected.


Nextdoor’s core values may conflict with the short-term interests of its business.

Nextdoor considers its core values as a guide to the decisions it makes, which Nextdoor believes is essential to its success in increasing its neighbor growth rate and engagement and in serving the best, long-term interests of Nextdoor and its stockholders. In the past, Nextdoor has forgone, and may in the future forgo, certain expansion or revenue opportunities that it does not believe are aligned with its core values, even if Nextdoor’s decision may negatively impact its operating results in the short term. Nextdoor’s decisions may not result in the long-term benefits that it expects, in which case its neighbor engagement, business, operating results, and financial condition could be harmed.

Nextdoor is dependent on Google Ad Manager (“GAM”) for a substantial majority of its revenue. Any failure or change in the GAM product or its terms and conditions, data usage or pricing could adversely affect Nextdoor’s business, operating results, and financial condition.

Currently, Nextdoor derives and expects to continue to derive, in the near future, the substantial majority of its revenue from GAM. As such, the continued use of GAM is critical to Nextdoor’s continued success and any service disruptions, adverse changes to the terms of use thereof, pricing or related terms and conditions for the GAM product, or difficulties with the product, including its data usage, meeting Nextdoor’s requirements or standards would negatively affect Nextdoor’s business, operating results, and financial condition.

Nextdoor relies on third-party software and service providers, including Amazon Web Services (“AWS”), to provide systems, storage and services for its platform. Any failure or interruption experienced by such third parties, including as a result of the COVID-19 pandemic, could result in the inability of neighbors and advertisers to access or utilize Nextdoor’s platform, and adversely impact Nextdoor’s business, operating results, and financial condition.

Nextdoor relies on third-party software and service providers, including AWS, to provide systems, storage and services, including neighbor login authentication, for its website. Any technical problem with, cyber-attack on or loss of access to such third parties’ systems, servers, or technologies could result in the inability of neighbors to access the Nextdoor platform or result in the theft of neighbors’ personal information.

Any significant disruption, limitation or loss of Nextdoor’s access to or other interference with its use of AWS, including as a result of termination by AWS of its agreement with Nextdoor, would negatively impact Nextdoor’s business, operating results, and financial condition. In addition, any transition of the cloud services currently provided by AWS to another cloud services provider would be difficult to implement and would cause Nextdoor to incur significant time and expense and could disrupt or degrade Nextdoor’s ability to deliver its products and services. The level of service provided by AWS could affect the availability or speed of Nextdoor’s services. If neighbors or advertisers are not able to access Nextdoor’s platform or encounter difficulties in doing so, Nextdoor may lose neighbors or advertisers, which could harm its reputation, business, operating results, and financial condition.

Nextdoor utilizes data center hosting facilities operated by AWS, located in various facilities. Nextdoor is unable to serve network traffic from back-up data center services. An unexpected disruption of services provided by these data centers could hamper Nextdoor’s ability to handle existing or increased traffic, result in the loss of data or cause Nextdoor’s platform to become unavailable, which may harm Nextdoor’s reputation, business, operating results, and financial condition.


Nextdoor relies on third parties, including email providers, mobile data networks, geolocation providers and the United States Postal Service (“USPS”) to verify its neighbors’ addresses. Any failure or interruption experienced by such third parties, including the USPS, could result in the inability of neighbors to join Nextdoor’s platform, resulting in harm to Nextdoor’s reputation and an adverse impact to its business, operating results, and financial condition.

Nextdoor relies on third parties to verify its neighbors’ addresses through several methods, including but not limited to email, SMS text message, phone calls, geolocation and mailed invitations. For example, Nextdoor utilizes email providers, mobile data networks, geolocation providers and the USPS to verify neighbors’ addresses. Address verification is a critical feature of Nextdoor’s platform because it demonstrates that neighbors actually live in the neighborhood they desire to join. Any failure, interruption, or loss of access to such third parties or their software or the USPS could result in the inability of neighbors to join Nextdoor’s platform. Nextdoor’s reliance on third parties makes it vulnerable to any service interruptions, whether as a result of a cyber-attack, security breach, weather or other events, or delays in their operations. Additionally, alternative email providers, mobile data networks, geolocation providers or postal providers may be more costly to use than Nextdoor’s current providers, including the USPS. Any disruption in the third parties, including the USPS, could harm its neighbor growth, which in turn could make Nextdoor a less attractive advertising platform and harm its reputation, and to its business, operating results, and financial condition.

Technologies have been developed that can block the display of advertisements on the Nextdoor platform, which could adversely impact its business, operating results, and financial condition.

Technologies have been developed, and will likely continue to be developed, that can block the display of advertisements on the Nextdoor platform. Nextdoor generates substantially all of its revenue from advertising, and ad-blocking technologies may prevent the display of certain advertisements appearing on Nextdoor’s platform, which could harm its business, operating results, and financial condition. Existing ad-blocking technologies that have not been effective on Nextdoor’s platform may become effective as Nextdoor makes certain platform changes, and new ad-blocking technologies are developed in the future. More neighbors may choose to use such ad-blocking products to block or obscure the display of advertisements on Nextdoor’s platform if Nextdoor is unable to successfully balance the amount of its organic content and paid advertisements, or if neighbors’ attitudes toward advertisements become more negative. Further, regardless of their effectiveness, ad-blockers may generate concern regarding the health of the digital advertising industry, which could reduce the value of digital advertising and harm Nextdoor’s business, operating results, and financial condition.

Security breaches, including improper access to or disclosure of Nextdoor’s data or its neighbors’ data, or other hacking and phishing attacks on Nextdoor’s or third-party systems, could harm its reputation and adversely affect its business.

Nextdoor collects, stores, and otherwise processes personal data relating to a number of individuals such as its neighbors, employees and partners, including, but not limited to, neighbor contact details, network details, and location data. The evolution of technology systems introduces unknown and complex security risks that can be unpredictable and difficult to defend against. Cyber-attacks continue to evolve in sophistication and volume, and inherently may be difficult to detect for long periods of time. In particular, social media companies, like Nextdoor, are prone to cyber-attacks by third parties seeking unauthorized access to company or user data or to disrupt their ability to provide access to their products and services.

Nextdoor takes a variety of technical and organizational security measures and other measures to protect its data. Although Nextdoor has implemented systems and processes that are designed to protect its data and its neighbors’ data, prevent data loss, disable undesirable accounts and activities on its platform and prevent or detect security breaches, and maintains an information security policy, such measures cannot provide absolute security, and despite measures that Nextdoor has or will in the future put in place, Nextdoor may be unable to anticipate or prevent unauthorized access to such data. For example, computer malware, viruses, social engineering (predominantly spear phishing attacks), and general hacking have become more prevalent in the industry, have occurred on Nextdoor’s systems in the past, and are likely to occur on Nextdoor’s systems in the future. In addition, Nextdoor regularly encounters attempts to create false or undesirable accounts or take other actions on its platform for purposes such as spamming, spreading misinformation, or other objectionable ends. Nextdoor’s efforts to protect its company data or the information that it receives may also be unsuccessful due to software bugs or other technical malfunctions; employee, contractor, or vendor error or malfeasance; government surveillance; or other threats that evolve.


Some third parties, including advertisers and vendors, may store information that Nextdoor shares with them on their networks. If these third parties fail to implement adequate data-security practices or fail to comply with Nextdoor’s terms and policies, neighbor data may be improperly accessed, used or disclosed. Even if these third parties take all the necessary precautions, their networks may still suffer a breach, which could compromise neighbor data. Any failure by Nextdoor to prevent or mitigate security breaches and improper access to or disclosure of Nextdoor’s data or its neighbors’ data, including personal information, content, or information from advertisers, could result in the loss or misuse of such data, which could harm Nextdoor’s business and reputation and diminish its competitive position.

Security breaches may cause interruptions to Nextdoor’s platform, degrade the neighbor experience, cause neighbors or advertisers to lose confidence and trust in Nextdoor’s platform, impair Nextdoor’s internal systems, or result in financial harm to Nextdoor.

In addition, third parties may attempt to fraudulently induce employees or neighbors to disclose information in order to gain access to Nextdoor’s data or its neighbors’ data. Cyber-attacks continue to evolve in sophistication and volume, and inherently may be difficult to detect for long periods of time. Although Nextdoor has an information security policy in place, and has developed systems and processes that are designed to protect its data and its neighbors’ data, to prevent data loss, to disable undesirable accounts and activities on its platform, and to prevent or detect security breaches, Nextdoor cannot assure you that such measures will provide absolute security, and Nextdoor may incur significant costs in protecting against or remediating cyber-attacks.

In addition, affected neighbors, government authorities or other third parties could initiate legal or regulatory actions against Nextdoor in connection with any actual or perceived security breaches or improper disclosure of data, which could cause Nextdoor to incur significant expense and liability that may not be fully covered by insurance, if at all, or result in orders or consent decrees forcing Nextdoor to modify its business practices. Such incidents or Nextdoor’s efforts to remediate such incidents may also result in a decline in its active neighbor base or engagement levels and trust. In addition, such incidents could also result in the loss or misuse of such data, which could harm Nextdoor’s business and reputation and diminish its competitive position. In addition, any of these events could have a material and adverse effect on Nextdoor’s business, operating results, financial condition, market acceptance of Nextdoor’s products or revenues and may also divert development resources and increase service and support costs.

Distribution and marketing of, and access to, Nextdoor’s platform depends, in significant part, on a variety of third-party publishers and platforms (including mobile app stores, third party payment providers, computer systems, and other communication systems and service providers). If these third parties limit, prohibit or otherwise interfere with or change the terms of the distribution, use or marketing of Nextdoor’s platform in any material way, it could materially adversely affect Nextdoor’s business, operating results, and financial condition.

Nextdoor markets and distributes its platform (including related mobile applications) through a variety of third-party publishers and distribution channels. Nextdoor’s ability to market its brands on any given property or channel is subject to the policies of the relevant third party. There is no guarantee that mobile platforms will continue to feature Nextdoor, or that neighbors using mobile devices will continue to use Nextdoor’s platform rather than competing products. Nextdoor is dependent on the interoperability of its platform with mobile operating systems, networks, technologies, products, and standards that Nextdoor does not control, such as the Android and iOS operating systems. Any changes, bugs, or technical issues in such systems, or changes in Nextdoor’s relationships with mobile operating system partners, handset manufacturers, or mobile carriers, or in their terms of service or policies that degrade the functionality of Nextdoor’s platform, reduce or eliminate Nextdoor’s ability to update or distribute its platform, give preferential treatment to competitive products, limit Nextdoor’s ability to deliver, target, or measure the effectiveness of advertisements, or charge fees related to the distribution of Nextdoor’s platform or Nextdoor’s


delivery of advertisements could materially adversely affect the usage of Nextdoor’s platform on mobile devices. For example, the release of iOS 14 brought with it a number of new changes, including the need for neighbors using the app to opt in before their identifier for advertisers (“IDFA”) can be accessed by an app (which came into effect in April 2021). Apple’s IDFA is a string of numbers and letters assigned to Apple devices which advertisers use to identify app users to deliver personalized and targeted advertising. As a consequence, the ability of advertisers to accurately target and measure their advertising campaigns at the neighbor level will depend on the opt-in rate to grant IDFA access and if the opt-in rate is low, advertisers’ ability to target and measure advertising campaigns on Nextdoor may become significantly limited.

Further, certain publishers and channels have, from time to time, limited or prohibited advertisements for a variety of reasons. There is no assurance that Nextdoor will not be limited or prohibited from using certain current or prospective marketing channels in the future. If this were to happen in the case of a significant marketing channel and/or for a significant period of time, Nextdoor’s business, operating results, and financial condition could be materially adversely affected.

Nextdoor’s platform and internal systems rely on software and hardware that is highly technical, and any errors, bugs, or vulnerabilities in these systems, or failures to address or mitigate technical limitations in Nextdoor’s systems, could adversely affect its business.

Nextdoor’s platform and internal systems rely on software and hardware, including software and hardware developed or maintained internally and/or by third parties, that is highly technical and complex. In addition, Nextdoor’s platform and internal systems depend on the ability of such software and hardware to store, retrieve, process, and manage immense amounts of data. The software and hardware on which Nextdoor relies has contained, and will in the future contain, errors, bugs, or vulnerabilities, and Nextdoor’s systems are subject to certain technical limitations that may compromise Nextdoor’s ability to meet its objectives. Some errors, bugs, or vulnerabilities inherently may be difficult to detect and may only be discovered after the code has been released for external or internal use. Errors, bugs, vulnerabilities, design defects, or technical limitations within the software and hardware on which Nextdoor relies have in the past led to, and may in the future lead to, outcomes including a negative experience for neighbors and advertisers who use Nextdoor’s platform, compromised ability of Nextdoor’s platform to perform in a manner consistent with Nextdoor’s terms, contracts, or policies, delayed product introductions or enhancements, targeting, measurement, or billing errors, compromised ability to protect the data of neighbors and/or Nextdoor’s intellectual property or other data, or reductions in Nextdoor’s ability to provide some or all of its services. For example, Nextdoor makes commitments to its neighbors as to how their data will be used within and across its platform, and Nextdoor’s systems are subject to errors, bugs and technical limitations that may prevent it from fulfilling these commitments reliably. In addition, any errors, bugs, vulnerabilities, or defects in Nextdoor’s systems or the software and hardware on which the company relies, failures to properly address or mitigate the technical limitations in its systems, or associated degradations or interruptions of service or failures to fulfill Nextdoor’s commitments to its neighbors, have in the past led to, and may in the future lead to, outcomes including damage to Nextdoor’s reputation, loss of neighbors, loss of advertisers, loss of revenue, regulatory inquiries, litigation, or liability for fines, damages, or other remedies, any of which could adversely affect Nextdoor’s business, operating results, and financial condition.

Risks related to financial and accounting matters

Nextdoor’s operating results may fluctuate significantly, which makes its future results difficult to predict.

Nextdoor’s quarterly and annual operating results have fluctuated in the past and may fluctuate in the future. Additionally, Nextdoor has a limited operating history with the current scale of its business, which makes it difficult to forecast its future results and subjects Nextdoor to a number of uncertainties, including Nextdoor’s ability to plan for and anticipate future growth. As a result, you should not rely upon Nextdoor’s past quarterly and annual operating results as indicators of future performance. Nextdoor has encountered, and will continue to encounter, risks and


uncertainties frequently experienced by growing companies in rapidly evolving markets, such as the risks and uncertainties described herein. Nextdoor’s operating results in any given quarter can be influenced by numerous factors, many of which are unpredictable or are outside of Nextdoor’s control, including, but not limited to:

 

   

Nextdoor’s ability to generate revenues from its platform;

 

   

Nextdoor’s ability to acquire, retain, and grow its neighbors and neighbor engagement on its platform;

 

   

ability to attract and retain advertisers;

 

   

ability to recognize revenue or collect payments from advertisers in a particular period;

 

   

fluctuations in spending by Nextdoor’s advertisers due to seasonality, episodic regional or global events, including the COVID-19 pandemic, or other factors;

 

   

fluctuations in internet usage generally;

 

   

the number, prominence, size, format, quality and relevancy of advertisements shown to neighbors;

 

   

the success of technologies designed to block the display of advertisements;

 

   

changes to third-party policies or applications that limit Nextdoor’s ability to deliver, target, or measure the effectiveness of advertising, including changes by mobile operating system and browser providers such as Apple and Google;

 

   

the pricing of Nextdoor’s advertisements;

 

   

the timing, cost of and mix of new and existing sales and marketing and promotional efforts;

 

   

the availability of Nextdoor’s platform and app on mobile devices and other third-party platforms;

 

   

changes to Nextdoor’s platform or the development and introduction of new products or services by Nextdoor’s competitors;

 

   

changes in advertising industry association rules and standards that limit Nextdoor’s ability to deliver, target or measure the effectiveness of advertising, such as the Network Advertising Initiative (“NAI”), and Interactive Advertising Bureau (“IAB”);

 

   

neighbor behavior or platform changes that may reduce traffic to features of the platform that Nextdoor monetizes;

 

   

system failures, disruptions, breaches of security or privacy, whether on Nextdoor’s platform or on those of third parties, and the costs associated with any such breaches and remediation;

 

   

negative publicity associated with Nextdoor’s platform, including as a result of content on its platform, security breaches and neighbor privacy concerns that may result in advertisers reducing or eliminated their spend with Nextdoor;

 

   

health epidemics, such as the COVID-19 pandemic, influenza, and other highly communicable diseases or viruses;

 

   

the timing of incurring additional expenses, such as increases in sales and marketing or research and development, including as a result of the COVID-19 pandemic;


   

adverse litigation judgments, settlements, or other litigation-related costs;

 

   

changes in the legislative or regulatory environment, including with respect to privacy and cybersecurity, or actions by governments or regulators, including fines, orders, or consent decrees;

 

   

changes in U.S. generally accepted accounting principles; and

 

   

changes in domestic and global business and macroeconomic conditions, including as a result of the COVID- 19 pandemic.

The impact of one or more of the foregoing and other factors may cause Nextdoor’s operating results to vary significantly. As such, quarter-to-quarter comparisons of Nextdoor’s operating results may not be meaningful and should not be relied upon as an indication of future performance. If Nextdoor’s quarterly and annual operating results fall below the expectations of investors or securities analysts, the price of its Class A common stock could decline substantially. If Nextdoor fails to meet or exceed the expectations of investors or securities analysts, then the trading price of its Class A common stock could fall substantially, and Nextdoor could face costly lawsuits, including securities class action suits. Furthermore, any quarterly or annual fluctuations in Nextdoor’s operating results may, in turn, cause the price of its stock to fluctuate substantially.

In addition, Nextdoor believes that its rapid growth may understate the potential seasonality of its business. As Nextdoor’s revenue growth rate slows, Nextdoor expects that the seasonality in its business may become more pronounced and may in the future cause its operating results to fluctuate. For example, advertising spending is traditionally seasonally strong in the fourth quarter of each year and Nextdoor believes that this seasonality affects its quarterly results, which generally reflect higher sequential revenue growth from the third to fourth quarter compared to sequential revenue growth from the fourth quarter to the subsequent first quarter. In addition, global economic concerns continue to create uncertainty and unpredictability and add risk to Nextdoor’s future outlook. An economic downturn in any particular region in which Nextdoor does business or globally could result in reductions in revenue, as Nextdoor’s advertisers reduce their advertising budgets, and other adverse effects that could harm Nextdoor’s business, operating results, and financial condition.

Certain of Nextdoor’s market opportunity estimates, growth forecasts and key metrics could prove to be inaccurate, and any real or perceived inaccuracies may harm its reputation and negatively affect its business.

Market opportunity estimates and growth forecasts discussed herein, including those Nextdoor has generated itself, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The key assumptions underlying Nextdoor’s growth forecasts and projections include Nextdoor’s ability to scale new neighbor growth, Nextdoor’s ability to grow engagement by its existing neighbor base and Nextdoor’s ability to increase monetization of its platform. These assumptions involve risks and uncertainties, including, but not limited to, those described in this “Risk Factors” section, which could cause actual results to differ materially from Nextdoor’s growth forecasts and projections. Unfavorable changes in any of these or other assumptions, most of which are beyond Nextdoor’s control, could materially and adversely affect its business, operating results, and financial condition and result in the growth forecasts and projections being materially different than actual results. Market opportunity estimates and growth forecasts, whether obtained from third-party sources or developed internally, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. In particular, Nextdoor’s estimates regarding its market penetration in new and existing markets are difficult to predict. In addition, the private placement transaction materials contain third-party estimates with respect to the addressable market for the global and U.S. digital advertising markets and the anticipated growth of such markets. Nextdoor cannot predict with precision its ability to address these markets. The addressable market Nextdoor estimates may not materialize for many years, if ever, and even if the markets in which it competes meet the size estimates and growth forecasted, its business could fail to grow at similar rates, if at all. Accordingly, Nextdoor’s forecasts of market growth should not be taken as indicative of its future growth. In addition, members of the staff of the SEC have recently


questioned whether the Private Securities Litigation Reform Act of 1995 safe harbor for forward-looking statements is applicable to SPAC transactions and the U.S. House Committee on Financial Services released draft legislation amending the Securities Act and the Exchange Act to specifically exclude SPACs from the safe harbor for forward-looking statements. If the safe harbor did not apply to such statements, Nextdoor may have increased risk of being subject to legal proceedings if the forward-looking statements were materially different than actual results.

Nextdoor regularly reviews key business metrics, including WAUs, Verified Users and ARPUs and other measures to evaluate growth trends, measure its performance, and make strategic decisions. These key metrics are calculated using internal company data and have not been validated by an independent third party and there are inherent challenges in such measurements. If Nextdoor fails to maintain an effective analytics platform, its key metrics calculations may be inaccurate, and Nextdoor may not be able to identify those inaccuracies. Nextdoor’s key business metrics may also be impacted by compliance or fraud-related bans, technical incidents, or false or spam accounts in existence on its platform. Nextdoor regularly deactivates accounts that violate Nextdoor’s terms of service, and exclude these accounts from the calculation of Nextdoor’s key business metrics; however, Nextdoor may not succeed in identifying and removing all such accounts from its platform. If Nextdoor’s metrics are incorrect or provide incomplete information about neighbors and their behavior, Nextdoor may make inaccurate conclusions about its business.

Nextdoor regularly reviews and may adjust its processes for calculating its market opportunity estimates, growth forecasts, and key metrics to improve their accuracy. Nextdoor’s market opportunity estimates, growth forecasts, and key metrics may differ from estimates published by third parties or from similarly titled metrics of its competitors due to differences in methodology. If investors or analysts do not perceive Nextdoor’s market opportunity estimates, growth forecasts, and key metrics to be accurate representations of its business, or if Nextdoor discovers material inaccuracies in its market opportunity estimates, growth forecasts and key metrics, Nextdoor’s reputation, business, operating results, and financial condition would be adversely affected.

Nextdoor has a history of net losses and may experience net losses in the future and Nextdoor cannot assure you that it will achieve or sustain profitability. If Nextdoor cannot achieve and sustain profitability, its business, financial condition, and operating results will be adversely affected.

Nextdoor has experienced significant net losses each year since it began operations in 2007, including net losses of approximately $73.3 million, $75.2 million and $25.1 million for the years ended December 31, 2019 and 2020 and for the three months ended March 31, 2021, respectively. Nextdoor has an accumulated deficit of $410.2 million as of March 31, 2021. Nextdoor anticipates that its operating expenses and capital expenditures will increase substantially in the foreseeable future as it continues to invest in acquiring additional neighbors, increasing engagement on its platform, increasing monetization on its platform, expanding its platform and operations internationally, hiring additional team members, developing and enhancing its platform, marketing and sales, and enhancing its infrastructure. Nextdoor’s expansion efforts may prove more expensive than it anticipates, and it may not succeed in increasing its revenues sufficiently to offset these higher expenses. Given the significant operating and capital expenditures associated with Nextdoor’s business plan, Nextdoor expects to continue to incur net losses for the foreseeable future and cannot assure you that it will be able to achieve profitability. If Nextdoor does achieve profitability, it cannot be certain that Nextdoor will be able to sustain or increase such profitability.

Nextdoor’s ability to use its U.S. federal and state net operating losses to offset future taxable income may be subject to certain limitations which could subject Nextdoor’s business to higher tax liability.

As of December 31, 2020, Nextdoor had gross U.S. federal net operating loss (“NOL”) carryforwards of approximately $333.0 million and gross state NOL carryforwards of approximately $185.5 million, which if not utilized, will begin to expire for federal and state income tax purposes beginning in 2028. To the extent that Nextdoor continues to generate taxable losses, unused losses will carry forward to offset future taxable income, if any. Under


the 2017 Tax Cuts and Jobs Act (the “Tax Act”), as modified by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), unused U.S. federal NOLs generated in tax years beginning after December 31, 2017, will not expire and may be carried forward indefinitely, but the deductibility of such federal NOLs in taxable years beginning after December 31, 2020, is limited to 80% of current year taxable income.

Under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and corresponding provisions of state law, if a corporation that undergoes an “ownership change,” which is generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a three-year period, the corporation’s ability to utilize its pre-change net operating loss carryforwards (“NOLs”) to offset its post-change income or taxes may be limited. Nextdoor has not completed a Section 382 study, and it is possible that Nextdoor has previously undergone one or more ownership changes so that its use of NOLs is currently subject to limitation. Nextdoor may experience an ownership change in connection with the Business Combination and may also experience ownership change(s) in the future as a result of subsequent shifts in its stock ownership, some of which may be outside Nextdoor’s control. Therefore, it is possible that such an ownership change could limit the amount of NOLs Nextdoor can use to offset future taxable income. Nextdoor’s current NOLs, and any NOLs of companies it has acquired, may be subject to limitations, thereby increasing Nextdoor’s overall tax liability. Nextdoor’s NOLs may also be impaired under similar provisions of state law. Nextdoor has recorded a full valuation allowance related to its U.S. federal and state NOLs and other net deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets. Nextdoor’s NOLs may expire unutilized or underutilized, which could prevent it from offsetting future taxable income. Any future changes in U.S. tax laws in respect of the utilization of NOLs may further affect the limitation in future years. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited at the state level could also impact Nextdoor’s ability to utilize NOLs. As a result, even if Nextdoor attains profitability, it may be unable to use all or a material portion of its net operating losses, which could adversely affect its business, operating results, financial condition and cash flows.

Nextdoor’s financial results may be adversely affected by changes in accounting principles generally accepted in the United States and its financial estimates may be different from its financial results.

Generally accepted accounting principles in the United States (“GAAP”) are subject to interpretation by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants, the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could harm Nextdoor’s revenue and financial results, and could affect the reporting of transactions completed before the announcement of a change.

If currency exchange rates fluctuate substantially in the future, Nextdoor’s operating results, which are reported in U.S. dollars, could be adversely affected.

As Nextdoor continues to expand its international operations, it will become more exposed to the effects of fluctuations in currency exchange rates. A substantial majority of Nextdoor’s revenues to date have been denominated in U.S. dollars and, therefore, Nextdoor has not historically been subject to foreign currency risk. However, a strengthening of the U.S. dollar could increase the cost for advertisers outside of the United States, which could adversely affect Nextdoor’s business, operating results, financial condition, and cash flows. In addition, as Nextdoor continues to expand internationally, it expects to incur increased expenses for employee compensation and other operating expenses at non-U.S. locations in the local currency. Fluctuations in the exchange rates between the U.S. dollar and other currencies could result in the dollar equivalent of such expenses being higher. This could have a negative impact on Nextdoor’s operating results. Although Nextdoor may in the future decide to undertake foreign exchange hedging transactions to cover a portion of Nextdoor’s foreign currency exchange exposure, it currently does not hedge its exposure to foreign currency exchange risks.


Nextdoor’s global operations subject Nextdoor to potentially adverse tax consequences.

Nextdoor operates in a number of tax jurisdictions globally, including in the U.S. at the federal, state and local levels, and in many foreign countries, and plans to continue to expand the scale of its operations in the future. Nextdoor is subject to review and potential audit by a number of U.S. and non-U.S. tax authorities. A change in law or in Nextdoor’s global operations could result in higher effective tax rates, reduced cash flows and lower overall profitability. In particular, Nextdoor’s intercompany relationships are subject to complex transfer pricing regulations administered by taxing authorities in various jurisdictions. Significant judgment is required in determining Nextdoor’s worldwide provision for income taxes and other tax liabilities. Tax authorities may disagree with and may challenge Nextdoor’s tax positions. If Nextdoor’s tax positions were not sustained, Nextdoor could be required to pay additional taxes, interest, penalties or other costs, or have other material consequences, which could result in higher effective tax rates, reduced cash flows, and lower overall profitability.

Taxing authorities in the U.S. and in foreign jurisdictions may successfully assert that Nextdoor should have collected or in the future should collect sales and use, gross receipts, value-added or similar taxes, and may successfully impose additional obligations on Nextdoor, and any such assessments or obligations could adversely affect Nextdoor’s business, operating results, and financial condition.

The application of indirect taxes, such as sales, use, value-added, and goods and services taxes, to businesses like Nextdoor is a complex and evolving issue. Many of the fundamental statutes and regulations that impose these taxes were established before the adoption and growth of the Internet and e-commerce. Significant judgment is required on an ongoing basis to evaluate applicable tax obligations and as a result amounts recorded are estimates and are subject to adjustments. In many cases, the ultimate tax determination is uncertain because it is not clear how new and existing statutes might apply to Nextdoor’s business.

In addition, governments are increasingly looking for ways to increase revenue, which has resulted in discussions about tax reform and other legislative action to increase tax revenue, including through indirect taxes. For example, in November 2020, San Francisco voters approved Proposition F, which gradually increases the gross receipts tax rates (effective January 1, 2021) for companies doing business in San Francisco. Additionally, the State of Maryland introduced a digital advertising tax which, if enacted, could apply to Nextdoor effective January 1, 2022. Such taxes could adversely affect Nextdoor’s business, operating results, and financial condition.

Nextdoor is subject to various indirect non-income taxes, such as payroll, sales, use, value-added and goods and services taxes in the United States and various foreign jurisdictions, and it may face indirect tax audits in various U.S. and foreign jurisdictions. In certain jurisdictions, Nextdoor collects and remits indirect taxes. However, tax authorities may question, challenge or disagree with Nextdoor’s calculation, reporting or collection of taxes and may require Nextdoor to collect taxes in jurisdictions in which it does not currently do so or to remit additional taxes and interest, and could impose associated penalties and fees. A successful assertion by one or more tax authorities requiring Nextdoor to collect taxes in jurisdictions in which it does not currently do so or to collect additional taxes in a jurisdiction in which it currently collects taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest, could discourage neighbors from utilizing Nextdoor’s platform or could otherwise harm Nextdoor’s business, operating results, and financial condition.

Nextdoor could be subject to changes in tax rates, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities.

Due to shifting economic and political conditions in both the United States and internationally, tax policies, laws, or rates in various jurisdictions may be subject to significant changes in ways that impair Nextdoor’s financial results. Various jurisdictions around the world have enacted or are considering digital services taxes, which could lead to inconsistent and potentially overlapping international tax regimes. The Organization for Economic Cooperation and Development (“OECD”) recently released proposals relating to its initiative for modernizing international tax rules, with the goal of having different countries implement a modernized and aligned international tax framework, but there can be no guarantee that this will occur.


Risks related to legal and regulatory matters

Nextdoor may be liable as a result of content or information that is published or made available on its platform.

Nextdoor is subject to many U.S. federal and state and foreign laws and regulations that involve matters central to its business, including laws and regulations that involve data privacy and protection, intellectual property (including copyright and patent laws), content regulation, rights of publicity, advertising, marketing, health and safety, competition, protection of minors, consumer protection, taxation, anti-bribery, anti-money laundering and corruption, economic or other trade prohibitions or sanctions or securities law compliance. Although content on Nextdoor’s platform is typically generated by third parties, and not by Nextdoor, Nextdoor may be sued or face regulatory liability for claims relating to content or information that is made available on its service, including claims of defamation, disparagement, intellectual property infringement, or other alleged damages could be asserted against Nextdoor. Nextdoor’s systems, tools and personnel that help it to proactively detect potentially policy-violating or otherwise inappropriate content cannot identify all such content on its service, and in many cases this content will appear on the Nextdoor platform. This risk may increase as Nextdoor develops and increases the use of certain features, such as video, for which identifying such content is challenging. Additionally, some controversial content may not be banned on the Nextdoor platform and, even if it is not featured in advertisements to neighbors, it may still appear in the newsfeed or elsewhere. This risk is enhanced in certain jurisdictions outside of the United States where Nextdoor’s protection from liability for content published on its platform by third parties may be unclear and where Nextdoor may be less protected under local laws than it is in the United States. Further, if policy-violating content is found on the Nextdoor platform, Nextdoor may be in violation of the terms of certain of its key agreements, which may result in termination of the agreement and potentially payment of damages in some cases. Nextdoor could incur significant costs in investigating and defending such claims and, if it is found liable, damages. If any of these events occur, Nextdoor’s business, operating results, and financial condition could be harmed.

While Nextdoor relies on a variety of statutory and common-law frameworks and defenses, including those provided by the Digital Millennium Copyright Act, the Communications Decency Act (“CDA”), the fair-use doctrine in the United States and the Electronic Commerce Directive in the European Union, differences between statutes, limitations on immunity, requirements to maintain immunity, and moderation efforts in the many jurisdictions in which Nextdoor operates may affect its ability to rely on these frameworks and defenses, or create uncertainty regarding liability for information or content uploaded by neighbors and advertisers or otherwise contributed by third-parties to its platform.

Actions by governments that restrict access to Nextdoor’s platform in their countries, or that otherwise impair Nextdoor’s ability to sell advertising in their countries, could substantially harm Nextdoor’s business, operating results, and financial condition.

Governments may seek to censor content available on Nextdoor’s platform or restrict access to the platform from their country entirely, or impose other restrictions that may affect the accessibility of the platform in their country for an extended period of time or indefinitely. In addition, government authorities in other countries may seek to restrict neighbors’ access to the platform if they consider Nextdoor to be in violation of their laws or a threat to public safety or for other reasons. It is possible that government authorities could take action that impairs Nextdoor’s ability to sell advertising, including in countries where access to Nextdoor’s consumer-facing platform may be blocked or restricted. In the event that content shown on Nextdoor’s platform is subject to censorship, access to the platform is restricted, in whole or in part, in one or more countries, or other restrictions are imposed on the platform, or Nextdoor’s competitors are able to successfully penetrate new geographic markets or capture a greater share of existing geographic markets that Nextdoor cannot access or where Nextdoor face other restrictions, Nextdoor’s ability to retain or increase its neighbor base, neighbor engagement, or the level of advertising by advertisers may be adversely affected, Nextdoor may not be able to maintain or grow its revenue as anticipated, and its financial results could be adversely affected.


Nextdoor’s business is subject to complex and evolving U.S. and foreign laws, regulations and industry standards, many of which are subject to change and uncertain interpretation, which uncertainty could harm Nextdoor’s business, operating results, and financial condition.

Nextdoor is subject to many U.S. federal and state and foreign laws, regulations and industry standards that involve matters central to its business, including laws and regulations that involve data privacy, cybersecurity, intellectual property (including copyright and patent laws), content, rights of publicity, advertising, marketing, competition, protection of minors, consumer protection, taxation, and telecommunications. These laws and regulations are constantly evolving and may be interpreted, applied, created, or amended, in a manner that could harm Nextdoor’s business. In addition, the introduction of new products, expansion of Nextdoor’s activities in certain jurisdictions, or other actions that Nextdoor may take may subject the company to additional laws, regulations, or other government scrutiny.

Nextdoor relies on a variety of statutory and common-law frameworks and defenses relevant to the content available on Nextdoor’s platform, including the Digital Millennium Copyright Act, the CDA and the fair-use doctrine in the United States, and the Electronic Commerce Directive in the European Union. However, each of these statutes is subject to uncertain or evolving judicial interpretation and regulatory and legislative amendments. For example, in the United States, laws such as the CDA, which have previously been interpreted to provide substantial protection to interactive computer service providers, may change and become less predictable or unfavorable by legislative action or juridical interpretation. There have been various federal and state legislative efforts to restrict the scope of the protections available to online platforms under the CDA, in particular with regards to Section 230 of the CDA, and current protections from liability for third-party content in the United States could decrease or change. Nextdoor could incur significant costs investigating and defending such claims and, if it is found liable, significant damages.

The European Union is also reviewing the regulation of digital services, and has introduced the Digital Services Act (“DSA”), a package of legislation intended to update the liability and safety rules for digital platforms, products, and services, which could negatively impact the scope of the limited immunity provided by the E-Commerce Directive. Some European jurisdictions and the United Kingdom have also proposed or intend to pass legislation that imposes new obligations and liabilities on platforms with respect to certain types of harmful content. While the scope and timing of these proposals are currently uncertain, if the rules, doctrines or currently available defenses change, if international jurisdictions refuse to apply similar protections that are currently available in the United States or the European Union or if a court were to disagree with Nextdoor’s application of those rules to its service, it could be required to expend significant resources to try to comply with the new rules or incur liability, and its business, operating results, and financial condition could be harmed.

Nextdoor collects, stores, uses, shares and otherwise processes data, some of which contains personal information about individuals such as its neighbors, employees and partners including, contact details, network details, and location data. Nextdoor is therefore subject to U.S. (federal, state, local) and foreign laws and regulations regarding data privacy and security and the processing of personal information and other data from neighbors, employees or business partners. The regulatory framework for privacy, information security, data protection and processing worldwide and interpretations of existing laws and regulations is likely to continue to be uncertain and current or future legislation or regulations in the United States and other jurisdictions, or new interpretations of existing laws and regulations, could significantly restrict or impose conditions on Nextdoor’s ability to process data and increase notice or consent requirements before Nextdoor can utilize advertising technologies.

In the United States, Nextdoor is subject to numerous federal, state and local data privacy and security laws and regulations governing the processing of information about individuals. For example, the CCPA, which took effect in January 2020, establishes certain transparency obligations and creates new data privacy rights for users, including rights to access and delete their personal information as well as opt-out of certain sales or transfers of their personal


information. The law also prohibits covered businesses from discriminating against consumers (for example, charging more for services) for exercising any of their CCPA rights. The CCPA imposes statutory damages for certain violations of the law as well as a private right of action for certain data breaches that result in the loss of personal information. This private right of action is expected to increase the likelihood of, and risks associated with, data breach litigation. It remains unclear how various provisions of the CCPA will be interpreted and enforced. Additionally, California voters approved a new privacy law, the CPRA, which becomes effective January 1, 2023 (with a look back to January 2022). The CPRA will significantly modify the CCPA, including by expanding consumers’ rights and establishing a new state agency that will be vested with authority to implement and enforce the CCPA and the CPRA. For example, the CPRA and the CCPA may lead other states to pass comparable legislation, with potentially greater penalties, and more rigorous compliance requirements relevant to Nextdoor’s business. Virginia and Colorado have enacted the Consumer Data Protection Act (“VCDPA”) and the Colorado Data privacy Act (“CDPA”), respectively, which may impose obligations similar to or more stringent than those Nextdoor may face under other data protection laws. Compliance with the CPRA, the CCPA, the VCDPA, the CDPA and any newly enacted privacy and data security laws or regulations may be challenging and cost- and time-intensive, and may require Nextdoor to modify its data processing practices and policies and to incur substantial costs and potential liability in an effort to comply with such legislation.

In the EEA, Nextdoor is subject to the GDPR and in the United Kingdom, Nextdoor is subject to the United Kingdom data protection regime consisting primarily of the UK GDPR and the UK Data Protection Act 2018, in each case in relation to Nextdoor’s collection, control, processing, sharing, disclosure and other use of data relating to an identifiable living individual (personal data). The GDPR, and national implementing legislation in EEA member states and the United Kingdom, imposes a strict data protection compliance regime. grants new rights for data subjects in regard to their personal data (including the right to be “forgotten” and the right to data portability) and enhances current rights (e.g., data subject access requests).

We are also subject to European Union rules with respect to cross-border transfers of personal data out of the EEA and the United Kingdom. Recent legal developments in Europe have created complexity and uncertainty regarding transfers of personal data from the EEA and the United Kingdom to the United States. On July 16, 2020, the Court of Justice of the European Union, or CJEU invalidated the EU-US Privacy Shield Framework, or Privacy Shield, under which personal data could be transferred from the EEA to U.S. entities who had self-certified under the Privacy Shield scheme. While the CJEU upheld the adequacy of the standard contractual clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism, and potential alternative to the Privacy Shield), it made clear that reliance on them alone may not necessarily be sufficient in all circumstances. Use of the standard contractual clauses must now be assessed on a case-by-case basis taking into account the legal regime applicable in the destination country, in particular applicable surveillance laws and rights of individuals and additional measures and/or contractual provisions may need to be put in place, however, the nature of these additional measures is currently uncertain. The CJEU went on to state that if a competent supervisory authority believes that the standard contractual clauses cannot be complied with in the destination country and the required level of protection cannot be secured by other means, such supervisory authority is under an obligation to suspend or prohibit that transfer. To safeguard data transfers from the EEA to other jurisdictions, including the USA, Nextdoor currently utilizes standard contractual contracts approved by the EU Commission.

This CJEU decision may result in different EEA data protection regulators applying differing standards for the transfer of personal data from the EEA to the United States, and even require ad hoc verification of measures taken with respect to data flows. Therefore, as a result of this CJEU decision, Nextdoor may be required to review, amend and take additional steps to legitimize impacted personal data transfers. As supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the standard contractual clauses cannot be used, and/or start taking enforcement action, Nextdoor could suffer increased costs to ensure compliance as well as additional complaints and/or regulatory investigations or fines, and/or if Nextdoor is otherwise unable to transfer personal data between and among countries and regions in which Nextdoor operates, it could affect the manner in which Nextdoor provides its services, the geographical location or segregation of its relevant systems and operations, and could adversely affect Nextdoor’s business, financial condition and results of operations.


Under the terms of the Trade and Cooperation Agreement agreed between the EU and the U.K. transfers of personal data from the EEA to the U.K., remain unrestricted until the end of June 2021, provided the U.K. makes no substantive changes to its data protection laws. The European Commission has published a draft “adequacy decision” for the U.K. according to which, if adopted, transfers of personal data from the EU to the U.K. would continue unrestricted and would not require any additional safeguards. This “adequacy decision” has now been approved by the EU Member States which paves the way for the European Commission to formally adopt the decision. If not adopted by the end of June 2021, data transfer mechanisms such as the SCCs will be required for transfer of personal data from the EEA to the U.K. If Nextdoor is required to implement additional measures to transfer data from the EEA to the U.K. or other third countries, this could increase Nextdoor’s compliance costs, and could adversely affect its business, financial condition and results of operations.

We are also subject to evolving E.U. and U.K. privacy laws on cookies and e-marketing. In the E.U. and the U.K., regulators are increasingly focusing on compliance with current national laws that implement the European Directive 2002/58/EC (the “ePrivacy Directive”). The ePrivacy Directive is highly likely to be replaced by an EU regulation known as the ePrivacy Regulation that will significantly increase fines for non-compliance. In the E.U. and the U.K., informed consent is required for the placement of certain cookies or similar technologies on a user’s device and for direct electronic marketing and (under the UK GDPR and the GDPR) valid consent is tightly defined, including, a prohibition on pre-checked consents and, in the context of cookies, a requirement to obtain separate consents for each type of cookie or similar technology. While the text of the ePrivacy Regulation is still under development, a recent European court decision and regulators’ recent guidance are driving increased attention to cookies and tracking technologies. If regulators start to enforce the strict approach in recent guidance, this could lead to substantial costs, require significant systems changes, limit the effectiveness of Nextdoor’s marketing activities, divert the attention of Nextdoor’s technology personnel, adversely affect Nextdoor’s margins, increase costs and subject Nextdoor to additional liabilities. Regulation of cookies and similar technologies, and any decline of cookies or similar online tracking technologies as a means to identify and potentially target users, may lead to broader restrictions and impairments on Nextdoor’s marketing and personalization activities and may negatively impact its efforts to understand users.

While Nextdoor has put in efforts to comply with these regulations, the uncertainty surrounding enforcement and changing privacy landscapes could change its compliance status. Similarly, there are a number of legislative proposals in the European Union, the United States, at both the federal and state level, as well as other jurisdictions that could impose new obligations or limitations in areas affecting Nextdoor’s business.

The costs of complying with these laws and regulations, which in some cases can be enforced by private parties in addition to government entities, are high and likely to increase in the future, particularly as the degree of regulation increases, Nextdoor’s business grows and its geographic scope expands. The impact of these laws and regulations may disproportionately affect Nextdoor’s business in comparison to its peers in the technology sector that have greater resources. Even though Nextdoor communicates with lawmakers and regulators in countries and regions in which it conducts business, and despite Nextdoor having a dedicated policy team to monitor legal and regulatory developments, any failure or perceived failure of compliance on Nextdoor’s part to comply with the laws and regulations may subject it to significant liabilities or penalties, or otherwise adversely affect its business, financial condition or operating results. Furthermore, it is possible that certain governments may seek to block or limit Nextdoor’s products or otherwise impose other restrictions that may affect the accessibility or usability of any or all its products for an extended period of time or indefinitely.

Nextdoor could be involved in legal disputes that are expensive and time consuming, and, if resolved adversely, could harm its business, operating results, and financial condition.

Nextdoor is currently involved in, and may in the future be involved in, actual and threatened legal proceedings, claims, investigations and government inquiries arising in the ordinary course of its business, including intellectual property, data privacy, cybersecurity, privacy and other torts, illegal or objectionable content, consumer protection, securities, stockholder derivative claims, employment, governance, workplace culture, contractual rights, civil rights infringement, false or misleading advertising, or other legal claims relating to content or information that


is provided to Nextdoor or published or made available on its platform. Any proceedings, claims or inquiries involving Nextdoor, whether successful or not, may be time consuming, result in costly litigation, unfavorable outcomes, increased costs of business, may require Nextdoor to change its business practices or platform, require significant amount of management’s time, may harm Nextdoor’s reputation or otherwise harm its business, operating results, and financial condition.

Nextdoor is currently involved in and has been subject to actual and threatened litigation with respect to third-party patents, trademarks, copyrights and other intellectual property, and may continue to be subject to intellectual property litigation and threats thereof. Companies in the internet, technology and media industries own large numbers of patents, copyrights, trademarks and trade secrets and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights. As Nextdoor faces increasing competition, grows its business and platform offerings, and becomes increasingly high profile, the possibility of receiving a larger number of intellectual property claims against the company grows. In addition, various “non-practicing entities” that own patents and other intellectual property rights have asserted, and may in the future attempt to assert, intellectual property claims against Nextdoor to extract value through licensing or other settlements.

From time to time, Nextdoor receives letters from patent holders alleging that Nextdoor’s platform infringes on their patent rights and from trademark holders alleging infringement of their trademark rights. Nextdoor also receives letters from holders of copyrighted content alleging infringement of their intellectual property rights. Nextdoor’s technologies and content, including the content that neighbors upload to the platform, may not be able to withstand such third-party claims.

With respect to any intellectual property claims, Nextdoor may have to seek a license to continue using technologies or engaging in practices found to be in violation of a third-party’s rights, which may not be available on reasonable terms and may significantly increase Nextdoor’s operating expenses. A license to continue such technologies or practices may not be available to Nextdoor at all and it may be required to discontinue use of such technologies or practices or to develop alternative non-infringing technologies or practices. The development of alternative non-infringing technologies or practices could require significant effort and expense or may not be achievable at all. Nextdoor’s business, operating results, and financial condition could be harmed as a result.

Exposure to United Kingdom political developments, including the effect of its withdrawal from the European Union, could be costly and difficult to comply with and could adversely impact Nextdoor’s business, operations results, and financial condition.

In June 2016, a referendum was passed in the United Kingdom to leave the European Union, commonly referred to as “Brexit.” This decision created an uncertain political and economic environment in the United Kingdom and other European Union countries, and the formal process for leaving the European Union has taken years to complete. Although the United Kingdom and the European Union have recently entered into a trade and cooperation agreement, the long-term nature of the United Kingdom’s relationship with the European Union remains unclear and there is considerable uncertainty as to their future political and economic relations. The political and economic instability created by Brexit has caused and may continue to cause significant volatility in global financial markets and uncertainty regarding the regulation of cybersecurity in the United Kingdom. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the United Kingdom determines which European Union laws to replace or replicate. For example, although the United Kingdom enacted a Data Protection Act in May 2018 that is consistent with the EU General Data Protection Regulation, uncertainty remains regarding how data transfers to and from the United Kingdom will be regulated. Brexit could also have the effect of disrupting the free movement of goods, services, capital, and people between the United Kingdom, the European Union, and elsewhere. The full effect of Brexit is uncertain and depends on any current and future agreements the United Kingdom makes with the European Union and others. Consequently, no assurance can be given about the impact of these developments, and Nextdoor’s operational, tax, and other policies may require reassessment and Nextdoor’s business, operating results, and financial condition may be seriously harmed.


The obligations associated with operating as a public company following the Business Combination will require significant resources and management attention and will cause Nextdoor to incur additional expenses, which will adversely affect its profitability.

Following the Business Combination, Nextdoor’s expenses will increase as a result of the additional accounting, legal and various other additional expenses usually associated with operating as a public company and complying with public company disclosure obligations. As a non-public company, Nextdoor is not required to comply with certain corporate governance and financial reporting practices and policies required of a publicly traded company. After the Business Combination, Nextdoor will be required to comply with certain requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), and other applicable securities rules and regulations. The Exchange Act requires, among other things, that Nextdoor files annual, quarterly, and current reports with respect to its business and operating results with the Securities and Exchange Commission (the “SEC”). Nextdoor will also be required to ensure that it has the ability to prepare financial statements that are fully compliant with all SEC reporting requirements on a timely basis. Compliance with these rules and regulations will increase Nextdoor’s legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on Nextdoor’s systems and resources. As a public company, Nextdoor will, among other things:

 

   

prepare and distribute periodic public reports and other shareholder communications in compliance with its obligations under the federal securities laws;

 

   

create or expand the roles and duties of its board of directors and committees of the board;

 

   

institute more comprehensive financial reporting and disclosure compliance functions; and

 

   

establish new internal policies, including those relating to disclosure controls and procedures.

These changes, and the additional involvement of accountants and legal advisors, will require a significant commitment of additional resources. Nextdoor might not be successful in complying with these obligations and the significant commitment of resources required for complying with them could have a material adverse effect on its business, financial condition, results of operations and cash flows.

Failure to maintain effective systems of internal control and disclosure controls could have a material adverse effect on Nextdoor’s business, operating results, and financial condition.

Effective internal and disclosure controls are necessary for Nextdoor to provide reliable financial reports and effectively prevent fraud and to operate successfully as a public company. As a public company, Nextdoor will be required by the Sarbanes-Oxley Act to design and maintain a system of internal control over financial reporting and disclosure controls and procedures. If Nextdoor cannot provide reliable financial reports or prevent fraud, its reputation and operating results would be harmed. As part of Nextdoor’s ongoing monitoring of its controls, it may discover material weaknesses or significant deficiencies that require remediation.


Nextdoor’s inability to maintain the operating effectiveness of the controls described above could result in a material misstatement of Nextdoor’s financial statements or other disclosures, which could have an adverse effect on its business, operating results, and financial condition. In addition, any failure to maintain effective controls in accordance with Section 404 of the Sarbanes-Oxley Act or to timely effect any necessary improvement of Nextdoor’s internal and disclosure controls could, among other things, result in losses from fraud or error, harm Nextdoor’s reputation or cause investors to lose confidence in its reported financial information, all of which could have a material adverse effect on its business, operating results, and financial condition.

Risks related to intellectual property

If Nextdoor is unable to protect its intellectual property, the value of its brands and other intangible assets may be diminished, and its business, operating results, and financial condition may be adversely affected.

Nextdoor relies and expects to continue to rely on a combination of confidentiality, assignment, and license agreements with its employees, consultants, and third parties with whom it has relationships, as well as trademark, copyright, patent, trade secret, and domain name protection laws, to protect its proprietary rights. In the United States and internationally, Nextdoor has filed various applications for protection of certain aspects of its intellectual property, and Nextdoor currently holds issued patents and copyrights in the United States, issued copyrights in the United States, and multiple trademark registrations in the United States and other foreign countries. Third parties may knowingly or unknowingly infringe Nextdoor’s proprietary rights, third parties may challenge proprietary rights held by Nextdoor, and pending and future trademark and patent applications may not be approved.

Any issued patents may be challenged, invalidated or circumvented, and any rights granted under these patents may not actually provide adequate defensive protection or competitive advantages to Nextdoor. Patent applications in the U.S. are typically not published until at least 18 months after filing, or, in some cases, not at all. Nextdoor cannot be certain that it was the first to make the inventions claimed in its pending patent applications or that it was the first to file for patent protection. Additionally, the process of obtaining patent protection is expensive and time-consuming, and Nextdoor may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. Recent changes to the patent laws in the U.S. may also bring into question the validity of certain software patents and may make it more difficult and costly to prosecute patent applications. Such changes may lead to uncertainties or increased costs and risks surrounding the prosecution, validity, ownership, enforcement, and defense of its issued patents and patent applications and other intellectual property, the outcome of third-party claims of infringement, misappropriation, or other violation of intellectual property brought against Nextdoor and the actual or enhanced damages (including treble damages) that may be awarded in connection with any such current or future claims, and could have a material adverse effect on Nextdoor’s business.

Nextdoor relies on its trademarks, trade names, and brand names to distinguish its platform from the products of its competitors. However, third parties may have already registered identical or similar marks for products or solutions that also address the software market. Efforts by third parties to limit use of Nextdoor’s brand names or trademarks and barriers to the registration of brand names and trademarks may restrict its ability to promote and maintain a cohesive brand throughout Nextdoor’s key markets. There can also be no assurance that pending or future

U.S. or foreign trademark applications will be approved in a timely manner or at all, or that such registrations will effectively protect Nextdoor’s brand names and trademarks. Third parties may also oppose Nextdoor’s trademark applications, or otherwise challenge Nextdoor’s use of the trademarks. In the event that Nextdoor’s trademarks are successfully challenged, Nextdoor could be forced to rebrand its platform, which would result in loss of brand recognition and would require it to devote resources to advertising and marketing new brands.

In addition, effective intellectual property protection may not be available in every country in which Nextdoor operates or intends to operate its business. In any or all of these cases, Nextdoor may be required to expend significant time and expense in order to prevent infringement or to enforce its rights. Although Nextdoor has generally taken measures to protect its proprietary rights, there can be no assurance that others will not offer products or concepts that are substantially similar to Nextdoor’s and compete with its business. If the protection of Nextdoor’s proprietary rights is inadequate to prevent unauthorized use or appropriation by third parties, the value of its brands and other intangible assets may be diminished and competitors may be able to more effectively mimic Nextdoor’s platform and methods of operations.


To prevent substantial unauthorized use of Nextdoor’s intellectual property rights, it may be necessary to prosecute actions for infringement and/or misappropriation of Nextdoor’s proprietary rights against third parties. Any such action could result in significant costs and diversion of its resources and management’s attention, and Nextdoor cannot assure that it will be successful in such action. Furthermore, many of Nextdoor’s current and potential competitors have the ability to dedicate substantially greater resources to enforce their intellectual property rights (or to contest claims of infringement) than Nextdoor does. Accordingly, despite Nextdoor’s efforts, it may not be able to prevent third parties from knowingly or unknowingly infringing upon, misappropriating or circumventing its intellectual property rights. If Nextdoor is unable to protect its proprietary rights (including aspects of its software and platform protected other than by patent rights), it will find itself at a competitive disadvantage to others who need not incur the additional expense, time and effort required to create its platform. Moreover, Nextdoor may need to expend additional resources to defend its intellectual property rights in foreign countries, and its inability to do so could impair its business, results of operations and financial condition or adversely affect its business, operating results, and financial condition.

Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and proprietary information.

Nextdoor has devoted substantial resources to the development of its intellectual property and proprietary rights. To protect its intellectual property and proprietary rights, Nextdoor relies in part on confidentiality agreements with its employees, vendors, licensees, independent contractors and other advisors. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. Effective trade secret protection may also not be available in every country in which Nextdoor’s platform is available or where it has employees or independent contractors. The loss of trade secret protection could make it easier for third parties to compete with Nextdoor’s platform by copying functionality. In addition, any changes in, or unexpected interpretations of, the trade secret and employment laws in any country in which it operates may compromise its ability to enforce its trade secret and intellectual property rights. In addition, others may independently discover trade secrets and proprietary information and in such cases, Nextdoor could not assert any trade secret rights against such parties. Costly and time-consuming litigation could be necessary to enforce and determine the scope of Nextdoor’s proprietary rights and failure to obtain or maintain trade secret protection could adversely affect its competitive business position.

Third parties may claim that Nextdoor’s platform infringes their intellectual property rights and this may create liability for Nextdoor or otherwise adversely affect its business, operating results and financial condition.

Third parties may claim that Nextdoor’s platform infringes their intellectual property rights, and such claims may result in legal claims against Nextdoor and its technology partners and customers. These claims may damage Nextdoor’s brand and reputation and create liability for Nextdoor. Nextdoor expects the number of such claims to increase as the functionality of Nextdoor’s platform overlaps with that of other products and services, and as the volume of issued software patents and patent applications continues to increase.

Companies in the software and technology industries own large numbers of patents, copyrights, trademarks, and trade secrets and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights. In addition, many of these companies have the capability to dedicate substantially greater resources to enforce their intellectual property rights and to defend claims that may be brought against them. Furthermore, patent holding companies, non-practicing entities, and other adverse patent owners that are not deterred by its existing intellectual property protections may seek to assert patent claims against Nextdoor. Nextdoor has received, and may in the future receive, notices that claim it has misappropriated, misused, or infringed other parties’ intellectual property rights, and, to the extent Nextdoor gains greater market visibility, Nextdoor may face a higher risk of being the subject of intellectual property infringement claims.


Nextdoor may also face exposure to third party intellectual property infringement, misappropriation, or violation actions if Nextdoor engages software engineers or other personnel who were previously engaged by competitors or other third parties and those personnel inadvertently or deliberately incorporate proprietary technology of third parties into its products. In addition, Nextdoor may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent Nextdoor’s ability to develop, market and support potential products or enhancements, which could severely harm its business. Any intellectual property claims, with or without merit, could be very time-consuming, could be expensive to settle or litigate, and could divert its management’s attention and other resources. These claims could also subject Nextdoor to significant liability for damages, potentially including treble damages if Nextdoor is found to have willfully infringed patents or copyrights. These claims could also result in Nextdoor having to stop using technology found to be in violation of a third party’s rights. Nextdoor might be required to seek a license for the intellectual property, which may not be available on reasonable terms or at all. Even if a license were available, Nextdoor could be required to pay significant royalties, which would increase its operating expenses. Alternatively, Nextdoor could be required to develop alternative non-infringing technology, which could require significant time, effort, and expense, and may affect the performance or features of its platform. If Nextdoor cannot license or develop alternative non-infringing substitutes for any infringing technology used in any aspect of its business, Nextdoor would be forced to limit use of its platform. Any of these results would adversely affect Nextdoor’s business, operating results and financial condition.

Nextdoor’s use of “open source” software could subject it to possible litigation or could prevent it from offering products that include open source software or require it to obtain licenses on unfavorable terms.

A portion of the technologies Nextdoor uses incorporates “open source” software, and Nextdoor may incorporate open source software in the future. Open source software is generally licensed by its authors or other third parties under open source licenses. These licenses may subject Nextdoor to certain unfavorable conditions, including requirements that Nextdoor offer its products that incorporate the open source software for no cost, that Nextdoor make publicly available the source code for any modifications or derivative work it creates based upon, incorporating or using the open source software, or that Nextdoor license such modifications or derivative works under the terms of the particular open source license. From time to time, companies that use third-party open source software have also faced claims challenging the use of such open source software and their compliance with the terms of the applicable open source license. Nextdoor may be subject to suits by parties claiming ownership of what it believes to be open source software, or claiming non-compliance with the applicable open source licensing terms.

In addition to using open source software, Nextdoor also licenses to others some of its software through open source projects. Open sourcing Nextdoor’s own software requires the company to make the source code publicly available, and therefore can affect its ability to protect Nextdoor’s intellectual property rights with respect to that software. Additionally, if a third-party software provider has incorporated open source software into software that Nextdoor licenses from such provider, it could be required to disclose any of its source code that incorporates or is a modification or derivative work of such licensed software. If an author or other third party that distributes open source software that Nextdoor uses or licenses were to allege that Nextdoor had not complied with the conditions of the applicable license, Nextdoor could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, enjoined from offering its products that contained the open source software, required to release proprietary source code, required to obtain licenses from third parties or otherwise required to comply with the unfavorable conditions unless and until Nextdoor can re-engineer the product so that it complies with the open source license or does not incorporate the open source software.

The terms of many open source licenses have not been interpreted by U.S. or foreign courts, and accordingly there is a risk that those licenses could be construed in a manner that imposes unanticipated conditions or restrictions on Nextdoor’s ability to commercialize its platform. In that event, Nextdoor could be required to seek licenses from third parties in order to continue offering its platform, to re-develop its platform, or to release its proprietary source code under the terms of an open source license, any of which could harm Nextdoor’s business. Enforcement activity for open source licenses can also be unpredictable. Were it determined that Nextdoor’s use was not in compliance with a particular license, it may be required to release its proprietary source code, defend claims, pay damages for breach of contract or copyright infringement, grant licenses to its patents, re-engineer its platform, or take other remedial action that may divert resources away from its product development efforts, any of which could negatively impact its business. Open source compliance problems can also result in damage to reputation and challenges in recruitment or retention of engineering personnel. Further, given the nature of open source software, it may be more


likely that third parties might assert copyright and other intellectual property infringement claims against Nextdoor based on Nextdoor’s use of these open source software programs. Litigation could be costly for Nextdoor to defend, have a material adverse effect on its business, results of operations and financial condition, or require Nextdoor to devote additional development resources to change its platform.

Nextdoor licenses technology from third parties, and Nextdoor’s inability to maintain those licenses could harm its business.

Nextdoor currently incorporates, and will in the future continue to incorporate, technology that it licenses from third parties, including software, into its platform. Licensing technologies from third parties exposes Nextdoor to increased risk of being the subject of intellectual property infringement due to, among other things, its lower level of visibility into the development process with respect to such technology and the care taken to safeguard against infringement risks. Nextdoor cannot be certain that its licensors do not or will not infringe on the intellectual property rights of third parties or that its licensors have or will have sufficient rights to the licensed intellectual property in all jurisdictions in which Nextdoor operates. Some of Nextdoor’s agreements with its licensors may be terminated by them for convenience, or otherwise provide for a limited term. If Nextdoor is unable to continue to license technology because of intellectual property infringement claims brought by third parties against its licensors or against us, or if Nextdoor is unable to continue its license agreements or enter into new licenses on commercially reasonable terms, Nextdoor’s ability to develop its platform that is dependent on that technology would be limited, and Nextdoor’s business could be harmed. Additionally, Nextdoor is unable to license technology from third parties, Nextdoor may be forced to acquire or develop alternative technology, which it may be unable to do in a commercially feasible manner or at all, and may require Nextdoor to use alternative technology of lower quality or performance standards. As a result, Nextdoor’s business, operating results and financial condition would be adversely affected.

Nextdoor does not intend to pay cash dividends for the foreseeable future.

Nextdoor has never declared or paid any cash dividends on its common stock and does not intend to pay any cash dividends in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of Nextdoor’s board of directors. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize future gains on their investments.

Because Nextdoor is going public through a business combination instead of an initial public offering, no underwriter has assumed risk in connection with the business combination or conducted due diligence of Nextdoor’s business, operations or financial condition, including review of the disclosure in the private placement transaction materials.

Nextdoor is going public through a business combination. The business combination transaction is not an underwritten initial public offering and, therefore, underwriters have not assumed risk in connection with the business combination. Section 11 of the Securities Act (“Section 11”) imposes liability on parties, including underwriters, involved in a securities offering if the registration statement contains a materially false statement or material omission. To effectively establish a due diligence defense against a cause of action brought pursuant to Section 11, a defendant, including an underwriter, carries the burden of proof to demonstrate that, after reasonable investigation, it believed that the statements in the registration statement were true and that there was no omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading material omissions. In order to meet this burden of proof, underwriters in a registered offering typically conduct extensive due diligence of the registrant, including reviewing the registrant’s disclosure in the registration statement. Such due diligence may include calls with the issuer’s management, review of material agreements, and background checks on key personnel, among other investigations.


Because Nextdoor intends to become publicly traded through a business combination with a special purpose acquisition company rather than through an underwritten offering of its common stock, no underwriter is involved in the transaction. As a result, no underwriter has conducted diligence on Nextdoor in order to establish a due diligence defense with respect to the disclosure presented in the private placement transaction materials. If such investigation had occurred, certain information in this prospectus may have been presented in a different manner or additional information may have been presented at the request of such underwriter. Moreover, no underwriter will be subject to liability to investors in connection with misstatements in the private placement transaction materials. As a result, investors may have less ability to recover damages in connection with litigation arising from the disclosure in the private placement transaction materials.

Additional Risks Related to Ownership of New Nextdoor Class A Common Stock Following the Business Combination and New Nextdoor Operating as a Public Company

Unless the context otherwise requires, all references in this subsection to the “Company,” “we,” “us” or “our” refer to KVSB prior to the consummation of the Business Combination and New Nextdoor following the consummation of the Business Combination.

The dual class structure of New Nextdoor’s common stock may adversely affect the trading market for its Class A common stock following the closing of the transaction.

S&P Dow Jones and FTSE Russell limit their eligibility criteria for inclusion of shares of public companies on certain indices, including the S&P 500, namely, to exclude companies with multiple classes of shares of common stock from being added to such indices. In addition, several shareholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the dual class structure of New Nextdoor’s common stock may prevent the inclusion of New Nextdoor’s Class A common stock in such indices and may cause shareholder advisory firms to publish negative commentary about New Nextdoor’s corporate governance practices or otherwise seek to cause New Nextdoor to change its capital structure. Any such exclusion from indices could result in a less active trading market for New Nextdoor’s Class A common stock. Any actions or publications by shareholder advisory firms critical of Nextdoor’s corporate governance practices or capital structure could also adversely affect the value of New Nextdoor’s Class A common stock.

The dual class structure of New Nextdoor’s common stock will have the effect of concentrating voting power with New Nextdoor’s management and other existing stockholders, which will limit your ability to influence the outcome of important transactions, including a change in control.

New Nextdoor’s Class B common stock has 10 votes per share and its Class A common stock has one vote per share. Following the Business Combination, New Nextdoor stockholders who hold shares of Class B common stock, including certain of New Nextdoor’s executive officers, employees, and directors and their affiliates and other existing stockholders, including the Sponsor, together will hold a substantial majority of the voting power of New Nextdoor’s outstanding capital stock. Because of the 10-to-1 voting ratio between New Nextdoor’s Class B and Class A common stock, the holders of New Nextdoor’s Class B common stock will, following the Business Combination, collectively control a majority of the combined voting power of common stock and therefore will be able to control all matters submitted to New Nextdoor’s stockholders for approval so long as the shares of Class B common stock represent at least 9.1% of all outstanding shares of its Class A and Class B common stock. This concentrated control will limit or preclude your ability to influence the outcome of important corporate matters, including a change in control, for the foreseeable future.

Following the Business Combination, transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, subject to limited exceptions, such as certain transfers effected for estate planning or charitable purposes. The conversion of Class B common stock to Class A common stock will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares in the long term.


The price of New Nextdoor Class A common stock may be volatile.

Upon consummation of the Business Combination, the price of New Nextdoor common stock, may fluctuate due to a variety of factors, including:

 

   

actual or anticipated fluctuations in our user growth, retention, engagement, revenue, or other operating results;

 

   

developments involving New Nextdoor’s competitors;

 

   

variations between our actual operating results and the expectations of securities analysts, investors, and the financial community;

 

   

actual or anticipated fluctuations in New Nextdoor’s quarterly or annual operating results;

 

   

any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information, or our failure to meet expectations based on this information;

 

   

publication of research reports by securities analysts about New Nextdoor or its competitors or its industry;

 

   

the public’s reaction to New Nextdoor’s press releases, its other public announcements and its filings with the SEC;

 

   

additional shares of our common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales, or if existing stockholders subject to a lock-up sell shares into the market when applicable “lock-up” periods end;

 

   

additions and departures of key personnel;

 

   

commencement of, or involvement in, litigation involving the combined company;

 

   

changes in its capital structure, such as future issuances of securities or the incurrence of additional debt;

 

   

the volume of shares of New Nextdoor common stock available for public sale;

 

   

announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;

 

   

announcements by us or estimates by third parties of actual or anticipated changes in the size of our user base or the level of user engagement;

 

   

changes in operating performance and stock market valuations of technology companies in our industry, including our partners and competitors;

 

   

price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;


   

developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and

 

   

other events or factors, including those resulting from effects of the COVID-19 outbreak, recessions, interest rates, local and national elections, international currency fluctuations, corruption, political instability and acts of war or terrorism.

In addition, extreme price and volume fluctuations in the stock markets have affected and continue to affect many technology companies’ stock prices. Often, their stock prices have fluctuated in ways unrelated or disproportionate to the companies’ operating performance. In the past, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and seriously harm our business.

New Nextdoor will have broad discretion in how we may use the net proceeds in connection with the Business Combination, and we may not use them effectively.

We cannot specify with any certainty the particular uses of the net proceeds that we will receive in connection with the Business Combination. Our management will have broad discretion in applying the net proceeds we receive in connection with the Business Combination. We may use the net proceeds for general corporate purposes, including working capital, operating expenses, and capital expenditures. We may use a portion of the net proceeds to acquire complementary businesses, products, services, or technologies. We may also spend or invest these proceeds in a way with which our stockholders disagree. If our management fails to use these funds effectively, our business could be seriously harmed. Pending their use, the net proceeds that we receive in connection with the Business Combination may be invested in a way that does not produce income or that loses value.

New Nextdoor does not intend to pay cash dividends for the foreseeable future.

Following the Business Combination, New Nextdoor currently intends to retain its future earnings, if any, to finance the further development and expansion of its business and does not intend to pay cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of New Nextdoor’s board of directors and will depend on its financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects and such other factors as its board of directors deems relevant. As a result, you may only receive a return on your investment in our Class A common stock if the market price of our Class A common stock increases.

If analysts do not publish research about New Nextdoor’s business or if they publish inaccurate or unfavorable research, New Nextdoor’s stock price and trading volume could decline.

The trading market for New Nextdoor common stock will depend in part on the research and reports that analysts publish about its business. New Nextdoor does not have any control over these analysts. If one or more of the analysts who cover New Nextdoor downgrade its common stock or publish inaccurate or unfavorable research about its business, the price of its common stock would likely decline. If few analysts cover New Nextdoor, demand for its common stock could decrease and its common stock price and trading volume may decline. Similar results may occur if one or more of these analysts stop covering New Nextdoor in the future or fail to publish reports on it regularly.

New Nextdoor may be subject to securities litigation, which is expensive and could divert management attention.

The market price of New Nextdoor common stock may be volatile and, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. New Nextdoor may be the target of this type of litigation in the future. Securities litigation against New Nextdoor could result in substantial costs and divert management’s attention from other business concerns, which could seriously harm its business.


Future resales of common stock after the consummation of the Business Combination may cause the market price of New Nextdoor’s securities to drop significantly, even if New Nextdoor’s business is doing well.

After the consummation of the Business Combination and subject to certain exceptions, the Sponsor and the Nextdoor Stockholders will be contractually restricted from selling or transferring any of its shares of common stock (not including the shares of New Nextdoor Class A common stock issued in the PIPE Investment pursuant to the terms of the Subscription Agreements or purchased in the public market) (the “Lock-up Shares”) for certain periods of time. Under the Proposed Bylaws, and subject to certain customary exceptions, such lockup restrictions applicable to all the Nextdoor Stockholders’ Lock-up Shares begin at the Closing and end on the date that is 180 days following the Closing. Pursuant to the Sponsor lock-up agreement, and subject to certain customary exceptions, such lockup restrictions applicable to the Sponsor Lock-up Shares begin at the Closing and end on the date that is one year following the Closing.

Following the expiration of each lockup, the applicable stockholders will not be restricted from selling shares of New Nextdoor common stock held by them, other than by applicable securities laws. Additionally, the Third Party PIPE Investors will not be restricted from selling any of their shares of our Class A common stock following the closing of the Business Combination, other than by applicable securities laws. As such, sales of a substantial number of shares of New Nextdoor Class A common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of New Nextdoor Class A common stock.

As restrictions on resale end and registration statements (filed after the Closing to provide for the resale of such shares from time to time) are available for use, the sale or possibility of sale of these shares could have the effect of increasing the volatility in New Nextdoor’s share price or the market price of New Nextdoor common stock could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.

Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate the Business Combination, require substantial financial and management resources and increase the time and costs of completing a business combination.

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 Nextdoor is not currently subject to Section 404 of the Sarbanes-Oxley Act. The standards required for a public company under Section 404 of the Sarbanes-Oxley Act are significantly more stringent than those required of Nextdoor as privately held companies. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that will be applicable to New Nextdoor after the Business Combination. If we are not able to implement the requirements of Section 404, including any additional requirements once we are no longer an emerging growth company, in a timely manner or with adequate compliance, we may not be able to assess whether its internal controls over financial reporting are effective, which may subject us to adverse regulatory consequences and could harm investor confidence and the market price of New Nextdoor common stock. Additionally, once we are no longer an emerging growth company, we will be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting.


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 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 shares of common stock held by non-affiliates exceeds $700 million as of the end of any second quarter of a fiscal year, in which case we would no longer be an emerging growth company as of the end of such fiscal year. 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 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 it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions 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 shares of common stock held by non-affiliates equals or exceeds $250 million as of the end of that year’s second fiscal quarter, and (2) our annual revenues equaled or exceeded $100 million during such completed fiscal year or the market value of our shares of common stock held by non-affiliates equals or exceeds $700 million as of the end of that year’s second fiscal quarter. 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 charter documents following the Business Combination and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may limit attempts by our stockholders to replace or remove our current management.

Provisions in our restated certificate of incorporation and restated bylaws following the Business Combination may have the effect of delaying or preventing a merger, acquisition or other change of control of the company that the stockholders may consider favorable. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, our restated certificate of incorporation and restated bylaws include provisions that:


   

provide that our board of directors is classified into three classes of directors with staggered three-year terms;

 

   

permit our board of directors to establish the number of directors and fill any vacancies and newly created directorships;

 

   

require super-majority voting to amend some provisions in our restated certificate of incorporation and restated bylaws;

 

   

authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan;

 

   

provide that only our chairperson of the board of directors, our chief executive officer, the lead independent director or a majority of our board of directors will be authorized to call a special meeting of stockholders;

 

   

eliminate the ability of our stockholders to call special meetings of stockholders;

 

   

do not provide for cumulative voting;

 

   

provide that directors may only be removed “for cause” and only with the approval of two-thirds of our stockholders;

 

   

provide for a dual class common stock structure in which holders of our Class B common stock may have the ability to control the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the outstanding shares of our common stock, including the election of directors and other significant corporate transactions, such as a merger or other sale of our company or its assets;

 

   

prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;

 

   

provide that our board of directors is expressly authorized to make, alter, or repeal our bylaws; and

 

   

establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.

Moreover, Section 203 of the DGCL may discourage, delay, or prevent a change in control of our company. Section 203 imposes certain restrictions on mergers, business combinations, and other transactions between us and holders of 15% or more of our common stock.

Our restated certificate of incorporation following the Business Combination will contain exclusive forum provisions for certain claims, which may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.


Our restated certificate of incorporation following the Business Combination will provide that the Court of Chancery of the State of Delaware, to the fullest extent permitted by law, will be the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the DGCL, our restated certificate of incorporation, or our restated bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine.

Moreover, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Our restated certificate of incorporation provides that the federal district courts of the United States will, to the fullest extent permitted by law, be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, or Federal Forum Provision. Our decision to adopt a Federal Forum Provision followed a decision by the Supreme Court of the State of Delaware holding that such provisions are facially valid under Delaware law. While there can be no assurance that federal or state courts will follow the holding of the Delaware Supreme Court or determine that the Federal Forum Provision should be enforced in a particular case, application of the Federal Forum Provision means that suits brought by our stockholders to enforce any duty or liability created by the Securities Act must be brought in federal court and cannot be brought in state court.

Section 27 of the Exchange Act creates exclusive federal jurisdiction over all claims brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. In addition, the Federal Forum Provision applies to suits brought to enforce any duty or liability created by the Exchange Act. Accordingly, actions by our stockholders to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder must be brought in federal court.

Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the regulations promulgated thereunder.

Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities shall be deemed to have notice of and consented to our exclusive forum provisions, including the Federal Forum Provision. These provisions may limit a stockholders’ ability to bring a claim in a judicial forum of their choosing for disputes with us or our directors, officers, or employees, which may discourage lawsuits against us and our directors, officers, and employees. Alternatively, if a court were to find the choice of forum provision contained in our restated certificate of incorporation or restated bylaws 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, financial condition, and operating results.


Forward-Looking Statements

This communication contains certain forward-looking statements within the meaning of the federal securities laws with respect to the proposed transaction between Nextdoor, Inc. (“Nextdoor”) and Kholsa Ventures Acquisition Co. II (“KVSB”). These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this communication. You should carefully consider the risks and uncertainties described in the “Risk Factors” section of KVSB’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, the registration statement on Form S-4, and other documents filed by KVSB from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Nextdoor and KVSB assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Neither Nextdoor nor KVSB gives any assurance that either Nextdoor or KVSB will achieve its expectations.

Additional Information and Where to Find It / Non-Solicitation

In connection with the proposed transaction, KVSB intends to file a proxy statement with the U.S. Securities and Exchange Commission (“SEC”). The proxy statement will be sent to the stockholders of KVSB. KVSB and Nextdoor also will file other documents regarding the proposed transaction with the SEC. Before making any voting decision, investors and security holders of KVSB are urged to read the proxy statement and all other relevant documents filed or that will be filed with the SEC in connection with the proposed transaction as they become available because they will contain important information about the proposed transaction. Investors and security holders will be able to obtain free copies of the proxy statement and all other relevant documents filed or that will be filed with the SEC by KVSB and Nextdoor through the website maintained by the SEC at www.sec.gov.

Participants in Solicitation

KVSB and Nextdoor and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from KVSB’s stockholders in connection with the proposed transaction. Information about KVSB’s directors and executive officers and their ownership of KVSB’s securities is set forth in KVSB’s filings with the SEC. To the extent that holdings of KVSB’s securities have changed since the amounts printed in KVSB’s Registration Statement on Form S-1, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. A list of the names of such directors and executive officers and information regarding their interests in the business combination will be contained in the proxy statement/prospectus when available. You may obtain free copies of these documents as described in the preceding paragraph.


No Offer or Solicitation

These communications do not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act, or an exemption therefrom.