As
filed with the U.S. Securities and Exchange Commission on May 25, 2021.
Registration
No.
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Sagaliam
Acquisition Corp.
(Exact name of registrant as specified in its charter)
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Delaware
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6770
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86-3006717
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(State
or other jurisdiction of
incorporation
or organization)
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(Primary
Standard Industrial
Classification
Code Number)
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(I.R.S.
Employer
Identification
Number)
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1800
Avenue of the Stars, Suite 1475
Los
Angeles, CA 90067
Telephone:
213-616-0011
(Address,
Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
Barry
Kostiner
1800
Avenue of the Stars, Suite 1475
Los
Angeles, CA 90067
Telephone:
415-928-9821
(Name,
Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)
Copies
to:
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Stuart
Neuhauser, Esq.
Richard
Baumann, Esq.
Matthew
Gray, Esq.
Ellenoff
Grossman & Schole LLP
1345
Avenue of the Americas
New
York, NY 10105
212-370-1300
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Alexander
McClean, Esq.
C.
Christopher Murillo, Esq.
Harter
Secret & Emery LLP
1600
Bausch & Lomb Place
Rochester,
NY 14604-2711
585-232-6500
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Approximate
date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration
statement.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933 check the following box. [ ]
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large
accelerated filer
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[ ]
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Accelerated
filer
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[ ]
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Non-accelerated
filer
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[X]
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Smaller
reporting company
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[X]
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Emerging
growth company
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[X]
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
[ ]
CALCULATION
OF REGISTRATION FEE
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Title
of Each Class of Security Being Registered
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Amount
Being Registered
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Proposed
Maximum Offering Price Per Security(1)
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Proposed
Maximum Aggregate Offering Price(1)
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Amount
of Registration Fee
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Units,
each consisting of one share of Class A common stock, $0.0001 par value, and one right to receive one-tenth (1/10) of one
share of Class A common stock upon the consummation of an initial business combination(2)
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11,500,000
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$
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10.00
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$
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115,000,000
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$
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12,546.50
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Shares
of Class A common stock included as part of the units(3)
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11,500,000
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—
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—
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—
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(4)
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Rights
included as part of the units(3)
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11,500,000
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—
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—
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—
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(4)
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Shares
of Class A common stock underlying the rights included as part of the units(3)
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1,150,000
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—
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—
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—
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(4)
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Representative’s
shares of Class A common stock(3)(5)
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57,500
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10.00
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575,000
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62.73
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Advisory
compensation
shares of Class A common stock(3)(5)
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57,500
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10.00
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575,000
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62.73
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Total
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$
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116,150,000
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$
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12,671.96
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(1)
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Estimated
solely for the purpose of calculating the registration fee.
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(2)
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Includes
1,500,000 units, consisting of 1,500,000 shares of Class A common stock and 1,500,000 rights, which may be issued upon exercise
of a 45-day option granted to the underwriters to cover over-allotments, if any.
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(3)
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Pursuant
to Rule 416, there are also being registered an indeterminable number of additional securities as may be issued to prevent
dilution resulting from stock splits, stock dividends or similar transactions.
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(4)
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No
fee pursuant to Rule 457(g).
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(5)
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Includes
7,500 shares of Class A common stock which may be issued upon exercise of a 45-day option granted to the underwriters to cover
over-allotments, if any.
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The
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it
is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
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PRELIMINARY
PROSPECTUS
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SUBJECT TO
COMPLETION, DATED May 25, 2021
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$100,000,000
Sagaliam
Acquisition Corp.
10,000,000
Units
Sagaliam
Acquisition Corporation is a newly incorporated blank check company, formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities,
which we refer to as our “initial business combination.” We have not selected any business combination target and
we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination
target with respect to an initial business combination with us. Although we may pursue an acquisition in any industry or geography,
we intend to capitalize on the capabilities of our management team and our sponsor to identify, acquire and operate a business
that may provide opportunities for attractive risk-adjusted returns in the telecommunications, media, and technology industries.
This
is an initial public offering of our securities. Each unit has an offering price of $10.00 and consists of one share of our Class
A common stock, par value of $0.0001, and one right to receive one-tenth (1/10) of one share of Class A common stock upon consummation
of our initial business combination. The underwriters have a 45-day option from the date of this prospectus to purchase up to
an additional 1,500,000 units to cover over-allotments, if any.
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of our Class A common stock
upon the completion of our initial business combination, subject to the limitations described herein. If we are unable to complete
our initial business combination within 18 months from the closing of this offering, we will redeem 100% of the public shares
for cash, subject to applicable law and certain conditions as further described herein.
Our
sponsor, Sagaliam Sponsor LLC, has agreed to purchase an aggregate of 390,000 units (or 420,000 units if the over-allotment option
is exercised in full) at a price of $10.00 per unit, for an aggregate purchase price of $3,900,000 (or $4,200,000 if the over-allotment
option is exercised in full), in a private placement that will close simultaneously with the closing of this offering. The private
placement units are identical to the units sold in this offering, except they and the underlying securities are subject to
certain transfer restrictions and entitled to certain registration rights as described in this prospectus.
Our sponsor, officers
and director nominees own an aggregate of 2,875,000 shares of our Class B common stock, up to 375,000 of which
are subject to forfeiture by our sponsor depending on the extent to which the underwriters’ over-allotment option
is exercised. Shares of Class B common stock will automatically convert into shares of Class A common stock at the time
of our initial business combination, or earlier at the option of the holder, as described herein.
Currently, there is no public market for our
units, Class A common stock or rights. We have applied to list our units on the Nasdaq Capital Market, or Nasdaq, under the symbol
“SAGAU”. We expect that our units will be listed on Nasdaq on or promptly after the date of this prospectus.
We cannot guarantee that our securities will be approved for listing on Nasdaq. We expect the Class A common stock and rights
comprising the units will begin separate trading on the 52nd day following the date of this prospectus unless Maxim
Group LLC, the representative of the underwriters, informs us of its decision to allow earlier separate trading, subject to our
satisfaction of certain conditions. Once the securities comprising the units begin separate trading, we expect that the Class
A common stock and rights will be listed on Nasdaq under the symbols “SAGA” and “SAGAR,”
respectively.
We
are an “emerging growth company” under applicable federal securities laws and will be subject to reduced public company
reporting requirements. Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on
page 30 for a discussion of information that should be considered in connection with an investment in our securities. Investors
will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings.
Neither
the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities
or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
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Per
Unit
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Total
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Public
offering price
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$
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10.00
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$
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100,000,000
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Underwriting
discounts and commissions(1)
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$
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0.55
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$
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5,500,000
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Proceeds,
before expenses, to Sagaliam Acquisition Corp.
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$
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9.45
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$
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94,500,000
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(1)
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Includes
$0.35 per unit, or $3,500,000 (or $4,025,000 if the underwriters’ over-allotment option is exercised in full) in the
aggregate payable to the underwriters for deferred underwriting commissions to be placed in a trust account located in the
United States, as described herein. The deferred commissions will be released to the underwriters only on completion of an
initial business combination, as described in this prospectus. In addition, we have agreed to issue to the representative
and/or its designees 50,000 shares of our Class A common stock (or 57,500 shares if the underwriters’ over-allotment
option is exercised in full) upon the consummation of this offering, which we refer to herein as the “representative’s
shares,” as compensation in connection with this offering. See the section of this prospectus entitled “Underwriting”
for a further description of the compensation and other items of value payable to the underwriters. In addition, we have agreed
to issue to Palladium Capital Group, LLC, an independent financial adviser (within the meaning of Financial Industry Regulatory Authority, Inc. (“FINRA”) Rule 5110(j)(9))
not participating (within the meaning of FINRA Rule 5110(j)(16)) in this offering, and/or its designees 50,000 shares
of our Class A common stock (or 57,500 shares if the underwriters’ over-allotment option is exercised in full) upon
the consummation of this offering, which we refer to herein as the “advisory compensation shares,” in consideration
of advisory services rendered to us.
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Of
the proceeds we receive from this offering and the sale of the private placement units described in this prospectus, $100,000,000 or
$115,000,000 if the underwriters’ over-allotment option is exercised in full ($10.00 per unit in
either case), will be deposited into a trust account in the United States, with Continental Stock Transfer & Trust Company
acting as trustee.
Palladium
Capital Group, LLC is acting as our financial advisor in connection with this offering.
The
underwriters are offering the units for sale on a firm commitment basis. The underwriters expect to deliver the units to the
purchasers on or about
,
2021.
Sole
Book-Running Manager
Maxim
Group LLC
The
date of this prospectus is ,
2021
TABLE
OF CONTENTS
You
should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone
to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely
on it. We are not, and the underwriters are not, making an offer to sell securities in any jurisdiction where the offer or sale
is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than
the date on the front of this prospectus.
This
prospectus does not constitute an offer to sell or a solicitation of an offer to buy any security other than the securities offered
by this prospectus. No offer to sell or solicitation of an offer to buy any securities is being made by anyone in any jurisdiction
in which such offer or solicitation is not authorized or is unlawful.
PROSPECTUS
SUMMARY
This
summary highlights the more detailed information appearing elsewhere in this prospectus. Before making any investment decision,
you should read this entire prospectus carefully, including the information in the section of this prospectus entitled “Risk
Factors” and our financial statements and the related notes, included elsewhere in this prospectus.
Unless
otherwise stated in this prospectus, or the context otherwise requires, references to:
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“advisory
compensation shares” are to the 50,000 shares of our
Class A common stock (or 57,500 shares if the underwriters’ over-allotment option is exercised in full) to be issued
in connection with the consummation of this offering to Palladium and/or its designees;
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●
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“common
stock” are to our Class A common stock and our Class B common stock, collectively;
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“founder
shares” are to shares of our Class B common stock, initially purchased by our sponsor in a private placement prior to
this offering, and the shares of our Class A common stock issuable upon the conversion thereof as provided herein;
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●
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“initial
stockholders” are to our sponsor, our officers, our director nominees and any other holders of our founder shares prior
to this offering (or their permitted transferees);
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●
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“Maxim”
are to Maxim Group LLC, the representative of the underwriters in this offering;
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“management”
or our “management team” are to our officers and directors;
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“Palladium”
are to Palladium Capital Group, LLC,
which is acting as our
independent financial advisor as defined under FINRA Rule 5110(j)(9) in connection with
this offering and is not participating (within the meaning of FINRA Rule 5110(j)(16))
in this offering;
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●
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“private
placement rights” are to the rights included in the private placement units being purchased by our Sponsor in the private
placement;
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●
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“private
placement shares” are to the shares of Class A common stock included in the private placement units being purchased
by our Sponsor in the private placement;
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●
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“private
placement units” are to the units issued to our sponsor in a private placement simultaneously with the closing of this
offering, which private placement units are identical to the units sold in this offering, except they and the underlying
securities are subject to certain transfer restrictions and entitled to certain registration rights as described in this
prospectus;
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●
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“public
rights” are to the rights sold as part of the units in this offering (whether they are purchased in this offering or
thereafter in the open market);
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●
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“public
shares” are to shares of our Class A common stock sold as part of the units in this offering (whether they are purchased
in this offering or thereafter in the open market);
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●
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“public
rights holders” are to the holders of our public rights, including our initial stockholders and members of our management
team to the extent any of them purchase public rights, provided that each initial stockholder’s and management team
member’s status as a “public rights holder” shall only exist with respect to such public rights;
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“public
stockholders” are to the holders of our public shares, including our initial stockholders and members of our management
team to the extent any of them purchase public shares, provided that each initial stockholder’s and management team
member’s status as a “public stockholder” shall only exist with respect to such public shares;
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“sponsor”
are to Sagaliam Sponsor LLC, a Delaware limited liability company and an affiliate of GLD Partners, LP;
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“representative”
are to Maxim Group LLC, the representative of the underwriters in this offering;
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“representative’s
shares” are to the 50,000 shares of our Class A common stock (or 57,500 shares if the underwriters’ over-allotment
option is exercised in full) to be issued in connection with the consummation of this offering to the representative and/or its designees;
and
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●
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“we,”
“us,” “SAC,” “company” or “our company” are to Sagaliam Acquisition Corp.
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Unless
we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment
option.
Our
Company
Sagaliam
Acquisition Corporation (“SAC”, “we” or “our company”) is a newly incorporated blank check
company, incorporated as a Delaware corporation, formed for the purpose of effecting a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination with one or more businesses or entities, which we refer to as our
“initial business combination.” We have not selected any business combination target and we have not, nor has anyone
on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target with respect
to an initial business combination with us. Although we may pursue an acquisition in any industry or geography, we intend to capitalize
on the capabilities of our management team and our sponsor to identify, acquire and operate a business that may provide opportunities
for attractive risk-adjusted returns in the telecommunications, media, and technology industries.
We
intend to identify and acquire a business that could benefit from a creative, forward-thinking owner with extensive operational
expertise that presents potential for an attractive risk-adjusted return profile. Even companies with solid fundamentals often
under-perform their potential, due to underinvestment, ineffective business strategies, sub-optimal capital allocation and capital
structures, excessive cost structures or incomplete management teams. Our management team has extensive experience in identifying
and executing acquisitions that are ripe for change, across industry sectors and business cycles. In addition, our management
has hands-on experience working with companies as active owners and directors by working closely with these companies to continue
their transformation and help create value.
Rather
than offering a one-time service of going public, SAC aims to act as a long-term partner to its target companies. Our objective
is to provide a target company an efficient path to go public with a significant degree of ongoing funding certainty, while creating
value for our stockholders by assisting management with strategy, business planning, capital structure optimization, team building
and synergistic opportunities.
Our
sponsor is an affiliate of GLD Partners, LP (“GLD”), a private equity investment firm whose principals have decades
of combined investment experience and a track record of value creation in portfolio companies. SAC has assembled a seasoned team
of industry advisors whom we believe will help us execute our differentiated investment strategy. Through our affiliation with
our sponsor and management team, we will seek to acquire established businesses that we believe are fundamentally sound but potentially
in need of financial, operational, strategic or managerial transformation to maximize value for stockholders. We intend to focus
on companies which we believe offer an opportunity for stockholder value creation through the combination of (i) an attractive
valuation entry point, (ii) a clear plan to unlock incremental value through operational and/or strategic improvements and (iii)
a clear path to bring the target company to the public market and implement best-in-class public company governance. We will seek
to partner with the owners of a target business to offer them an option to create partial liquidity, transition their legacy to
a public company and/or resolve any fragmented ownership or succession planning issues, all while maintaining a singular focus
on driving the target business to a higher level of performance and value. We may also look at earlier stage companies that exhibit
the potential to change the industries in which they participate, and which offer the potential of sustained high levels of revenue
growth.
Although
we may pursue an acquisition opportunity in any business industry or sector, we intend to focus our search for target businesses
in the telecommunications, media and technology industries. We intend to build an industry-leading sustainable business with attractive
returns on invested capital and robust free cash flow generation. By consummating a business combination with a target business
in the telecommunications, media or technology industries, we hope to offer public market investors near-term access and direct
investment exposure to the long-term trends favorably impacting these sectors and to the consolidation and value-creation opportunities
related thereto. We intend to take a disciplined approach towards consummating an initial business combination with an emphasis
on building significant stockholder value over the long-term. We also intend to look for target businesses with proven management
teams who will foster an ownership culture with strong alignment of incentives.
Our
Management Team
We
believe that the collective experience of our management team will allow us to source, identify and execute an attractive transaction
for our stockholders. Our management team is led by Barry Kostiner as Chairman and Chief Executive Officer, Thomas Neukranz as Chief
Financial Officer and Director and Jane Liu as Vice President, Business Development.
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●
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Barry
Kostiner – Chairman and Chief Executive Officer. Mr. Kostiner is serving as the Chief Executive and Chairman
of Sagaliam Acquisition Corp. Additionally, Mr. Kostiner has served as the President
of Legacy Tech Partners, LLC (LTP), a microcap-focused EdTech investment vehicle, since February 2021, and has also
been a Manager of Capital Markets at Legacy Education Alliance, Inc. (OTC: LEAI) since March 2021. Mr. Kostiner
joined the Board of Directors of LEAI in May 2021. LEAI has had cumulative education revenues in excess of $500 million
over the past decade, prior to the Covid-19 pandemic.
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Mr.
Kostiner was the CFO of Ameri Holdings Inc. (Nasdaq: AMRH) from October 2018 through December 2020. The operations of AMRH,
including its global IT services business focused on SAP with operations in both the US and India, was acquired by management,
with the residual Nasdaq vehicle acquired by Enveric Biosciences (Nasdaq: ENVB), an evidence-based cannabinoid pharma company
focused on palliative therapies for cancer patients. Mr. Kostiner has been a consultant to ENVB since January 2021. From
May 2016 through October 2018, Mr. Kostiner was a consultant to Cypress Skilled Nursing, a healthcare facility
operator and from May 2017 through October 2018 he was a consultant to LinKay Technologies Inc., an artificial intelligence
incubator with a portfolio of intellectual property focused on AI and LiDAR / geospatial technology, with research
staff in India and New York. Mr. Kostiner’s 20-year career in energy includes eight years at Goldman Sachs and Merrill
Lynch and their affiliates, with a focus on energy trading and portfolio management, as well as serving as the CEO of an oil
& gas SPAC (Nasdaq: PGRI) from 2005 through 2009. Mr. Kostiner earned a Bachelor’s of Science degree in Electrical
Engineering and a Master’s of Science in Operations Research from MIT. His thesis on the mathematics of electric industry
deregulation was sponsored by Harvard’s Kennedy School of Government.
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●
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Mr.
Thomas W. Neukranz – Chief Financial Officer and Director. Mr. Neukranz is serving as
Chief Financial Officer and a director of Sagaliam Acquisition Corp. Mr. Neukranz has served as Managing Director of Capital
Markets for GLD Partners, LP since July 2020. Prior to joining GLD, Mr. Neukranz served as Head of Capital Markets for CleanFund
Inc., from July 2017 to August 2019, and as Executive Vice President and a member of the Executive Committee of Aegon Investment
Management, from February 2017 to August 2018. From 1993 to 2000, Mr. Neukranz was a Partner and Head of the Institutional
businesses at RS Investments, Vice President, Global Head of Exchange Derivatives at Goldman Sachs and Head of Exchange Traded
Derivatives at JP Morgan. Previously, Mr. Neukranz was responsible for derivative hedging for Bank of America and Lehman Brothers.
Mr. Neukranz began his career on the floor of the Board of Trade in Chicago. Mr. Neukranz has serves on the Board of the Stanford
Cancer Institute since 2016 and served as Chairman from 2017 through 2019. Mr. Neukranz received a B.S. in Industrial Management
from Purdue University, and holds Series 7 and 63 FINRA licenses.
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●
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Ms.
Jane Liu – Vice President, Business Development. Ms. Liu is serving as Vice President, Business Development
of Sagaliam Acquisition Corp. Ms. Liu has served as Director of Finance for GLD Partners, LP since July 2020. Prior thereto,
Ms. Liu served as Senior Financial Analyst for CleanFund Commercial PACE Capital, Inc., from March 2017 to June 2020, and
served as Business Analyst for Industrial and Commercial Bank of China in 2015. Ms. Liu received a B.S. in Economics and Finance
from the University of Western Ontario, and a Master’s Degree in Financial Analysis from the University of San Francisco.
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Mr.
George Caruolo — Director Nominee. Mr. Caruolo has agreed to join our board of directors on the effective date of the
registration statement of which this prospectus is a part. Mr. Caruolo has been the principal of his own law firm for over 30
years and a government relations strategy advisor based in Rhode Island for over 10 years. He has represented privately
held and publicly traded clients in the areas of healthcare, electric utilities, solar energy, gaming, heavy construction, developmental
disabilities and Native American tribal affairs, as well as in other areas, both regionally and nationally. He is a director of
Allegro, LLC, a fintech company. He was an elected state representative and majority leader of the Rhode Island General Assembly,
has chaired the Rhode Island State Education Board and has served on other boards of directors. Mr. Caruolo received a
Bachelor’s Degree from Harvard University and a Juris Doctor degree from Suffolk University Law School.
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Mr.
Gabriel Del Virginia — Director Nominee. Mr. Del Virginia has agreed to join our board of directors on the effective
date of the registration statement of which this prospectus is a part. Mr. Del Virginia has more than 30 years of experience
providing legal representation in various types of public and private business entities in corporate, mergers and acquisitions,
financing, litigation and financial restructuring matters, as an associate at several prominent national law firms, including
Milbank Tweed Hadley & McCloy, and thereafter as principal of his own law firm, where he has practiced for over 10 years.
Mr. Del Virginia also served on the board of directors Sysorex Global Holdings Corp. (SYRX), a Nasdaq-listed technology
company that provides data analytics and location-based solutions and services to commercial and government customers worldwide.
He graduated from Rutgers University and the Rutgers Law School, clerked for a United States Federal Judge, and is a member
of the bars of New Jersey and New York.
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Mr.
Glauco Lolli-Ghetti — Director Nominee. Mr. Lolli-Ghetti has agreed to join our board of directors on the effective
date of the registration statement of which this prospectus is a part. Since 2019, Mr. Lolli-Ghetti has served as Head
of Development at Palatine Capital Partners, a real estate private equity firm, where he is responsible for development investment
strategies across acquisition and entitlement. Prior to joining Palatine, Mr. Lolli-Ghetti founded Urban Muse, a real estate investment
company responsible for developing 372,000 square feet of mixed-use properties with an aggregate cost of $397 million. Prior to
forming Urban Muse, Mr. Lolli-Ghetti was development manager at Federal Realty Investment Trust, a publicly traded REIT with a
market cap of $6.75 billion. Mr. Lolli-Ghetti received a Bachelor’s Degree from Lehigh University.
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Past
performance by our management team is not a guarantee of success with respect to locating and acquiring a target business and
helping it to succeed. Although Mr. Kostiner has prior experience pursuing an acquisition on behalf of a blank check company,
other members of our management team do not. Nevertheless, we believe we will greatly benefit from the experience of our management
team as we seek to identify and consummate an initial business combination.
Our
Competitive Advantages
The
networking, sourcing, valuation, diligence and execution capabilities of our team should provide us what we believe to be a significant
and attractive pipeline of opportunities. Our competitive strengths include:
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Extensive
Operating Experience. We meticulously composed our executive team, Board of Directors and Advisory Board with professionals
with notable experience in operational, financial, C-suite and board-level roles.
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Proprietary
Sourcing Capabilities Developed Through Strong Networks of Relationships. We intend to capitalize on our management team’s
domain expertise, acquired through decades of strategic deal-making in the telecommunications, media, technology and related
industries. We believe our management’s deep network of CEO-level and other C-suite and board relationships, in addition
to contacts with pre-eminent private and public market investors, will present us with a substantial number of potential business
combination targets.
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Ability
to Drive Public Shareholder Value. We plan to work with the management team of our initial business combination target
to build shareholder value both organically and inorganically. Our team has collectively achieved success at a wide variety
of legacy companies and emerging growth platforms, many of which were publicly traded. All members of our team have played
key executive operating roles, served as board members and/or been investors at these organizations. In addition, the roles
played by this team have often included key growth initiatives and expansion into new geographies or products.
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Our
Business Strategy
Although
our efforts to identify a prospective target business will not necessarily be limited to a particular industry, sector or region,
we intend to capitalize on our expertise in the telecommunications, media, and technology industries.
We
believe that the telecommunications, media and technology industries present attractive characteristics of long-term growth prospects
globally, stable and cycle-resistant demand, fragmented markets with opportunities for consolidation, a lack of dominant players
and global brands, predictable digital transition patterns and a large universe of growing and profitable targets.
We
believe that five long-term trends are driving positive transformation in the telecommunications, media and technology industries,
creating opportunities for long-term value creation in the sector specifically and, more broadly, in the associated knowledge
economy. These drivers of transformation are: Digitization (the use of digital content and services), Responsiveness
(designing and offering products and services on a customized or bespoke basis for the individual), Privatization (the
growing private supply of media, content and services), Automation (the use of artificial intelligence and data to enhance
the efficacy and efficiency of product delivery platforms) and Globalization (the international development and dissemination
of content, certification, technology and brands). We intend to take advantage of these long-term trends and the associated consolidation
and value-creation opportunities.
Our
acquisition and value creation strategy is to identify, acquire and, after our initial business combination, fundamentally enhance
a company in the public markets. We intend to seek a company in an industry that complements the experience and expertise of our
management team and is a business to which we believe we can add value.
We
are committed to delivering attractive returns to all stakeholders.
Our
management team is deeply familiar with the trends of our target industries and brings an investing approach that offers multiple
competitive advantages in sourcing, evaluating and executing on opportunities, including being:
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Stockholder
Centric: We think like owners and are focused on long-term gains rather than short-term results. At SAC, the
compensation structure of the management team is closely tied to the long-term performance of the stock. See “Management
– Officer and Director Compensation”.
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Forward
Looking: We are deeply familiar with the trends of the industries in which we plan to invest and can evaluate
the opportunities and risks presented by ongoing secular changes and temporary market disruptions.
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Nimble:
Our team is structured to allow it to move quickly when opportunities arise, and we can be creative in our deal structures.
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Financially
Sophisticated: Our management team has extensive experience in mergers, capital restructuring, divestitures,
investing, capital deployment, credit analysis and setting capital structures.
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Long-Term
Focused: We take a long-term, strategic view in our various operating businesses and are less concerned with
short-term bouts of volatility.
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Connected,
through Proprietary Sourcing Channels and Leading Industry Relationships: We believe the capabilities and connections
associated with our management team will provide us with a differentiated pipeline of acquisition opportunities that would
be difficult for other participants in the market to replicate. We expect these sourcing capabilities will be further bolstered
by our management team and SAC’s reputation and deep industry relationships.
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Our
Business Combination Criteria
Consistent
with our business strategy, we have developed the following general criteria and guidelines that we believe are important in evaluating
prospective initial business combinations. We will use these criteria and guidelines in evaluating business combination opportunities,
but we may decide to enter into our initial business combination with a target business that does not meet these criteria and
guidelines.
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Businesses
with Significant Revenue and Earnings Growth Potential. We will seek to acquire one or more businesses that we believe
will have multiple organic and M&A-driven growth opportunities over time. We will search for attractive, growth-oriented
businesses that exhibit sound, underlying fundamentals as well as demonstrated revenue growth and a clear path to profitability.
This includes such potential targets that are currently, or have the potential to be, a category leader with long-term growth
potential.
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Targets
That Can Benefit from our Management Team’s Relationships and Experience. Although we may pursue an initial business
combination opportunity in any industry or sector, we intend to capitalize on our management team’s domain expertise
acquired through decades of strategic deal-making in the media, digital media/consumer technology and related industries.
We believe our management’s deep network of CEO-level and other C-suite and board relationships, in addition to contacts
with pre-eminent private and public market investors, will give us a number of competitive advantages and will present us
with a substantial number of potential business combination targets, particularly in the aforementioned industries.
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Companies
with Potential to Benefit from Digital Disruption. We will seek to acquire one or more businesses which currently, or
have the potential to, benefit from digital disruption, or a disruption of traditional business models or markets.
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Businesses
in High-Growth Markets. We will seek out opportunities in higher-growth sectors in the U.S., as well as in selected developed
and emerging international markets.
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Companies
that Drive Shareholder Returns. We will seek to acquire one or more businesses that offer an attractive risk-adjusted
return for our stockholders, weighing potential growth opportunities and operational improvements in the target business against
any identified downside risks.
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These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination
may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our
management may deem relevant. In the event that we decide to enter into our initial business combination with a target business
that does not meet the above criteria and guidelines, we will disclose that the target business does not meet them in our stockholder
communications related to our initial business combination, which, as discussed in this prospectus, would be in the form of tender
offer documents or proxy solicitation materials that we would file with the SEC.
Our
Sourcing of Potential Business Combination Targets
We
believe our management team’s significant transaction experience and industry relationships will provide us with a substantial
number of potential business combination targets. Over the course of their careers, the members of our management team have developed
a broad network of contacts and corporate relationships. This network has grown through the activities of our management team
in sourcing, acquiring, financing and selling businesses, our management team’s relationships with sellers, financing sources
and target management teams and the experience of our management team in executing transactions under varying economic and financial
market conditions.
We
believe this network will provide our management team with a robust and consistent flow of acquisition opportunities which are
proprietary or where a limited group of investors are invited to participate in the sale process. We believe that the network
of contacts and relationships of our management team will provide us with important sources of acquisition opportunities. In addition,
we anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment
market participants, private equity funds and large business enterprises seeking to divest non-core assets or divisions.
We
are not prohibited from pursuing an initial business combination with a business that is owned by our sponsor, officers or directors
or any related entities, or making an acquisition through a joint venture or other form of shared ownership with any of them.
In the event we seek to complete our initial business combination with a target that is owned by our sponsor, officers or directors
or any related entities, we, or a committee of independent and disinterested directors, expect to obtain an opinion from an independent
investment banking firm or another accounting, valuation or appraisal firm, to the effect that such initial business combination
is fair to our company from a financial point of view. However, we are not required to obtain such an opinion in any context.
See
“— Conflicts of Interest” and “Management — Conflicts of Interest” for information
regarding limitations on our access to investment opportunities sourced by members of our management team, SAC or other entities
in which members of our management team are involved, including a list of our executive officers and directors and entities for
which a conflict of interest may or does exist between such officers or directors and our company.
Initial
Business Combination
Nasdaq
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of
the value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest
earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination.
Our board of directors will make the determination as to the fair market value of our initial business combination. If our board
of directors is not able to independently determine the fair market value of our initial business combination, we will obtain
an opinion from an independent investment banking firm that is a member of FINRA or an independent accounting firm with respect
to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make an independent
determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or
experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of a target’s
assets or prospects. Additionally, pursuant to Nasdaq rules, any initial business combination must be approved by a majority of
our independent directors.
We
will have until 18 months from the closing of this offering to consummate an initial business combination. However, if we anticipate
that we may not be able to consummate our initial business combination within 18 months, we may seek to amend our amended and
restated certificate of incorporation to extend the time we have to consummate an initial business combination.
We
anticipate structuring our initial business combination either (i) in such a way so that the post-transaction company in which
our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses,
or (ii) in such a way so that the post-transaction company owns or acquires less than 100% of such interests or assets of the
target business in order to meet certain objectives of the target management team or stockholders, or for other reasons. However,
we will only complete an initial business combination if the post-transaction company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required
to register as an investment company under the Investment Company Act of 1940, as amended, or the “Investment Company Act”.
Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior
to the initial business combination may collectively own a minority interest in the post-transaction company, depending on valuations
ascribed to the target and us in the initial business combination. For example, we could pursue a transaction in which we issue
a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire
a 100% controlling interest in the target.
However,
as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business
combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than
100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company,
the portion of such business or businesses that is owned or acquired is what will be taken into account for purposes of Nasdaq’s
80% of net assets test. If the initial business combination involves more than one target business, the 80% of net assets test
will be based on the aggregate value of all of the transactions and we will treat the target businesses together as the initial
business combination for purposes of a tender offer or for seeking stockholder approval, as applicable.
Our
Business Combination Process
In
evaluating prospective business combinations, we expect to conduct a thorough due diligence review process that will encompass,
among other things, a review of historical and projected financial and operating data, meetings with management and their advisors
(if applicable), on-site inspection of facilities and assets, discussion with customers and suppliers, legal reviews and other
reviews as we deem appropriate.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers
or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor,
officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking
firm that is a member of FINRA or an independent accounting firm that our initial business combination is fair to our company
from a financial point of view.
Each
of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations
to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity.
Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an
entity to which he or she has then-current fiduciary or contractual obligations to present the opportunity to such entity, he
or she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity. We believe, however,
that the fiduciary duties or contractual obligations of our officers or directors will not materially affect our ability to complete
our initial business combination. Our amended and restated certificate of incorporation will provide that we renounce our interest
in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely
in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted
to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer
that opportunity to us without violating another legal obligation.
Our sponsor and our officers
and directors will own founder shares following this offering. Because of this ownership, our sponsor and our officers and directors
may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate
our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating
a particular business combination if the retention or resignation of any such officers or directors were to be included by a target
business as a condition to any agreement with respect to our initial business combination.
Financial Advisory
Services
We have engaged Palladium, which is a registered
broker-dealer, to provide financial advisory services as a broker-dealer in connection with this offering, which services are
independent from those being provided by the underwriters. We have agreed to pay Palladium customary fees in connection with this
offering, which includes deferred compensation that is contingent on the completion of an initial business combination within
the specified time period. The underwriters have agreed to reimburse us for the fee to be paid to Palladium. As a result, there
is no additional offering expense related to this fee. However, this engagement may present potential conflicts of interest because
a portion of the fees payable are contingent on the consummation of an initial business combination. In addition, we may engage
Palladium for capital markets or financial advisory services after this offering (in connection with an initial business combination
or otherwise), which could create additional conflicts of interest. We may also engage other service providers for services in
connection with identifying and investigating potential targets for, and the consummation of, our business combination, and we
may pay fees, including non-cash compensation, and reimburse expenses for any such services. Similarly, Palladium or such
other service providers may provide services to prospective acquisition targets, including in connection with or following an
initial business combination with us, and may receive fees and other compensation and expense reimbursements in exchange for such
services.
Risk
Factors Summary
Our
business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors”
immediately following this prospectus summary. These risks include, but are not limited to:
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Our
public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we
may complete our initial business combination even though a majority of our public stockholders do not support such a combination.
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Your
only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise
of your right to redeem your shares from us for cash, unless we seek stockholder approval of the initial business combination.
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Our
search for a business combination, and any target business with which we ultimately consummate a business combination, may
be materially adversely affected by the novel coronavirus (COVID-19) pandemic.
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As
the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and
there may be more competition for attractive targets. This could increase the cost of our initial business combination and
could even result in our inability to find a target or to consummate an initial business combination.
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If
the net proceeds of this offering and the sale of the private placement units not being held in the trust account are insufficient
to allow us to operate for at least the next 18 months, we may be unable to complete our initial business combination, in
which case our public stockholders may only receive $10.00 per share, or less than such amount in certain circumstances, and
our rights will expire worthless.
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If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption
amount received by stockholders may be less than $10.00 per share.
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We
may not hold an annual meeting of stockholders until after the consummation of our initial business combination.
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Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses
and our strategy will be to identify, acquire and build a company in our target investment area, we may enter into our initial
business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with
which we enter into our initial business combination may not have attributes entirely consistent with our general criteria
and guidelines.
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We
are not required to obtain an opinion from an independent investment banking firm or another independent entity, and consequently,
you may have no assurance from an independent source that the price we are paying for the business is fair to our stockholders
from a financial point of view.
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We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may
adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment
in us.
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We
may attempt to complete our initial business combination with a private company about which little information is available,
which may result in a business combination with a company that is not as profitable as we suspected, if at all.
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We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for
us to complete our initial business combination with which a substantial majority of our stockholders do not agree.
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We
may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth
of a target business, which could compel us to restructure or abandon a particular business combination.
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Our
initial stockholders may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that
you do not support.
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We
may engage in a business combination with one or more target businesses that have relationships with entities that may be
affiliated with our sponsor, officers, directors or existing holders which may raise potential conflicts of interest.
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Since
our sponsor, officers and directors will lose their entire investment in us if our initial business combination is not completed,
a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial
business combination.
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Our
officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination
as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete
our initial business combination.
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We
may seek business combination opportunities in industries or sectors which may or may not be outside of our management’s
area of expertise.
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Our
ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent
upon the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key
personnel could negatively impact the operations and profitability of our post-combination business.
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You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. Therefore,
to liquidate your investment, you may be forced to sell your public shares or rights, potentially at a loss.
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Our
sponsor paid an aggregate of $25,000, or approximately $0.009 per founder share and, accordingly, you will experience immediate
and substantial dilution from the purchase of the shares of our Class A common stock.
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We
are a newly formed company with no operating history and no revenues, and you have no basis on which to evaluate our ability
to achieve our business objective.
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Past
performance by our management team may not be indicative of future performance of an investment in the Company.
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Corporate
Information
Our
executive offices are located at 1800 Avenue of the Stars, Suite 1475, Los Angeles, CA 90067, and our telephone number is 213-616-0011.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities
Act”), as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take
advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not
emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory
vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors
find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of
our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition
period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words,
an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply
to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary
of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which
we are deemed to be a large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates
exceeds $700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible
debt securities during the prior three-year period. References herein to emerging growth company will have the meaning associated
with it in the JOBS Act.
Additionally,
we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of
our common stock held by non-affiliates exceeds $250 million as of the end of the prior June 30th, or (2) our annual
revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates
exceeds $700 million as of the prior June 30th.
THE
OFFERING
In
deciding whether to invest in our securities, you should take into account not only the backgrounds of the members of our management
team, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance
with Rule 419 promulgated under the Securities Act. You will not be entitled to protections normally afforded to investors in
Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section of this prospectus
entitled “Risk Factors.”
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Securities
offered
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10,000,000
units, at $10.00 per unit, each unit consisting of:
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one share of Class A common stock; and
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one
right entitling the holder to receive one-tenth (1/10) of one share of Class A common stock upon consummation of our initial
business combination,
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Proposed
Nasdaq symbols
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Units:
“SAGAU”
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Class
A common stock: “SAGA”
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Rights:
“SAGAR”
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Rights
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Each holder of a right will automatically receive one-tenth (1/10)
of one share of Class A common stock upon consummation of our initial business combination, except in cases where we are not the
surviving company in a business combination or the registered holder of a certificated right fails to tender their original rights
certificate. No additional consideration will be required to be paid by a holder of rights in order to receive the additional shares
upon consummation of a business combination, as the consideration related thereto has been included in the unit purchase price
paid for by investors in this offering. If we enter into a definitive agreement for a business combination in which we will not
be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share consideration
the holders of shares of Class A common stock will receive in the transaction on an as-exchanged for Class A common stock basis,
and rights holders will be required to affirmatively elect to exchange their rights for the underlying shares as well as to return
the original rights certificates to us within a fixed period of time after which period the rights will expire worthless. Pursuant
to the rights agreement, a rights holder may exchange rights only for a whole number of shares of Class A common stock. This means
that we will not issue fractional shares in connection with an exchange of rights and rights may be exchanged only in multiples
of 10 rights (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like). Fractional
shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions
of the Delaware General Corporation Law.
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Trading
commencement and separation of Class A common stock and rights
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The
units will begin trading on or promptly after the date of this prospectus. We expect the Class A common stock and rights comprising
the units will begin separate trading on the 52nd day following the date of this prospectus unless the representative
informs us of its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described
below and having issued a press release announcing when such separate trading will begin. Once the shares of Class A common stock
and rights commence separate trading, holders will have the option to continue to hold units or to have their units separated
into the component securities. Holders will need to have their brokers contact our transfer agent in order to have the units separate
into shares of Class A common stock and rights.
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|
|
|
|
|
Separate
trading of the Class A
common
stock and rights is
prohibited
until we have filed a
Current
Report on Form 8-K
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|
In
no event will the Class A common stock and rights be traded separately until we have
filed a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting
our receipt of the gross proceeds at the closing of this offering. We will file the Current
Report on Form 8-K promptly after the closing of this offering, which is anticipated
to take place three business days from the date of this prospectus.
|
|
Units:
|
|
|
|
Number
outstanding before this offering
|
|
0
|
|
Number
of private placement units to be sold in a private placement simultaneously with this offering
|
|
390,000(1)
|
|
Number
outstanding after this offering
and
the private placement
|
|
10,390,000(1)(2)
|
|
|
|
|
|
Common
stock:
|
|
|
|
Number
outstanding before this offering
|
|
2,875,000
shares of Class B common stock(3)
|
|
Number
outstanding after this offering and the private placement
|
|
12,990,000
shares of Class A and Class B common stock(4)(5)
|
|
|
|
|
|
Rights:
|
|
|
|
Number
outstanding before this offering
|
|
0
|
|
Number
outstanding after this offering
and
the private placement
|
|
10,390,000(1)(6)
|
|
(1)
|
Assumes
no exercise of the underwriters’ over-allotment option.
|
|
(2)
|
Comprised
of 10,000,000 units to be sold in this offering and 390,000 private placement units.
|
|
(3)
|
Includes
up to 375,000 shares subject to forfeiture by our sponsor depending on the extent to which the underwriters’
over-allotment option is exercised.
|
|
(4)
|
Assumes
no exercise of the underwriters’ over-allotment option and the forfeiture by our sponsor of 375,000 founder shares.
|
|
(5)
|
Comprised
of 10,000,000 shares of Class A common stock included in the units to be sold in this offering, 50,000 representative’s shares,
50,000 advisory compensation shares, 390,000 shares of Class A common stock included in the private placement units and 2,500,000
shares of Class B common stock (or founder shares). The Class B common stock is convertible into shares of our Class A common stock
on a one-for-one basis, subject to adjustment as described below, adjacent to the caption “Founder shares conversion and anti-dilution
rights.”
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|
(6)
|
Comprised
of 10,000,000 public rights included in the units to be sold in this offering and 390,000 private placement rights included
in the private placement units to be sold in the private placement.
|
|
Founder
shares
|
|
On
April 5, 2021, our sponsor purchased 2,875,000 founder shares for an aggregate purchase
price of $25,000, and later transferred a total of 275,000 founder shares to our officers
and director nominees. The number of founder shares issued on April 5, 2021 was
determined based on the expectation that the founder shares would represent 20% of the outstanding
shares after this offering (excluding the private placement shares, representative’s
shares and advisory compensation shares). As such, our sponsor, officers
and director nominees will collectively own 20% of our issued and outstanding shares
after this offering (excluding the private placement shares, representative’s
shares and advisory compensation shares and assuming our initial stockholders
do not purchase any units in this offering). Neither our sponsor nor any of our officers
or directors have expressed an intention to purchase any units in this offering. Up to 375,000
of our sponsor’s founder shares will be subject to forfeiture depending on the
extent to which the underwriters’ over-allotment option is exercised, so that
our sponsor, officers and director nominees will maintain ownership of 20% of our
common stock after this offering (excluding the private placement shares, representative’s
shares and advisory compensation shares and assuming neither our sponsor
nor any of our officers or directors purchase any units in this offering). We will effect
a stock dividend or share contribution prior to this offering should the size of the offering
change, in order to maintain such ownership percentage.
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|
|
|
The
founder shares are identical to the shares of Class A common stock included in the units being sold in this offering, except
that:
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|
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|
●
|
the
founder shares are shares of Class B common stock that automatically convert into shares of our Class A common stock at the
time of our initial business combination, or at any time prior thereto at the option of the holder, on a one-for-one basis,
subject to adjustment pursuant to certain anti-dilution rights, as described herein;
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|
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|
●
|
the
founder shares are subject to certain transfer restrictions and entitled to certain registration rights, as described
in more detail below;
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|
|
|
|
|
|
|
|
●
|
our
sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to (i) waive
their redemption rights with respect to their founder shares, private placement shares and public shares in connection
with the completion of our initial business combination, (ii) waive their redemption rights with respect to their founder
shares, private placement shares and public shares in connection with a stockholder vote to approve an amendment to
our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to redeem 100%
of our public shares if we do not complete our initial business combination within 18 months from the closing of this offering
or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity
and (iii) waive their rights to liquidating distributions from the trust account with respect to their founder shares and
private placement shares if we fail to complete our initial business combination within 18 months from the closing of
this offering, although they will be entitled to liquidating distributions from the trust account with respect to any public
shares they hold if we fail to complete our initial business combination within the prescribed time frame;
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|
|
|
|
|
|
|
|
●
|
pursuant
to the letter agreement, our sponsor, officers and directors have agreed to vote any founder shares and private placement
shares held by them and any public shares purchased during or after this offering (including in open market and privately
negotiated transactions) in favor of our initial business combination. If we submit our initial business combination to our
public stockholders for a vote, we will complete our initial business combination only if a majority of the outstanding shares
of common stock voted are voted in favor of the initial business combination. As a result, in addition to our initial stockholders’
founder shares and private placement shares, we would need only approximately 357,501, or 3.6%, of the
10,000,000 public shares sold in this offering to be voted in favor of an initial business combination, or 257,501, or
2.6%, if the holders of the representative’s shares and the advisory compensation shares also choose to vote in favor
of the business combination (assuming only a quorum is present at the meeting and only a majority of shares present
are required to approve the business combination) in order to have our initial business combination approved (assuming
the over-allotment option is not exercised); and
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|
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|
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|
|
●
|
the
founder shares are entitled to registration rights.
|
|
Representative’s
shares
|
|
In
connection with the consummation of this offering, we will issue to the representative and/or its designees 50,000 representative’s
shares (or 57,500 shares if the underwriters’ over-allotment option is exercised in full). The holders of the representative’s
shares have agreed not to transfer, assign or sell any such shares without our prior consent until the completion of our initial
business combination. In addition, the holders of the representative’s shares have agreed (i) to waive their redemption
rights (or right to participate in any tender offer) with respect to such shares in connection with the completion of our
initial business combination and (ii) to waive their rights to liquidating distributions from the trust account with respect
to such shares if we fail to complete our initial business combination within 18 months from the closing of this offering.
The representative’s shares are deemed to be underwriters’ compensation by FINRA pursuant to FINRA Rule 5110.
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|
|
|
|
|
Advisory compensation shares
|
|
In
connection with the consummation of this offering, we will issue to Palladium and/or its designees 50,000 shares of
Class A common stock (or 57,500 shares if the underwriters’ over-allotment option is exercised in full).
The holders of the advisory compensation shares have agreed not to transfer, assign or sell any such shares without
our prior consent until the completion of our initial business combination. In addition, the holders of the advisory compensation
shares have agreed (i) to waive their redemption rights (or right to participate in any tender offer) with respect to
such shares in connection with the completion of our initial business combination and (ii) to waive their rights to liquidating
distributions from the trust account with respect to such shares if we fail to complete our initial business combination within
18 months from the closing of this offering. Palladium is an independent financial adviser providing advisory
services to us and is not participating (within the meaning of FINRA Rule 5110(j)(16)) in this offering.
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|
|
|
|
Transfer
restrictions on
founder shares
|
|
Our
initial stockholders have agreed not to transfer, assign or sell any of their founder shares until the earlier to occur
of (i) one year after the date of the consummation of our initial business combination or (ii) the date on which we consummate
a liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the
right to exchange their shares of Class A common stock for cash, securities or other property (except as described herein
under the section of this prospectus entitled “Principal Stockholders — Restrictions on Transfers of Founder
Shares and Private Placement Units”). Any permitted transferees will be subject to the same restrictions and other
agreements of our initial stockholders with respect to any founder shares. Notwithstanding the foregoing, if the closing
price of our shares of Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing 150
days after our initial business combination, the founder shares will no longer be subject to such transfer restrictions.
We refer to such transfer restrictions throughout this prospectus as the lock-up.
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|
|
|
|
|
Founder
shares conversion and
anti-dilution
rights
|
|
The
shares of Class B common stock (all of which are held by our initial stockholders, initially) will automatically convert
into shares of our Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment
for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as provided
herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued
in excess of the amounts offered in this prospectus and related to the closing of the initial business combination, the ratio
at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders
of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance
or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common
stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock
outstanding upon the completion of this offering (excluding the private placement shares, representative’s shares
and advisory compensation shares) plus all shares of Class A common stock and equity-linked securities issued or deemed
issued in connection with the initial business combination (excluding any shares or equity-linked securities issued, or to be
issued, to any seller in the initial business combination or any units issued to our sponsor, its affiliates or certain of our
officers and directors upon conversion of working capital loans made to us). Holders of founder shares may also elect to convert
their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment as provided
above, at any time. The term “equity-linked securities” refers to any debt or equity securities that are convertible,
exercisable or exchangeable for shares of Class A common stock issued in a financing transaction in connection with our initial
business combination, including but not limited to a private placement of equity or debt. Securities could be “deemed issued”
for purposes of the conversion rate adjustment if such shares are issuable upon the conversion or exercise of convertible securities,
rights or similar securities.
|
|
Voting
Rights
|
|
Holders
of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted
to a vote of our stockholders, with each share of common stock entitling the holder to one vote, except as required by
law or our amended and restated certificate of incorporation.
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|
|
|
|
|
Private
placement units and underlying securities
|
|
Our
sponsor has agreed to purchase an aggregate of 390,000 private placement units (or 420,000 units if the over-allotment
option is exercised in full) at a price of $10.00 per unit, for an aggregate purchase price of $3,900,000, or $4,200,000 if the
over-allotment option is exercised in full. The private placement units are identical to the units sold in this offering except
that the private placement units, the shares of Class A common stock and rights comprising such units (and
the shares of Class A common stock underlying such rights), so long as they are held by our sponsor or any permitted transferees,
(i) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holders until the later of 30
days after the completion of our initial business combination and one year after the completion of this offering,
and (ii) will be entitled to registration rights. A portion of the purchase price of the private placement units will be added
to the proceeds from this offering to be held in the trust account such that at the time of closing $100,000,000 (or $115,000,000
if the underwriters exercise their over-allotment option in full) will be held in the trust account. If we do not complete our
initial business combination within 18 months from the closing of this offering, the proceeds from the sale of the private placement
units held in the trust account will be used to fund the redemption of our public shares (subject to the requirements of applicable
law). Holders of the private placement units and the underlying securities have agreed to waive their rights to liquidating
distributions from the trust account with respect to such securities if we fail to complete our initial business combination
within 18 months from the closing of this offering.
|
|
|
|
|
|
Transfer
restrictions on private placement units and underlying securities
|
|
The
private placement units (including the shares of Class A common stock and rights underlying such units, and the
shares of Class A common stock underlying such rights) will not be transferable, assignable or salable until the
later of 30 days after the completion of our initial business combination and one year after the completion of this offering
(except as described under the section of this prospectus entitled “Principal Stockholders — Restrictions
on Transfers of Founder Shares and Private Placement Units”). Following such period and subject to applicable
federal and state securities laws, the private placement units (including the shares of Class A common stock
and rights underlying such units, and the shares of Class A common stock underlying such rights) will be transferable,
assignable or salable, except that the private placement units will not trade.
|
|
Proceeds
to be held in trust account
|
|
Nasdaq
rules provide that at least 90% of the gross proceeds from this offering and the sale of the private placement units be deposited
in a trust account. Of the net proceeds of this offering and the sale of the private placement units, $100,000,000, or $10.00 per
unit ($115,000,000, or $10.00 per unit, if the underwriters’ over-allotment option is exercised in full) will be placed into
a trust account in the United States, with Continental Stock Transfer & Trust Company acting as trustee. These proceeds
include $3,500,000 (or $4,025,000 if the underwriters’ over-allotment option is exercised in full) in deferred underwriting
commissions.
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|
|
|
|
|
|
|
Except
with respect to interest earned on the funds held in the trust account that may be released to us to pay our franchise and
income tax obligations (less up to $150,000 of interest to pay dissolution expenses), the proceeds from this offering and
the sale of the private placement units will not be released from the trust account until the earliest of (a) the completion
of our initial business combination, (b) the redemption of any public shares properly submitted in connection with a stockholder
vote to amend our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation
to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing
of this offering or (ii) with respect to any other provision relating to stockholders’ rights or pre-business combination
activity, and (c) the redemption of our public shares if we are unable to complete our initial business combination within
18 months from the closing of this offering, subject to applicable law. The proceeds deposited in the trust account could
become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders.
|
|
Ability
to extend time to complete business combination
|
|
We
will have until 18 months from the closing of this offering to consummate an initial business combination. However, if we anticipate
that we may not be able to consummate our initial business combination within 18 months, we may seek to amend our amended and
restated certificate of incorporation to extend the time we have to consummate an initial business combination.
|
|
|
|
|
|
Anticipated
expenses and funding sources
|
|
Except
as described above with respect to the payment of taxes, unless and until we complete our initial business combination, no proceeds
held in the trust account will be available for our use. The proceeds held in the trust account will be invested only in U.S.
government securities with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7
under the Investment Company Act which invest only in direct U.S. government treasury obligations. We will disclose in each quarterly
and annual report filed with the SEC prior to our initial business combination whether the proceeds deposited in the trust account
are invested in U.S. government treasury obligations or money market funds or a combination thereof. Based upon current interest
rates, we expect the trust account to generate approximately $140,000 of interest annually assuming an interest rate of 0.14%
per year; however, we can provide no assurances regarding this amount. Unless and until we complete our initial business combination,
we may pay our expenses only from:
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|
|
|
●
|
the
net proceeds of this offering and the sale of the private placement units not held in the trust account, which will be approximately
$1,000,000 of working capital after the payment of approximately $900,000 of expenses relating to this offering; and
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|
|
|
●
|
any
loans or additional investments from our sponsor, members of our management team or their affiliates or other third parties,
although they are under no obligation to advance funds or invest in us, and provided that any such loans will not have any
claim on the proceeds held in the trust account unless such proceeds are released to us upon completion of an initial business
combination.
|
|
Conditions
to completing our initial business combination
|
|
Nasdaq
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of
the value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest
earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination.
Our board of directors will make the determination as to the fair market value of our initial business combination. If our board
of directors is not able to independently determine the fair market value of our initial business combination, we will obtain
an opinion from an independent investment banking firm that is a member of FINRA or an independent accounting firm with respect
to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make an independent
determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or
experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of a target’s
assets or prospects. There is no limitation on our ability to raise funds privately, or through loans in connection with our initial
business combination.
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|
|
|
|
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|
|
We
anticipate structuring our initial business combination either (i) in such a way so that the post-transaction company in which
our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses,
or (ii) in such a way so that the post-transaction company owns or acquires less than 100% of such interests or assets of
the target business in order to meet certain objectives of the target management team or stockholders, or for other reasons.
However, we will only complete an initial business combination if the post-transaction company owns or acquires 50% or more
of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for
it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction
company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the initial business
combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to
the target and us in the initial business combination. For example, we could pursue a transaction in which we issue a substantial
number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100%
controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders
immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent
to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses
are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired
is what will be taken into account for
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|
purposes
of Nasdaq’s 80% of net assets test. If the initial business combination involves more than one target business, the
80% of net assets test will be based on the aggregate value of all of the transactions and we will treat the target businesses
together as the initial business combination for purposes of a tender offer or for seeking stockholder approval, as applicable.
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Permitted
purchases of public
shares and public rights by our affiliates
|
|
If
we seek stockholder approval of our initial business combination and we do not conduct
redemptions in connection with our initial business combination pursuant to the tender
offer rules, our sponsor, initial stockholders, directors, officers, advisors or their
affiliates may purchase shares or public rights in privately negotiated transactions
or in the open market either prior to or following the completion of our initial business
combination. There is no limit on the number of shares our initial stockholders, directors,
officers, advisors or their affiliates may purchase in such transactions, subject to
compliance with applicable law and Nasdaq rules. However, they have no current commitments,
plans or intentions to engage in such transactions and have not formulated any terms
or conditions for any such transactions. If they engage in such transactions, they will
not make any such purchases when they are in possession of any material nonpublic information
not disclosed to the seller or if such purchases are prohibited by Regulation M under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We
do not currently anticipate that such purchases, if any, would constitute a tender offer
subject to the tender offer rules under the Exchange Act or a going-private transaction
subject to the going-private rules under the Exchange Act; however, if the purchasers
determine at the time of any such purchases that the purchases are subject to such rules,
the purchasers will comply with such rules. Any such purchases will be reported pursuant
to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject
to such reporting requirements. None of the funds held in the trust account will be used
to purchase shares or public rights in such transactions prior to completion of our initial
business combination. See “Proposed Business — Permitted purchases of our
securities” for a description of how our sponsor, initial stockholders, directors,
officers, advisors or any of their affiliates will select which stockholders to purchase
securities from in any private transaction.
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|
|
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|
The
purpose of any such purchases of shares could be to vote such shares in favor of the initial business combination and thereby
increase the likelihood of obtaining stockholder approval of the initial business combination or to satisfy a closing condition
in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our
initial business combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases
of public rights could be to reduce the number of public rights, or the securities underlying them, that are outstanding.
Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise
have been possible. In addition, if such purchases are made, the public “float” of our shares of Class A common
stock or rights may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult
to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
|
|
Redemption
rights for public stockholders upon completion of our initial business combination
|
|
We
will provide our public stockholders with the opportunity to redeem all or a portion
of their public shares upon the completion of our initial business combination at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the trust account
as of two business days prior to the consummation of our initial business combination,
including interest earned on the funds held in the trust account and not previously released
to us to pay our franchise and income taxes, divided by the number of then outstanding
public shares, subject to the limitations described herein. The amount in the trust account
is initially anticipated to be $10.00 per public share. The per-share amount we will
distribute to investors who properly redeem their shares will not be reduced by the deferred
underwriting commissions we will pay to the underwriters. There will be no redemption
rights upon the completion of a business combination with respect to the Company’s
rights. Our sponsor, officers and directors have entered into a letter agreement with
us, pursuant to which they have agreed to waive their redemption rights with respect
to any founder shares and private placement shares held by them and any public
shares they may acquire during or after this offering in connection with the completion
of our initial business combination or otherwise.
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|
|
|
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|
|
We
may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their
shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth
in the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the
proposal to approve the initial business combination in the event we distribute proxy materials, or to deliver their shares
to the transfer agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System,
at the holder’s option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public
shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy
such delivery requirements.
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|
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Manner
of conducting redemptions
|
|
We
will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion
of our initial business combination either (i) in connection with a stockholder meeting called to approve the initial business
combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed
initial business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on
a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek
stockholder approval under the law or stock exchange listing requirements. Under Nasdaq rules, asset acquisitions and stock
purchases would not typically require stockholder approval while direct mergers with our company where we do not survive and
any transactions where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate
of incorporation would require stockholder approval. We may conduct redemptions without a stockholder vote pursuant to the
tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirements or we
choose to seek stockholder approval for business or other legal reasons. So long as we obtain and maintain a listing for our
securities on Nasdaq, we will be required to comply with such rules.
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|
If
a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we
will, pursuant to our amended and restated certificate of incorporation:
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|
●
|
conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and
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|
●
|
file
tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same
financial and other information about the initial business combination and the redemption rights as is required under Regulation
14A of the Exchange Act, which regulates the solicitation of proxies.
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|
Such
provisions may be amended if approved by holders of a majority of our common stock entitled to vote thereon.
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|
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|
Whether
or not we maintain our registration under the Exchange Act or our listing on Nasdaq, we will provide our public stockholders
with the opportunity to redeem their public shares by one of the two methods listed above. Upon the public announcement of
our initial business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we or our sponsor
will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common stock in the open
market, in order to comply with Rule 14e-5 under the Exchange Act.
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In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20
business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial
business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on
public stockholders not tendering more than a specified number of public shares, which number will be based on the requirement
that we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001
either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’
fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible
asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public
stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial
business combination.
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If,
however, stockholder approval of the transaction is required by law or stock exchange listing requirements, or we decide to
obtain stockholder approval for business or other legal reasons, we will:
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●
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conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the
solicitation of proxies, and not pursuant to the tender offer rules, and
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file
proxy materials with the SEC.
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If
we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares
of common stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the
holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the
voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting.
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Our
initial stockholders will count towards this quorum and, pursuant to the letter agreement, our sponsor, officers and directors
have agreed to vote their founder shares, private placement shares and any public shares purchased during or after
this offering (including in open market and privately negotiated transactions) in favor of our initial business combination.
For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect
on the approval of our initial business combination once a quorum is obtained. As a result, in addition to our initial stockholders’
founder shares and private placement shares, we would need only approximately 357,501, or 3.6%, of the
10,000,000 public shares sold in this offering to be voted in favor of an initial business combination, or 257,501, or
2.6%, if the holders of the representative’s shares and the advisory compensation shares also choose to vote in favor
of the business combination (assuming only a quorum is present at the meeting and only a majority of shares present
are required to approve the business combination) in order to have our initial business combination approved (assuming
the over-allotment option is not exercised). We intend to give approximately 30 days (but not less than 10 days nor more than
60 days) prior written notice of any such meeting, if required, at which a vote shall be taken to approve our initial business
combination. These quorum and voting thresholds, and the voting agreements of our initial stockholders, may make it more likely
that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares irrespective
of whether they vote for or against the proposed transaction.
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We
may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their
shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth
in the tender offer documents mailed to such holders, or up to two business days prior to the vote on the proposal to approve
the initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent
electronically. We believe that this will allow our transfer agent to efficiently process any redemptions without the need
for further communication or action from the redeeming public stockholders, which could delay redemptions and result in additional
administrative cost. If the proposed initial business combination is not approved and we continue to search for a target company,
we will promptly return any certificates delivered, or shares tendered electronically, by public stockholders who elected
to redeem their shares.
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Our
amended and restated certificate of incorporation will provide that we will only redeem our public shares so long as (after
such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our
initial business combination and after payment of underwriters’ fees and commissions (so that we are not subject to
the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained
in the agreement relating to our initial business combination. For example, the proposed initial business combination may
require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working
capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with
the terms of the proposed initial business combination. In the event the aggregate cash consideration we would be required
to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy
cash conditions pursuant to the terms of the proposed initial business combination exceed the aggregate amount of cash available
to us, we will not complete the initial business combination or redeem any shares, and all shares of Class A common stock
submitted for redemption will be returned to the holders thereof.
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Limitation
on redemption rights of stockholders holding 15% or more of the shares sold in this offering if we hold stockholder vote
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Notwithstanding
the foregoing redemption rights, if we seek stockholder approval of our initial business
combination and we do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, our amended and restated certificate
of incorporation will provide that a public stockholder, together with any affiliate
of such stockholder or any other person with whom such stockholder is acting in concert
or as a “group” (as defined under Section 13 of the Exchange Act), will be
restricted from redeeming its shares with respect to more than an aggregate of 15% of
the shares sold in this offering, without our prior consent. We believe the restriction
described above will discourage stockholders from accumulating large blocks of shares,
and subsequent attempts by such holders to use their ability to redeem their shares as
a means to force us or our management to purchase their shares at a significant premium
to the then-current market price or on other undesirable terms. Absent this provision,
a public stockholder holding more than an aggregate of 15% of the shares sold in this
offering could threaten to exercise its redemption rights against an initial business
combination if such holder’s shares are not purchased by us or our management at
a premium to the then-current market price or on other undesirable terms. By limiting
our stockholders’ ability to redeem to no more than 15% of the shares sold in this
offering, we believe we will limit the ability of a small group of stockholders to unreasonably
attempt to block our ability to complete our initial business combination, particularly
in connection with an initial business combination with a target that requires as a closing
condition that we have a minimum net worth or a certain amount of cash. However, we would
not be restricting our stockholders’ ability to vote all of their shares (including
all shares held by those stockholders that hold more than 15% of the shares sold in this
offering) for or against our initial business combination.
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Redemption
rights in connection with proposed amendments to our certificate of incorporation
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Our
amended and restated certificate of incorporation provides that any of its provisions related to pre-business combination
activity (including the requirement to deposit proceeds of this offering and the private placement of units into the trust
account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders
as described herein) may be amended if approved by holders of a majority of our common stock entitled to vote thereon,
and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended
if approved by holders of a majority of our common stock entitled to vote thereon. In all other instances, our amended
and restated certificate of incorporation may be amended by holders of a majority of our outstanding common stock entitled
to vote thereon, subject to applicable provisions of the Delaware General Corporation Law, or
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DGCL,
or applicable stock exchange rules. Under our amended and restated certificate of incorporation, we may not issue additional
securities that can vote on amendments to our amended and restated certificate of incorporation or on our initial business
combination or that would entitle holders thereof to receive funds from the trust account. Our initial stockholders, who will
collectively beneficially own 20% of our common stock upon the closing of this offering (excluding the private placement
shares, representative’s shares and advisory compensation shares and assuming our initial stockholders
do not purchase any units in this offering), will participate in any vote to amend our amended and restated certificate of
incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. Our sponsor, executive
officers, directors and director nominees have agreed, pursuant to a written agreement with us, that they will not propose
any amendment to our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation
to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing
of this offering or (ii) with respect to any other provision relating to stockholders’ rights or pre-business combination
activity, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon
approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding
public shares. Our sponsor, officers and directors have entered into a letter agreement with us pursuant to which they have
agreed to waive their redemption rights with respect to any founder shares, private placement shares and any public
shares held by them in connection with the completion of our initial business combination.
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Release
of funds in trust account on closing of our initial business combination
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On
the completion of our initial business combination, the funds held in the trust account will be used to pay amounts due
to any public stockholders who exercise their redemption rights as described above under “Redemption rights for
public stockholders upon completion of our initial business combination.” We will use the remaining funds to pay
the underwriters their deferred underwriting commissions, to pay all or a portion of the consideration payable to the
target or owners of the target of our initial business combination and to pay other expenses associated with our initial
business combination. If our initial business combination is paid for using equity or debt securities, or not all of the
funds released from the trust account are used for payment of the consideration in connection with our initial business
combination, we may apply the balance of the cash released to us from the trust account for general corporate purposes,
including for maintenance or expansion of operations of post-transaction businesses, the payment of principal or interest
due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or
for working capital.
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Redemption
of public shares and distribution and liquidation if no initial business combination
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Our amended and restated certificate of incorporation provides that we will have only 18 months from the closing of this offering
to complete our initial business combination. If we are unable to complete our initial business combination within such 18-month
period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but
not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and
not previously released to us to pay our franchise and income taxes (less up to $150,000 of interest to pay dissolution expenses),
divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law,
and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide
for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions
with respect to our rights, which will expire worthless if we fail to complete our initial business combination within the
applicable time period.
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Our
sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights
to liquidating distributions from the trust account with respect to any founder shares and private placement shares
held by them if we fail to complete our initial business combination within 18 months from the closing of this offering. However,
if our initial stockholders acquire public shares in or after this offering, they will be entitled to liquidating distributions
from the trust account with respect to such public shares if we fail to complete our initial business combination within the
applicable time period.
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The
underwriters have agreed to waive their rights to their deferred underwriting commission held in the trust account in the
event we do not complete our initial business combination and subsequently liquidate and, in such event, such amounts will
be included with the funds held in the trust account that will be available to fund the redemption of our public shares. The
holders of representative’s shares will not participate in any distribution from our trust account with respect to such
shares.
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Limited
payments to insiders
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There
will be no finder’s fees, reimbursement, consulting fee, non-cash payments, monies in respect of any payment of a loan
or other compensation paid by us to our sponsor, officers or directors, or any affiliate of our sponsor or officers prior
to, or in connection with any services rendered in order to effectuate, the consummation of our initial business combination
(regardless of the type of transaction that it is). However, the following payments will be made to our sponsor, officers
or directors, or our or their affiliates, none of which will be made from the proceeds of this offering held in the trust
account prior to the completion of our initial business combination:
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Repayment
of up to an aggregate of $300,000 in loans made to us by our sponsor to cover offering-related and organizational expenses;
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Payment
to our sponsor of $30,000 per month, from the effective date of the registration statement of which this prospectus forms a part
and for up to 18 months following the completion of this offering, for the provision of officers’ cash salaries, office
space, utilities and secretarial and administrative support (plus an additional amount in respect of officers’ cash salaries
payable for services provided prior to the effective date, which the Company expects will not exceed approximately $30,000);
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Reimbursement
for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; and
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Repayment
of loans which may be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance
transaction costs in connection with an intended initial business combination, the terms of which have not been determined
nor have any written agreements been executed with respect thereto. Up to $1,500,000 of such working capital loans may be
convertible into units at a price of $10.00 per unit (which, for example, would result in the holders being issued 150,000
units, if $1,500,000 of loans were so converted), at the option of the lender. Such units would be identical to the
private placement units. The terms of such working capital loans by our sponsor or its affiliates, or our officers and directors,
if any, have not been determined and no written agreements exist with respect to such loans.
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Our
audit committee will review on a quarterly basis all payments that were made to our sponsor, officers or directors, or our
or their affiliates.
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Audit
Committee
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We
will establish and maintain an audit committee, which will be composed entirely of independent directors to, among other things,
monitor compliance with the terms described above and the other terms relating to this offering. If any noncompliance is identified,
then the audit committee will be charged with the responsibility to immediately take all action necessary to rectify such
noncompliance or otherwise to cause compliance with the terms of this offering. For more information, see the section of this
prospectus entitled “Management — Committees of the Board of Directors — Audit Committee.”
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Indemnity
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Our
sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or
products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality
or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser
of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the
liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes
payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed
a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will
it apply to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities
under the Securities Act. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have
we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our
sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our sponsor would be able
to satisfy those obligations. None of our officers or directors will indemnify us for claims by third parties including, without
limitation, claims by vendors and prospective target businesses.
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Financial Advisory Services
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We have engaged Palladium,
which is a registered broker-dealer, to provide financial advisory services as a broker-dealer
in connection with this offering, which services are independent from those being provided
by the underwriters. We have agreed to pay Palladium customary fees in connection with
this offering, which includes deferred compensation that is contingent on the completion
of an initial business combination within the specified time period. The underwriters
have agreed to reimburse us for the fee to be paid to Palladium. As a result, there is
no additional offering expense related to this fee. However, this engagement may present
potential conflicts of interest because a portion of the fees payable are contingent
on the consummation of an initial business combination. In addition, we may engage Palladium
for capital markets or financial advisory services after this offering (in connection
with an initial business combination or otherwise), which could create additional conflicts
of interest. We may also engage other service providers for services in connection with
identifying and investigating potential targets for, and the consummation of, our business
combination, and we may pay fees, including non-cash compensation, and reimburse expenses
for any such services. Similarly, Palladium or such other service providers may provide
services to prospective acquisition targets, including in connection with or following
an initial business combination with us, and may receive fees and other compensation
and expense reimbursements in exchange for such services.
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RISKS
We
are a newly formed company that has conducted no operations and has generated no revenues. Until we complete our initial business
combination, we will have no operations and will generate no operating revenues. In making your decision whether to invest in
our securities, you should take into account not only the background of our management team, but also the special risks we face
as a blank check company. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act.
Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional
information concerning how Rule 419 blank check offerings differ from this offering, please see the section of this prospectus
entitled “Proposed Business — Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419.”
You should carefully consider these and the other risks set forth in the section of this prospectus entitled “Risk Factors.”
SUMMARY
FINANCIAL DATA
The
following table summarizes the relevant financial data for our business and should be read with our financial statements, which
are included in this prospectus. We have not had any significant operations to date, so only balance sheet data is presented.
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April
6, 2021
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Actual
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As
Adjusted
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Balance
Sheet Data:
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Working
(deficiency) capital(1)
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$
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(324,393
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)
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$
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97,524,323
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Total
assets(2)
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348,716
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101,024,323
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Total
liabilities(3)
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324,493
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3,500,000
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Value
of common stock subject to possible redemption(4)
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—
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92,524,322
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Stockholders’
equity(5)
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24,223
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5,000,001
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(1)
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The
“as adjusted” calculation includes $100,000,000 of cash held in trust from the proceeds of this offering and the
sale of private placement units, plus $50 from the issuance of the representative’s shares, plus $50 from the
issuance of the advisory compensation shares plus approximately $1,000,000 in cash held outside the trust account,
plus $24,223 of actual stockholders’ equity on April 6, 2021 less $3,500,000 in deferred underwriting commissions.
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(2)
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The
“as adjusted” calculation equals $100,000,000 of cash held in trust from the proceeds of this offering and the
sale of the private placement units, plus $50 from the issuance of the representative’s shares, plus $50 from
the issuance of the advisory compensation shares plus approximately $1,000,000 in cash held outside the trust account,
plus $24,223 of actual stockholders’ equity on April 6, 2021.
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(3)
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The
“as adjusted” calculation equals $3,500,000 of deferred underwriting commissions, assuming the over-allotment
option is not exercised.
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(4)
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The
“as adjusted” calculation equals the “as adjusted” total assets, less the “as adjusted”
total liabilities, less the “as adjusted” stockholders equity which is set to approximate the minimum net tangible
assets threshold of at least $5,000,001 either immediately prior to or upon consummation of our initial business combination.
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(5)
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Excludes
9,252,432 shares of common stock purchased in the public market which are subject to redemption in connection with
our initial business combination. The “as adjusted” calculation equals the “as adjusted” total assets,
less the “as adjusted” total liabilities, less the value of shares of common stock that may be redeemed
in connection with our initial business combination ($10.00 per share).
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The
“as adjusted” information gives effect to the issuance of the representative’s shares and advisory compensation
shares, the sale of the units we are offering and the sale of the private placement units, including the application of the
related gross proceeds and the payment of the estimated remaining costs from such sale and the repayment of the accrued and other
liabilities required to be repaid.
The
“as adjusted” total assets amount $100,000,000 to be held in the trust account (or $115,000,000 if the over-allotment
option is exercised in full) which, except for limited situations described in this prospectus, will be available to us only upon
the consummation of a business combination within the time period described in this prospectus. If a business combination is not
so consummated, the trust account, less amounts we are permitted to withdraw from interest earned on the funds in the trust account
as described in this prospectus, will be distributed solely to our public stockholders (subject to our obligations under Delaware
law to provide for claims of creditors).
We
will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 either immediately
prior to or upon such consummation and, solely if we seek stockholder approval, a majority of the outstanding shares of common
stock voted are voted in favor of the business combination.
RISK
FACTORS
An
investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together
with the other information contained in this prospectus, before making a decision to invest in our units. If any of the following
events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the
trading price of our securities could decline, and you could lose all or part of your investment.
Risks
Relating to Our Search For, and Consummation of or Inability to Consummate, a Business Combination
Our
public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we may
complete our initial business combination even though a majority of our public stockholders do not support such a combination.
We
may choose not to hold a stockholder vote to approve our initial business combination unless the initial business combination
would require stockholder approval under applicable law or stock exchange listing requirements or if we decide to hold a stockholder
vote for business or other legal reasons. Except as required by law, the decision as to whether we will seek stockholder approval
of a proposed initial business combination or will allow stockholders to sell their shares to us in a tender offer will be made
by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether
the terms of the transaction would otherwise require us to seek stockholder approval. Accordingly, we may complete our initial
business combination even if holders of a majority of our public shares do not approve of the initial business combination we
complete. Please see the section of this prospectus entitled “Proposed Business — Stockholders May Not Have the Ability
to Approve Our Initial Business Combination” for additional information.
Your
only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise
of your right to redeem your shares from us for cash, unless we seek stockholder approval of the initial business combination.
At
the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of our
initial business combination. Since our board of directors may complete an initial business combination without seeking stockholder
approval, public stockholders may not have the right or opportunity to vote on the initial business combination, unless we seek
such stockholder vote. Accordingly, if we do not seek stockholder approval, your only opportunity to affect the investment decision
regarding a potential business combination may be limited to exercising your redemption rights within the period of time (which
will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders in which we describe
our initial business combination.
If
we seek stockholder approval of our initial business combination, our initial stockholders have agreed to vote in favor of such
initial business combination, regardless of how our public stockholders vote.
Pursuant to the letter
agreement, our sponsor, officers and directors have agreed to vote their founder shares and private placement shares, as
well as any public shares purchased during or after this offering (including in open market and privately negotiated transactions),
in favor of our initial business combination. As a result, in addition to our initial stockholders’ founder shares and
the private placement shares, we would need only approximately 357,501, or approximately 3.6%, of the 10,000,000
public shares sold in this offering to be voted in favor of an initial business combination, or 257,501, or 2.6%, if the holders
of the representative’s shares and the advisory compensation shares also choose to vote in favor of the business combination
(assuming only a quorum is present at the meeting and only a majority of shares are required to approve the business
combination) in order to have our initial business combination approved (assuming the over-allotment option is not exercised).
Our initial stockholders will own shares representing 20% of our outstanding shares of common stock immediately following the
completion of this offering (excluding the private placement shares, representative’s shares and advisory
compensation shares and assuming our initial stockholders do not purchase any units in this offering). Accordingly, if we
seek stockholder approval of our initial business combination, the agreement by our initial stockholders to vote in favor of our
initial business combination will increase the likelihood that we will receive the requisite stockholder approval for such initial
business combination.
The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential
business combination targets, which may make it difficult for us to enter into an initial business combination with a target.
We
may seek to enter into an initial business combination agreement with a prospective target that requires as a closing condition
that we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights,
we would not be able to meet such closing condition and, as a result, would not be able to proceed with the initial business combination.
Furthermore, we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least
$5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’
fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible
asset or cash requirement which may be contained in the agreement relating to our initial business combination. Consequently,
if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or such
greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the
related business combination and may instead search for an alternate business combination. Prospective targets will be aware of
these risks and, thus, may be reluctant to enter into an initial business combination with us.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us
to complete the most desirable business combination or optimize our capital structure.
At
the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise
their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares
that will be submitted for redemption. If our initial business combination agreement requires us to use a portion of the cash
in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve
a portion of the cash in the trust account to meet such requirements, or arrange for third party financing. In addition, if a
larger number of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to
reserve a greater portion of the cash in the trust account or arrange for third party financing. Raising additional third party
financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. Furthermore,
this dilution would increase to the extent that the anti-dilution provision of the Class B common stock result in the issuance
of Class A shares on a greater than one-to-one basis upon conversion of the Class B common stock at the time of our business combination.
The above considerations may limit our ability to complete the most desirable business combination available to us or optimize
our capital structure. The amount of the deferred underwriting commissions payable to the underwriters will not be adjusted for
any shares that are redeemed in connection with an initial business combination. The per-share amount we will distribute to stockholders
who properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after such redemptions,
the per-share value of shares held by non-redeeming stockholders will reflect our obligation to pay the deferred underwriting
commissions.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the
probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order
to redeem your stock.
If
our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price,
or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful
is increased. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account
until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open
market; however, at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In either
situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption
until we liquidate or you are able to sell your stock in the open market.
The
requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses
leverage over us in negotiating an initial business combination and may decrease our ability to conduct due diligence on potential
business combination targets as we approach our dissolution deadline, which could undermine our ability to complete our initial
business combination on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning an initial business combination will be aware that
we must complete our initial business combination within 18 months from the closing of this offering. Consequently, such target
business may obtain leverage over us in negotiating an initial business combination, knowing that if we do not complete our initial
business combination with that particular target business, we may be unable to complete our initial business combination with
any target business. This risk will increase as we get closer to the timeframe described above. In addition, we may have limited
time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected upon a
more comprehensive investigation.
We
may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all
operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public
stockholders may only receive $10.00 per share, or less than such amount in certain circumstances, and our rights will expire
worthless.
Our
amended and restated certificate of incorporation provides that we must complete our initial business combination within 18 months
from the closing of this offering. We may not be able to find a suitable target business and complete our initial business combination
within such time period. If we have not completed our initial business combination within such time period, we will: (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in
the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our
franchise and income taxes (less up to $150,000 of interest to pay dissolution expenses), divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right
to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate,
subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. In such case, our public stockholders may only receive $10.00 per share, and our rights will expire worthless. In certain
circumstances, our public stockholders may receive less than $10.00 per share on the redemption of their shares. See “—
If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption
amount received by stockholders may be less than $10.00 per share” and other risk factors below.
Our
search for a business combination, and any target business with which we ultimately consummate a business combination, may be
materially adversely affected by the novel coronavirus (COVID-19) pandemic.
The
COVID-19 pandemic worldwide and resulting epidemic in the United States has resulted in a widespread health crisis that has adversely
affected the economy and financial markets, and the business of any potential target business with which we consummate a business
combination could be materially and adversely affected. We may be unable to complete a business combination if continued concerns
relating to COVID-19 restrict travel, limit the ability to have meetings with potential investors or the target company’s
personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent
to which COVID-19 impacts our search for a business combination will depend on future developments, which are highly uncertain
and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain
COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for
an extensive period of time, our ability to consummate a business combination, or the operations of a target business with which
we ultimately consummate a business combination, may be materially adversely affected.
As
the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there
may be more competition for attractive targets. This could increase the cost of our initial business combination and could even
result in our inability to find a target or to consummate an initial business combination.
In
recent years, the number of special purpose acquisition companies that have been formed has increased substantially. Many potential
targets for special purpose acquisition companies have already entered into an initial business combination, and there are still
many companies preparing for an initial public offering. As a result, at times, fewer attractive targets may be available to consummate
an initial business combination.
In
addition, because there are more special purpose acquisition companies seeking to enter into an initial business combination with
available targets, the competition for available targets with attractive fundamentals or business models may increase, which could
cause target companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such
as economic or industry sector downturns, geopolitical tensions, or increases in the cost of additional capital needed to close
business combinations or operate targets post-business combination. This could increase the cost of, delay or otherwise complicate
or frustrate our ability to find and consummate an initial business combination, and may result in our inability to consummate
an initial business combination on terms favorable to our investors.
If
we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors and their affiliates
may elect to purchase shares or rights from public stockholders, which may influence a vote on a proposed initial business combination
and reduce the public “float” of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase
shares or public rights or a combination thereof in privately negotiated transactions or in the open market either prior to or
following the completion of our initial business combination, although they are under no obligation to do so. However, they have
no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for
any such transactions. None of the funds in the trust account will be used to purchase shares or public rights in such transactions.
Such
a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of our shares is
no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our sponsor,
directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders
who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior
elections to redeem their shares. The purpose of such purchases could be to vote such shares in favor of the initial business
combination and thereby increase the likelihood of obtaining stockholder approval of the initial business combination, or to satisfy
a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at
the closing of our initial business combination, where it appears that such requirement would otherwise not be met. The purpose
of any such purchases of public rights could be to reduce the number of public rights, or the securities underlying them, that
are outstanding. Any such purchases of our securities may result in the completion of our initial business combination that may
not otherwise have been possible. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act
to the extent such purchasers are subject to such reporting requirements.
In
addition, if such purchases are made, the public “float” of our Class A common stock or public rights and the number
of beneficial holders of our securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing
or trading of our securities on a national securities exchange.
If
a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination,
or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial
business combination. Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials,
as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy materials or
tender offer documents, as applicable, that we will furnish to holders of our public shares in connection with our initial business
combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares.
For example, we may require our public stockholders seeking to exercise their redemption rights, whether they are record holders
or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date
set forth in the tender offer documents mailed to such holders, or up to two business days prior to the vote on the proposal to
approve the initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer
agent electronically. In the event that a stockholder fails to comply with these or any other procedures, its shares may not be
redeemed. See the section of this prospectus entitled “Proposed Business — Redemption Rights for Public Stockholders
upon Completion of our Initial Business Combination — Tendering Stock Certificates in Connection with a Tender Offer or
Redemption Rights.”
Changes
in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate
and complete an initial business combination.
In
recent months, the market for directors and officers liability insurance for special purpose acquisition companies has changed
in ways adverse to us and our management team. Fewer insurance companies are offering quotes for directors and officers liability
coverage, the premiums charged for such policies have generally increased and the terms of such policies have generally become
less favorable. These trends are likely to continue into the future.
The
representative may have a conflict of interest if they render services to us in connection with our initial business combination.
We
may elect to engage Maxim Group LLC (who is the representative of the underwriters of this offering) to assist us in connection
with our initial business combination. The representative’s shares held by the representative and/or its designees will
also be worthless if we do not consummate an initial business combination. Therefore, if the representative provides services
to us in connection with our initial business combination, these financial interests may result in the representative having a
conflict of interest when providing such services to us.
Palladium
may have a conflict of interest in connection with rendering their financial advisory services, including without limitation in
connection with our initial business combination.
We
have engaged Palladium, which is a registered broker-dealer, to provide financial advisory services as a broker-dealer in connection
with this offering, which services are independent from those being provided by the underwriters. We have agreed to pay Palladium
customary fees in connection with this offering, which includes deferred compensation that is contingent on the completion of
an initial business combination with-in the specified time period. The underwriters have agreed to reimburse us for the fee to
be paid to Palladium. As a result, there is no additional offering expense related to this fee. However, this engagement may present
potential conflicts of interest because a portion of the fees payable are contingent on the consummation of an initial business
combination. Furthermore, the advisory compensation shares held by Palladium and/or its designees will also be worthless if we
do not consummate an initial business combination. In addition, we may engage Palladium for capital markets or financial advisory
services after this offering (in connection with an initial business combination or otherwise), which could create additional
conflicts of interest. We may also engage other service providers for services in connection with identifying and investigating
potential targets for, and the consummation of, our business combination, and we may pay fees, including non-cash compensation,
and reimburse expenses for any such services. Similarly, Palladium or such other service providers may provide services to
prospective acquisition targets, including in connection with or following an initial business combination with us, and may receive
fees and other compensation and expense reimbursements in exchange for such services. These and other activities may result in
actual or apparent conflicts of interest.
You
will not be entitled to protections normally afforded to investors of many other blank check companies.
Since
the net proceeds of this offering and the sale of the private placement units are intended to be used to complete an initial business
combination with a target business that has not been identified, we may be deemed to be a “blank check” company under
the United States securities laws. However, because we will have net tangible assets in excess of $7,500,000 upon the successful
completion of this offering and the sale of the private placement units and will file a Current Report on Form 8-K, including
an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank
check companies, such as Rule 419.
Accordingly,
investors will not be afforded the benefits or protections of those rules. Among other things, this means our units will be immediately
tradable and we will have a longer period of time to complete our initial business combination than do companies subject to Rule
419. Moreover, if this offering were subject to Rule 419, that rule would prohibit the release of any interest earned on funds
held in the trust account to us unless and until the funds in the trust account were released to us in connection with our completion
of an initial business combination. For a more detailed comparison of our offering to offerings that comply with Rule 419, please
see the section of this prospectus entitled “Proposed Business — Comparison of This Offering to Those of Blank Check
Companies Subject to Rule 419.”
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer
rules, and if you or a “group” of stockholders are deemed to hold in excess of 15% of our Class A common stock, you
will lose the ability to redeem all such shares in excess of 15% of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that
a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting
in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption
rights with respect to more than an aggregate of 15% of the shares sold in this offering without our prior consent, which we refer
to as the “Excess Shares.” However, we would not be restricting our stockholders’ ability to vote all of their
shares (including Excess Shares) for or against our initial business combination. Your inability to redeem the Excess Shares will
reduce your influence over our ability to complete our initial business combination and you could suffer a material loss on your
investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions
with respect to the Excess Shares if we complete our initial business combination. And as a result, you will continue to hold
that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your stock in open market
transactions, potentially at a loss.
Because
of our limited resources and the significant competition for business combination opportunities, it may be more difficult for
us to complete our initial business combination. If we are unable to complete our initial business combination, our public stockholders
may receive only approximately $10.00 per share on our redemption of our public shares, or less than such amount in certain circumstances,
and our rights will expire worthless.
We
expect to encounter intense competition from other entities having a business objective similar to ours, including private investors
(which may be individuals or investment partnerships), other blank check companies and other entities competing for the types
of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive experience
in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various
industries. Many of these competitors possess greater technical, human and other resources or more industry knowledge than we
do, and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe
there are numerous target businesses we could potentially acquire with the net proceeds of this offering and the sale of the private
placement units, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be
limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition
of certain target businesses. Furthermore, because we are obligated to pay cash for the shares of Class A common stock which our
public stockholders redeem in connection with our initial business combination, target companies will be aware that this may reduce
the resources available to us for our initial business combination. This may place us at a competitive disadvantage in successfully
negotiating an initial business combination. If we are unable to complete our initial business combination, our public stockholders
may receive only approximately $10.00 per share on the liquidation of our trust account and our rights will expire worthless.
In certain circumstances, our public stockholders may receive less than $10.00 per share upon our liquidation. See “—
If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption
amount received by stockholders may be less than $10.00 per share” and other risk factors below.
If
the net proceeds of this offering and the sale of the private placement units not being held in the trust account are insufficient
to allow us to operate for at least the next 18 months, we may be unable to complete our initial business combination, in which
case our public stockholders may only receive $10.00 per share, or less than such amount in certain circumstances, and our rights
will expire worthless.
The
funds available to us outside of the trust account may not be sufficient to allow us to operate for at least the next 18 months,
assuming that our initial business combination is not completed during that time. We believe that, upon the closing of this offering,
the funds available to us outside of the trust account will be sufficient to allow us to operate for at least the next 18 months;
however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion of the funds
available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of
the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent or merger agreements
designed to keep target businesses from “shopping” around for transactions with other companies on terms more favorable
to such target businesses) with respect to a particular proposed initial business combination, although we do not have any current
intention to do so. If we entered into a letter of intent or merger agreement where we paid for the right to receive exclusivity
from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise),
we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business. If
we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per
share on the liquidation of our trust account and our rights will expire worthless. In certain circumstances, our public stockholders
may receive less than $10.00 per share upon our liquidation. See “— If third parties bring claims against us, the
proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than
$10.00 per share” and other risk factors below.
If
the net proceeds of this offering and the sale of the private placement units not being held in the trust account are insufficient,
it could limit the amount available to fund our search for a target business or businesses and complete our initial business combination
and we will depend on loans from our sponsor or management team to fund our search for an initial business combination, to pay
our franchise and income taxes and to complete our initial business combination. If we are unable to obtain these loans, we may
be unable to complete our initial business combination.
Of
the net proceeds of this offering and the sale of the private placement units, only approximately $1,000,000 will be available
to us initially outside the trust account to fund our working capital requirements. In the event that our offering expenses exceed
our estimate of approximately $900,000, we may fund such excess with funds not to be held in the trust account. In such case,
the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. The amount held in
the trust account will not be impacted as a result of such increase or decrease. Conversely, in the event that the offering expenses
are less than our estimate of approximately $900,000, the amount of funds we intend to be held outside the trust account would
increase by a corresponding amount. If we are required to seek additional capital, we would need to borrow funds from our sponsor,
management team or other third parties to operate or may be forced to liquidate. None of our sponsor, members of our management
team nor any of their affiliates is under any obligation to advance funds to us in such circumstances. Any such advances would
be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial business
combination. Up to $1,500,000 of such working capital loans may be convertible into private placement units at a price of $10.00
per unit (which, for example, would result in the holders being issued 150,000 private placement units, if $1,500,000 of loans
were so converted), at the option of the lender. Prior to the completion of our initial business combination, we do not expect
to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing
to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account. If we are unable
to obtain these loans, we may be unable to complete our initial business combination. If we are unable to complete our initial
business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate
the trust account. Consequently, our public stockholders may only receive approximately $10.00 per share on our redemption of
our public shares, and our rights will expire worthless. In certain circumstances, our public stockholders may receive less than
$10.00 per share on the redemption of their shares. See “— If third parties bring claims against us, the proceeds
held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00
per share” and other risk factors below.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share.
Our
placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek to
have all vendors, service providers, prospective target businesses and other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit
of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not
be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary
responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order
to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party
refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis
of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if
management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.
Marcum LLP, our independent registered public accounting firm, and the underwriters of this offering will not execute agreements
with us waiving such claims to the monies held in the trust account.
Examples
of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party
consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants
that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for
any reason. Upon redemption of our public shares, if we are unable to complete our initial business combination within the prescribed
timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required
to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following
redemption. Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.00 per share
initially held in the trust account, due to claims of such creditors. Pursuant to the letter agreement, the form of which is filed
as Exhibit 10.1 to the registration statement of which this prospectus forms a part, our sponsor has agreed that it will be liable
to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business
with which we have entered into a written letter of intent, confidentiality or similar agreement or business combination agreement,
reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount
per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share
due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims
by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account
(whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of this offering
against certain liabilities, including liabilities under the Securities Act. However, we have not asked our sponsor to reserve
for such indemnification obligations, nor have we independently verified whether our sponsor has sufficient funds to satisfy its
indemnity obligations and believe that our sponsor’s only assets are securities of our company. Therefore, we cannot assure
you that our sponsor would be able to satisfy those obligations. None of our officers or directors will indemnify us for claims
by third parties including, without limitation, claims by vendors and prospective target businesses.
Our
directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of
funds in the trust account available for distribution to our public stockholders.
In
the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount
per share held in the trust account as of the date of the liquidation of the trust account if less than $10.00 per share due to
reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and our sponsor
asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim,
our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations.
While
we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary
duties may choose not to do so in any particular instance if, for example, the cost of such legal action is deemed by the independent
directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome
is not likely. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the
trust account available for distribution to our public stockholders may be reduced below $10.00 per share.
We
may not have sufficient funds to satisfy indemnification claims of our directors and officers.
We
have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors
have agreed to waive any right, title, interest or claim of any kind in or to any monies in the trust account and to not seek
recourse against the trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied
by us only if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination.
Our obligation to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers
or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative
litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders.
Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage
awards against our officers and directors pursuant to these indemnification provisions.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and
our board may be exposed to claims of punitive damages.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. In addition, our board of directors
may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself
and us to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over
the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with
our liquidation may be reduced.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable
bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the
claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise
be received by our stockholders in connection with our liquidation may be reduced.
Holders
of rights will not have redemption rights and the rights will be worthless if we do not complete an initial business combination.
If
we are unable to complete an initial business combination within the required time period and we redeem the funds held in the
trust account, the rights will laps and holders will not receive any of the amounts held in the trust account in exchange for
such rights. If we are unable to complete an initial business combination within the required time period and we redeem
the public shares for the funds held in the trust account, holders of rights will not receive any of such funds for their rights
and the rights will expire worthless.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance
requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions
on the nature of our investments; and
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restrictions
on the issuance of securities, each of which may make it difficult for us to complete
our initial business combination.
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In
addition, we may have imposed upon us burdensome requirements, including:
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registration
as an investment company;
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adoption
of a specific form of corporate structure; and
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reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations.
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In
order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we
must ensure that we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our
activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting
more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business
will be to identify and complete an initial business combination and thereafter to operate the post-transaction business or assets
for the long term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan
to buy unrelated businesses or assets or to be a passive investor.
We
do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds
held in the trust account may only be invested in United States “government securities” within the meaning of Section
2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions
under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations.
Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment
of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long
term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid
being deemed an “investment company” within the meaning of the Investment Company Act. This offering is not intended
for persons who are seeking a return on investments in government securities or investment securities. The trust account is intended
as a holding place for funds pending the earliest to occur of: (i) the completion of our initial business combination; (ii) the
redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate
of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete
our initial business combination within 18 months from the closing of this offering or (B) with respect to any other provision
relating to stockholders’ rights or pre-initial business combination activity; or (iii) absent an initial business combination
within 18 months from the closing of this offering, our return of the funds held in the trust account to our public stockholders
as part of our redemption of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject
to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional
regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete
an initial business combination or may result in our liquidation. If we are unable to complete our initial business combination,
our public stockholders may receive only approximately $10.00 per share on the liquidation of our trust account and our rights
will expire worthless.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our
ability to negotiate and complete our initial business combination and results of operations.
We
are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to
comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may
be difficult, time consuming and costly.
Those
laws and regulations and their interpretation and application may also change from time to time and those changes could have a
material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable
laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to
negotiate and complete our initial business combination and results of operations.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption
of their shares.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received
by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our initial business combination within 18 months from the closing of this
offering may be considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures set
forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a
60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which
the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are
made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such
stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder
would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon
as reasonably possible following the 12th month (or up to the 21st month) from the closing of this offering
in the event we do not complete our initial business combination and, therefore, we do not intend to comply with the foregoing
procedures.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company,
and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise
would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution
complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited
to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability
of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly
assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims
to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third
anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon
the redemption of our public shares in the event we do not complete our initial business combination within 18 months from the
closing of this offering is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed
to be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that
are currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then
be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
We
may not hold an annual meeting of stockholders until after the consummation of our initial business combination, which could delay
the opportunity for our stockholders to elect directors.
In
accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until no later than one
year after our first fiscal year end following our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required
to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election
is made by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors
prior to the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the
DGCL, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation
of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court
of Chancery in accordance with Section 211(c) of the DGCL.
The
grant of registration rights to our initial stockholders and holders of the representative’s shares and advisory compensation
shares may make it more difficult to complete our initial business combination, and the future exchange of such rights
may adversely affect the market price of our Class A common stock.
Pursuant
to an agreement to be entered into concurrently with the issuance and sale of the securities in this offering, our initial stockholders
and their permitted transferees can demand that we register the private placement units, the private placement units, the shares
of including the Class A common stock and rights underlying such units and upon conversion of the founder shares held, or to be
held, by them and holders of securities that may be issued upon conversion of working capital loans may demand that we register
such rights or the common stock issuable upon exchange of such rights. In addition, the representative may demand that
we register the resale of the representative’s shares, and Palladium may demand that we register the resale of the advisory
compensation shares. We will bear the cost of registering these securities. The registration and availability of such a significant
number of securities for trading in the public market may have an adverse effect on the market price of our Class A common stock.
In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude.
This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask
for more cash consideration to offset the negative impact on the market price of our Class A common stock that is expected when
the securities owned by our initial stockholders or holders of working capital loans or their respective permitted transferees
are registered.
Because
we are neither limited to evaluating a target business in a particular industry sector nor have we selected any specific target
businesses with which to pursue our initial business combination, you will be unable to ascertain the merits or risks of any particular
target business’s operations.
We
intend to focus our search on established, technology focused businesses, except that we will not, under our amended and restated
certificate of incorporation, be permitted to effectuate our initial business combination with another blank check company or
similar company with nominal operations. Because we have not yet selected or approached any specific target business with respect
to a business combination, there is no basis to evaluate the possible merits or risks of any particular target business’s
operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete our initial
business combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example,
if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be
affected by the risks inherent in the business and operations of a financially unstable or a development stage entity. Although
our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you
that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due
diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the
chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our units will
ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business
combination target. Accordingly, any stockholders who choose to remain stockholders following our initial business combination
could suffer a reduction in the value of their securities. Such stockholders are unlikely to have a remedy for such reduction
in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a
duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities
laws that the proxy solicitation or tender offer materials, as applicable, relating to the business combination contained an actionable
material misstatement or material omission.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses,
we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result,
the target business with which we enter into our initial business combination may not have attributes entirely consistent with
our general criteria and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target
business with which we enter into our initial business combination will not have all of these positive attributes. If we complete
our initial business combination with a target that does not meet some or all of these guidelines, such combination may not be
as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce
a prospective business combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders
may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business
that requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction
is required by law, or we decide to obtain stockholder approval for business or other legal reasons, it may be more difficult
for us to attain stockholder approval of our initial business combination if the target business does not meet our general criteria
and guidelines. If we are unable to complete our initial business combination, our public stockholders may receive only approximately
$10.00 per share on the liquidation of our trust account and our rights will expire worthless. In certain circumstances, our public
stockholders may receive less than $10.00 per share on the redemption of their shares. See “— If third parties bring
claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders
may be less than $10.00 per share” and other risk factors below.
We
are not required to obtain an opinion from an independent investment banking firm or from an independent accounting firm, and
consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our
company from a financial point of view.
Unless
we complete our initial business combination with an affiliated entity or our board cannot independently determine the fair market
value of the target business or businesses, we are not required to obtain an opinion from an independent investment banking firm
that is a member of FINRA or from an independent accounting firm that the price we are paying is fair to our company from a financial
point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, who will
determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed
in our proxy materials or tender offer documents, as applicable, related to our initial business combination.
Resources
could be wasted in researching business combinations that are not completed, which could materially adversely affect subsequent
attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination,
our public stockholders may receive only approximately $10.00 per share, or less than such amount in certain circumstances, on
the liquidation of our trust account and our rights will expire worthless.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys, consultants and others. If we decide not to complete a specific initial business combination, the costs incurred up
to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to
a specific target business, we may fail to complete our initial business combination for any number of reasons including those
beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely
affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business
combination, our public stockholders may receive only approximately $10.00 per share on the liquidation of our trust account and
our rights will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share on
the redemption of their shares. See “— If third parties bring claims against us, the proceeds held in the trust account
could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other
risk factors below.
We
may only be able to complete one business combination with the proceeds of this offering and the sale of the private placement
units, which will cause us to be solely dependent on a single business which may have a limited number of services and limited
operating activities. This lack of diversification may negatively impact our operating results and profitability.
Of
the net proceeds from this offering and the sale of the private placement units, $100,000,000 (or $115,000,000 if the underwriters’
over-allotment option is exercised in full) will be available to complete our initial business combination and pay related fees
and expenses (which includes $3,500,000, or $4,025,000 if the over-allotment option is exercised in full, for the payment of deferred
underwriting commissions).
We
may effectuate our initial business combination with a single target business or multiple target businesses simultaneously or
within a short period of time. However, we may not be able to effectuate our initial business combination with more than one target
business because of various factors, including the existence of complex accounting issues and the requirement that we prepare
and file pro forma financial statements with the SEC that present operating results and the financial condition of several target
businesses as if they had been operated on a combined basis. By completing our initial business combination with only a single
entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we
would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike
other entities which may have the resources to complete several business combinations in different industries or different areas
of a single industry. In addition, we intend to focus our search for an initial business combination in a single industry. Accordingly,
the prospects for our success may be:
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solely
dependent upon the performance of a single business, property or asset, or
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dependent
upon the development or market acceptance of a single or limited number of products,
processes or services.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a
substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to
complete our initial business combination and give rise to increased costs and risks that could negatively impact our operations
and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which
may make it more difficult for us, and delay our ability, to complete our initial business combination. We do not, however, intend
to purchase multiple businesses in unrelated industries in conjunction with our initial business combination. With multiple business
combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations
and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation
of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately
address these risks, it could negatively impact our profitability and results of operations.
We
may attempt to complete our initial business combination with a private company about which little information is available, which
may result in an initial business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our initial business combination strategy, we may seek to effectuate our initial business combination with a privately
held company. Very little public information generally exists about private companies, and we could be required to make our decision
on whether to pursue a potential initial business combination on the basis of limited information, which may result in an initial
business combination with a company that is not as profitable as we suspected, if at all.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to
complete an initial business combination with which a substantial majority of our stockholders do not agree.
Our
amended and restated certificate of incorporation will not provide a specified maximum redemption threshold, except that we will
only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately
prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions
(such that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement
which may be contained in the agreement relating to our initial business combination. As a result, we may be able to complete
our initial business combination even though a substantial majority of our public stockholders do not agree with the transaction
and have redeemed their shares or, if we seek stockholder approval of our initial business combination and do not conduct redemptions
in connection with our initial business combination pursuant to the tender offer rules, have entered into privately negotiated
agreements to sell their shares to our sponsor, officers, directors, advisors or their affiliates. In the event the aggregate
cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption
plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business combination exceed
the aggregate amount of cash available to us, we will not complete the initial business combination or redeem any shares, all
shares of Class A common stock submitted for redemption will be returned to the holders thereof, and we instead may search for
an alternate business combination.
In
order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions
of their charters and other governing instruments, including their rights agreements. We cannot assure you that we will not seek
to amend our amended and restated certificate of incorporation or governing instruments in a manner that will make it easier for
us to complete our initial business combination that our stockholders may not support.
In
order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions
of their charters and modified governing instruments, including their rights agreements. For example, blank check companies have
amended the definition of business combination, increased redemption thresholds and extended the time to consummate an initial
business combination and, with respect to their rights, amended their rights agreements to require the rights to be exchanged
for cash and/or other securities. Amending our amended and restated certificate of incorporation will require the approval of
holders of a majority of our common stock, and amending our rights agreement will require a vote of holders of at least a majority
of the public rights. In addition, our amended and restated certificate of incorporation requires us to provide our public stockholders
with the opportunity to redeem their public shares for cash if we propose an amendment to our amended and restated certificate
of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete
our initial business combination within 18 months from the closing of this offering or (B) with respect to any other provision
relating to stockholders’ rights or pre-initial business combination activity. To the extent any such amendments would be
deemed to fundamentally change the nature of any securities offered through this registration statement, we would register, or
seek an exemption from registration for, the affected securities. We cannot assure you that we will not seek to amend our charter
or governing instruments or extend the time to consummate an initial business combination in order to effectuate our initial business
combination.
The
provisions of our amended and restated certificate of incorporation that relate to our pre-business combination activity (and
corresponding provisions of the agreement governing the release of funds from our trust account), including an amendment to permit
us to withdraw funds from the trust account such that the per share amount investors will receive upon any redemption or liquidation
is substantially reduced or eliminated, may be amended with the approval of holders of a majority of our common stock, which is
a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore, to amend our amended
and restated certificate of incorporation and the trust agreement to facilitate the completion of an initial business combination
that some of our stockholders may not support.
Our
amended and restated certificate of incorporation will provide that any of its provisions related to pre-initial business combination
activity (including the requirement to deposit proceeds of this offering and the private placement of units into the trust account
and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described
herein and including to permit us to withdraw funds from the trust account such that the per share amount investors will receive
upon any redemption or liquidation is substantially reduced or eliminated) may be amended if approved by holders of a majority
of our common stock entitled to vote thereon, and corresponding provisions of the trust agreement governing the release of funds
from our trust account may be amended if approved by holders of a majority of our common stock entitled to vote thereon. In all
other instances, our amended and restated certificate of incorporation may be amended by holders of a majority of our outstanding
common stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. We may
not issue additional securities that can vote on amendments to our amended and restated certificate of incorporation. Our initial
stockholders, who will collectively beneficially own 20% of our common stock upon the closing of this offering (excluding the
private placement shares, representative’s shares and advisory compensation shares
and assuming our initial stockholders do not purchase any units in this offering), will participate in any vote to amend our amended
and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose.
As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation which govern our
pre-initial business combination behavior more easily than some other blank check companies, and this may increase our ability
to complete an initial business combination with which you do not agree. Our stockholders may pursue remedies against us for any
breach of our amended and restated certificate of incorporation.
Our
sponsor, executive officers, directors and director nominees have agreed, pursuant to a written agreement with us, that they will
not propose any amendment to our amended and restated certificate of incorporation (i) to modify the substance or timing of our
obligation to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the
closing of this offering or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business
combination activity, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common
stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account, divided by the number of then outstanding public shares. These agreements are contained in a letter agreement
that we have entered into with our sponsor, officers and directors. Our stockholders are not parties to, or third-party beneficiaries
of, these agreements and, as a result, will not have the ability to pursue remedies against our sponsor, officers or directors
for any breach of these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder
derivative action, subject to applicable law.
We
may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth
of a target business, which could compel us to restructure or abandon a particular business combination.
We
have not selected any specific business combination target, but intend to target businesses larger than we could acquire with
the net proceeds of this offering and the sale of the private placement units. As a result, we may be required to seek additional
financing to complete such proposed initial business combination. We cannot assure you that such financing will be available on
acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete our initial
business combination, we would be compelled to either restructure the transaction or abandon that particular business combination
and seek an alternative target business candidate. Further, the amount of additional financing we may be required to obtain could
increase as a result of future growth capital needs for any particular transaction, the depletion of the available net proceeds
in search of a target business, the obligation to repurchase for cash a significant number of shares from stockholders who elect
redemption in connection with our initial business combination and/or the terms of negotiated transactions to purchase shares
in connection with our initial business combination. If we are unable to complete our initial business combination, our public
stockholders may receive only approximately $10.00 per share plus any pro rata interest earned on the funds held in the trust
account and not previously released to us to pay our franchise and income taxes on the liquidation of our trust account and our
rights will expire worthless. In addition, even if we do not need additional financing to complete our initial business combination,
we may require such financing to fund the operations or growth of the target business. The failure to secure additional financing
could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors
or stockholders is required to provide any financing to us in connection with or after our initial business combination. If we
are unable to complete our initial business combination, our public stockholders may only receive approximately $10.00 per share
on the liquidation of our trust account, and our rights will expire worthless. Furthermore, as described in the risk factor entitled
“If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption
amount received by stockholders may be less than $10.00 per share,” under certain circumstances our public stockholders
may receive less than $10.00 per share upon the liquidation of the trust account.
Our
initial stockholders may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you
do not support.
Upon
the closing of this offering, our initial stockholders will own shares representing 20.1% of our issued and outstanding
shares of common stock (assuming our initial stockholders do not purchase any units in this offering). Accordingly, they may exert
a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments
to our amended and restated certificate of incorporation and approval of major corporate transactions. If our initial stockholders
purchase any units in this offering or if our initial stockholders purchase any additional shares of common stock in the aftermarket
or in privately negotiated transactions, this would increase their control. Factors that would be considered in making such additional
purchases would include consideration of the current trading price of our Class A common stock. In addition, our board of directors,
whose members were elected by our initial stockholders, is and will be divided into two classes, with members of each class
serving staggered two-year terms (except that the terms of the initial Class I directors will expire at the first annual meeting
of our stockholders held after the completion of this offering). We may not hold an annual meeting of stockholders to elect
new directors prior to the completion of our initial business combination, in which case all of the current directors will continue
in office until at least the completion of the initial business combination. If there is an annual meeting, as a consequence of
our “staggered” board of directors, only a minority of the board of directors will be considered for election and
our initial stockholders, because of their ownership position, will have considerable influence regarding the outcome. Accordingly,
our initial stockholders will continue to exert control at least until the completion of our initial business combination.
Our
rights and founder shares may have an adverse effect on the market price of our Class A common stock and make it more difficult
to effectuate our initial business combination.
We
will be issuing rights to receive 1,000,000 shares of our Class A common stock (or 1,150,000 shares of Class A common stock if
the underwriters’ over-allotment option is exercised in full) as part of the units offered by this prospectus and, simultaneously
with the closing of this offering, we will be issuing in a private placement, 390,000 private placement units (or up to 420,000
units if the underwriters’ over-allotment option is exercised in full). Our initial stockholders currently own an aggregate
of 2,875,000 founder shares (up to 375,000 of which are subject to forfeiture by our sponsor depending on the extent to
which the underwriters’ over-allotment option is exercised). The founder shares are convertible into shares of Class A common
stock on a one-for-one basis, subject to adjustment as set forth herein. In addition, if our sponsor or its affiliates, or any
of our officers or directors, makes any working capital loans, up to $1,500,000 of such loans may be convertible into units at
a price of $10.00 per unit (which, for example, would result in the holders being issued 150,000 units, if $1,500,000 of loans
were so converted), at the option of the lender. Such units would be identical to the private placement units.
To
the extent we issue shares of Class A common stock to effectuate an initial business combination, the potential for the issuance
of a substantial number of additional shares of Class A common stock upon exchange of these rights could make us a less attractive business combination vehicle to a target business. Any such issuance will increase the
number of issued and outstanding shares of our Class A common stock and reduce the value of the shares of Class A common stock
issued to complete the initial business combination. Therefore, our rights and founder shares may make it more difficult to effectuate
an initial business combination or increase the cost of acquiring the target business.
The
private placement units are identical to the rights sold as part of the units in this offering except that, so long as they are
held by our sponsor or its permitted transferees, (i) they (including the Class A common stock and rights underlying the units
and the shares of Class A common stock underlying the rights) may not, subject to certain limited exceptions, be transferred,
assigned or sold by our sponsor until the later of 30 days after the completion of our initial business combination
and one year after the completion of this offering, and (ii) will
be entitled to registration rights.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on an initial business combination meeting certain financial
significance tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the
same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the
tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting
principles generally accepted in the United States of America, or GAAP, or international financial reporting standards as issued
by the International Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements
may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States),
or PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire because some
targets may be unable to provide such financial statements in time for us to disclose such statements in accordance with federal
proxy rules and complete our initial business combination within the prescribed time frame.
We
may engage in an initial business combination with one or more target businesses that have relationships with entities that may
be affiliated with our sponsor, officers, directors or existing holders which may raise potential conflicts of interest.
In
light of the involvement of our sponsor, officers and directors with other entities, we may decide to acquire one or more businesses
or entities affiliated with our sponsor, officers or directors. Our directors also serve as officers and board members for other
entities, including, without limitation, those described under the section of this prospectus entitled “Management —
Conflicts of Interest.” Such entities may compete with us for business combination opportunities. Our sponsor, officers
and directors are not currently aware of any specific opportunities for us to complete our initial business combination with any
entities with which they are affiliated, and there have been no preliminary discussions concerning an initial business combination
with any such entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated
entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for an initial business
combination as set forth in the section of this prospectus entitled “Proposed Business — Selection of a Target Business
and Structuring of our Initial Business Combination” and such transaction was approved by a majority of our disinterested
directors. Despite our agreement to obtain an opinion from an independent investment banking firm that is a member of FINRA, or
from an independent accounting firm, regarding the fairness to our stockholders from a financial point of view of an initial business
combination with one or more domestic or international businesses affiliated with our officers, directors or existing holders,
potential conflicts of interest still may exist and, as a result, the terms of the initial business combination may not be as
advantageous to our public stockholders as they would be absent any conflicts of interest.
Since
our sponsor, officers and directors will lose their entire investment in us if our initial business combination is not completed,
a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial
business combination.
On
April 5, 2021, our sponsor purchased an aggregate of 2,875,000 founder shares (up to 375,000 of which are subject to forfeiture
by our sponsor if the underwriters’ over-allotment option is not exercised in full) for an aggregate purchase price of $25,000,
and later transferred a total of 275,000 founder shares to our officers and director nominees. The number of founder shares issued
was determined based on the expectation that such founder shares would represent 20% of the outstanding shares after this offering (excluding
the private placement shares, representative’s shares and advisory compensation shares and assuming our initial
stockholders do not purchase any units in this offering). The founder shares will expire worthless if we do not complete an initial business
combination. In addition, our sponsor has agreed to purchase an aggregate of 390,000 units (or 420,000 units if the over-allotment option
is exercised in full) at a price of $10.00 per unit, for an aggregate purchase price of $3,900,000, or $4,200,000 if the over-allotment
option is exercised in full, that will also be worthless if we do not complete an initial business combination. Holders of founder shares
have agreed (A) to vote any shares owned by them in favor of any proposed initial business combination and (B) not to redeem any shares
owned by them in connection with a stockholder vote to approve a proposed initial business combination or in connection with a tender
offer. In addition, we may obtain loans from our sponsor, affiliates of our sponsor or an officer or director. The personal and financial
interests of our officers and directors may influence their motivation in identifying and selecting a target business combination, completing
an initial business combination and influencing the operation of the business following the initial business combination.
We
may seek business combination opportunities in industries or sectors which may or may not be outside of our management’s
area of expertise.
Although
we intend to focus our search on established, technology focused businesses, we will consider an initial business combination
outside of our management’s area of expertise if an initial business combination candidate is presented to us and we determine
that such candidate offers an attractive business combination opportunity for our company or we are unable to identify a suitable
candidate in this sector after having expanded a reasonable amount of time and effort in an attempt to do so. Although our management
will endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will
adequately ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our units
will not ultimately prove to be less favorable to investors in this offering than a direct investment, if an opportunity were
available, in an initial business combination candidate. In the event we elect to pursue a business combination outside of the
areas of our management’s expertise, our management’s expertise may not be directly applicable to its evaluation or
operation, and the information contained in this prospectus regarding the areas of our management’s expertise would not
be relevant to an understanding of the business that we elect to acquire. As a result, our management may not be able to adequately
ascertain or assess all of the significant risk factors. Accordingly, any stockholders who choose to remain stockholders following
our initial business combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have
a remedy for such reduction in value.
We
may engage in an initial business combination with one or more target businesses that have relationships with entities that may
be affiliated with our sponsor, officers, directors or existing holders which may raise potential conflicts of interest.
In
light of the involvement of our sponsor, officers and directors with other entities, we may decide to acquire one or more businesses
or entities affiliated with our sponsor, officers or directors. Our directors also serve as officers and board members for other
entities, including, without limitation, those described under the section of this prospectus entitled “Management —
Conflicts of Interest.” Such entities may compete with us for business combination opportunities. Our sponsor, officers
and directors are not currently aware of any specific opportunities for us to complete our initial business combination with any
entities with which they are affiliated, and there have been no preliminary discussions concerning an initial business combination
with any such entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated
entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for an initial business
combination as set forth in the section of this prospectus entitled “Proposed Business — Selection of a Target Business
and Structuring of our Initial Business Combination” and such transaction was approved by a majority of our disinterested
directors.
Despite
our agreement to obtain an opinion from an independent investment banking firm that is a member of FINRA, or from an independent
accounting firm, regarding the fairness to our stockholders from a financial point of view of an initial business combination
with one or more domestic or international businesses affiliated with our officers, directors or existing holders, potential conflicts
of interest still may exist and, as a result, the terms of the initial business combination may not be as advantageous to our
public stockholders as they would be absent any conflicts of interest.
Risks
Relating to Post-Business Combination Company
Subsequent
to the completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and
impairment or other charges that could have a significant negative effect on our financial condition, results of operations and
our stock price, which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will
surface all material issues that may be present inside a particular target business, that it would be possible to uncover all
material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our
control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure
our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully
identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with
our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity,
the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In
addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of
assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing to partially finance the initial
business combination. Accordingly, any stockholders who choose to remain stockholders following the initial business combination
could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value
unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of
care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that
the proxy solicitation or tender offer materials, as applicable, relating to the initial business combination constituted an actionable
material misstatement or omission.
Our
management may not be able to maintain control of a target business after our initial business combination.
We
may structure an initial business combination so that the post-transaction company in which our public stockholders own shares
will own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination
if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target sufficient for us not to be required to register as an investment company under the Investment
Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns
50% or more of the voting securities of the target, our stockholders prior to the initial business combination may collectively
own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the
initial business combination. For example, we could pursue a transaction in which we issue a substantial number of new shares
of Class A common stock in exchange for all of the outstanding capital stock of a target.
In
this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new
shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding
shares of common stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine their
holdings resulting in a single person or group obtaining a larger share of the company’s stock than we initially acquired.
Accordingly, this may make it more likely that our management will not be able to maintain our control of the target business.
We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications
or abilities necessary to profitably operate such business.
We
may seek business combination opportunities with a financially unstable business or an entity lacking an established record of
revenue, cash flow or earnings, which could subject us to volatile revenues, cash flows or earnings or difficulty in retaining
key personnel.
To
the extent we complete our initial business combination with a financially unstable business or an entity lacking an established
record of revenues or earnings, we may be affected by numerous risks inherent in the operations of the business with which we
combine. These risks include volatile revenues or earnings and difficulties in obtaining and retaining key personnel. Although
our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we may not be able to
properly ascertain or assess all of the significant risk factors and we may not have adequate time to complete due diligence.
Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that
those risks will adversely impact a target business.
Risks
Relating to Our Management Team
Our
officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination
as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete
our initial business combination.
Our
officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict
of interest in allocating their time between our operations and our search for an initial business combination and their other
businesses. We do not intend to have any full-time employees prior to the completion of our initial business combination. Each
of our officers is engaged in other business endeavors for which he may be entitled to substantial compensation and our officers
are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors may also serve
as officers or board members for other entities. If our officers’ and directors’ other business affairs require them
to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability
to devote time to our affairs which may have a negative impact on our ability to complete our initial business combination. For
a complete discussion of our officers’ and directors’ other business affairs, please see the section of this prospectus
entitled “Management — Directors and Officers.”
We
are dependent upon our officers and directors and their departure could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals and, in particular, our officers and directors. We believe
that our success depends on the continued service of our officers and directors, at least until we have completed our initial
business combination. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or
officers. The unexpected loss of the services of one or more of our directors or officers could have a detrimental effect on us.
Our
ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon
the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel
could negatively impact the operations and profitability of our post-combination business.
Our
ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. The role of
our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain
with the target business in senior management or advisory positions following our initial business combination, it is likely that
some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals
we employ after our initial business combination, we cannot assure you that our assessment of these individuals will prove to
be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could
cause us to have to expend time and resources helping them become familiar with such requirements. In addition, the officers and
directors of an initial business combination candidate may resign upon completion of our initial business combination. The departure
of an initial business combination target’s key personnel could negatively impact the operations and profitability of our
post-combination business. The role of an initial business combination candidate’s key personnel upon the completion of
our initial business combination cannot be ascertained at this time. Although we contemplate that certain members of an initial
business combination candidate’s management team will remain associated with the initial business combination candidate
following our initial business combination, it is possible that members of the management of an initial business combination candidate
will not wish to remain in place. The loss of key personnel could negatively impact the operations and profitability of our post-combination
business.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business
combination. These agreements may provide for them to receive compensation following our initial business combination and as a
result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our
key personnel may be able to remain with the company after the completion of our initial business combination only if they are
able to negotiate employment or consulting agreements in connection with the initial business combination. Such negotiations would
take place simultaneously with the negotiation of the initial business combination and could provide for such individuals to receive
compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the
initial business combination. The personal and financial interests of such individuals may influence their motivation in identifying
and selecting a target business. However, we believe the ability of such individuals to remain with us after the completion of
our initial business combination will not be the determining factor in our decision as to whether or not we will proceed with
any potential business combination. There is no certainty, however, that any of our key personnel will remain with us after the
completion of our initial business combination. We cannot assure you that any of our key personnel will remain in senior management
or advisory positions with us. The determination as to whether any of our key personnel will remain with us will be made at the
time of our initial business combination.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial
business combination with a target business whose management may not have the skills, qualifications or abilities to manage a
public company, which could, in turn, negatively impact the value of our stockholders’ investment in us.
When
evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess
the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary
to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly,
any stockholders who choose to remain stockholders following the initial business combination could suffer a reduction in the
value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
Certain
of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business
activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their
time and determining to which entity a particular business opportunity should be presented.
Following
the completion of this offering and until we consummate our initial business combination, we intend to engage in the business
of identifying and combining with one or more businesses or entities. Our sponsor and officers and directors are, and may in the
future become, affiliated with entities (such as operating companies or investment vehicles) that are engaged in a similar business,
although they may not participate in the formation of, or become an officer or director of, any other special purpose acquisition
companies with a class of securities registered under the Exchange Act until we have entered into a definitive agreement regarding
our initial business combination or we have failed to complete our initial business combination within 18 months after the closing
of this offering.
Our
officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the
other entities to which they owe certain fiduciary or contractual duties.
Accordingly,
they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These
conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation
to us. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity
offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as
a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would
otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to
us without violating another legal obligation.
For
a complete discussion of our officers’ and directors’ business affiliations and the potential conflicts of interest
that you should be aware of, please see the sections of this prospectus entitled “Management — Directors and Officers,”
“Management — Conflicts of Interest” and “Certain Relationships and Related Party Transactions.”
Our
officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with
our interests.
We
have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct
or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which
we are a party or have an interest. In fact, we may enter into an initial business combination with a target business that is
affiliated with our sponsor, our directors or officers, although we do not intend to do so. We do not have a policy that expressly
prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly,
such persons or entities may have a conflict between their interests and ours.
Risks
Relating to Our Securities
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate
your investment, therefore, you may be forced to sell your public shares or rights, potentially at a loss.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earliest to occur of: (i) our completion
of an initial business combination, and then only in connection with those shares of Class A common stock that such stockholder
properly elected to redeem, subject to the limitations described herein, (ii) the redemption of any public shares properly submitted
in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance
or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within
18 months from the closing of this offering or (B) with respect to any other provision relating to stockholders’ rights
or pre-initial business combination activity and (iii) the redemption of our public shares if we are unable to complete an initial
business combination within 18 months from the closing of this offering, subject to applicable law and as further described herein.
In no other circumstances will a public stockholder have any right or interest of any kind in the trust account. Holders of rights
will not have any right to the proceeds held in the trust account with respect to the rights. Accordingly, to liquidate your investment,
you may be forced to sell your public shares or rights, potentially at a loss.
Our
sponsor paid an aggregate of $25,000, or approximately $0.009 per founder share and, accordingly, you will experience immediate
and substantial dilution from the purchase of our Class A common stock.
The
difference between the public offering price per share and the pro forma net tangible book value per share of our Class A common
stock after this offering constitutes the dilution to you and the other investors in this offering. Our sponsor acquired the founder
shares at a nominal price, significantly contributing to this dilution. Upon the closing of this offering, you and the other public
stockholders will incur an immediate and substantial dilution of approximately 88.5% (or $8.04 per share, assuming no exercise
of the underwriters’ over-allotment option), the difference between the pro forma net tangible book value per share of $1.05
(after this offering and the private placement) and the fully diluted average price per share (after this offering and the
private placement) of $9.09. In addition, because of the anti-dilution rights of the founder shares, any equity or equity-linked
securities issued or deemed issued in connection with our initial business combination would be disproportionately dilutive to
our Class A common stock.
Because each unit contains one right
to receive one-tenth (1/10) of one share of Class A common stock upon consummation of our initial business combination, and rights
may only be exercised for whole shares, the units may be worth less than units of other blank check companies.
Each
unit contains one right to receive one-tenth (1/10) of one share of Class A common stock upon consummation of our initial business
combination. No fractional shares will be issued in exchange for rights. Accordingly, unless you purchase at least ten units,
you will not be able to receive a whole share in exchange for your rights. This is different from other offerings similar to ours
whose units include warrants or rights to purchase or receive one whole share. We have established the components of the units
in this way in order to reduce the dilutive effect of the rights upon completion of an initial business combination, thus making
us, we believe, a more attractive merger partner for target businesses. Nevertheless, this unit structure may cause our units
to be worth less than if they included a right to purchase one whole share.
Nasdaq
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our
securities and subject us to additional trading restrictions.
We
have applied to have our units listed on Nasdaq. We expect that our units will be listed on Nasdaq on or promptly after the date
of this prospectus. Following the date the shares of our Class A common stock and rights are eligible to trade separately, we
anticipate that the shares of our Class A common stock and rights will be separately listed on Nasdaq. We cannot guarantee that
our securities will be approved for listing on Nasdaq. Although after giving effect to this offering we expect to meet, on a pro
forma basis, the minimum initial listing standards set forth in the Nasdaq listing standards, we cannot assure you that our securities
will be, or will continue to be, listed on Nasdaq in the future or prior to our initial business combination. In order to continue
listing our securities on Nasdaq prior to our initial business combination, we must maintain certain financial, distribution and
stock price levels. Generally, we must maintain a minimum amount in stockholders’ equity (generally $2,500,000) and a minimum
number of holders of our securities (generally 300 public holders). Additionally, in connection with our initial business combination,
we will be required to demonstrate compliance with Nasdaq’s initial listing requirements, which are more rigorous than Nasdaq’s
continued listing requirements, in order to continue to maintain the listing of our securities on Nasdaq. For instance, our stock
price would generally be required to be at least $4.00 per share, our stockholders’ equity would generally be required to
be at least $5.0 million and we would be required to have a minimum of 300 round lot holders of our securities. We cannot assure
you that we will be able to meet those initial listing requirements at that time.
If
Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities
exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant
material adverse consequences, including:
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a
limited availability of market quotations for our securities;
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reduced
liquidity for our securities;
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a
determination that our Class A common stock is a “penny stock” which will
require brokers trading in our Class A common stock to adhere to more stringent rules
and possibly result in a reduced level of trading activity in the secondary trading market
for our securities;
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limited amount of news and analyst coverage; and
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a
decreased ability to issue additional securities or obtain additional financing in the
future.
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The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating
the sale of certain securities, which are referred to as “covered securities.” Because we expect that our units and
eventually our Class A common stock and rights will be listed on Nasdaq, our units, Class A common stock and rights will be covered
securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states
to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states
can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers
to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities
regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale
of securities of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not
be covered securities and we would be subject to regulation in each state in which we offer our securities, including in connection
with our initial business combination.
The
securities in which we invest the funds held in the trust account could bear a negative rate of interest, which could reduce the
value of the assets held in trust such that the per-share redemption amount received by public stockholders may be less than $10.00
per share.
The
proceeds held in the trust account will be invested only in U.S. government treasury obligations with a maturity of 185 days or
less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in
direct U.S. government treasury obligations. While short-term U.S. government treasury obligations currently yield a positive
rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued
interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility
that it may in the future adopt similar policies in the United States. In the event that we are unable to complete our initial
business combination or make certain amendments to our amended and restated certificate of incorporation, our public stockholders
are entitled to receive their pro-rata share of the proceeds held in the trust account, plus any interest income, net of taxes
paid or payable (less, in the case we are unable to complete our initial business combination, $100,000 of interest). Negative
interest rates could reduce the value of the assets held in trust such that the per-share redemption amount received by public
stockholders may be less than $10.00 per share.
We
may amend the terms of the rights in a manner that may be adverse to holders of public rights without your
approval.
Our
rights will be issued under a rights agreement between Continental Stock Transfer & Trust Company, as rights agent,
and us. The rights agreement provides that the terms of the rights may be amended without the consent of any holder to cure any
ambiguity or correct any defective provision, but requires the approval by the holders of at least a majority of the then outstanding
rights (including the private placement rights and any rights included in units issued upon conversion of working capital loans
made to us) to make any change that adversely affects the interests of the registered holders of rights. Accordingly, we may
amend the terms of the rights in a manner adverse to a holder if holders of at least a majority of the then outstanding rights approve of such amendment. Although our ability to amend the terms of the rights with the consent of at least a majority
of the then outstanding rights is unlimited, examples of such amendments could be amendments to, among other things, convert the
rights into cash or stock, shorten the period holders have to exchange their rights or decrease the number of shares of
our Class A common stock issuable upon exchange of rights.
We
may issue additional common stock or preferred stock to complete our initial business combination or under an employee incentive
plan after completion of our initial business combination. We may also issue shares of Class A common stock upon the conversion
of the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of
the anti-dilution provisions contained in our amended and restated certificate of incorporation. Any such issuances would dilute
the interest of our stockholders and likely present other risks.
Our
amended and restated certificate of incorporation authorizes the issuance of up to 100,000,000 shares of Class A common stock,
par value $0.0001 per share, 10,000,000 shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred
stock, par value $0.0001 per share. Immediately after this offering, there will be 88,471,000 and 7,110,000 (assuming,
in each case, that the underwriters have not exercised their over-allotment option) authorized but unissued shares of Class A
common stock and Class B common stock, respectively, available for issuance, which amount takes into account the shares of Class
A common stock reserved for issuance upon exchange of outstanding rights but not the shares of Class A common stock issuable
upon conversion of Class B common stock. Immediately after the consummation of this offering, there will be no shares of preferred
stock issued and outstanding. Shares of Class B common stock are convertible into shares of our Class A common stock initially
at a one-for-one ratio but subject to adjustment as set forth herein, including in certain circumstances in which we issue Class
A common stock or equity-linked securities related to our initial business combination. Shares of Class B common stock are also
convertible at the option of the holder at any time.
We
may issue a substantial number of additional shares of common or preferred stock to complete our initial business combination
or under an employee incentive plan after completion of our initial business combination (although our amended and restated certificate
of incorporation will provide that we may not issue securities that can vote with common stockholders on matters related to our
pre-initial business combination activity). We may also issue shares of Class A common stock upon conversion of the Class B common
stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions
contained in our amended and restated certificate of incorporation. However, our amended and restated certificate of incorporation
will provide, among other things, that prior to our initial business combination, we may not issue additional shares of capital
stock that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote on any initial business
combination. These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and
restated certificate of incorporation, may be amended with the approval of our stockholders. However, our sponsor, executive officers,
directors and director nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to redeem 100%
of our public shares if we do not complete our initial business combination within 18 months from the closing of this offering
or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity,
unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such
amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including
interest (which interest shall be net of taxes payable), divided by the number of then outstanding public shares.
The
issuance of additional shares of common or preferred stock:
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●
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may
significantly dilute the equity interest of investors in this offering;
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●
|
may
subordinate the rights of holders of common stock if preferred stock is issued with rights
senior to those afforded our common stock;
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●
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could
cause a change of control if a substantial number of shares of our common stock are issued,
which may affect, among other things, our ability to use our net operating loss carry
forwards, if any, and could result in the resignation or removal of our present officers
and directors; and
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●
|
may
adversely affect prevailing market prices for our units, Class A common stock and/or
rights.
|
The
determination of the offering price of our units and the size of this offering is more arbitrary than the pricing of securities
and size of an offering of an operating company in a particular industry. You may have less assurance, therefore, that the offering
price of our units properly reflects the value of such units than you would have in a typical offering of an operating company.
Prior
to this offering there has been no public market for any of our securities. The public offering price of the units and the terms
of the rights were negotiated between us and the underwriters. In determining the size of this offering, management held customary
organizational meetings with representatives of the underwriters, both prior to our inception and thereafter, with respect to
the state of capital markets, generally, and the amount the underwriters believed they reasonably could raise on our behalf. Factors
considered in determining the size of this offering, prices and terms of the units, including the Class A common stock and rights
underlying the units, include:
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the history and
prospects of companies whose principal business is the acquisition of other companies;
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●
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prior offerings
of those companies;
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●
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our prospects for
acquiring an operating business;
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●
|
a review of debt
to equity ratios in leveraged transactions;
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our capital structure;
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an assessment of
our management and their experience in identifying operating companies;
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general conditions
of the securities markets at the time of this offering; and
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●
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other factors as
were deemed relevant.
|
Although
these factors were considered, the determination of our offering price is more arbitrary than the pricing of securities of an
operating company in a particular industry since we have no historical operations or financial results.
There
is currently no market for our securities and a market for our securities may not develop, which would adversely affect the liquidity
and price of our securities.
There
is currently no market for our securities. Stockholders therefore have no access to information about prior market history on
which to base their investment decision. Following this offering, the price of our securities may vary significantly due to one
or more potential business combinations and general market or economic conditions. Furthermore, an active trading market for our
securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market
can be established and sustained.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete an initial business combination, which
may adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment
in us.
Although
we have no commitments as of the date of this prospectus to issue any notes or other debt securities, or to otherwise incur outstanding
debt following this offering, we may choose to incur substantial debt to complete our initial business combination. We have agreed
that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim
of any kind in or to the monies held in the trust account. As such, no issuance of debt will affect the per-share amount available
for redemption from the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
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default
and foreclosure on our assets if our operating revenues after an initial business combination
are insufficient to repay our debt obligations;
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acceleration
of our obligations to repay the indebtedness even if we make all principal and interest
payments when due if we breach certain covenants that require the maintenance of certain
financial ratios or reserves without a waiver or renegotiation of that covenant;
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●
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our
immediate payment of all principal and accrued interest, if any, if the debt security
is payable on demand;
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our
inability to obtain necessary additional financing if the debt security contains covenants
restricting our ability to obtain such financing while the debt security is outstanding;
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●
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our
inability to pay dividends on our common stock;
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using
a substantial portion of our cash flow to pay principal and interest on our debt, which
will reduce the funds available for dividends on our common stock if declared, our ability
to pay expenses, make capital expenditures and acquisitions, and fund other general corporate
purposes;
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limitations
on our flexibility in planning for and reacting to changes in our business and in the
industry in which we operate;
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increased
vulnerability to adverse changes in general economic, industry and competitive conditions
and adverse changes in government regulation;
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limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions,
debt service requirements, and execution of our strategy; and
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other
disadvantages compared to our competitors who have less debt.
|
We
may issue our shares to investors in connection with our initial business combination at a price that is less than the prevailing
market price of our shares at that time.
In
connection with our initial business combination, we may issue shares to investors in private placement transactions (so-called
PIPE transactions) at a price of $10.00 per share or which approximates the per-share amounts in our trust account at such time,
which is generally approximately $10.00. The purpose of such issuances will be to enable us to provide sufficient liquidity to
the post-business combination entity. The price of the shares we issue may therefore be less, and potentially significantly less,
than the market price for our shares at such time.
Our
sponsor may decide not to extend the term we have to consummate our initial business combination, in which case we would cease
all operations except for the purpose of winding up and we would redeem our public shares and liquidate, and the rights will expire
worthless.
We
will have until 18 months from the closing of this offering to consummate an initial business combination. However, if we anticipate
that we may not be able to consummate our initial business combination within 18 months, we may seek to amend our amended and
restated certificate of incorporation to extend the time we have to consummate an initial business combination. Our sponsor and
its affiliates or designees are not obligated to fund the trust account to extend the time for us to complete our initial business
combination. If we are unable to consummate our initial business combination within the applicable time period, we will, as promptly
as reasonably possible but not more than ten business days thereafter, redeem the public shares for a pro rata portion of the
funds held in the trust account and as promptly as reasonably possible following such redemption, subject to the approval of our
remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law. In such event, the rights will expire worthless.
Additional
Risks
We
are a newly formed company with no operating history and no revenues, and you have no basis on which to evaluate our ability to
achieve our business objective.
We
are a newly formed company with no operating results, and we will not commence operations until obtaining funding through this
offering. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective
of completing our initial business combination with one or more target businesses. We have no plans, arrangements or understandings
with any prospective target business concerning an initial business combination and may be unable to complete our initial business
combination. If we fail to complete our initial business combination, we will never generate any operating revenues.
Past
performance by our management team may not be indicative of future performance of an investment in the Company.
Past
performance by our management team is not a guarantee either (i) of success with respect to any business combination we may consummate
or (ii) that we will be able to locate a suitable candidate for our initial business combination. You should not rely on the historical
record of our management team’s performance as indicative of our future performance of an investment in the company or the
returns the company will, or is likely to, generate going forward.
Our
independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt
about our ability to continue as a “going concern.”
As
of April 6, 2021, we had $100 in cash and a working capital deficit of $(324,393). Further, we have incurred and expect to continue
to incur significant costs in pursuit of our financing and acquisition plans. Management’s plans to address this need for
capital through this offering are discussed in the section of this prospectus titled “Management’s Discussion and
Analysis of Financial Condition and Results of Operations.” We cannot assure you that our plans to raise capital or to consummate
an initial business combination will be successful. These factors, among others, raise substantial doubt about our ability to
continue as a going concern. The financial statements contained elsewhere in this prospectus do not include any adjustments that
might result from our inability to consummate this offering or our inability to continue as a going concern.
We
are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure
requirements available to emerging growth companies, this could make our securities less attractive to investors and may make
it more difficult to compare our performance with other public companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are
not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports
and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and
stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access
to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances
could cause us to lose that status earlier, including if the market value of our Class A common stock held by non-affiliates exceeds
$700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following
December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions.
If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our
securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading
prices of our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We
have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has
different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard
at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another
public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended
transition period difficult or impossible because of the potential differences in accountant standards used. Additionally, we
are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take
advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of
our common stock held by non-affiliates exceeds $250 million as of the end of the prior June 30th, or (2) our annual
revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates
exceeds $700 million as of the prior June 30th. 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.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require
substantial financial and management resources, and increase the time and costs of completing an initial business combination.
Section
404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual
Report on Form 10-K for the year ending December 31, 2022. Only in the event we are deemed to be a large accelerated filer or
an accelerated filer, and no longer qualify as an emerging growth company, will we be required to comply with the independent
registered public accounting firm attestation requirement on our internal control over financial reporting. Further, for as long
as we remain an emerging growth company, we will not be required to comply with the independent registered public accounting firm
attestation requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance
with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a
target company with which we seek to complete our initial business combination may not be in compliance with the provisions of
the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such entity
to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination.
Provisions
in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the
price investors might be willing to pay in the future for our Class A common stock and could entrench management.
Our
amended and restated certificate of incorporation will contain provisions that may discourage unsolicited takeover proposals that
stockholders may consider to be in their best interests. These provisions include a staggered board of directors and the ability
of the board of directors to designate the terms of and issue new series of preferred shares, which may make the removal of management
more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices
for our securities.
We
are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these
provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve payment
of a premium over prevailing market prices for our securities.
An
investment in this offering may result in uncertain or adverse U.S. federal income tax consequences.
An
investment in this offering may result in uncertain U.S. federal income tax consequences. For instance, if we are determined to
be a personal holding company for U.S. federal income tax purposes, our taxable income would be subjected to an additional 20%
federal income tax, which would reduce the net after-tax amount of interest income earned on the funds placed in our trust account.
Finally, it is unclear whether the redemption rights with respect to our shares suspend the running of a U.S. holder’s holding
period for purposes of determining whether (i) any gain or loss realized by such holder on the sale or exchange of Class A common
stock is long-term capital gain or loss, (ii) any dividends we pay would be considered “qualified dividends” for U.S.
federal income tax purposes and (iii) any dividend we pay would be eligible for the corporate dividends-received deduction. See
the section entitled “Material U.S. Federal Income Tax Considerations” for a summary of the principal U.S. federal
income tax consequences of an investment in our securities. Prospective investors are urged to consult their tax advisors with
respect to these and other tax consequences when purchasing, holding or disposing of our securities.
Our
amended and restated certificate of incorporation will require, to the fullest extent permitted by law, that derivative actions
brought in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and
other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware,
the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel,
which may have the effect of discouraging lawsuits against our directors, officers, other employees or stockholders.
Our
amended and restated certificate of incorporation will require, to the fullest extent permitted by law, that derivative actions
brought in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and
other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware,
the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel except
any action (A) as to which the Court of Chancery in the State of Delaware determines that there is an indispensable party not
subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction
of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a
court or forum other than the Court of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction,
or (D) any action arising under the Securities Act, as to which the Court of Chancery and the federal district court for the District
of Delaware shall have concurrent jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares
of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate
of incorporation. This choice of forum provision may make it more costly for a stockholder to bring a claim, and it may also limit
a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our
directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although our
stockholders cannot waive our compliance with federal securities laws and the rules and regulations thereunder. Alternatively,
if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be
inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions,
which could harm our business, operating results and financial condition.
Our
amended and restated certificate of incorporation will provide that the exclusive forum provision will be applicable to the fullest
extent permitted by applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought
to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive
forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim
for which the federal courts have exclusive jurisdiction. In addition, our amended and restated certificate of incorporation provides
that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States
of America shall, to the fullest extent permitted by law, be the exclusive forum for the resolution of any complaint asserting
a cause of action arising under the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder. We
note, however, that there is uncertainty as to whether a court would enforce this provision and that investors cannot waive compliance
with the federal securities laws and the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent
jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by the Securities Act
or the rules and regulations thereunder.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain
statements in this prospectus may constitute “forward-looking statements” for purposes of the federal securities laws.
Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations,
hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts
or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements.
The words “anticipate,” “believe,” “continue,” “could,” “estimate,”
“expect,” “intend,” “may,” “might,” “plan,” “possible,”
“potential,” “predict,” “project,” “should,” “would” and similar expressions
may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
Forward-looking statements in this prospectus may include, for example, statements about:
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our
ability to select an appropriate target business or businesses;
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our
ability to complete our initial business combination;
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our
expectations around the performance of the prospective target business or businesses;
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our
success in retaining or recruiting, or changes required in, our officers, key employees
or directors following our initial business combination;
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our
officers and directors allocating their time to other businesses and potentially having
conflicts of interest with our business or in approving our initial business combination,
as a result of which they would then receive expense reimbursements;
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our
potential ability to obtain additional financing to complete our initial business combination;
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our
pool of prospective target businesses;
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the
ability of our officers and directors to generate a number of potential acquisition opportunities;
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our
public securities’ potential liquidity and trading;
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the
lack of a market for our securities;
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the
use of proceeds not held in the trust account or available to us from interest income
on the trust account balance;
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the
trust account not being subject to claims of third parties; or
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our
financial performance following this offering.
|
The
forward-looking statements contained in this prospectus are based on our current expectations and beliefs concerning future developments
and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have
anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control)
or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by
these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under
the section of this prospectus entitled “Risk Factors.” Should one or more of these risks or uncertainties materialize,
or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking
statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under applicable securities laws.
USE
OF PROCEEDS
We
are offering 10,000,000 units at an offering price of $10.00 per unit. We estimate that the net proceeds of this offering together
with the funds we will receive from the sale of the private placement units will be used as set forth in the following table.
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No
Exercise of
Over-allotment
Option
|
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Full
Exercise of Over-allotment
Option
|
|
|
Gross
proceeds
|
|
|
|
|
|
|
|
|
|
Gross proceeds
from units offered to public(1)
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$
|
100,000,000
|
|
|
$
|
115,000,000
|
|
|
Gross proceeds
from private placement units
|
|
|
3,900,000
|
|
|
|
4,200,000
|
|
|
Total gross proceeds
|
|
$
|
103,900,000
|
|
|
$
|
119,200,000
|
|
|
Estimated
offering expenses(2)
|
|
|
|
|
|
|
|
|
|
Underwriting
commissions (2.0% of gross proceeds from units offered to public, excluding deferred portion)(3)(4)
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$
|
2,000,000
|
|
|
$
|
2,300,000
|
|
|
Legal fees and expenses
|
|
|
300,000
|
|
|
|
300,000
|
|
|
Accounting fees and expenses
|
|
|
45,000
|
|
|
|
45,000
|
|
|
SEC and FINRA expenses
|
|
|
30,595
|
|
|
|
30,595
|
|
|
Travel and road show expenses
|
|
|
25,000
|
|
|
|
25,000
|
|
|
Nasdaq listing fees
|
|
|
75,000
|
|
|
|
75,000
|
|
|
Printing expenses
|
|
|
40,000
|
|
|
|
40,000
|
|
|
Director and officer liability insurance
premiums
|
|
|
350,000
|
|
|
|
350,000
|
|
|
Miscellaneous
|
|
|
34,405
|
|
|
|
34,405
|
|
|
Total offering
expenses (excluding underwriting commissions)
|
|
$
|
900,000
|
|
|
$
|
900,000
|
|
|
Proceeds after
underwriting commissions and offering expenses
|
|
$
|
101,000,000
|
|
|
$
|
116,000,000
|
|
|
Held in trust account(3)
|
|
$
|
100,000,000
|
|
|
$
|
115,000,000
|
|
|
% of public offering
size
|
|
|
100
|
%
|
|
|
100
|
%
|
|
Not held in trust
account
|
|
$
|
1,000,000
|
|
|
$
|
1,000,000
|
|
The
following table shows the use of the approximately $1,000,000 of net proceeds not held in the trust account.(5)
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|
Amount
|
|
|
%
of Total
|
|
|
Legal,
accounting, due diligence, travel, and other expenses in connection with any business combination(6)
|
|
$
|
250,000
|
|
|
|
25.0
|
%
|
|
Legal and accounting fees related to
regulatory reporting obligations
|
|
|
100,000
|
|
|
|
10.0
|
%
|
|
Nasdaq continued listing fees
|
|
|
79,000
|
|
|
|
7.9
|
%
|
|
Payment
to our sponsor for the provision of officers’ cash salaries, office space, utilities and secretarial and administrative support
($30,000 per month from the effective date of the registration statement of which this prospectus forms a part and for up
to 18 months following the completion of this offering, plus an additional amount in respect of officers’ cash salaries
payable for services provided prior to the effective date, which the Company expects will not exceed approximately $30,000)
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|
|
570,000
|
|
|
|
57.0
|
%
|
|
Working capital
to cover miscellaneous expenses (including taxes net of anticipated interest income)
|
|
|
1,000
|
|
|
|
0.1
|
%
|
|
Total
|
|
$
|
1,000,000
|
|
|
|
100.0
|
%
|
|
(1)
|
Includes
gross proceeds from this offering of $100,000,000 (or $115,000,000 if the underwriters’
over-allotment option is exercised in full).
|
|
(2)
|
A
portion of the offering expenses will be paid from the proceeds of loans from our sponsor
of up to $300,000 as described in this prospectus. As of April 6, 2021, we had drawn
down $48,602 (of up to $300,000 available to us) under the promissory note with our sponsor
to be used for a portion of the expenses of this offering. These amounts will be repaid
upon completion of this offering out of the approximately $900,000 of offering proceeds
that has been allocated for the payment of offering expenses (other than underwriting
commissions). In the event that offering expenses are less than set forth in this table,
any such amounts will be used for post-closing working capital expenses.
|
|
(3)
|
The
underwriters have agreed to defer underwriting commissions equal to 3.5% of the gross
proceeds of this offering. Upon completion of our initial business combination, $3,500,000,
which constitutes the underwriters’ deferred commissions (or $4,025,000 if the
underwriters’ over-allotment option is exercised in full) will be paid to the underwriters
from the funds held in the trust account, and the remaining funds, less amounts released
to the trustee to pay redeeming stockholders, will be released to us and can be used
to pay all or a portion of the purchase price of the business or businesses with which
our initial business combination occurs or for general corporate purposes, including
payment of principal or interest on indebtedness incurred in connection with our initial
business combination, to fund the purchases of other companies or for working capital.
The underwriters will not be entitled to any interest accrued on the deferred underwriting
discounts and commissions.
|
|
(4)
|
Amount
shown as underwriting commission includes the fee payable to Palladium at the closing
of this offering. For financial advisory services provided by Palladium in connection
with this offering, we have agreed to pay Palladium a fee in an amount equal to (1) 20%
of the non-deferred underwriting commission payable to the underwriter, which will be
paid to Palladium upon the closing of this offering, and (2) 20% of the deferred
underwriting commission payable to the underwriter, which will be paid to Palladium upon
the closing of our initial business combination. The underwriter has agreed to reimburse
us for the fee to Palladium as it becomes payable out of the underwriting commission.
|
|
(5)
|
These
expenses are estimates only and do not include interest which may be available to us
from the trust account. Our actual expenditures for some or all of these items may differ
from the estimates set forth herein. For example, we may incur greater legal and accounting
expenses than our current estimates in connection with negotiating and structuring our
initial business combination based upon the level of complexity of such business combination.
In the event we identify an initial business combination target in a specific industry
subject to specific regulations, we may incur additional expenses associated with legal
due diligence and the engagement of special legal counsel. In addition, our staffing
needs may vary and as a result, we may engage a number of consultants to assist with
legal and financial due diligence. We do not anticipate any change in our intended use
of proceeds, other than fluctuations among the current categories of allocated expenses,
which fluctuations, to the extent they exceed current estimates for any specific category
of expenses, would not be available for our expenses.
|
|
(6)
|
Includes
estimated amounts that may also be used in connection with our initial business combination
to fund a “no shop” provision and commitment fees for financing.
|
Of
the net proceeds of this offering and the sale of the private placement units, $100,000,000 (or $115,000,000 if the underwriters’
over-allotment option is exercised in full), including $3,500,000 (or $4,025,000 if the underwriters’ over-allotment option is
exercised in full) of deferred underwriting commissions, will be placed in a trust account in the United States, with Continental
Stock Transfer & Trust Company acting as trustee, and will be invested only in U.S. government treasury bills with a maturity
of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest
only in direct U.S. government treasury obligations.
We
will have until 18 months from the closing of this offering to consummate an initial business combination. However, if we anticipate
that we may not be able to consummate our initial business combination within 18 months, we may seek to amend our amended and
restated certificate of incorporation to extend the time we have to consummate an initial business combination.
We
estimate that the interest earned on the trust account will be approximately $140,000 per year, assuming an interest rate of 0.14%
per year; however, we can provide no assurance regarding this amount. Except with respect to interest earned on the funds held
in the trust account that may be released to us to pay our franchise and income tax obligations (less up to $150,000 of interest
to pay dissolution expenses), the proceeds from this offering and the sale of the private placement units will not be released
from the trust account until the earliest to occur of: (a) the completion of our initial business combination, (b) the redemption
of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of
incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete
our initial business combination within 18 months from the closing of this offering or (B) with respect to any other provision
relating to stockholders’ rights or pre-initial business combination activity, and (c) the redemption of our public shares
if we are unable to complete our initial business combination within 18 months from the closing of this offering, subject to applicable
law.
The
net proceeds held in the trust account may be used as consideration to pay the sellers of a target business with which we ultimately
complete our initial business combination. If our initial business combination is paid for using equity or debt securities, or
not all of the funds released from the trust account are used for payment of the consideration in connection with our initial
business combination, we may apply the balance of the cash released from the trust account for general corporate purposes, including
for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness
incurred in completing our initial business combination, to fund the purchase of other companies or for working capital. There
is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination.
We
believe that amounts not held in trust will be sufficient to pay the costs and expenses to which such proceeds are allocated.
This belief is based on the fact that while we may begin preliminary due diligence of a target business in connection with an
indication of interest, we intend to undertake in-depth due diligence, depending on the circumstances of the relevant prospective
business combination, only after we have negotiated and signed a letter of intent or other preliminary agreement that addresses
the terms of an initial business combination. However, if our estimate of the costs of undertaking in-depth due diligence and
negotiating an initial business combination is less than the actual amount necessary to do so, we may be required to raise additional
capital, the amount, availability and cost of which is currently unascertainable. If we are required to seek additional capital,
we could seek such additional capital through loans or additional investments from our sponsor, members of our management team
or their affiliates, but such persons are not under any obligation to advance funds to, or invest in, us.
Commencing
as of the effective date of the registration statement of which this prospectus forms a part, we have agreed to pay our sponsor
a total of $30,000 per month for the provision of officers’ cash salaries, office space, utilities and secretarial and administrative
support (plus an additional amount in respect of officers’ cash salaries payable for services provided prior to the effective
date, which the Company expects will not exceed approximately $30,000). Upon completion of our initial business combination or our
liquidation (and in the case of officers’ cash salaries subject to any applicable notice periods), we will cease paying these monthly
fees.
Our
sponsor has agreed to loan us up to $300,000 to be used for a portion
of the expenses of this offering. As of April 6, 2021, we had drawn down $48,602 under the promissory note with our sponsor to be used
for a portion of the expenses of this offering. This loan is non-interest bearing, unsecured and due at the earlier of December 31, 2021
or the closing of this offering. The loan will be repaid upon the closing of this offering out of the offering proceeds not held in the
trust account.
In
addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsor or an
affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required.
If we complete our initial business combination, we would repay such loaned amounts out of the proceeds of the trust account released
to us. Otherwise, such loans would be repaid only out of funds held outside the trust account. In the event that our initial business
combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts
but no proceeds from our trust account would be used to repay such loaned amounts. Up to $1,500,000 of such working capital loans
may be convertible into units at a price of $10.00 per unit (which, for example, would result in the holders
being issued 150,000 units, if $1,500,000 of loans were so converted), at the option of the lender. Such units
would be identical to the private placement units. The terms of such working capital loans by our sponsor or its affiliates, or
our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. We do
not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties
will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our sponsor, initial stockholders, directors, officers, advisors or their
affiliates may purchase shares or public rights in privately negotiated transactions or in the open market either prior to or
following the completion of our initial business combination. There is no limit on the number of shares our initial stockholders,
directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law
and Nasdaq rules. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated
any terms or conditions for any such transactions. If they engage in such transactions, they will not make any such purchases
when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited
by Regulation M under the Exchange Act. We do not currently anticipate that such purchases, if any, would constitute a tender
offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules
under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject
to such rules, the purchasers will comply with such rules. Any such purchases will be reported pursuant to Section 13 and Section
16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements. None of the funds held in the
trust account will be used to purchase shares or public rights in such transactions prior to completion of our initial business
combination. See “Proposed Business — Permitted purchases of our securities” for a description of how our sponsor,
initial stockholders, directors, officers, advisors or any of their affiliates will select which stockholders to purchase securities
from in any private transaction.
The
purpose of any such purchases of shares could be to vote such shares in favor of the initial business combination and thereby
increase the likelihood of obtaining stockholder approval of the initial business combination or to satisfy a closing condition
in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial
business combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of
public rights could be to reduce the number of public rights, or the securities underlying them, that are outstanding. Any such
purchases of our securities may result in the completion of our initial business combination that may not otherwise have been
possible. In addition, if such purchases are made, the public “float” of our shares of Class A common stock or rights
may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain
or obtain the quotation, listing or trading of our securities on a national securities exchange.
We
will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either
immediately prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and
commissions (so that we are not subject to the SEC’s “penny stock” rules) and the agreement for our initial
business combination may require as a closing condition that we have a minimum net worth or a certain amount of cash. If too many
public stockholders exercise their redemption rights so that we cannot satisfy the net tangible asset requirement or any net worth
or cash requirements, we would not proceed with the redemption of our public shares or the initial business combination, and instead
may search for an alternate business combination.
A
public stockholder will be entitled to receive funds from the trust account only upon the earliest to occur of: (i) our completion
of an initial business combination, (ii) the redemption of any public shares properly submitted in connection with a stockholder
vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to
redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of this
offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination
activity, and (iii) the redemption of our public shares if we are unable to complete our initial business combination within 18
months following the closing of this offering, subject to applicable law and as further described herein and any limitations (including
but not limited to cash requirements) created by the terms of the proposed initial business combination. In no other circumstances
will a public stockholder have any right or interest of any kind to or in the trust account.
Our
sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption
rights with respect to any founder shares, private placement shares and any public shares held by them in connection with the
completion of our initial business combination. In addition, our initial stockholders have agreed to waive their rights to liquidating
distributions from the trust account with respect to any founder shares and private placement shares held by them if we fail to
complete our initial business combination within the prescribed time frame. However, if our sponsor or any of our officers, directors
or affiliates acquires public shares in or after this offering, they will be entitled to liquidating distributions from the trust account
with respect to such public shares if we fail to complete our initial business combination within the prescribed time frame.
DIVIDEND
POLICY
We
have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of
our initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings,
if any, capital requirements and general financial condition subsequent to completion of our initial business combination. If
we increase or decrease the size of this offering we will effect a stock dividend or a share contribution back to capital or other
appropriate mechanism, as applicable, with respect to our Class B common stock immediately prior to the consummation of this offering
in such amount as to maintain the ownership of our initial stockholders at 20% of the issued and outstanding shares of our common
stock upon the consummation of this offering (excluding the private placement shares, representative’s shares
and advisory compensation shares and assuming our initial stockholders do not purchase any units in this offering).
Further, if we incur any indebtedness in connection with our initial business combination, our ability to declare dividends may
be limited by restrictive covenants we may agree to in connection therewith.
DILUTION
The
difference between the public offering price per share of Class A common stock, and the pro forma net tangible book value per
share of our Class A common stock after this offering constitutes the dilution to investors in this offering. Net tangible book
value per share is determined by dividing our net tangible book value, which is our total tangible assets less total liabilities
(including the value of Class A common stock which may be redeemed for cash), by the number of outstanding shares of our Class
A common stock.
At
April 6, 2021, our net tangible book deficit was $(324,393), or approximately $(0.11) per share of common stock then outstanding.
After giving effect to the sale of 10,000,000 units in this offering (or 11,500,000 units if the underwriters’ over-allotment
option is exercised in full), the sale of the private placement units, the shares underlying the rights included in all such units,
the issuance of the representative’s shares, the issuance of the advisory compensation shares and the deduction of
underwriting commissions and estimated expenses of this offering, our pro forma net tangible book value at April 6, 2021 would
have been $5,000,001, or approximately $1.05 per share (or $0.93 per share if the underwriters’ over-allotment
option is exercised in full), representing an immediate increase in net tangible book value (as decreased by the value of the
9,252,432 shares of Class A common stock that may be redeemed for cash, or 10,699,934 shares of Class A common stock if the underwriters’
over-allotment option is exercised in full) of $1.05 per share (or $0.93 per share if the underwriters’ over-allotment
option is exercised in full) to our initial stockholders as of the date of this prospectus and dilution to public stockholders
from this offering will be $8.04 per share (or $8.17 if the underwriters’ over-allotment option is exercised
in full).
The
following table illustrates the dilution to the public shareholders on a per-share basis, assuming no value is attributed to the
rights included in the units or the private placement units:
|
|
|
No
Exercise of
Over-Allotment
Option
|
|
|
Full
Exercise
of
Over-Allotment
Option
|
|
|
Average
price per share after this offering and the private placement (including shares underlying rights)
|
|
$
|
9.09
|
|
|
$
|
9.09
|
|
|
Net tangible book value before this
offering
|
|
$
|
(0.13
|
)
|
|
$
|
(0.11
|
)
|
|
Increase attributable
to public stockholders and holders of private placement units
|
|
$
|
1.18
|
|
|
$
|
1.04
|
|
|
Pro forma net
tangible book value after this offering and the private placement
|
|
$
|
1.05
|
|
|
$
|
0.93
|
|
|
Dilution to public
stockholders
|
|
$
|
8.04
|
|
|
$
|
8.17
|
|
|
Percentage of
dilution to public stockholders
|
|
|
88.5
|
%
|
|
|
89.8
|
%
|
For
purposes of presentation, we have reduced our pro forma net tangible book value after this offering (assuming no exercise of the
underwriters’ over-allotment option) by $92,524,322 because holders of up to approximately 94.1% of our public shares
may redeem their shares for a pro rata share of the aggregate amount then on deposit in the trust account at a per share redemption
price equal to the amount in the trust account as set forth in our tender offer or proxy materials (initially anticipated to be
the aggregate amount held in trust two days prior to the commencement of our tender offer or stockholders meeting, including interest
earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes), divided
by the number of shares of Class A common stock sold in this offering.
The
following table sets forth information with respect to our initial stockholders and the public stockholders:
|
|
|
Shares
Purchased
|
|
|
Total
Cash Consideration
|
|
|
Average
Price
Per Share
|
|
|
|
|
Number
|
|
|
Percentage
|
|
|
Amount
|
|
|
Percentage
|
|
|
|
|
|
Initial stockholders(1)
|
|
|
2,500,000
|
|
|
|
17.82
|
%
|
|
$
|
25,000
|
|
|
|
0.02
|
%
|
|
$
|
0.01
|
|
|
Representative’s shares
|
|
|
50,000
|
|
|
|
0.36
|
%
|
|
$
|
—
|
|
|
|
0.00
|
%
|
|
|
0.00
|
|
|
Advisory compensation
shares
|
|
|
50,000
|
|
|
|
0.36
|
%
|
|
$
|
—
|
|
|
|
0.00
|
%
|
|
|
0.00
|
|
|
Shares included in private placement
units (including shares underlying rights)
|
|
|
429,000
|
|
|
|
3.06
|
|
|
|
3,900,000
|
|
|
|
3.75
|
%
|
|
|
9.09
|
|
|
Public stockholders
(including shares underlying rights)
|
|
|
11,000,000
|
|
|
|
78.41
|
%
|
|
$
|
100,000,000
|
|
|
|
96.22
|
%
|
|
$
|
9.09
|
|
|
|
|
|
14,029,000
|
|
|
|
100.00
|
%
|
|
$
|
103,925,000
|
|
|
|
100.00
|
%
|
|
|
|
|
(1)
Assumes no exercise of the underwriters’ over-allotment option and the corresponding forfeiture of an aggregate of 375,000
shares of Class B common stock held by our sponsor.
The
pro forma net tangible book value per share after this offering is calculated as follows:
|
|
|
Without
Over-Allotment
|
|
|
With
Over-Allotment
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
Net tangible book value
before this offering
|
|
$
|
(324,393
|
)
|
|
$
|
(324,393
|
)
|
|
Proceeds from this
offering and sale of the private placement units, net of expenses(1)
|
|
|
101,000,000
|
|
|
|
116,000,000
|
|
|
Plus: Proceeds from the issuance of
the representative’s shares
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Plus: Proceeds from the issuance of
the advisory compensation shares
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Plus: Offering costs paid for in advance
|
|
|
348,616
|
|
|
|
348,616
|
|
|
Less: Deferred underwriting commissions
|
|
|
(3,500,000
|
)
|
|
|
(4,025,000
|
)
|
|
Less:
Proceeds held in trust subject to redemption to maintain net tangible assets of $5,000,001(2)
|
|
|
92,524,222
|
|
|
|
106,999,222
|
|
|
|
|
$
|
5,000,001
|
|
|
$
|
5,000,001
|
|
|
|
|
Without
Over-Allotment
|
|
|
With
Over-Allotment
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
Shares of Class B common
stock outstanding prior to this offering
|
|
|
2,875,000
|
|
|
|
2,875,000
|
|
|
Shares of Class B common stock forfeited
if over-allotment is not exercised
|
|
|
(375,000
|
)
|
|
|
—
|
|
|
Shares of Class A common stock comprising
the representative’s shares
|
|
|
50,000
|
|
|
|
57,500
|
|
|
Shares of Class A common stock comprising
the advisory compensation shares
|
|
|
50,000
|
|
|
|
57,500
|
|
|
Shares of Class A common stock included
in the units in this offering
|
|
|
10,000,000
|
|
|
|
11,500,000
|
|
|
Shares of Class A common stock underlying
the rights included in the units in this offering
|
|
|
1,000,000
|
|
|
|
1,150,000
|
|
|
Shares of Class A common stock
included in the private placement units
|
|
|
390,000
|
|
|
|
420,000
|
|
|
Shares of Class A common stock
underlying the rights included in the private placement units
|
|
|
39,000
|
|
|
|
42,000
|
|
|
Less: Shares
subject to redemption
|
|
|
9,252,422
|
|
|
|
10,699,922
|
|
|
|
|
|
4,776,578
|
|
|
|
5,402,078
|
|
|
(1)
|
Expenses applied
against gross proceeds include offering expenses of approximately $900,000 and underwriting commissions of $2,000,000 (or
$2,300,000 if the underwriters’ over-allotment option is exercised in full) (excluding deferred underwriting fees).
See “Use of Proceeds.”
|
|
(2)
|
If we seek stockholder
approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination
pursuant to the tender offer rules, our sponsor, initial stockholders, directors, officers, advisors or their affiliates may
purchase shares or public rights in privately negotiated transactions or in the open market either prior to or following the
completion of our initial business combination. In the event of any such purchases of our shares prior to the completion of
our initial business combination, the number of shares of Class A common stock subject to redemption will be reduced by the
amount of any such purchases, increasing the pro forma net tangible book value per share. See “Proposed Business —
Effecting Our Initial Business Combination — Permitted Purchases of Our Securities.”
|
CAPITALIZATION
The
following table sets forth our capitalization at April 6, 2021 and as adjusted to give effect to the sale of our units and the
private securities and the application of the estimated net proceeds derived from the sale of such securities:
|
|
|
Actual
|
|
|
As
Adjusted
|
|
|
Promissory
note – related party(1)
|
|
$
|
48,602
|
|
|
|
—
|
|
|
Deferred underwriting
commissions
|
|
|
—
|
|
|
|
3,500,000
|
|
|
Class
A common stock, $0.0001 par value, subject to possible redemption/ tender, 0 and 9,252,422 shares actual and as adjusted,
respectively(2)
|
|
|
—
|
|
|
|
92,524,222
|
|
|
Preferred stock, $0.0001 par value,
1,000,000 shares authorized; 0 shares issued and outstanding, actual and as adjusted, respectively
|
|
|
—
|
|
|
|
—
|
|
|
Class A common stock,
$0.0001 par value, 100,000,000 shares authorized; 0 and 1,237,578 shares excluding 9,252,422 shares subject to redemption
issued and outstanding, actual and as adjusted, respectively
|
|
|
—
|
|
|
|
124
|
|
|
Class B common stock, $0.0001
par value, 10,000,000 shares authorized, 2,875,000 and 2,890,000 shares issued and outstanding, actual and as adjusted, respectively(3)
|
|
|
288
|
|
|
|
251
|
|
|
Additional paid-in capital
|
|
|
24,712
|
|
|
|
5,000,404
|
|
|
Accumulated deficit
|
|
|
(777
|
)
|
|
|
(777
|
)
|
|
Total stockholders’
equity
|
|
|
24,223
|
|
|
|
5,000,001
|
|
|
Total capitalization
|
|
$
|
72,825
|
|
|
|
101,024,223
|
|
|
(1)
|
Our sponsor has
agreed to loan us up to $300,000 to be used for a portion of the expenses of this offering. The “as adjusted”
information gives effect to the repayment of any loans made under this note out of the proceeds from this offering and the
sale of the private placement units. As of April 6, 2021, we had drawn down $48,602 under the promissory note with our sponsor
to be used for a portion of the expenses of this offering.
|
|
|
|
|
(2)
|
Upon the completion
of our initial business combination, we will provide our stockholders with the opportunity to redeem their public shares for
cash equal to their pro rata share of the aggregate amount then on deposit in the trust account as of two business days prior
to the consummation of the initial business combination including interest earned on the funds held in the trust account and
not previously released to us to pay our franchise and income taxes, subject to the limitations described herein whereby our
net tangible assets will be maintained at a minimum of $5,000,001 and any limitations (including, but not limited to, cash
requirements) created by the terms of the proposed initial business combination.
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(3)
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The actual share amount
is prior to the forfeiture of founder shares by our sponsor in the event the underwriters’ over-allotment option
is not fully exercised, and the as-adjusted amount assumes no exercise of the underwriters’ over-allotment option.
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MANAGEMENT’s
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
SAC
is a newly incorporated blank check company, incorporated as a Delaware corporation, formed for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses
or entities, which we refer to as our “initial business combination.” We have not selected any business combination
target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any
business combination target with respect to an initial business combination with us. Although we may pursue an acquisition in
any industry or geography, we intend to capitalize on the capabilities of our management team and our sponsor to identify, acquire
and operate a business that may provide opportunities for attractive risk-adjusted returns in the telecommunications, media, and
technology industries.
We
intend to effectuate our initial business combination using cash from the proceeds of this offering and the private placement
of the private placement units, the proceeds of the sale of our securities in connection with our initial business combination
(pursuant to forward purchase contracts or backstop agreements we may enter into following the consummation of this offering or
otherwise), our shares, debt or a combination of cash, shares and debt.
The
issuance of additional shares in connection with an initial business combination to the owners of the target or other investors:
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may
significantly dilute the equity interest of investors in this offering, which dilution
would increase if the anti-dilution provisions in the Class B common stock resulted in
the issuance of Class A shares on a greater than one-to-one basis upon conversion of
the Class B common stock;
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may
subordinate the rights of holders of our common stock if preferred stock is issued with
rights senior to those afforded our common stock;
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could
cause a change in control if a substantial number of shares of our common stock is issued,
which may affect, among other things, our ability to use our net operating loss carry
forwards, if any, and could result in the resignation or removal of our present officers
and directors;
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may
have the effect of delaying or preventing a change of control of us by diluting the stock
ownership or voting rights of a person seeking to obtain control of us; and
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may
adversely affect prevailing market prices for our Class A common stock and/or rights.
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Similarly,
if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result
in:
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default
and foreclosure on our assets if our operating revenues after an initial business combination
are insufficient to repay our debt obligations;
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acceleration
of our obligations to repay the indebtedness even if we make all principal and interest
payments when due if we breach certain covenants that require the maintenance of certain
financial ratios or reserves without a waiver or renegotiation of that covenant;
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our
immediate payment of all principal and accrued interest, if any, if the debt security
is payable on demand;
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our
inability to obtain necessary additional financing if the debt security contains covenants
restricting our ability to obtain such financing while the debt security is outstanding;
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our
inability to pay dividends on our common stock;
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using
a substantial portion of our cash flow to pay principal and interest on our debt, which
will reduce the funds available for dividends on our common stock if declared, our ability
to pay expenses, make capital expenditures and acquisitions, and fund other general corporate
purposes;
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limitations
on our flexibility in planning for and reacting to changes in our business and in the
industry in which we operate;
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increased
vulnerability to adverse changes in general economic, industry and competitive conditions
and adverse changes in government regulation;
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limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions,
debt service requirements, and execution of our strategy; and
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other
purposes and other disadvantages compared to our competitors who have less debt.
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As
indicated in the accompanying financial statements, at April 6, 2021, we had $100 in cash and $348,616 of deferred offering costs.
Further, we expect to continue to incur significant costs in the pursuit of our initial business combination plans. We cannot
assure you that our plans to raise capital or to complete our initial business combination will be successful.
Results
of Operations and Known Trends or Future Events
We
have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational
activities and those necessary to prepare for this offering. Following this offering, we will not generate any operating revenues
until after completion of our initial business combination. We will generate non-operating income in the form of interest income
on cash and cash equivalents after this offering. There has been no significant change in our financial or trading position and
no material adverse change has occurred since the date of our audited financial statements. After this offering, we expect to
incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance),
as well as expenses as we conduct due diligence on prospective business combination candidates. We expect our expenses to increase
substantially after the closing of this offering.
Liquidity
and Capital Resources
As
indicated in the accompanying financial statements, at April 6, 2021, we had $100 in cash and a working capital deficit of $(324,393)
(excluding deferred offering costs). Further, we have incurred and expect to continue to incur significant costs in pursuit of
our financing and acquisition plans. We cannot assure you that our plans to raise capital or to consummate an initial business
combination will be successful. These factors, among others, raise substantial doubt about our ability to continue as a going
concern.
Our
liquidity needs have been satisfied prior to the completion of this offering through a capital contribution from our sponsor of
$25,000 for the founder shares and up to $300,000 in loans available from our sponsor under an unsecured promissory note. We estimate
that the net proceeds from (i) the sale of the units in this offering, after deducting offering expenses of approximately $900,000,
underwriting commissions of $2,000,000 (or $2,300,000 if the underwriters’ over-allotment option is exercised in full) (excluding
deferred underwriting commissions of $3,500,000 (or $4,025,000 if the underwriters’ over-allotment option is exercised in
full), and (ii) the sale of the private placement units for a purchase price of $3,900,000 (or $4,200,000 if the over-allotment
option is exercised in full), will be $101,000,000 (or $116,000,000 if the underwriters’ over-allotment option is exercised
in full). Of this amount, $100,000,000 (or $115,000,000 if the underwriters’ over-allotment option is exercised in full)
will be held in the trust account, which includes $3,500,000 (or $4,025,000 if the underwriters’ over-allotment option is
exercised in full) of deferred underwriting commissions. The proceeds held in the trust account will be invested only in U.S.
government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under
Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. The remaining approximately
$1,000,000 will not be held in the trust account. In the event that our offering expenses exceed our estimate of approximately
$900,000, we may fund such excess with funds not to be held in the trust account. In such case, the amount of funds we intend
to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that the offering expenses
are less than our estimate of approximately $900,000, the amount of funds we intend to be held outside the trust account would
increase by a corresponding amount.
We
intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on
the trust account (less deferred underwriting commissions) to complete our initial business combination. We may withdraw interest
to pay franchise and income taxes. We estimate our annual franchise tax obligations, based on the number of shares of our common
stock authorized and outstanding after the completion of this offering, to be $200,000, which is the maximum amount of annual
franchise taxes payable by us as a Delaware corporation per annum, which we may pay from funds from this offering held outside
of the trust account or from interest earned on the funds held in our trust account and released to us for this purpose. Our annual
income tax obligations will depend on the amount of interest and other income earned on the amounts held in the trust account.
We expect the interest earned on the amount in the trust account will be sufficient to pay our income taxes. To the extent that
our capital stock or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining
proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses,
make other acquisitions and pursue our growth strategies.
Prior
to the completion of our initial business combination, we will have available to us the approximately $1,000,000 of proceeds held
outside the trust account. We will use these funds to identify and evaluate target businesses, perform business due diligence
on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses
or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure,
negotiate and complete an initial business combination.
In
order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination,
our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds
as may be required. If we complete our initial business combination, we would repay such loaned amounts. In the event that our
initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay
such loaned amounts but no proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such working
capital loans may be convertible into units at a price of $10.00 per unit (which, for example, would result
in the holders being issued 150,000 units, if $1,500,000 of loans were so converted), at the option of the lender.
Such units would be identical to the private placement units. The terms of such working capital loans by our sponsor or its affiliates,
or our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. We
do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties
will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
We
expect our primary liquidity requirements during that period to include approximately $250,000 for legal, accounting, due diligence,
travel and other expenses associated with structuring, negotiating and documenting successful business combinations; approximately
$100,000 for legal and accounting fees related to regulatory reporting requirements; approximately $79,000 for Nasdaq continued
listing fees; approximately $570,000 for the provision of officers’ cash salaries, office space, utilities and secretarial
and administrative support; and approximately $1,000 for working capital that will be used for miscellaneous expenses and reserves
(including taxes net of anticipated interest income).
These
amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not
being placed in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business
or as a down payment or to fund a “no-shop” provision (a provision designed to keep target businesses from “shopping”
around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed
initial business combination, although we do not have any current intention to do so. If we entered into an agreement where we
paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a
“no-shop” provision would be determined based on the terms of the specific business combination and the amount of
our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in
our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.
We
do not believe we will need to raise additional funds following this offering in order to meet the expenditures required for operating
our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and
negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds
available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing
either to complete our initial business combination or because we become obligated to redeem a significant number of our public
shares upon completion of our initial business combination, in which case we may issue additional securities or incur debt in
connection with such business combination. In addition, we intend to target businesses larger than we could acquire with the net
proceeds of this offering and the sale of the private placement units, and may as a result be required to seek additional financing
to complete such proposed initial business combination. Subject to compliance with applicable securities laws, we would only complete
such financing simultaneously with the completion of our initial business combination. If we are unable to complete our initial
business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate
the trust account. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain
additional financing in order to meet our obligations.
Controls
and Procedures
We
are not currently required to maintain an effective system of internal controls as defined by Section 404 of the Sarbanes-Oxley
Act. We will be required to comply with the internal control requirements of the Sarbanes-Oxley Act for the fiscal year ending
December 31, 2022. Only in the event that we are deemed to be a large accelerated filer or an accelerated filer would we be required
to comply with the independent registered public accounting firm attestation requirement. Further, for as long as we remain an
emerging growth company as defined in the JOBS Act, we intend to take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being
required to comply with the independent registered public accounting firm attestation requirement.
Prior
to the closing of this offering, we have not completed an assessment, nor has our independent registered public accounting firm
tested our systems, of internal controls. We expect to assess the internal controls of our target business or businesses prior
to the completion of our initial business combination and, if necessary, to implement and test additional controls as we may determine
are necessary in order to state that we maintain an effective system of internal controls. A target business may not be in compliance
with the provisions of the Sarbanes-Oxley Act regarding the adequacy of internal controls. Many small and mid-sized target businesses
we may consider for our initial business combination may have internal controls that need improvement in areas such as:
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staffing for
financial, accounting and external reporting areas, including segregation of duties;
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reconciliation
of accounts;
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proper recording
of expenses and liabilities in the period to which they relate;
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evidence of internal
review and approval of accounting transactions;
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documentation of
processes, assumptions and conclusions underlying significant estimates; and
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documentation of accounting policies and procedures.
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Because
it will take time, management involvement and perhaps outside resources to determine what internal control improvements are necessary
for us to meet regulatory requirements and market expectations for our operation of a target business, we may incur significant
expense in meeting our public reporting responsibilities, particularly in the areas of designing, enhancing, or remediating internal
and disclosure controls. Doing so effectively may also take longer than we expect, thus increasing our exposure to financial fraud
or erroneous financing reporting.
Once
our management’s report on internal controls is complete, we will retain our independent registered public accounting firm
to audit and render an opinion on such report when required by Section 404 of the Sarbanes-Oxley Act. The independent registered
public accounting firm may identify additional issues concerning a target business’s internal controls while performing
their audit of internal control over financial reporting.
Quantitative
and Qualitative Disclosures about Market Risk
The
net proceeds of this offering and the sale of the private placement units held in the trust account will be invested in U.S. government
treasury bills with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the
Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these
investments, we believe there will be no associated material exposure to interest rate risk.
Related
Party Transactions
On
April 5, 2021, our sponsor purchased 2,875,000 founder shares (up to 375,000 of which are subject to forfeiture by our sponsor
if the underwriters’ over-allotment option is not exercised in full) for an aggregate purchase price of $25,000, or approximately
$0.009 per founder share. Our sponsor later transferred a total of 275,000 founder shares to our officers and director nominees. The
number of founder shares issued was determined based on the expectation that such founder shares would represent 20% of the outstanding
shares upon completion of this offering (excluding the private placement shares, representative’s shares and advisory
compensation shares and assuming our initial stockholders do not purchase any units in this offering). The per share purchase price
of the founder shares was determined by dividing the amount of cash contributed to the company by the aggregate number of founder shares
issued. If we increase or decrease the size of this offering we will effect a stock dividend or a share contribution back to capital
or other appropriate mechanism, as applicable, with respect to our Class B common stock immediately prior to the consummation of this
offering in such amount as to maintain the ownership of our initial stockholders at 20% of the issued and outstanding shares of our common
stock upon the consummation of this offering (excluding the private placement shares, representative’s shares and
advisory compensation shares and assuming our initial stockholders do not purchase any units in this offering).
Commencing
as of the effective date of the registration statement of which this prospectus forms a part, we have agreed to pay our sponsor
a total of $30,000 per month for the provision of officers’ cash salaries, office space, utilities and secretarial and administrative
support (plus an additional amount in respect of officers’ cash salaries payable for services provided prior to the effective
date, which the Company expects will not exceed approximately $30,000). Upon completion of our initial business combination or our
liquidation (and in the case of officers’ cash salaries subject to any applicable notice periods), we will cease paying these monthly
fees.
Our
sponsor, officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred
in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable
business combinations. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers,
directors or our or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There
is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on
our behalf.
Prior
to the consummation of this offering, our sponsor has agreed to loan us up to $300,000 to be used for a portion of the expenses
of this offering. These loans are non-interest bearing, unsecured and are due at the earlier of December 31, 2021 or the closing
of this offering. The loan will be repaid upon the closing of this offering out of the approximately $900,000 of offering proceeds
that has been allocated to the payment of offering expenses (other than underwriting commissions).
In
addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsor or an
affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required.
If we complete our initial business combination, we would repay such loaned amounts. In the event that our initial business combination
does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no
proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such working capital loans may be convertible
into units at a price of $10.00 per unit (which, for example, would result in the holders being issued 150,000 units, if $1,500,000 of loans were so converted), at the option of the lender. Such units would be identical
to the private placement units. The terms of such working capital loans by our sponsor or its affiliates, or our officers and
directors, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek
loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to
loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
Our
sponsor has agreed to purchase an aggregate of 390,000 units (or 420,000 units if the over-allotment option is exercised in
full) at a price of $10.00 per unit, for an aggregate purchase price of $3,900,000, or $4,200,000 if the over-allotment
option is exercised in full. The private placement units will be identical to the units sold in this offering except that the
private placement units, so long as they are held by our sponsor or its permitted transferees, (i) may not (including the
Class A common stock and rights underlying the units, and the shares of Class A common stock underlying the rights),
subject to certain limited exceptions, be transferred, assigned or sold by the holders until the later of 30 days after
the completion of our initial business combination and one year after the completion of this offering, and (ii) will be
entitled to registration rights. During the period described above, the holders will be permitted to transfer the
private placement units held by them to certain permitted transferees, including our officers and directors and other persons
or entities affiliated with or related to them, but the transferees receiving such securities will be subject to the same
agreements with respect to such securities as our sponsor. Following such period and subject to applicable federal and state securities laws, the private placement units (including
the shares of Class A common stock and rights underlying such units, and the shares of Class A common stock underlying
such rights) will be transferable, assignable or salable, except that the private placement units will not trade. In
addition, holders of the private placement units and the underlying securities have agreed to waive their rights to
liquidating distributions from the trust account with respect to such securities if we fail to complete our initial business
combination within 18 months from the closing of this offering.
Pursuant
to a registration rights agreement we will enter into with our initial stockholders on or prior to the closing of this offering,
we may be required to register certain securities for sale under the Securities Act. These holders, and holders of units issued
upon conversion of working capital loans, if any, are entitled under the registration rights agreement to make up to three demands
that we register certain of our securities held by them for sale under the Securities Act and to have the securities covered thereby
registered for resale pursuant to Rule 415 under the Securities Act. In addition, these holders have the right to include their
securities in other registration statements filed by us. We will bear the costs and expenses of filing any such registration statements.
See the section of this prospectus entitled “Certain Relationships and Related Party Transactions.”
Off-Balance
Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results
As
of April 6, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have
any commitments or contractual obligations. No unaudited quarterly operating data is included in this prospectus, as we have conducted
no operations to date.
JOBS
Act
On
April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements
for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to
comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are
electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial
statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective
dates.
Additionally,
we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject
to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions
we may not be required to, among other things, (i) provide an independent registered public accounting firm’s attestation report
on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure
that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii)
comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the report of
independent registered public accounting firm providing additional information about the audit and the financial statements (auditor
discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation
and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period
of five years following the completion of this offering or until we are no longer an “emerging growth company,” whichever
is earlier.
PROPOSED
BUSINESS
Sagaliam
Acquisition Corporation (“SAC”, “we” or “our company”) is a newly incorporated blank check company,
incorporated as a Delaware corporation, formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination with one or more businesses or entities, which we refer to as our “initial
business combination.” We have not selected any business combination target and we have not, nor has anyone on our behalf, engaged
in any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination
with us. Although we may pursue an acquisition in any industry or geography, we intend to capitalize on the capabilities of our management
team and our sponsor to identify, acquire and operate a business that may provide opportunities for attractive risk-adjusted returns
in the telecommunications, media, and technology industries.
We
intend to identify and acquire a business that could benefit from a creative, forward-thinking owner with extensive operational expertise
that presents potential for an attractive risk-adjusted return profile. Even companies with solid fundamentals often under-perform their
potential, due to underinvestment, ineffective business strategies, sub-optimal capital allocation and capital structures, excessive
cost structures or incomplete management teams. Our management team has extensive experience in identifying and executing acquisitions
that are ripe for change, across industry sectors and business cycles. In addition, our management has hands-on experience working with
companies as active owners and directors by working closely with these companies to continue their transformation and help create value.
Rather
than offering a one-time service of going public, SAC aims to act as a long-term partner to its target companies. Our objective is to
provide a target company an efficient path to go public with a significant degree of ongoing funding certainty, while creating value
for our stockholders by assisting management with strategy, business planning, capital structure optimization, team building and synergistic
opportunities.
Our
sponsor is an affiliate of GLD Partners, LP (“GLD”), a private equity investment firm whose principals have decades of combined
investment experience and a track record of value creation in portfolio companies. SAC has assembled a seasoned team of industry advisors
whom we believe will help us execute our differentiated investment strategy. Through our affiliation with our sponsor and management
team, we will seek to acquire established businesses that we believe are fundamentally sound but potentially in need of financial, operational,
strategic or managerial transformation to maximize value for stockholders. We intend to focus on companies which we believe offer an
opportunity for stockholder value creation through the combination of (i) an attractive valuation entry point, (ii) a clear plan to unlock
incremental value through operational and/or strategic improvements and (iii) a clear path to bring the target company to the public
market and implement best-in-class public company governance. We will seek to partner with the owners of a target business to offer them
an option to create partial liquidity, transition their legacy to a public company and/or resolve any fragmented ownership or succession
planning issues, all while maintaining a singular focus on driving the target business to a higher level of performance and value. We
may also look at earlier stage companies that exhibit the potential to change the industries in which they participate, and which offer
the potential of sustained high levels of revenue growth.
Although
we may pursue an acquisition opportunity in any business industry or sector, we intend to focus our search for target businesses in the
telecommunications, media and technology industries. We intend to build an industry-leading sustainable business with attractive returns
on invested capital and robust free cash flow generation. By consummating a business combination with a target business in the telecommunications,
media or technology industries, we hope to offer public market investors near-term access and direct investment exposure to the long-term
trends favorably impacting these sectors and to the consolidation and value-creation opportunities related thereto. We intend to take
a disciplined approach towards consummating an initial business combination with an emphasis on building significant stockholder value
over the long-term. We also intend to look for target businesses with proven management teams who will foster an ownership culture with
strong alignment of incentives.
Our
Management Team
We
believe that the collective experience of our management team will allow us to source, identify and execute an attractive transaction
for our stockholders. Our management team is led by Barry Kostiner as Chairman and Chief Executive Officer, Thomas Neukranz as Chief
Financial Officer and Director and Jane Liu as Vice President, Business Development.
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Barry
Kostiner – Chairman and Chief Executive Officer. Mr. Kostiner is serving as the Chief Executive and Chairman
of Sagaliam Acquisition Corp. Additionally, Mr. Kostiner has served as the President of Legacy Tech Partners,
LLC (LTP), a microcap-focused EdTech investment vehicle, since February 2021, and has also been a
Manager of Capital Markets at Legacy Education Alliance, Inc. (OTC: LEAI) since March 2021. Mr. Kostiner joined the Board of Directors of LEAI in
May 2021. LEAI has had cumulative
education revenues in excess of $500 million over the past decade, prior to the Covid-19 pandemic.
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Mr.
Kostiner was the CFO of Ameri Holdings Inc. (Nasdaq: AMRH) from October 2018 through December 2020. The operations
of AMRH, including its global IT services business focused on SAP with operations in both the US and India, was acquired by
management, with the residual Nasdaq vehicle acquired by Enveric Biosciences (Nasdaq: ENVB), an evidence-based cannabinoid
pharma company focused on palliative therapies for cancer patients. Mr. Kostiner has been a consultant to ENVB since January
2021. From May 2016 through October 2018, Mr. Kostiner was a consultant to Cypress Skilled Nursing, a healthcare facility
operator and from May 2017 through October 2018 he was a consultant to LinKay Technologies Inc., an artificial intelligence
incubator with a portfolio of intellectual property focused on AI and LiDAR / geospatial technology, with research staff
in India and New York. Mr. Kostiner’s 20-year career in energy includes eight years at Goldman Sachs and Merrill Lynch
and their affiliates, with a focus on energy trading and portfolio management, as well as serving as the CEO of an oil &
gas SPAC (Nasdaq: PGRI) from 2005 through 2009. Mr. Kostiner earned a Bachelor’s of Science degree in Electrical
Engineering and a Master’s of Science in Operations Research from MIT. His thesis on the mathematics of electric industry
deregulation was sponsored by Harvard’s Kennedy School of Government.
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Mr.
Thomas W. Neukranz – Chief Financial Officer and Director. Mr. Neukranz is serving as
Chief Financial Officer and a director of Sagaliam Acquisition Corp. Mr. Neukranz has served as Managing Director of Capital
Markets for GLD Partners, LP since July 2020. Prior to joining GLD, Mr. Neukranz served as Head of Capital Markets for CleanFund
Inc., from July 2017 to August 2019, and as Executive Vice President and a member of the Executive Committee of Aegon Investment
Management, from February 2017 to August 2018. From 1993 to 2000, Mr. Neukranz was a Partner and Head of the Institutional
businesses at RS Investments, Vice President, Global Head of Exchange Derivatives at Goldman Sachs and Head of Exchange Traded
Derivatives at JP Morgan. Previously, Mr. Neukranz was responsible for derivative hedging for Bank of America and Lehman Brothers.
Mr. Neukranz began his career on the floor of the Board of Trade in Chicago. Mr. Neukranz has serves on the Board of the Stanford
Cancer Institute since 2016 and served as Chairman from 2017 through 2019. Mr. Neukranz received a B.S. in Industrial Management
from Purdue University, and holds Series 7 and 63 FINRA licenses.
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Ms.
Jane Liu – Vice President, Business Development. Ms. Liu is serving as Vice President, Business Development
of Sagaliam Acquisition Corp. Ms. Liu has served as Director of Finance for GLD Partners, LP since July 2020. Prior thereto,
Ms. Liu served as Senior Financial Analyst for CleanFund Commercial PACE Capital, Inc., from March 2017 to June 2020, and
served as Business Analyst for Industrial and Commercial Bank of China in 2015. Ms. Liu received a B.S. in Economics and Finance
from the University of Western Ontario, and a Master’s Degree in Financial Analysis from the University of San Francisco.
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Mr.
George Caruolo — Director Nominee. Mr. Caruolo has agreed to join our board of directors on the effective date of the
registration statement of which this prospectus is a part. Mr. Caruolo has been the principal of his own law firm for over 30
years and a government relations strategy advisor based in Rhode Island for over 10 years. He has represented privately
held and publicly traded clients in the areas of healthcare, electric utilities, solar energy, gaming, heavy construction, developmental
disabilities and Native American tribal affairs, as well as in other areas, both regionally and nationally. He is a director of
Allegro, LLC, a fintech company. He was an elected state representative and majority leader of the Rhode Island General Assembly,
has chaired the state Rhode Island Education Board and has served on other boards of directors. Mr. Caruolo received a
Bachelor’s Degree from Harvard University and a Juris Doctor degree from Suffolk University Law School.
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Mr.
Gabriel Del Virginia — Director Nominee. Mr. Del Virginia has agreed to join our board of directors on the effective
date of the registration statement of which this prospectus is a part. Mr. Del Virginia has more than 30 years of experience
providing legal representation in various types of public and private business entities in corporate, mergers and acquisitions,
financing, litigation and financial restructuring matters, as an associate at several prominent national law firms, including
Milbank Tweed Hadley & McCloy, and thereafter as principal of his own law firm, where he has practiced for over 10 years.
Mr. Del Virginia also served on the board of directors Sysorex Global Holdings Corp. (SYRX), a Nasdaq-listed technology
company that provides data analytics and location-based solutions and services to commercial and government customers worldwide.
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Mr.
Glauco Lolli-Ghetti — Director Nominee. Mr. Lolli-Ghetti has agreed to join our board of directors on the effective
date of the registration statement of which this prospectus is a part. Since 2019, Mr. Lolli-Ghetti has served as
Head of Development at Palatine Capital Partners, a real estate private equity firm, where he is
responsible for development investment strategies across acquisition and entitlement. Prior to joining Palatine, Mr. Lolli-Ghetti
founded Urban Muse, a real estate investment company responsible for developing 372,000 square feet of mixed-use properties
with an aggregate cost of $397 million. Prior to forming Urban Muse, Mr. Lolli-Ghetti was development manager at Federal Realty
Investment Trust, a publicly traded REIT with a market cap of $6.75 billion. Mr. Lolli-Ghetti received a Bachelor’s
Degree from Lehigh University.
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Past
performance by our management team is not a guarantee of success with respect to locating and acquiring a target business and
helping it to succeed. Although Mr. Kostiner has prior experience pursuing an acquisition on behalf of a blank check company,
other members of our management team do not. Nevertheless, we believe we will greatly benefit from the experience of our management
team as we seek to identify and consummate an initial business combination.
Members
of our management team are not obligated to devote any specific number of hours to our matters, but they intend to devote as much of
their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time that any
member of our management team will devote in any time period will vary based on whether a target business has been selected for our initial
business combination and the current stage of the business combination process.
Our
Competitive Advantages
The
networking, sourcing, valuation, diligence and execution capabilities of our team should provide us what we believe to be a significant
and attractive pipeline of opportunities. Our competitive strengths include:
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Extensive
Operating Experience. We meticulously composed our executive team, Board of Directors and Advisory Board with professionals with
notable experience in operational, financial, C-suite and board-level roles.
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Proprietary
Sourcing Capabilities Developed Through Strong Networks of Relationships. We intend to capitalize on our management team’s
domain expertise, acquired through decades of strategic deal-making in the telecommunications, media, technology and related industries.
We believe our management’s deep network of CEO-level and other C-suite and board relationships, in addition to contacts with
pre-eminent private and public market investors, will present us with a substantial number of potential business combination targets.
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Ability
to Drive Public Shareholder Value. We plan to work with the management team of our initial business combination target to build
shareholder value both organically and inorganically. Our team has collectively achieved success at a wide variety of legacy companies
and emerging growth platforms, many of which were publicly traded. All members of our team have played key executive operating roles,
served as board members and/or been investors at these organizations. In addition, the roles played by this team have often included
key growth initiatives and expansion into new geographies or products.
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Our
Business Strategy
Although
our efforts to identify a prospective target business will not necessarily be limited to a particular industry, sector or region, we
intend to capitalize on our expertise in the telecommunications, media, and technology industries.
We
believe that the telecommunications, media and technology industries present attractive characteristics of long-term growth prospects
globally, stable and cycle-resistant demand, fragmented markets with opportunities for consolidation, a lack of dominant players and
global brands, predictable digital transition patterns and a large universe of growing and profitable targets.
We
believe that five long-term trends are driving positive transformation in the telecommunications, media and technology industries, creating
opportunities for long-term value creation in the sector specifically and, more broadly, in the associated knowledge economy. These drivers
of transformation are: Digitization (the use of digital content and services), Responsiveness (designing and offering products
and services on a customized or bespoke basis for the individual), Privatization (the growing private supply of media, content
and services), Automation (the use of artificial intelligence and data to enhance the efficacy and efficiency of product delivery
platforms) and Globalization (the international development and dissemination of content, certification, technology and brands).
We intend to take advantage of these long-term trends and the associated consolidation and value-creation opportunities.
Our
acquisition and value creation strategy is to identify, acquire and, after our initial business combination, fundamentally enhance a
company in the public markets. We intend to seek a company in an industry that complements the experience and expertise of our management
team and is a business to which we believe we can add value.
We
are committed to delivering attractive returns to all stakeholders.
Our
management team is deeply familiar with the trends of our target industries and brings an investing approach that offers multiple competitive
advantages in sourcing, evaluating and executing on opportunities, including being:
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Stockholder
Centric: We think like owners and are focused on long-term gains rather than short-term results. At SAC, the compensation
structure of the management team is closely tied to the long-term performance of the stock. See “Management – Officer
and Director Compensation”.
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Forward
Looking: We are deeply familiar with the trends of the industries in which we plan to invest and can evaluate the
opportunities and risks presented by ongoing secular changes and temporary market disruptions.
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Nimble:
Our team is structured to allow it to move quickly when opportunities arise, and we can be creative in our deal structures.
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Financially
Sophisticated: Our management team has extensive experience in mergers, capital restructuring, divestitures, investing,
capital deployment, credit analysis and setting capital structures.
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Long-Term
Focused: We take a long-term, strategic view in our various operating businesses and are less concerned with short-term
bouts of volatility.
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Connected,
through Proprietary Sourcing Channels and Leading Industry Relationships: We believe the capabilities and connections
associated with our management team will provide us with a differentiated pipeline of acquisition opportunities that would be difficult
for other participants in the market to replicate. We expect these sourcing capabilities will be further bolstered by our management
team and SAC’s reputation and deep industry relationships.
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Our
Business Combination Criteria
Consistent
with our business strategy, we have developed the following general criteria and guidelines that we believe are important in evaluating
prospective initial business combinations. We will use these criteria and guidelines in evaluating business combination opportunities,
but we may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines.
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Businesses
with Significant Revenue and Earnings Growth Potential. We will seek to acquire one or more businesses that we believe will have
multiple organic and M&A-driven growth opportunities over time. We will search for attractive, growth-oriented businesses that
exhibit sound, underlying fundamentals as well as demonstrated revenue growth and a clear path to profitability. This includes such
potential targets that are currently, or have the potential to be, a category leader with long-term growth potential.
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Targets
That Can Benefit from our Management Team’s Relationships and Experience. Although we may pursue an initial business combination
opportunity in any industry or sector, we intend to capitalize on our management team’s domain expertise acquired through decades
of strategic deal-making in the media, digital media/consumer technology and related industries. We believe our management’s
deep network of CEO-level and other C-suite and board relationships, in addition to contacts with pre-eminent private and public
market investors, will give us a number of competitive advantages and will present us with a substantial number of potential business
combination targets, particularly in the aforementioned industries.
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Companies
with Potential to Benefit from Digital Disruption. We will seek to acquire one or more businesses which currently, or have the
potential to, benefit from digital disruption, or a disruption of traditional business models or markets.
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Businesses
in High-Growth Markets. We will seek out opportunities in higher-growth sectors in the U.S., as well as in selected developed
and emerging international markets.
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Companies
that Drive Shareholder Returns. We will seek to acquire one or more businesses that offer an attractive risk-adjusted return
for our stockholders, weighing potential growth opportunities and operational improvements in the target business against any identified
downside risks.
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These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be
based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management
may deem relevant. In the event that we decide to enter into our initial business combination with a target business that does not meet
the above criteria and guidelines, we will disclose that the target business does not meet them in our stockholder communications related
to our initial business combination, which, as discussed in this prospectus, would be in the form of tender offer documents or proxy
solicitation materials that we would file with the SEC.
Our
Sourcing of Potential Business Combination Targets
We
believe our management team’s significant transaction experience and industry relationships will provide us with a substantial
number of potential business combination targets. Over the course of their careers, the members of our management team have developed
a broad network of contacts and corporate relationships. This network has grown through the activities of our management team in sourcing,
acquiring, financing and selling businesses, our management team’s relationships with sellers, financing sources and target management
teams and the experience of our management team in executing transactions under varying economic and financial market conditions.
We
believe this network will provide our management team with a robust and consistent flow of acquisition opportunities which are proprietary
or where a limited group of investors are invited to participate in the sale process. We believe that the network of contacts and relationships
of our management team will provide us with important sources of acquisition opportunities. In addition, we anticipate that target business
candidates will be brought to our attention from various unaffiliated sources, including investment market participants, private equity
funds and large business enterprises seeking to divest non-core assets or divisions.
We
are not prohibited from pursuing an initial business combination with a business that is owned by our sponsor, officers or directors
or any related entities, or making an acquisition through a joint venture or other form of shared ownership with any of them. In the
event we seek to complete our initial business combination with a target that is owned by our sponsor, officers or directors or any related
entities, we, or a committee of independent and disinterested directors, expect to obtain an opinion from an independent investment banking
firm or another accounting, valuation or appraisal firm, to the effect that such initial business combination is fair to our company
from a financial point of view. However, we are not required to obtain such an opinion in any context.
See
“— Conflicts of Interest” and “Management — Conflicts of Interest” for information
regarding limitations on our access to investment opportunities sourced by members of our management team, SAC or other entities in which
members of our management team are involved, including a list of our executive officers and directors and entities for which a conflict
of interest may or does exist between such officers or directors and our company.
Initial
Business Combination
Nasdaq
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value
of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on
the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. Our board of
directors will make the determination as to the fair market value of our initial business combination. If our board of directors is not
able to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent
investment banking firm that is a member of FINRA or an independent accounting firm with respect to the satisfaction of such criteria.
While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value
of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular
target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. Additionally, pursuant
to Nasdaq rules, any initial business combination must be approved by a majority of our independent directors.
We
will have until 18 months from the closing of this offering to consummate an initial business combination. However, if we anticipate
that we may not be able to consummate our initial business combination within 18 months, we may seek to amend our amended and restated
certificate of incorporation to extend the time we have to consummate an initial business combination.
We
anticipate structuring our initial business combination either (i) in such a way so that the post-transaction company in which our public
stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses, or (ii) in such
a way so that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order
to meet certain objectives of the target management team or stockholders, or for other reasons. However, we will only complete an initial
business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target
or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company
under the Investment Company Act of 1940, as amended, or the “Investment Company Act”. Even if the post-transaction company
owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the initial business combination may collectively
own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the initial business
combination. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the
outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target.
However,
as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination
could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity
interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business
or businesses that is owned or acquired is what will be taken into account for purposes of Nasdaq’s 80% of net assets test. If
the initial business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value
of all of the transactions and we will treat the target businesses together as the initial business combination for purposes of a tender
offer or for seeking stockholder approval, as applicable.
Our
Business Combination Process
In
evaluating prospective business combinations, we expect to conduct a thorough due diligence review process that will encompass, among
other things, a review of historical and projected financial and operating data, meetings with management and their advisors (if applicable),
on-site inspection of facilities and assets, discussion with customers and suppliers, legal reviews and other reviews as we deem appropriate.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors.
In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors,
we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm that is a member of FINRA
or an independent accounting firm that our initial business combination is fair to our company from a financial point of view.
Each
of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations
to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity. Accordingly,
if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or
she has then-current fiduciary or contractual obligations to present the opportunity to such entity, he or she will honor his or her
fiduciary or contractual obligations to present such opportunity to such entity. We believe, however, that the fiduciary duties or contractual
obligations of our officers or directors will not materially affect our ability to complete our initial business combination. Our amended
and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director
or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our
company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us
to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
Our
sponsor and our officers and directors will own founder shares following this offering. Because of this ownership, our sponsor and our
officers and directors may have a conflict of interest in determining whether a particular target business is an appropriate business
with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest
with respect to evaluating a particular business combination if the retention or resignation of any such officers or directors were to
be included by a target business as a condition to any agreement with respect to our initial business combination.
Financial Advisory Services
We have engaged Palladium, which is a registered
broker-dealer, to provide financial advisory services as a broker-dealer in connection with this offering, which services are
independent from those being provided by the underwriters. We have agreed to pay Palladium customary fees in connection with this
offering, which includes deferred compensation that is contingent on the completion of an initial business combination within
the specified time period. The underwriters have agreed to reimburse us for the fee to be paid to Palladium. As a result, there
is no additional offering expense related to this fee. However, this engagement may present potential conflicts of interest because
a portion of the fees payable are contingent on the consummation of an initial business combination. In addition, we may engage
Palladium for capital markets or financial advisory services after this offering (in connection with an initial business combination
or otherwise), which could create additional conflicts of interest. We may also engage other service providers for services in
connection with identifying and investigating potential targets for, and the consummation of, our business combination, and we
may pay fees, including non-cash compensation, and reimburse expenses for any such services. Similarly, Palladium or such other
service providers may provide services to prospective acquisition targets, including in connection with or following an initial
business combination with us, and may receive fees and other compensation and expense reimbursements in exchange for such services.
Status
as a Public Company
We
believe our structure will make us an attractive business combination partner to target businesses. As a public company, we offer a target
business an alternative to the traditional initial public offering through a merger or other business combination with us. Following
an initial business combination, we believe the target business would have greater access to capital and additional means of creating
management incentives that are better aligned with stockholders’ interests than it would as a private company. A target business
can further benefit by augmenting its profile among potential new customers and vendors and aid in attracting talented employees. In
a business combination transaction with us, the owners of the target business may, for example, exchange their shares of stock in the
target business for our shares of Class A common stock (or shares of a new holding company) or for a combination of our shares of Class
A common stock and cash, allowing us to tailor the consideration to the specific needs of the sellers.
Although
there are various costs and obligations associated with being a public company, we believe target businesses will find this method a
more expeditious and cost effective method to becoming a public company than the typical initial public offering. The typical initial
public offering process takes a significantly longer period of time than the typical business combination transaction process, and there
are significant expenses in the initial public offering process, including underwriting discounts and commissions, marketing and road
show efforts that may not be present to the same extent in connection with an initial business combination with us.
Furthermore,
once a proposed initial business combination is completed, the target business will have effectively become public, whereas an initial
public offering is always subject to the underwriters’ ability to complete this offering, as well as general market conditions,
which could delay or prevent this offering from occurring or could have negative valuation consequences. Following an initial business
combination, we believe the target business would then have greater access to capital and an additional means of providing management
incentives consistent with stockholders’ interests and the ability to use its shares as currency for acquisitions. Being a public
company can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting
talented employees.
While
we believe that our structure and our management team’s backgrounds will make us an attractive business partner, some potential
target businesses may view our status as a blank check company, such as our lack of an operating history and our ability to seek stockholder
approval of any proposed initial business combination, negatively.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such,
we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies
that are not “emerging growth companies” including, but not limited to, not being required to comply with the independent
registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory
vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find
our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities
may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other
words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of
the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed
to be a large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates exceeds $700
million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt
securities during the prior three-year period.
Additionally,
we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take
advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held
by non-affiliates exceeds $250 million as of the end of the prior June 30th, or (2) our annual revenues exceeded $100 million
during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior
June 30th.
Financial
Position
With
funds available for an initial business combination initially in the amount of approximately $97,500,000, after payment of the estimated
expenses of this offering and $3,500,000 of deferred underwriting fees (or approximately $111,975,000, after payment of the estimated
expenses of this offering and $4,025,000 of deferred underwriting fees if the underwriters’ over-allotment option is exercised
in full), in each case before fees and expenses associated with locating a target business and conducting our initial business combination,
we offer a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential
growth and expansion of its operations or strengthening its balance sheet by reducing its debt or leverage ratio. Because we are able
to complete our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the
flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to
fit its needs and desires. However, we have not taken any steps to secure third party financing and there can be no assurance it will
be available to us.
Effecting
Our Initial Business Combination
We
are not presently engaged in, and we will not engage in, any operations for an indefinite period of time following this offering. We
intend to effectuate our initial business combination using cash from the proceeds of this offering and the private placement of the
private placement units, the proceeds of the sale of our shares in connection with our initial business combination (including pursuant
to forward purchase agreements or backstop agreements we may enter into following the consummation of this offering or otherwise), shares
issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.
We may seek to complete our initial business combination with a company or business that may be financially unstable or in its early
stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
If
our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust account
are used for payment of the consideration in connection with our initial business combination or used for redemptions of our Class A
common stock, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for
maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred
in completing our initial business combination, to fund the purchase of other companies or for working capital.
We
may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of our initial
business combination, and we may effectuate our initial business combination using the proceeds of such offering rather than using the
amounts held in the trust account. In addition, we intend to target businesses larger than we could acquire with the net proceeds of
this offering and the sale of the private placement units, and may as a result be required to seek additional financing to complete such
proposed initial business combination. Subject to compliance with applicable securities laws, we would expect to complete such financing
only simultaneously with the completion of our initial business combination. In the case of an initial business combination funded with
assets other than the trust account assets, our proxy materials or tender offer documents disclosing the initial business combination
would disclose the terms of the financing and, only if required by law, we would seek stockholder approval of such financing. There are
no prohibitions on our ability to raise funds privately, or through loans in connection with our initial business combination. At this
time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through
the sale of securities or otherwise.
Sources
of Target Businesses
We
anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment bankers
and investment professionals. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited
by us by calls or mailings. These sources may also introduce us to target businesses in which they think we may be interested on an unsolicited
basis, since many of these sources will have read this prospectus and know what types of businesses we are targeting. Our officers and
directors, as well as our sponsor and their affiliates, may also bring to our attention target business candidates that they become aware
of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade
shows or conventions. In addition, we expect to receive a number of proprietary deal flow opportunities that would not otherwise necessarily
be available to us as a result of the business relationships of our officers and directors and our sponsor and their affiliates. While
we do not presently anticipate engaging the services of professional firms or other individuals that specialize in business acquisitions
on any formal basis, we may engage these firms or other individuals in the future, in which event we may pay a finder’s fee, consulting
fee, advisory fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction.
We will engage a finder only to the extent our management determines that the use of a finder may bring opportunities to us that may
not otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction that our management determines
is in our best interest to pursue. Payment of finder’s fees is customarily tied to completion of a transaction, in which case any
such fee will be paid out of the funds held in the trust account. In no event, however, will our sponsor or any of our existing officers
or directors, or any entity with which our sponsor or officers are affiliated, be paid any finder’s fee, reimbursement, consulting
fee, monies in respect of any payment of a loan or other compensation by the company prior to, or in connection with any services rendered
for any services they render in order to effectuate, the completion of our initial business combination (regardless of the type of transaction
that it is). None of our sponsor, officers or directors, or any of their respective affiliates, will be allowed to receive any compensation,
finder’s fees or consulting fees from a prospective business combination target in connection with a contemplated initial business
combination. We have agreed to pay our sponsor a total of $30,000 per month for the provision of officers’ cash salaries, office
space, utilities and secretarial and administrative support (plus an additional amount in respect of officers’ cash salaries
payable for services provided prior to the effective date, which the Company expects will not exceed approximately $30,000) and to
reimburse our sponsor for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination.
Some of our officers and directors may enter into employment or consulting agreements with the post-transaction company following our
initial business combination. The presence or absence of any such fees or arrangements will not be used as a criterion in our selection
process of an initial business combination candidate.
We
are not prohibited from pursuing an initial business combination with an initial business combination target that is affiliated with
our sponsor, officers or directors or making the initial business combination through a joint venture or other form of shared ownership
with our sponsor, officers or directors. In the event we seek to complete our initial business combination with an initial business combination
target that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion
from an independent investment banking firm which is a member of FINRA or an independent accounting firm that such an initial business
combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
As
more fully discussed in the section of this prospectus entitled “Management — Conflicts of Interest,” if any of our
officers or directors becomes aware of an initial business combination opportunity that falls within the line of business of any entity
to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such business combination
opportunity to such entity prior to presenting such business combination opportunity to us. Our officers and directors currently have
certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us.
Selection
of a Target Business and Structuring of our Initial Business Combination
Nasdaq
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value
of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on
the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. The fair market
value of our initial business combination will be determined by our board of directors based upon one or more standards generally accepted
by the financial community, such as discounted cash flow valuation, a valuation based on trading multiples of comparable public businesses
or a valuation based on the financial metrics of M&A transactions of comparable businesses. If our board of directors is not able
to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment
banking firm that is a member of FINRA or an independent accounting firm with respect to the satisfaction of such criteria. While we
consider it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our
initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target
or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. We do not intend to purchase
multiple businesses in unrelated industries in conjunction with our initial business combination. Subject to this requirement, our management
will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will
not be permitted to effectuate our initial business combination with another blank check company or a similar company with nominal operations.
In
any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting securities
of the target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register as an investment
company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business
or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction company is what will be
taken into account for purposes of Nasdaq’s 80% of net assets test. There is no basis for investors in this offering to evaluate
the possible merits or risks of any target business with which we may ultimately complete our initial business combination.
To
the extent we effect our initial business combination with a company or business that may be financially unstable or in its early stages
of development or growth we may be affected by numerous risks inherent in such company or business. Although our management will endeavor
to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant
risk factors.
In
evaluating a prospective business target, we expect to conduct a thorough due diligence review, which may encompass, among other things,
meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection of facilities,
as well as a review of financial and other information that will be made available to us.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the costs
associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification
and evaluation of a prospective target business with which our initial business combination is not ultimately completed will result in
our incurring losses and will reduce the funds we can use to complete another business combination.
Lack
of Business Diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend entirely
on the future performance of a single business. Unlike other entities that have the resources to complete business combinations with
multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate
the risks of being in a single line of business. In addition, we intend to focus our search for an initial business combination in a
single industry. By completing our initial business combination with only a single entity, our lack of diversification may:
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subject
us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the
particular industry in which we operate after our initial business combination, and
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cause
us to depend on the marketing and sale of a single product or limited number of products or services.
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Limited
Ability to Evaluate the Target’s Management Team
Although
we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial
business combination with that business, our assessment of the target business’ management may not prove to be correct. In addition,
the future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future
role of members of our management team, if any, in the target business cannot presently be stated with any certainty. The determination
as to whether any of the members of our management team will remain with the combined company will be made at the time of our initial
business combination. While it is possible that one or more of our directors will remain associated in some capacity with us following
our initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial
business combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge
relating to the operations of the particular target business.
We
cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company. The
determination as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business
combination.
Following
an initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite
skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve Our Initial Business Combination
We
may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval
if it is required by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business or other legal
reasons. Presented in the table below is a graphic explanation of the types of initial business combinations we may consider and whether
stockholder approval is currently required under Delaware law for each such transaction.
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Type
of Transaction
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Whether
Stockholder
Approval Is
Required
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Purchase
of assets
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No
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Purchase
of stock of target not involving a merger with the company
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No
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Merger
of target into a subsidiary of the company
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No
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Merger
of the company with a target
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Yes
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Under
Nasdaq’s listing rules, stockholder approval would be required for our initial business combination if, for example:
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we
issue shares of Class A common stock that will be equal to or in excess of 20% of the number of shares of our Class A common stock
then outstanding;
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any
of our directors, officers or substantial stockholders (as defined by Nasdaq rules) has a 5% or greater interest (or such persons
collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise
and the present or potential issuance of common stock could result in an increase in outstanding common shares or voting power of
5% or more; or
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the
issuance or potential issuance of common stock will result in our undergoing a change of control.
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Permitted
Purchases of our Securities
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, our sponsor, initial stockholders, directors, officers, advisors or their affiliates
may purchase shares or public rights in privately negotiated transactions or in the open market either prior to or following the completion
of our initial business combination.
There
is no limit on the number of shares our initial stockholders, directors, officers, advisors or their affiliates may purchase in such
transactions, subject to compliance with applicable law and Nasdaq rules. However, they have no current commitments, plans or intentions
to engage in such transactions and have not formulated any terms or conditions for any such transactions. If they engage in such transactions,
they will not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or
if such purchases are prohibited by Regulation M under the Exchange Act. We do not currently anticipate that such purchases, if any,
would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the
going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases
are subject to such rules, the purchasers will comply with such rules. Any such purchases will be reported pursuant to Section 13 and
Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements. None of the funds held in the
trust account will be used to purchase shares or public rights in such transactions prior to completion of our initial business combination.
The
purpose of any such purchases of shares could be to vote such shares in favor of the initial business combination and thereby increase
the likelihood of obtaining stockholder approval of the initial business combination or to satisfy a closing condition in an agreement
with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination,
where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public rights could be to reduce
the number of public rights, or the securities underlying them, that are outstanding. Any such purchases of our securities may result
in the completion of our initial business combination that may not otherwise have been possible. In addition, if such purchases are made,
the public “float” of our shares of Class A common stock or rights may be reduced and the number of beneficial holders of
our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities
on a national securities exchange.
Our
sponsor, officers, directors and/or their affiliates anticipate that they may identify the stockholders with whom our sponsor, officers,
directors or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt
of redemption requests submitted by stockholders following our mailing of proxy materials in connection with our initial business combination.
To the extent that our sponsor, officers, directors, advisors or their affiliates enter into a private purchase, they would identify
and contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share of the
trust account or vote against our initial business combination, whether or not such stockholder has already submitted a proxy with respect
to our initial business combination. Our sponsor, officers, directors, advisors or their affiliates will only purchase shares if such
purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any
purchases by our sponsor, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange
Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability
for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that must be
complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or their affiliates
will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act. Any such purchases
will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchases are subject to such reporting
requirements.
Redemption
Rights for Public Stockholders upon Completion of our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon
the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on
deposit in the trust account as of two business days prior to the consummation of the initial business combination including interest
earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes, divided
by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account
is initially anticipated to be approximately $10.00 per public share. The per-share amount we will distribute to investors who
properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. Our
sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their
redemption rights with respect to any founder shares, private placement shares and any public shares held by them in connection
with the completion of our initial business combination.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the
completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the initial business
combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed initial business
combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as
the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under the law or
stock exchange listing requirement. Under Nasdaq rules, asset acquisitions and stock purchases would not typically require stockholder
approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding
common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. If we structure
an initial business combination with a target company in a manner that requires stockholder approval, we will not have discretion as
to whether to seek a stockholder vote to approve the proposed initial business combination. We may conduct redemptions without a stockholder
vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirements
or we choose to seek stockholder approval for business or other legal reasons. So long as we obtain and maintain a listing for our securities
on Nasdaq, we will be required to comply with such rules.
If
a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant
to our amended and restated certificate of incorporation:
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conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and
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file
tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial
and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the
Exchange Act, which regulates the solicitation of proxies.
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Upon
the public announcement of our initial business combination, we or our sponsor will terminate any plan established in accordance with
Rule 10b5-1 to purchase shares of our Class A common stock in the open market if we elect to redeem our public shares through a tender
offer, to comply with Rule 14e-5 under the Exchange Act.
In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days,
in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until
the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more
than a specified number of public shares which are not purchased by our sponsor, which number will be based on the requirement that we
will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately
prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that
we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may
be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered
to purchase, we will withdraw the tender offer and not complete the initial business combination.
If,
however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder
approval for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation
of proxies, and not pursuant to the tender offer rules, and
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file
proxy materials with the SEC.
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In
the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business combination.
If
we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of
common stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the holders
present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power
of all outstanding shares of capital stock of the company entitled to vote at such meeting. Our initial stockholders will count
toward this quorum and, pursuant to the letter agreement they have entered into with us, our sponsor, officers and directors have
agreed to vote their founder shares, private placement shares and any public shares purchased during or after this offering
(including in open market and privately negotiated transactions) in favor of our initial business combination. For purposes of
seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval
of our initial business combination once a quorum is obtained. As a result, in addition to our initial stockholders’ founder
shares and private placement shares, we would need only approximately 357,501, or 3.6%, of the 10,000,000
public shares sold in this offering to be voted in favor of an initial business combination, or 257,501, or 2.6%, if the holders
of the representative’s shares and the advisory compensation shares also choose to vote in favor of the business combination
(assuming only a quorum is present at the meeting and only a majority of shares are required to approve the business
combination) in order to have our initial business combination approved (assuming the over-allotment option is not exercised).
We intend to give approximately 30 days (but not less than 10 days nor more than 60 days) prior written notice of any such meeting,
if required, at which a vote shall be taken to approve our initial business combination. These quorum and voting thresholds, and
the voting agreements of our initial stockholders, may make it more likely that we will consummate our initial business combination.
Each public stockholder may elect to redeem its public shares irrespective of whether they vote for or against the proposed transaction.
Our
amended and restated certificate of incorporation will provide that we will only redeem our public shares so long as (after such redemption)
our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination
and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock”
rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business
combination. For example, the proposed initial business combination may require: (i) cash consideration to be paid to the target or its
owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash
to satisfy other conditions in accordance with the terms of the proposed initial business combination. In the event the aggregate cash
consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount
required to satisfy cash conditions pursuant to the terms of the proposed initial business combination exceed the aggregate amount of
cash available to us, we will not complete the initial business combination or redeem any shares, and all shares of Class A common stock
submitted for redemption will be returned to the holders thereof.
Limitation
on Redemption upon Completion of our Initial Business Combination if we Seek Stockholder Approval
Notwithstanding
the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with
our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide
that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in
concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights
with respect to more than an aggregate of 15% of the shares sold in this offering, which we refer to as the “Excess Shares.”
Such restriction shall also be applicable to our affiliates. We believe this restriction will discourage stockholders from accumulating
large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed
initial business combination as a means to force us or our management to purchase their shares at a significant premium to the then-current
market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the
shares sold in this offering could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or
our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability
to redeem no more than 15% of the shares sold in this offering without our prior consent, we believe we will limit the ability of a small
group of stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection
with an initial business combination with a target that requires as a closing condition that we have a minimum net worth or a certain
amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares)
for or against our initial business combination.
Tendering
Stock Certificates in Connection with a Tender Offer or Redemption Rights
We
may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their
shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in
the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal
to approve the initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer
agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s
option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares in connection
with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements.
Accordingly, a public stockholder would have from the time we send out our tender offer materials until the close of the tender
offer period, or up to two days prior to the vote on the initial business combination if we distribute proxy materials, as applicable,
to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively short redemption period,
it is advisable for stockholders to use electronic delivery of their public shares.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through
the DWAC System. The transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker whether or not
to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking
to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless
of the timing of when such delivery must be effectuated.
The
foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection with
their business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote on an initial
business combination, and a holder could simply vote against a proposed initial business combination and check a box on the proxy card
indicating such holder was seeking to exercise his or her redemption rights. After the initial business combination was approved, the
company would contact such stockholder to arrange for him or her to deliver his or her certificate to verify ownership. As a result,
the stockholder then had an “option window” after the completion of the initial business combination during which he or she
could monitor the price of the company’s stock in the market. If the price rose above the redemption price, he or she could sell
his or her shares in the open market before actually delivering his or her shares to the company for cancellation. As a result, the redemption
rights, to which stockholders were aware they needed to commit before the stockholder meeting, would become “option” rights
surviving past the completion of the initial business combination until the redeeming holder delivered its certificate. The requirement
for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once
the initial business combination is approved.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the
date of the stockholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered
its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect
to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically).
It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed
promptly after the completion of our initial business combination.
If
our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their
redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case,
we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If
our initial proposed initial business combination is not completed, we may continue to try to complete an initial business combination
with a different target until 18 months from the closing of this offering.
Ability
to Extend Time to Complete Business Combination
We
will have until 18 months from the closing of this offering to consummate an initial business combination. However, if we anticipate
that we may not be able to consummate our initial business combination within 18 months, we may seek to amend our amended and restated
certificate of incorporation to extend the time we have to consummate an initial business combination.
Redemption
of Public Shares and Liquidation if No Initial Business Combination
Our
amended and restated certificate of incorporation provides that we will have only 18 months from the closing of this offering to complete
our initial business combination. If we are unable to complete our initial business combination within such 18-month period, we will:
(i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business
days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account including interest earned on the funds held in the trust account and not previously released to us to pay our franchise
and income taxes (less up to $150,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares,
which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further
liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption
rights or liquidating distributions with respect to our rights, which will expire worthless if we fail to complete our initial business
combination within the 18-month time period.
Our
sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights
to liquidating distributions from the trust account with respect to any founder shares and private placement shares held
by them if we fail to complete our initial business combination within 18 months from the closing of this offering. However, if
our sponsor, officers or directors acquire public shares in or after this offering, they will be entitled to liquidating distributions
from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted
18-month time period.
Our
sponsor, executive officers, directors and director nominees have agreed, pursuant to a written agreement with us, that they will not
propose any amendment to our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation
to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of this
offering or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity,
unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such
amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest
earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes divided by the
number of then outstanding public shares. However, we will only redeem our public shares so long as (after such redemption) our net tangible
assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment
of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules). If this
optional redemption right is exercised with respect to an excessive number of public shares such that we cannot satisfy the net tangible
asset requirement (described above), we would not proceed with the amendment or the related redemption of our public shares at such time.
We
expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be
funded from amounts remaining out of the approximately $1,000,000 of proceeds held outside the trust account, although we cannot assure
you that there will be sufficient funds for such purpose. We will depend on sufficient interest being earned on the proceeds held in
the trust account to pay any franchise and income tax obligations we may owe. However, if those funds are not sufficient to cover the
costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust
account not required to pay franchise and income taxes on interest income earned on the trust account balance, we may request the trustee
to release to us an additional amount of up to $150,000 of such accrued interest to pay those costs and expenses.
If
we were to expend all of the net proceeds of this offering and the sale of the private placement units, other than the proceeds deposited
in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption amount
received by stockholders upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account could, however,
become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders. We cannot
assure you that the actual per-share redemption amount received by stockholders will not be substantially less than $10.00. Under Section
281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments
to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution
of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds
sufficient to pay or provide for all creditors’ claims.
Although
we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute
agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit
of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that
they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach of
fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order
to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses
to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives
available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such
third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where
we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise
or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver
or in cases where management is unable to find a service provider willing to execute a waiver. Marcum LLP, our independent registered
public accounting firm, and the underwriters of this offering will not execute agreements with us waiving such claims to the monies held
in the trust account.
In
addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising
out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Our sponsor
has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us,
or a prospective target business with which we have entered into a written letter of intent, confidentiality or similar agreement or
business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and
(ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than
$10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply
to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust
account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of this offering
against certain liabilities, including liabilities under the Securities Act. However, we have not asked our sponsor to reserve for such
indemnification obligations, nor have we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations
and believe that our sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our sponsor would
be able to satisfy those obligations. None of our officers or directors will indemnify us for claims by third parties including, without
limitation, claims by vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below (i) $10.00 per public share or (ii) such lesser amount per public
share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets,
in each case net of the amount of interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy
its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors
would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect
that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to
us, it is possible that our independent directors in exercising their business judgment may choose not to do so if, for example, the
cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent
directors determine that a favorable outcome is not likely. We have not asked our sponsor to reserve for such indemnification obligations
and we cannot assure you that our sponsor would be able to satisfy those obligations. Accordingly, we cannot assure you that due to claims
of creditors the actual value of the per-share redemption price will not be less than $10.00 per public share.
We
will seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring
to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not
be liable as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities
under the Securities Act. We will have access to up to approximately $1,000,000 from the proceeds of this offering with which to pay
any such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated to be no more
than approximately $150,000). In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities
is insufficient, stockholders who received funds from our trust account could be liable for claims made by creditors. In the event that
our offering expenses exceed our estimate of approximately $900,000, we may fund such excess with funds from the funds not to be held
in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding
amount. Conversely, in the event that the offering expenses are less than our estimate of approximately $900,000 the amount of funds
we intend to be held outside the trust account would increase by a corresponding amount.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by
them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public
shares in the event we do not complete our initial business combination within 18 months from the closing of this offering may be considered
a liquidating distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL
intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party
claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional
150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a
liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to
the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination within 18 months from the closing of this offering, is not considered a liquidating
distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal
proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL,
the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three
years, as in the case of a liquidating distribution. If we are unable to complete our initial business combination within 18 months from
the closing of this offering, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably
possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously
released to us to pay our franchise and income taxes (less up to $150,000 of interest to pay dissolution expenses), divided by the number
of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including
the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate,
subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more)
and any liability of our stockholders may extend well beyond the third anniversary of such date.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such
time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within
the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations will be
limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as
lawyers, investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in our
underwriting agreement, we will seek to have all vendors, service providers, prospective target businesses or other entities with which
we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust
account. As a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any
claim that would result in any liability extending to the trust account is remote. Further, our sponsor may be liable only to the extent
necessary to ensure that the amounts in the trust account are not reduced below (i) $10.00 per public share or (ii) such lesser amount
per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the
trust assets, in each case net of the amount of interest withdrawn to pay taxes and will not be liable as to any claims under our indemnity
of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. In the event that an
executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability
for such third-party claims.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the
trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of
third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot
assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed
under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore, our board of directors
may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, thereby exposing itself and
our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
We cannot assure you that claims will not be brought against us for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) the completion of
our initial business combination, (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to
amend any provisions of our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation
to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of this
offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity,
and (iii) the redemption of all of our public shares if we are unable to complete our business combination within 18 months from the
closing of this offering, subject to applicable law. In no other circumstances will a stockholder have any right or interest of any kind
to or in the trust account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s
voting in connection with the initial business combination alone will not result in a stockholder’s redeeming its shares to us
for an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights as described above.
These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated certificate
of incorporation, may be amended with a stockholder vote.
Comparison
of This Offering to Those of Blank Check Companies Subject to Rule 419
The
following table compares the terms of this offering to the terms of an offering by a blank check company subject to the provisions of
Rule 419. This comparison assumes that the gross proceeds, underwriting commissions and underwriting expenses of our offering would be
identical to those of an offering undertaken by a company subject to Rule 419, and that the underwriters will not exercise their over-allotment
option. None of the provisions of Rule 419 apply to our offering.
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Terms
of Our Offering
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Terms
Under A Rule 419 Offering
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Escrow
of offering proceeds
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$100,000,000
of the net proceeds of this offering and the sale of the private placement units will be deposited into a trust account in the United
States, with Continental Stock Transfer & Trust Company acting as trustee.
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Approximately
$88,200,000 of the offering proceeds would be deposited into either an escrow account with an insured depositary institution or in
a separate bank account established by a broker-dealer in which the broker-dealer acts as trustee for persons having the beneficial
interests in the account.
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Investment
of net proceeds
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$100,000,000
of the net offering proceeds and the sale of the private placement units held in trust will be invested only in U.S. government treasury
bills with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment
Company Act which invest only in direct U.S. government treasury obligations.
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Proceeds
could be invested only in specified securities such as a money market fund meeting conditions of the Investment Company Act or in
securities that are direct obligations of, or obligations guaranteed as to principal or interest by, the United States.
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Receipt
of interest on escrowed funds
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Interest
on proceeds from the trust account to be paid to stockholders is reduced by (i) any income or franchise taxes paid or payable, and
(ii) in the event of our liquidation for failure to complete our initial business combination within the allotted time, up to $150,000
of net interest that may be released to us should we have no or insufficient working capital to fund the costs and expenses of our
dissolution and liquidation.
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Interest
on funds in escrow account would be held for the sole benefit of investors, unless and only after the funds held in escrow were released
to us in connection with our completion of a business combination.
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Limitation
on fair value or net assets of target business
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Nasdaq
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the
value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned
on the trust account) at the time of the agreement to enter into the initial business combination.
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The
fair value or net assets of a target business must represent at least 80% of the maximum offering proceeds.
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Terms
of Our Offering
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Terms
Under A Rule 419 Offering
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Trading
of securities issued
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We
expect the units will begin trading on or promptly after the date of this prospectus. The Class A common stock and rights comprising
the units will begin separate trading on the 52nd day following the date of this prospectus unless Maxim informs us of
its decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having
issued a press release announcing when such separate trading will begin. We will file the Current Report on Form 8-K promptly after
the closing of this offering, which is anticipated to take place three business days from the date of this prospectus. If the over-allotment
option is exercised following the initial filing of such Current Report on Form 8-K, an additional Current Report on Form 8-K will
be filed to provide updated financial information to reflect the exercise of the over-allotment option.
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No
trading of the units or the underlying Class A common stock and rights would be permitted until the completion of a business combination.
During this period, the securities would be held in the escrow or trust account.
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Election
to remain an investor
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We
will provide our public stockholders with the opportunity to redeem their public shares for cash equal to their pro rata share of
the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business
combination, including interest earned on the funds held in the trust account and not previously released to us to pay our franchise
and income taxes, upon the completion of our initial business combination, subject to the limitations described herein. We may not
be required by law to hold a stockholder vote. We intend to give approximately 30 days (but not less than 10 days nor more than 60
days) prior written notice of any such meeting, if required, at which a vote shall be taken to approve our initial business combination.
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A
prospectus containing information pertaining to the business combination required by the SEC would be sent to each investor. Each
investor would be given the opportunity to notify the company in writing, within a period of no less than 20 business days and no
more than 45 business days from the effective date of a post-effective amendment to the company’s registration statement, to
decide if it elects to remain a stockholder of the company or require the return of its investment. If the company has not received
the notification by the end of the 45th business day, funds and interest or dividends, if any, held in the trust or escrow
account are automatically returned to the stockholder. Unless a sufficient number of investors elect to remain
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Terms
of Our Offering
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Terms
Under A Rule 419 Offering
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If
we are not required by law and do not otherwise decide to hold a stockholder vote, we will, pursuant to our amended and restated
certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents
with the SEC which will contain substantially the same financial and other information about the initial business combination and
the redemption rights as is required under the SEC’s proxy rules. In the event we conduct redemptions pursuant to the tender
offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange
Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. If,
however, we hold a stockholder vote, we will, like many blank check companies, offer to redeem shares in conjunction with a proxy
solicitation pursuant to the proxy rules. If we seek stockholder approval, we will complete our initial business combination only
if a majority of the outstanding shares of common stock voted are voted in favor of the initial business combination. Additionally,
each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction.
A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the
company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at
such meeting.
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investors,
all funds on deposit in the escrow account must be returned to all of the investors and none of the securities are issued.
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Business
combination deadline
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If
we are unable to complete an initial business combination within 18 months from the closing of this offering, we will (i) cease all
operations except
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If
a business combination has not been completed within 18 months after the effective date of the company’s registration statement,
funds held in the trust or escrow account are returned to investors.
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Terms
of Our Offering
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Terms
Under A Rule 419 Offering
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for
the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of
the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including
interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes (less
up to $150,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption
will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating
distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject
to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations
under Delaware law to provide for claims of creditors and the requirements of other applicable law.
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Limitation
on redemption rights of stockholders holding more than 15% of the shares sold in this offering if we hold a stockholder vote
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If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that
a public stockholder (including our affiliates), together with any affiliate of such stockholder or any other person with whom such
stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted
from seeking redemption rights with respect to Excess Shares (more than an aggregate of 15% of the shares sold in this offering).
Our public stockholders’ inability to redeem Excess Shares will reduce their influence over our ability to complete our initial
business combination and they could suffer a material loss on their investment in us if they sell any Excess Shares in open market
transactions.
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Many
blank check companies provide no restrictions on the ability of stockholders to redeem shares based on the number of shares held
by such stockholders in connection with an initial business combination.
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Terms
of Our Offering
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Terms
Under A Rule 419 Offering
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Tendering
stock certificates in connection with a tender offer or redemption rights
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We
may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares
in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender
offer documents mailed to such holders or up to two business days prior to the vote on the proposal to approve the initial business
combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically using The
Depository Trust Company’s DWAC System, at the holder’s option. The tender offer or proxy materials, as applicable, that
we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are
requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have from the time we
send out our tender offer materials until the close of the tender offer period, or up to two days prior to the vote on the initial
business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption
rights.
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In
order to perfect redemption rights in connection with their business combinations, holders could vote against a proposed initial
business combination and check a box on the proxy card indicating such holders were seeking to exercise their redemption rights.
After the business combination was approved, the company would contact such stockholders to arrange for them to deliver their certificate
to verify ownership.
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Release
of funds
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Except
with respect to interest earned on the funds held in the trust account that may be released to us to pay our franchise and income
tax obligations, the proceeds from this offering and the sale of the private placement units held in the trust account will not be
released from the trust account until the earliest to occur of: (i) the completion of our initial business combination, (ii) the
redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate
of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete
our initial business combination within 18 months from the closing of this offering
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The
proceeds held in the escrow account are not released until the earlier of the completion of a business combination or the failure
to effect a business combination within the allotted time.
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Terms
of Our Offering
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Terms
Under A Rule 419 Offering
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or
(B) with respect to any other provision relating to stockholders’ rights or pre-business combination activity and (iii) the
redemption of 100% of our public shares if we are unable to complete an initial business combination within the required time frame
(subject to the requirements of applicable law). On the completion of our initial business combination, all amounts held in the trust
account will be released to us, less amounts released to a separate account controlled by the trustee for disbursal to redeeming
stockholders. We will use these funds to pay amounts due to any public stockholders who exercise their redemption rights as described
above under “Redemption rights for public stockholders upon completion of our initial business combination,” to pay the
underwriters their deferred underwriting commissions, to pay all or a portion of the consideration payable to the target or owners
of the target of our initial business combination and to pay other expenses associated with our initial business combination.
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Competition
In
identifying, evaluating and selecting a target business for our initial business combination, we may encounter intense competition from
other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged
buyout funds, and operating businesses seeking strategic business combinations. Many of these entities are well established and have
extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors
possess greater financial, technical, human and other resources than we do. Our ability to acquire larger target businesses will be limited
by our available financial resources. This inherent limitation gives others an advantage in pursuing the initial business combination
of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their redemption
rights may reduce the resources available to us for our initial business combination and our outstanding rights, and the future dilution
they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive
disadvantage in successfully negotiating an initial business combination.
Facilities
Our
executive offices are located at 1800 Avenue of the Stars, Suite 1475, Los Angeles, CA 90067, and our telephone number is 415-928-9821.
Our executive offices are provided
to us by an affiliate of our sponsor. Commencing as of the effective date of the registration statement of which this prospectus forms
a part, we have agreed to pay our sponsor a total of $30,000 per month for the provision of officers’ cash salaries, office
space, utilities and secretarial and administrative support (plus an additional amount in respect of officers’ cash salaries
payable for services provided prior to the effective date, which the Company expects will not exceed approximately $30,000). We consider
our current office space adequate for our current operations.
Employees
We
currently have three employees. These individuals are not obligated to devote any specific number of hours to our matters but they intend
to devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount
of time they will devote in any time period will vary based on whether a target business has been selected for our initial business combination
and the stage of the initial business combination process we are in. We do not intend to have any full-time employees prior to the completion
of our initial business combination.
Periodic
Reporting and Financial Information
We
will register our units, Class A common stock and rights under the Exchange Act and have reporting obligations, including the requirement
that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual
reports will contain financial statements audited and reported on by our independent registered public accountants.
We
will provide stockholders with audited financial statements of the prospective target business as part of the tender offer materials
or proxy solicitation materials sent to stockholders to assist them in assessing the target business. In all likelihood, these financial
statements will need to be prepared in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical
financial statements may be required to be audited in accordance with the standards of the PCAOB. These financial statement requirements
may limit the pool of potential targets we may conduct an initial business combination with because some targets may be unable to provide
such statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination
within the prescribed time frame. We cannot assure you that any particular target business identified by us as a potential business combination
candidate will have financial statements prepared in accordance with GAAP or that the potential target business will be able to prepare
its financial statements in accordance with the requirements outlined above. To the extent that these requirements cannot be met, we
may not be able to acquire the proposed target business. While this may limit the pool of potential business combination candidates,
we do not believe that this limitation will be material.
We
will be required to evaluate our internal control procedures for the fiscal year ending December 31, 2022 as required by the Sarbanes-Oxley
Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth
company, will we be required to have our internal control procedures audited. A target company may not be in compliance with the provisions
of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity
to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination.
Prior to the date of this prospectus, we will file a Registration Statement on Form 8-A with the SEC to voluntarily register our securities
under Section 12 of the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act.
We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent
to the consummation of our initial business combination.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of
the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed
to be a large accelerated filer, which means the market value of our shares of Class A common stock that are held by non-affiliates exceeds
$700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible
debt during the prior three-year period.
Legal
Proceedings
There
is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team
in their capacity as such.
MANAGEMENT
Officers,
Directors and Director Nominees
|
Name
|
|
Age
|
|
Position
|
|
Barry
Kostiner
|
|
49
|
|
Chairman
and Chief Executive Officer
|
|
Thomas
W. Neukranz
|
|
63
|
|
Chief
Financial Officer and Director
|
|
Jane
Liu
|
|
29
|
|
Vice
President, Business Development
|
|
George
Caruolo*
|
|
68
|
|
Director
Nominee
|
|
Gabriel
Del Virginia*
|
|
63
|
|
Director
Nominee
|
|
Glauco
Lolli-Ghetti*
|
|
44
|
|
Director
Nominee
|
*
This individual has agreed to occupy such position on the effective date of the registration statement of which this prospectus is a
part.
Our
officers, directors and director nominees are as follows:
Barry
Kostiner – Chairman and Chief Executive Officer. Mr. Kostiner is serving as the Chief Executive and Chairman of
Sagaliam Acquisition Corp. Additionally, Mr. Kostiner has served as the President of Legacy Tech Partners, LLC
(LTP), a microcap-focused EdTech investment vehicle, since February 2021 and has also been a Manager of Capital
Markets at Legacy Education (OTC: LEAI) since March 2021. Mr. Kostiner joined the Board of Directors of LEAI in May 2021.
LEAI has had cumulative education revenues in excess of $500 million over the past decade, prior to the Covid-19 pandemic.
Mr.
Kostiner was the CFO of Ameri Holdings Inc. (Nasdaq: AMRH) from October 2018 through December 2020. The operations of
AMRH, including its global IT services business focused on SAP with operations in both the US and India, was acquired by
management, with the residual Nasdaq vehicle acquired by Enveric Biosciences (Nasdaq: ENVB), an evidence-based cannabinoid
pharma company focused on palliative therapies for cancer patients. Mr. Kostiner has been a consultant to ENVB since
January 2021. From May 2016 through October 2018, Mr. Kostiner was a consultant to Cypress Skilled
Nursing, a healthcare facility operator and from May 2017 through October 2018 he was a consultant to LinKay Technologies
Inc., an artificial intelligence incubator with a portfolio of intellectual property focused on AI and LiDAR / geospatial
technology, with research staff in India and New York. Mr. Kostiner’s 20-year career in energy includes eight years at
Goldman Sachs and Merrill Lynch and their affiliates, with a focus on energy trading and portfolio management, as well as
serving as the CEO of an oil & gas SPAC (Nasdaq: PGRI) from 2005 through 2009. Mr. Kostiner earned a
Bachelor’s of Science degree in Electrical Engineering and a Master’s of Science in Operations Research from MIT.
His thesis on the mathematics of electric industry deregulation was sponsored by Harvard’s Kennedy School of
Government.
Mr.
Thomas W. Neukranz – Chief Financial Officer and Director. Mr. Neukranz is serving as Chief
Financial Officer and a director of Sagaliam Acquisition Corp. Mr. Neukranz has served as Managing Director of Capital Markets
for GLD Partners, LP since July 2020. Prior to joining GLD, Mr. Neukranz served as Head of Capital Markets for CleanFund
Inc., from July 2017 to August 2019, and as Executive Vice President and a member of the Executive Committee of
Aegon Investment Management, from February 2017 to August 2018. From 1993 to 2000, Mr. Neukranz was a Partner and
Head of the Institutional businesses at RS Investments, Vice President, Global Head of Exchange Derivatives at Goldman Sachs and
Head of Exchange Traded Derivatives at JP Morgan. Previously, Mr. Neukranz was responsible for derivative hedging for Bank of
America and Lehman Brothers. Mr. Neukranz began his career on the floor of the Board of Trade in Chicago. Mr. Neukranz has serves
on the Board of the Stanford Cancer Institute since 2016 and served as Chairman from 2017 through 2019. Mr. Neukranz received
a B.S. in Industrial Management from Purdue University, and holds Series 7 and 63 FINRA licenses.
Ms.
Jane Liu – Vice President, Business Development. Ms. Liu is serving as Vice President, Business Development of
Sagaliam Acquisition Corp. Ms. Liu has served as Director of Finance for GLD Partners, LP since July 2020. Prior thereto,
Ms. Liu served as Senior Financial Analyst for CleanFund Commercial PACE Capital, Inc., from March 2017 to June 2020, and served
as Business Analyst for Industrial and Commercial Bank of China in 2015. Ms. Liu received a B.S. in Economics and Finance from
the University of Western Ontario, and a Master’s Degree in Financial Analysis from the University of San Francisco.
Mr.
George Caruolo — Director Nominee. Mr. Caruolo has agreed to join our board of directors on the effective date of the registration
statement of which this prospectus is a part. Mr. Caruolo has been the principal of his own law firm for over 30 years and a government
relations strategy advisor based in Rhode Island for over 10 years. He has represented privately held and publicly traded clients
in the areas of healthcare, electric utilities, solar energy, gaming, heavy construction, developmental disabilities and Native American
tribal affairs, as well as in other areas, both regionally and nationally. He is a director of Allegro, LLC, a fintech company.
He was an elected state representative and majority leader of the Rhode Island General Assembly, has chaired the Rhode Island
Education Board and has served on other boards of directors. Mr. Caruolo received a Bachelor’s Degree from Harvard University
and a Juris Doctor degree from Suffolk University Law School.
Mr.
Gabriel Del Virginia — Director Nominee. Mr. Del Virginia has agreed to join our board of directors on the effective
date of the registration statement of which this prospectus is a part. Mr. Del Virginia has more than 30 years of experience providing
legal representation in various types of public and private business entities in corporate, mergers and acquisitions, financing,
litigation and financial restructuring matters, as an associate at several prominent national law firms, including Milbank Tweed
Hadley & McCloy, and thereafter as principal of his own law firm, where he has practiced for over 10 years. Mr. Del Virginia
also served on the board of directors Sysorex Global Holdings Corp. (SYRX), a Nasdaq-listed technology company that provides data
analytics and location-based solutions and services to commercial and government customers worldwide.
Mr.
Glauco Lolli-Ghetti — Director Nominee. Mr. Lolli-Ghetti has agreed to join our board of directors on the effective
date of the registration statement of which this prospectus is a part. Since 2019, Mr. Lolli-Ghetti has served as
Head of Development at Palatine Capital Partners, a real estate private equity firm, where he is responsible for development
investment strategies across acquisition and entitlement. Prior to joining Palatine, Mr. Lolli-Ghetti founded Urban Muse, a real
estate investment company responsible for developing 372,000 square feet of mixed-use properties with an aggregate cost of $397
million. Prior to forming Urban Muse, Mr. Lolli-Ghetti was development manager at Federal Realty Investment Trust, a publicly
traded REIT with a market cap of $6.75 billion. Mr. Lolli-Ghetti received a Bachelor’s Degree from Lehigh University.
Number
and Terms of Office of Officers and Directors
We will have five
directors upon completion of this offering. Our board of directors will be divided into two classes, with only one class of directors
being elected in each year and each class (except for those directors appointed prior to our first annual meeting of stockholders)
serving a two-year term. In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting
until one year after our first fiscal year end following our listing on Nasdaq. The term of office of the first class of directors,
consisting of Messrs. Del Virginia and Lolli-Ghetti, will expire at our first annual meeting of stockholders. The term
of office of the second class of directors, consisting of Messrs. Kostiner, Neukranz and Caruolo, will expire at the second
annual meeting of stockholders.
Our
officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms
of office. Our board of directors is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our
bylaws provide that our officers may consist of a Chairman of the Board, Chief Executive Officer, Chief Financial Officer, President,
Vice Presidents, Secretary, Treasurer, Assistant Secretaries and such other offices as may be determined by the board of directors.
Nasdaq
listing standards require that a majority of our board of directors be independent. An “independent director” is defined
generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship
which in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment
in carrying out the responsibilities of a director. Our board of directors has determined that Messrs. Caruolo, Del Virginia and Lolli-Ghetti
are “independent directors” as defined in the Nasdaq listing standards and applicable SEC rules. Our independent directors
will have regularly scheduled meetings at which only independent directors are present.
Officer
and Director Compensation
Commencing as of the effective
date of the registration statement of which this prospectus forms a part, we have agreed to pay our sponsor a total of $30,000 per
month for the provision of officers’ cash salaries, office space, utilities and secretarial and administrative support (plus
an additional amount in respect of officers’ cash salaries payable for services provided prior to the effective date, which the
Company expects will not exceed approximately $30,000). Upon completion of our initial business combination or our liquidation (and,
in the case of officers’ cash salaries, subject to any applicable notice periods), we will cease paying these monthly fees. The
$30,000 monthly amount includes a monthly cash salary of $10,000 for our CEO, Barry Kostiner, a monthly cash salary of $3,000
for our CFO, Thomas Neukranz, and a monthly cash salary of $1,000 for our Vice President, Business Development, Jane Liu.
Other than disclosed herein, none of our officers has received any cash compensation for services rendered to us. In addition to the
foregoing cash compensation, as additional consideration for their services, our sponsor has transferred 150,000 founder shares to
Mr. Kostiner, 40,000 founder shares to Mr. Neukranz and 10,000 founder shares to Ms. Liu.
As consideration for
their services as members of our board of directors, our sponsor will transfer 25,000 founder shares each to Messrs. Caruolo,
Del Virginia and Lolli-Ghetti.
Other than
the foregoing, no compensation of any kind, including any finder’s fee, reimbursement, consulting fee or monies in respect
of any payment of a loan, will be paid by us to our sponsor, officers, directors or any affiliate of our sponsor, officers or
directors, prior to or in connection with any services rendered in order to effectuate the consummation of our initial business
combination (regardless of the type of transaction). However, these persons will be reimbursed for any out-of-pocket expenses
incurred in connection with activities on our behalf, such as identifying potential target businesses and performing due diligence
on suitable business combinations. Our audit committee will review on a quarterly basis all payments made to our sponsor, officers,
directors or any affiliate of our sponsor, officers or directors. Any such payments prior to an initial business combination will
be made using funds held outside the trust account. Other than quarterly audit committee review of such payments, we do not expect
to have any additional controls in place governing reimbursement payments to our sponsor, officers, directors or any affiliate
of our sponsor, officers or directors for their out-of-pocket expenses incurred in connection with activities on our behalf.
After
the completion of our initial business combination, directors or officers who remain with the combined companies may be paid consulting
or management fees or other compensation from the combined company. All of this compensation will be disclosed to stockholders, to the
extent then known, in the tender offer materials or proxy solicitation materials furnished to our stockholders in connection with a proposed
initial business combination. We have not established any limit on the amount of such compensation. It is unlikely that the amount of
such compensation will be known at the time of the proposed initial business combination, because the directors of the post-combination
business will be responsible for determining officer and director compensation.
We
do not intend to take any action to ensure that our officers or directors maintain their positions after the consummation of our initial
business combination, although it is possible that some or all of our officers and directors may negotiate employment or consulting arrangements
to remain after our initial business combination. The existence or terms of any such employment or consulting arrangements may influence
our officers’ and directors’ motivation to identify or select a target business, but we do not believe that opportunities
for our officers or directors to remain after the consummation of our initial business combination will be a determining factor in our
decision to proceed with any potential business combination. We are not party to any agreements with our officers or directors that provide
for benefits upon termination of employment.
Committees
of the Board of Directors
Our
board of directors will have two standing committees: an audit committee and a compensation committee. Subject to phase-in rules and
a limited exception, Nasdaq rules and Rule 10A-3 of the Exchange Act require that the audit committee of a listed company be comprised
solely of independent directors, and Nasdaq rules require that the compensation committee of a listed company be comprised solely of
independent directors.
Audit
Committee
Prior
to the consummation of this offering, we will establish an audit committee of the board of directors. Messrs. Caruolo, Del Virginia and
Lolli-Ghetti will serve as members of our audit committee, and Mr. Caruolo will chair the audit committee. Under the Nasdaq listing standards
and applicable SEC rules, we are required to have at least three members of the audit committee, all of whom must be independent. Each
of Messrs. Caruolo, Del Virginia and Lolli-Ghetti meet the independent director standard under Nasdaq listing standards and under Rule
10-A-3(b)(1) of the Exchange Act.
Each
member of the audit committee is financially literate and our board of directors has determined that Mr. Caruolo qualifies as an “audit
committee financial expert” as defined in applicable SEC rules.
We
will adopt an audit committee charter, which will detail the principal functions of the audit committee, including:
|
|
●
|
the
appointment, compensation, retention, replacement, and oversight of the work of the independent registered public accounting firm
engaged by us;
|
|
|
|
|
|
|
●
|
pre-approving
all audit and permitted non-audit services to be provided by the independent registered public accounting firm engaged by us, and
establishing pre-approval policies and procedures;
|
|
|
|
|
|
|
●
|
setting
clear hiring policies for employees or former employees of the independent registered public accounting firm, including but not limited
to, as required by applicable laws and regulations;
|
|
|
|
|
|
|
●
|
setting
clear policies for audit partner rotation in compliance with applicable laws and regulations;
|
|
|
|
|
|
|
●
|
obtaining
and reviewing a report, at least annually, from the independent registered public accounting firm describing (i) the independent
registered public accounting firm’s internal quality-control procedures, (ii) any material issues raised by the most recent
internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional
authorities within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken
to deal with such issues and (iii) all relationships between the independent registered public accounting firm and us to assess the
independent registered public accounting firm’s independence;
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|
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|
|
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|
●
|
reviewing
and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC
prior to us entering into such transaction; and
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|
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|
●
|
reviewing
with management, the independent registered public accounting firm, and our legal advisors, as appropriate, any legal, regulatory
or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published
reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting
standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.
|
Compensation
Committee
Prior
to the consummation of this offering, we will establish a compensation committee of the board of directors. Messrs. Del Virginia and
Lolli-Ghetti will serve as members of our compensation committee. Under the Nasdaq listing standards and applicable SEC rules, we are
required to have at least two members of the compensation committee, all of whom must be independent Messrs. Del Virginia and Lolli-Ghetti
are independent, and Mr. Del Virginia will chair the compensation committee.
We
will adopt a compensation committee charter, which will detail the principal functions of the compensation committee, including:
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●
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reviewing
and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation,
if any is paid by us, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining
and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;
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●
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reviewing
and approving on an annual basis the compensation, if any is paid by us, of all of our other officers;
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●
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reviewing
on an annual basis our executive compensation policies and plans;
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●
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implementing
and administering our incentive compensation equity-based remuneration plans;
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●
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assisting
management in complying with our proxy statement and annual report disclosure requirements;
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●
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approving
all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;
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●
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if
required, producing a report on executive compensation to be included in our annual proxy statement; and
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●
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reviewing,
evaluating and recommending changes, if appropriate, to the remuneration for directors.
|
The
charter will also provide that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation
consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work
of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other
adviser, the compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and
the SEC.
Commencing
as of the effective date of the registration statement of which this prospectus forms a part, we have agreed to pay our sponsor
a total of $30,000 per month for the provision of officers’ cash salaries, office space, utilities and secretarial and administrative
support (plus an additional amount in respect of officers’ cash salaries payable for services provided prior to the effective date,
which the Company expects will not exceed approximately $30,000). Upon completion of our initial business combination or our liquidation
(and in the case of officers’ cash salaries subject to any applicable notice periods), we will cease paying these monthly fees.
Notwithstanding the foregoing, as indicated above, other than these payments to our sponsor, and the reimbursement of expenses,
no compensation of any kind, including finder’s, consulting or other similar fees, will be paid to any of our existing stockholders,
officers, directors or any of their respective affiliates, prior to, or for any services they render in order to effectuate the consummation
of an initial business combination. Accordingly, it is likely that prior to the consummation of an initial business combination, the
compensation committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into
in connection with such initial business combination.
Director
Nominations
We do not have a standing
nominating committee though we intend to form a nominating and corporate governance committee as and when required to do
so by law or Nasdaq rules. In accordance with Rule 5605 of the Nasdaq rules, a majority of the independent directors may recommend
a director nominee for selection by the board of directors.
The
board of directors believes that the independent directors can satisfactorily carry out the responsibility of properly selecting or approving
director nominees without the formation of a standing nominating committee. The directors who will participate in the consideration and
recommendation of director nominees are Messrs. Caruolo, Del Virginia and Lolli-Ghetti. In accordance with Rule 5605 of the Nasdaq rules,
all such directors are independent. As there is no standing nominating committee, we do not have a nominating committee charter in place.
The
board of directors will also consider director candidates recommended for nomination by our stockholders during such times as they are
seeking proposed nominees to stand for election at the next annual meeting of stockholders (or, if applicable, a special meeting of stockholders).
Our stockholders that wish to nominate a director for election to our board of directors should follow the procedures set forth in our
bylaws.
We
have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess.
In general, in identifying and evaluating nominees for director, the board of directors considers educational background, diversity of
professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent
the best interests of our stockholders.
Compensation
Committee Interlocks and Insider Participation
None
of our officers currently serves, or in the past year has served, as a member of the compensation committee of any entity that has one
or more officers serving on our board of directors.
Code
of Ethics
Prior
to the consummation of this offering, we will have adopted a Code of Ethics applicable to our directors, officers and employees. We will
file a copy of our Code of Ethics and our audit and compensation committee charters as exhibits to the registration statement of which
this prospectus is a part. You will be able to review these documents by accessing our public filings at the SEC’s web site at
www.sec.gov. In addition, a copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose
any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K. See the section of this prospectus
entitled “Where You Can Find Additional Information.”
Conflicts
of Interest
Members
of our management team do not have any obligation to present us with any opportunity for a potential business combination of which they
become aware, unless presented to such member solely in his or her capacity as a director or officer of the company. Our amended and
restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director
or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our
company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us
to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
Our
officers and directors have agreed not to participate in the formation of, or become an officer or director of any other special purpose
acquisition company with a class of securities registered under the Exchange Act, until we have entered into a definitive agreement regarding
our initial business combination or we have failed to complete our initial business combination within 18 months after the closing of
this offering. Potential investors should also be aware of the following other potential conflicts of interest:
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None
of our officers or directors is required to commit his or her full time to our affairs and, accordingly, may have conflicts of interest
in allocating his or her time among various business activities.
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In
the course of their other business activities, our officers and directors may become aware of investment and business opportunities
which may be appropriate for presentation to us as well as the other entities with which they are affiliated. Our management may
have conflicts of interest in determining to which entity a particular business opportunity should be presented.
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Our
initial stockholders have agreed to waive their redemption rights with respect to any founder shares, any private placement
shares and any public shares held by them in connection with the consummation of our initial business combination. Additionally,
our initial stockholders have agreed to waive their redemption rights with respect to any founder shares held by them if we
fail to consummate our initial business combination within 18 months after the closing of this offering. If we do not complete
our initial business combination within such applicable time period, the proceeds of the sale of the private placement units
held in the trust account will be used to fund the redemption of our public shares, and the private placement units (and the
underlying securities) will expire worthless. Our initial stockholders have agreed not to transfer, assign or sell any of
their founder shares until the earlier to occur of (i) one year after the date of the consummation of our initial business
combination or (ii) the date on which we consummate a liquidation, merger, stock exchange or other similar transaction which
results in all of our stockholders having the right to exchange their shares of Class A common stock for cash, securities
or other property (except as described herein under the section of this prospectus entitled “Principal Stockholders
— Restrictions on Transfers of Founder Shares and Private Placement Units”). Any permitted transferees will be
subject to the same restrictions and other agreements of our initial stockholders with respect to any founder shares. Notwithstanding
the foregoing, if the closing price of our shares of Class A common stock equals or exceeds $12.00 per share (as adjusted
for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading
day period commencing 150 days after our initial business combination, the founder shares will no longer be subject to such
transfer restrictions. With certain limited exceptions, the private placement units and the securities underlying such
rights will not be transferable, assignable or saleable by our sponsor or its permitted transferees until the later of
30 days after the completion of our initial business combination and one year after the completion of this offering. Since
our sponsor and officers and directors may directly or indirectly own common stock and rights following this offering, our
officers and directors may have a conflict of interest in determining whether a particular target business is an appropriate
business with which to effectuate our initial business combination.
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Our
officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention
or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect
to our initial business combination.
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Our
sponsor, officers or directors may have a conflict of interest with respect to evaluating a business combination and financing
arrangements as we may obtain loans from our sponsor or an affiliate of our sponsor or any of our officers or directors to
finance transaction costs in connection with an intended initial business combination. Up to $1,500,000 of such working capital
loans may be convertible into units at a price of $10.00 per unit (which, for example, would result in the holders being issued
150,000 units, if $1,500,000 of loans were so converted), at the option of the lender. Such units would be identical
to the private placement units.
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The
conflicts described above may not be resolved in our favor.
In
general, officers and directors of a corporation incorporated under the laws of the State of Delaware are required to present business
opportunities to a corporation if:
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the
corporation could financially undertake the opportunity;
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the
opportunity is within the corporation’s line of business; and
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it
would not be fair to our company and its stockholders for the opportunity not to be brought to the attention of the corporation.
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Accordingly,
as a result of multiple business affiliations, our officers and directors may have similar legal obligations relating to presenting business
opportunities meeting the above-listed criteria to multiple entities. Furthermore, our amended and restated certificate of incorporation
will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is
expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we
are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director
or officer is permitted to refer that opportunity to us without violating another legal obligation.
Below
is a table summarizing the entities to which our executive officers, directors and director nominees currently have fiduciary duties
or contractual obligations:
|
Name
of Individual
|
|
Name
of Affiliated Company
|
|
Affiliation
|
|
Barry
Kostiner
|
|
Legacy
Education Alliance, Inc. (OTC: LEAI)
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|
Director;
Manager, Capital Markets
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Legacy
Tech Partners, LLC
|
|
President
|
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Enveric
Biosciences, Inc. (Nasdaq: ENVB)
|
|
Consultant
|
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Thomas
W. Neukranz
|
|
GLD Partners,
LP
|
|
Managing
Director
|
|
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|
Global
Pacific Capital, LLC
|
|
Managing
Director
|
|
|
|
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|
Jane
Liu
|
|
GLD
Management Inc.
|
|
Director
of Finance, Capital Markets
|
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George
Caruolo
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|
Allegro, LLC
|
|
Director
|
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|
Gabriel
Del Virginia
|
|
None
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|
N/A
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|
Glauco
Lolli-Ghetti
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|
Urban
Muse, LLC
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|
Managing
Member
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|
Urban
Muse Management, LLC
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|
Managing
Member
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Palatine
Real Estate Fund III, GP, LLC
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Limited
Partner
|
Accordingly,
if any of the above executive officers, directors or director nominees becomes aware of a business combination opportunity which is suitable
for any of the above entities to which he or she has current fiduciary or contractual obligations, he or she will honor his or her fiduciary
or contractual obligations to present such business combination opportunity to such entity, and only present it to us if such entity
rejects the opportunity.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors.
In the event we seek to complete our initial business combination with such a company, we, or a committee of independent directors, would
obtain an opinion from an independent investment banking firm which is a member of FINRA, or from an independent accounting firm, that
such an initial business combination is fair to our company from a financial point of view.
In
the event that we submit our initial business combination to our public stockholders for a vote, pursuant to the letter agreement,
our sponsor, officers and directors have agreed to vote any founder shares and private placement shares held by them and
any public shares purchased during or after this offering (including in open market and privately negotiated transactions) in
favor of our initial business combination.
We have engaged Palladium, which is a registered broker-dealer, to provide financial
advisory services as a broker-dealer in connection with this offering, which services are independent from those being provided
by the underwriters. We have agreed to pay Palladium customary fees in connection with this offering, which includes deferred
compensation that is contingent on the completion of an initial business combination within the specified time period. The underwriters
have agreed to reimburse us for the fee to be paid to Palladium. As a result, there is no additional offering expense related
to this fee. However, this engagement may present potential conflicts of interest because a portion of the fees payable are contingent
on the consummation of an initial business combination. In addition, we may engage Palladium for capital markets or financial
advisory services after this offering (in connection with an initial business combination or otherwise), which could create additional
conflicts of interest. We may also engage other service providers for services in connection with identifying and investigating
potential targets for, and the consummation of, our business combination, and we may pay fees, including non-cash compensation,
and reimburse expenses for any such services. Similarly, Palladium or such other service providers may provide services to
prospective acquisition targets, including in connection with or following an initial business combination with us, and may receive
fees and other compensation and expense reimbursements in exchange for such services.
Limitation
on Liability and Indemnification of Officers and Directors
Our
amended and restated certificate of incorporation will provide that our officers and directors will be indemnified by us to the fullest
extent authorized by Delaware law, as it now exists or may in the future be amended. In addition, our amended and restated certificate
of incorporation will provide that our directors will not be personally liable for monetary damages to us or our stockholders for breaches
of their fiduciary duty as directors, unless they violated their duty of loyalty to us or our stockholders, acted in bad faith, knowingly
or intentionally violated the law, authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived
an improper personal benefit from their actions as directors.
We
will enter into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification
provided for in our amended and restated certificate of incorporation. Our bylaws also will permit us to secure insurance on behalf of
any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would permit
such indemnification. We will purchase a policy of directors’ and officers’ liability insurance that insures our officers
and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations
to indemnify our officers and directors.
These
provisions may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions
also may have the effect of reducing the likelihood of derivative litigation against officers and directors, even though such an action,
if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected
to the extent we pay the costs of settlement and damage awards against officers and directors pursuant to these indemnification provisions.
We
believe that these provisions, the directors’ and officers’ liability insurance and the indemnity agreements are necessary
to attract and retain talented and experienced officers and directors.
PRINCIPAL
STOCKHOLDERS
The
following table sets forth information regarding the beneficial ownership of our common stock as of the date of this prospectus, and
as adjusted to reflect the sale of our common stock included in the units offered by this prospectus, and assuming no purchase of units
in this offering, by:
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each
person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;
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●
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each
of our executive officers, directors and director nominees that beneficially owns shares of our common stock; and
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●
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all
our executive officers, directors and director nominees as a group.
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Unless
otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares
of common stock beneficially owned by them. The following table does not reflect record or beneficial ownership of the private placement
rights or private placement units as these rights are not exercisable within 60 days of the date of this prospectus.
On
April 5, 2021, our sponsor purchased 2,875,000 founder shares (up to 375,000 of which were subject to forfeiture by our
sponsor if the underwriters’ over-allotment option is not exercised in full) for an aggregate purchase price of $25,000,
and later transferred a total of 275,000 founder shares to our officers and director nominees, leaving our sponsor with 2,600,000
founder shares (up to 375,000 of which remain subject to forfeiture by our sponsor if the underwriters’ over-allotment option
is not exercised in full). In addition, our sponsor has committed, pursuant to a written agreement, to purchase an aggregate
of 390,000 private placement units for a purchase price of $10.00 per unit in a private placement that will occur simultaneously
with the closing of this offering (assuming the underwriters do not exercise their over-allotment option). The following table
presents the number of shares and percentage of our common stock owned by our initial stockholders before and after this offering.
The post-offering numbers and percentages presented assume that the underwriters do not exercise their over-allotment option,
that our sponsor forfeits 375,000 founder shares, and that there are 12,990,000 shares of our common stock, consisting
of (i) 10,490,000 shares of our Class A common stock (including 10,000,000 public shares, 390,000 private placement
shares, 50,000 representative’s shares and 50,000 advisory compensation shares) and (ii) 2,500,000 shares
of our Class B common stock, issued and outstanding after this offering.
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Before Offering
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After Offering
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Name and Address of Beneficial Owner(1)
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Number of Shares Beneficially Owned(2)
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Approximate Percentage of Outstanding Common Stock
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Number of Shares Beneficially
Owned(3)
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Approximate Percentage of Outstanding Common Stock
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Sagaliam Sponsor LLC
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2,600,000
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(4)(5)
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90.4
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%
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2,615,000
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(4)
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20.1
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%
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Daniel Gordon
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2,600,000
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(4)(5)
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90.4
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%
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2,615,000
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(4)
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20.1
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%
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Barry Kostiner
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150,000
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5.2
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%
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150,000
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1.2
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%
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Thomas W. Neukranz
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40,000
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1.4
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%
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40,000
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*
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Jane Liu
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10,000
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*
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10,000
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*
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George Caruolo
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25,000
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*
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25,000
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*
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Gabriel Del Virginia
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25,000
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*
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25,000
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*
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Glauco Lolli-Ghetti
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25,000
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*
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25,000
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*
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All executive officers, directors and
director nominees as a group (6 individuals)
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275,000
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9.6
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%
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275,000
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2.1
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%
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*
Less than 1%
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(1)
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Unless
otherwise noted, the business address of each of the following entities or individuals is 1800 Avenue of the Stars, Suite 1475, Los
Angeles, CA 90067.
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(2)
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Interests
shown consist solely of 2,785,000 founder shares, classified as Class B common stock, up to 375,000 of which are subject to forfeiture by our sponsor
depending on the extent to which the underwriters’ over-allotment option is exercised. Such shares are convertible
into shares of Class A common stock on a one-for-one basis, subject to adjustment, as described in the section of this prospectus
entitled “Description of Securities.”
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(3)
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Interests
shown consist of 2,500,000 founder shares, classified as Class B common stock, and 390,000 private placement shares, classified
as Class A common stock.
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(4)
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Represents
shares held directly by Sagaliam Sponsor LLC, our sponsor. The managing
member of our sponsor is GLD Sponsor Member, LLC. The majority member of GLD Sponsor
Member, LLC is GLD Partners, LP. The general partner of GLD Partners, LP is
GLD Management, Inc. Daniel Gordon is the sole shareholder of GLD Management, Inc.,
as well as being a limited partner of GLD Partners, LP and a manager
of GLD Sponsor Member, LLC. As such, Mr. Gordon may be deemed to have beneficial ownership
of the shares held directly by our sponsor. As a result of its purchase of 390,000 private placement units, our sponsor
will also hold rights to receive 39,000 additional shares of Class A common stock upon consummation of our initial business combination.
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(5)
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Includes
375,000 founder shares subject to forfeiture by our sponsor depending on the extent to which the underwriters’
over-allotment option is exercised.
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Immediately
after this offering, our initial stockholders will beneficially own 20% of the then-issued and outstanding shares of our common
stock (excluding the private placement shares, representative’s shares and advisory compensation shares
and assuming our initial stockholders do not purchase any units in this offering). Neither our sponsor nor any of our officers
or directors have expressed an intention to purchase any units in this offering. If we increase or decrease the size of this offering,
we will effect a stock dividend or a share contribution back to capital, or other appropriate mechanism, as applicable, with respect
to our Class B common stock immediately prior to the consummation of this offering in such amount as to maintain the ownership
of our initial stockholders at 20% of the issued and outstanding shares of our common stock upon the consummation of this offering
(excluding the private placement shares, representative’s shares and advisory compensation shares and
assuming our initial stockholders do not purchase any units in this offering). Because of this ownership block, our initial stockholders
may be able to effectively influence the outcome of all matters requiring approval by our stockholders, including the election
of directors, amendments to our amended and restated certificate of incorporation and approval of significant corporate transactions,
including approval of our initial business combination.
The
holders of the founder shares have agreed (A) to vote any shares owned by them in favor of any proposed initial business combination
and (B) not to redeem any shares in connection with a stockholder vote to approve a proposed initial business combination or in connection
with a tender offer.
Our
sponsor and our executive officers and directors are deemed to be our “promoters” as such term is defined under the federal
securities laws.
Restrictions
on Transfers of Founder Shares and Private Placement Units
The
founder shares, private placement units, and any shares of Class A common stock issued upon conversion or exchange thereof
are each subject to transfer restrictions pursuant to lock-up provisions in a letter agreement with us to be entered into by our
sponsor, officers and directors. Our initial stockholders have agreed not to transfer, assign or sell (a) any of their
founder shares until the earlier to occur of (i) one year after the date of the consummation of our initial business combination
or (ii) the date on which we consummate a liquidation, merger, stock exchange or other similar transaction which results in all
of our stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property or
(b) any of their private placement units and the securities underlying them until the later of 30 days after the completion of
our initial business combination and one year after the completion of this offering (except in each case as described
herein under the section of this prospectus entitled “Principal Stockholders — Restrictions on Transfers of Founder
Shares and Private Placement Units”). Any permitted transferees will be subject to the same restrictions and other agreements
of our initial stockholders with respect to any founder shares. Notwithstanding the foregoing, if the closing price of our shares
of Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing 150 days after our initial business combination,
the founder shares will no longer be subject to such transfer restrictions. In addition, the lock-up provisions of the insider
letter provide that the founder shares and any shares of Class A common stock issued upon conversion
or exchange thereof are not transferable or salable until one year after the completion of our initial business
combination. However, any such securities may be transferred or sold (a) to our officers or directors, any affiliates or family
members of any of our officers or directors, any members of our sponsor, or any affiliates of our sponsor, (b) in the case of
an individual, by gift to a member of the individual’s immediate family or to a trust, the beneficiary of which is a member
of one of the individual’s immediate family, an affiliate of such person or to a charitable organization; (c) in the case
of an individual, by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual,
pursuant to a qualified domestic relations order; (e) by private sales or transfers made in connection with the consummation of
an initial business combination at prices no greater than the price at which the securities were originally purchased; (f) in
the event of our liquidation prior to the completion of our initial business combination; (g) by virtue of the laws of Delaware
or our sponsor’s limited liability company agreement upon dissolution of our sponsor; or (h) in the event of our liquidation,
merger, capital stock exchange, reorganization or other similar transaction which results in all of our stockholders having the
right to exchange their shares of common stock for cash, securities or other property subsequent to our completion of our initial
business combination; provided, however, that in the case of clauses (a) through (e) or (g) these permitted transferees must enter
into a written agreement agreeing to be bound by these transfer restrictions and the other restrictions contained in the letter
agreements, and by the same agreements entered into by our sponsor with respect to such securities (including provisions relating
to voting, the trust account and liquidation distributions described elsewhere in this prospectus).
Registration
Rights
The
holders of the Class A common stock issuable upon conversion of the founder shares, shares of Class A common stock
included in the private placement units and underlying the private placement rights, representative’s shares,
advisory compensation shares, and shares of Class A common stock included in or underlying the units that may be issued
upon conversion of working capital loans will have registration rights to require us to register a sale of any shares of Class
A common stock held by them pursuant to a registration rights agreement to be signed prior to or on the effective date of
this offering. These holders will be entitled to make up to three demands, excluding short form registration demands, that we
register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration
rights to include their securities in other registration statements filed by us. Notwithstanding the foregoing, the underwriters
may not exercise their demand and “piggyback” registration rights after five and seven years, respectively, after
the effective date of the registration statement of which this prospectus forms a part and may not exercise their demand rights
on more than one occasion.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
On
April 5, 2021, we issued an aggregate of 2,875,000 founder shares (up to 375,000 of which are subject to forfeiture by
our sponsor if the underwriters’ over-allotment option is not exercised in full) to our sponsor for an aggregate purchase
price of $25,000 in cash. Our sponsor later transferred a total of 275,000 founder shares to our officers and director nominees.
The number of founder shares issued was determined based on the expectation that such founder shares would represent 20% of
the outstanding shares upon completion of this offering (excluding the private placement shares, representative’s
shares and advisory compensation shares and assuming our initial stockholders do not purchase any units in this
offering). If we increase or decrease the size of this offering we will effect a stock dividend or a share contribution back to
capital or other appropriate mechanism, as applicable, with respect to our Class B common stock immediately prior to the consummation
of this offering in such amount as to maintain the ownership of our initial stockholders at 20% of the issued and outstanding
shares of our common stock upon the consummation of this offering (excluding the private placement shares, representative’s
shares and advisory compensation shares and assuming our initial stockholders do not purchase any units in this
offering). Up to 375,000 founder shares are subject to forfeiture by our sponsor depending on the extent to which the underwriters’
over-allotment option is exercised. The founder shares (including the Class A common stock and rights underlying such units) may
not, subject to certain limited exceptions, be transferred, assigned or sold by the holder.
Commencing
as of the effective date of the registration statement of which this prospectus forms a part, we have agreed to pay our sponsor
a total of $30,000 per month for the provision of officers’ cash salaries, office space, utilities and secretarial and administrative
support (plus an additional amount in respect of officers’ cash salaries payable for services provided prior to the effective
date, which the Company expects will not exceed approximately $30,000). Upon completion of our initial business combination or our
liquidation (and in the case of officers’ cash salaries subject to any applicable notice periods), we will cease paying these monthly
fees.
Our
sponsor, officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in
connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business
combinations. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers, directors or
our or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling
on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf. Other than the foregoing,
no compensation of any kind, including any finder’s fee, reimbursement, consulting fee or monies in respect of any payment of a
loan, will be paid by us to our sponsor, officers and directors, or any affiliate of our sponsor or officers, prior to, or in connection
with any services rendered in order to effectuate, the consummation of an initial business combination (regardless of the type of transaction).
Prior
to the closing of this offering, our sponsor has agreed to loan us up to $300,000 to be used for a portion of the expenses of this offering.
These loans are non-interest bearing, unsecured and are due at the earlier of December 31, 2021 or the closing of this offering. The
loan will be repaid upon the closing of this offering out of the approximately $900,000 of offering proceeds that has been allocated
to the payment of offering expenses (other than underwriting commissions). The value of our sponsor’s interest in this transaction
corresponds to the principal amount outstanding under any such loan.
In
addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsor or an
affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required.
If we complete an initial business combination, we would repay such loaned amounts. In the event that the initial business combination
does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no
proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such working capital loans may be convertible
into units at a price of $10.00 per unit (which, for example, would result in the holders being issued 150,000 units, if $1,500,000
of loans were so converted), at the option of the lender. Such units would be identical to the private placement units.
The terms of such working capital loans by our sponsor or its affiliates, or our officers and directors, if any, have not been
determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than
our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a
waiver against any and all rights to seek access to funds in our trust account.
Our sponsor has agreed
to purchase an aggregate of 390,000 units (or 420,000 units if the over-allotment option is exercised in full) at a price of $10.00
per units, for an aggregate purchase price of $3,900,000, or $4,200,000 if the over-allotment option is exercised in full. The
private placement units will be identical to the units sold in this offering except that the private placement units, so long
as they are held by our sponsor or its permitted transferees, (i) may not (including the Class A common stock and rights
underlying the units, and the shares of Class A common stock underlying such rights), subject to certain limited exceptions,
be transferred, assigned or sold by the holders until the later of 30 days after the completion of our initial business combination
and one year after the closing of this offering, and (ii) will be entitled to registration rights. The holders will be permitted
to transfer the private placement units and the underlying securities held by them to certain permitted transferees, including
our officers and directors and other persons or entities affiliated with or related to them, but the transferees receiving such
securities will be subject to the same agreements with respect to such securities as our sponsor. In addition, holders of the
private placement units and the underlying securities have agreed to waive their rights to liquidating distributions from the
trust account with respect to such securities if we fail to complete our initial business combination within 18 months from the
closing of this offering.
We
will enter into a registration rights agreement with respect to the founder shares, shares of Class A common stock included
in the private placement units and underlying the private placement rights, representative’s shares, advisory compensation
shares, and shares of Class A common stock included in or underlying the units that may be issued upon conversion of working capital loans,
which is described under the section of this prospectus entitled “Description of Securities — Registration Rights.”
As
more fully discussed in the section of this prospectus entitled “Management — Conflicts of Interest,” if any of our
officers or directors becomes aware of an initial business combination opportunity that falls within the line of business of any entity
to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations
to present such business combination opportunity to such other entity. Our officers and directors currently have certain relevant fiduciary
duties or contractual obligations that may take priority over their duties to us.
After
the completion of our initial business combination, directors or officers who remain with the combined companies may be paid consulting
or management fees or other compensation from the combined company. All of this compensation will be disclosed to stockholders, to the
extent then known, in the tender offer materials or proxy solicitation materials furnished to our stockholders in connection with a proposed
initial business combination. We have not established any limit on the amount of such compensation. It is unlikely that the amount of
such compensation will be known at the time of the proposed initial business combination, because the directors of the post-combination
business will be responsible for determining officer and director compensation.
Related
Party Transactions Policy
We
have not yet adopted a formal policy for the review, approval or ratification of related party transactions. Accordingly, the transactions
discussed above were not reviewed, approved or ratified in accordance with any such policy.
Prior
to the consummation of this offering, we will adopt a code of ethics requiring us to avoid, wherever possible, all conflicts of interests,
except under guidelines or resolutions approved by our board of directors (or the appropriate committee of our board) or as disclosed
in our public filings with the SEC. Under our code of ethics, conflict of interest situations will include any financial transaction,
arrangement or relationship (including any indebtedness or guarantee of indebtedness) involving the company. A form of the code of ethics
that we plan to adopt prior to the consummation of this offering is filed as an exhibit to the registration statement of which this prospectus
is a part.
In
addition, our audit committee, pursuant to a written charter that we will adopt prior to the consummation of this offering, will be responsible
for reviewing and approving related party transactions to the extent that we enter into such transactions. An affirmative vote of a majority
of the members of the audit committee present at a meeting at which a quorum is present will be required in order to approve a related
party transaction. A majority of the members of the entire audit committee will constitute a quorum. Without a meeting, the unanimous
written consent of all of the members of the audit committee will be required to approve a related party transaction. A form of the audit
committee charter that we plan to adopt prior to the consummation of this offering is filed as an exhibit to the registration statement
of which this prospectus is a part. We also require each of our directors and executive officers to complete a directors’ and officers’
questionnaire that elicits information about related party transactions.
These
procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a
conflict of interest on the part of a director, employee or officer.
To
further minimize conflicts of interest, we have agreed not to consummate an initial business combination with an entity that is affiliated
with any of our sponsor, officers or directors unless we, or a committee of independent directors, have obtained an opinion from an independent
investment banking firm which is a member of FINRA or an independent accounting firm that our initial business combination is fair to
our company from a financial point of view. Furthermore, no finder’s fees, reimbursements, consulting fee, monies in respect of
any payment of a loan or other compensation will be paid by us to our sponsor, officers or directors, or any affiliate of our sponsor
or officers, for services rendered to us prior to, or in connection with any services rendered in order to effectuate, the consummation
of our initial business combination (regardless of the type of transaction that it is). However, the following payments will be made
to our sponsor, officers or directors, or our or their affiliates, none of which will be made from the proceeds of this offering held
in the trust account prior to the completion of our initial business combination:
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Repayment
of up to an aggregate of $300,000 in loans made to us by our sponsor to cover offering-related and organizational expenses;
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Payment
to our sponsor of $30,000 per month, from the effective date of the registration statement of which this prospectus forms a part
and for up to 18 months following the completion of this offering, for the provision of officers’ cash salaries, office
space, utilities and secretarial and administrative support (plus an additional amount in respect of officers’ cash salaries
payable for services provided prior to the effective date, which the Company expects will not exceed approximately $30,000);
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●
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Reimbursement
for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; and
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Repayment
of loans which may be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction
costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written
agreements been executed with respect thereto. Up to $1,500,000 of such working capital loans may be convertible into private placement
units at a price of $10.00 per unit (which, for example, would result in the holders being issued 150,000 private placement units,
if $1,500,000 of loans were so converted), at the option of the lender.
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Our
audit committee will review on a quarterly basis all payments that were made to our sponsor, officers or directors, or our or their affiliates.
DESCRIPTION
OF SECURITIES
Pursuant
to our amended and restated certificate of incorporation, our authorized capital stock consists of 100,000,000 shares of Class A common
stock, $0.0001 par value, 10,000,000 shares of Class B common stock, $0.0001 par value, and 1,000,000 shares of undesignated preferred
stock, $0.0001 par value. The following description summarizes the material terms of our capital stock. Because it is only a summary,
it may not contain all the information that is important to you.
Units
Each
unit sold in this offering has an offering price of $10.00 and consists of one share of Class A common stock and one right to
receive one-tenth (1/10) of one share of Class A common stock upon consummation of our initial business combination, as described
in this prospectus. Pursuant to the rights agreement, a rights holder may exchange rights only for a whole number of shares
of Class A common stock. This means that rights may be exchanged only in multiples of 10 rights (subject to adjustment
for stock splits, stock dividends, reorganizations, recapitalizations and the like).
We
expect the Class A common stock and rights comprising the units to begin separate trading on the 52nd day following the closing
of this offering, unless Maxim informs us of its decision to allow earlier separate trading, subject to our having filed the Current
Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Once the shares
of Class A common stock and rights commence separate trading, holders will have the option to continue to hold units or separate their
units into the component securities. Holders will need to have their brokers contact our transfer agent in order to separate the units
into shares of Class A common stock and rights.
In
no event will the Class A common stock and rights be traded separately until we have filed with the SEC a Current Report on Form 8-K
that includes an audited balance sheet reflecting our receipt of the gross proceeds at the closing of this offering. We will file such
a Current Report on Form 8-K upon the closing of this offering, which is anticipated to take place three business days after the date
of this prospectus.
Each
unit sold in the private placement has an offering price of $10.00 and consists of one share of Class A common stock and
one right to receive one-tenth (1/10) of one share of Class A common stock upon consummation of our initial business combination,
as described in this prospectus. Pursuant to the rights agreement, a rights holder may exchange rights only for a whole
number of shares of Class A common stock. This means that rights may be exchanged only in multiples of 10 rights
(subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like).
The
private placement units (including the Class A common stock and rights underlying such units and the Class A common
stock underlying such rights) will not be transferable, assignable or salable until the later of 30 days after the
completion of our initial business combination and one year after the completion of this offering (except, among other
limited exceptions as described under the section of this prospectus entitled “Principal Stockholders —
Restrictions on Transfers of Founder Shares and Private Placement Units,” to our officers and directors and other
persons or entities affiliated with our sponsor). Following such period and subject to applicable federal and state securities laws, the private placement units (including the
shares of Class A common stock and rights underlying such units, and the shares of Class A common stock underlying such
rights) will be transferable, assignable or salable, except that the private placement units will not trade. Holders of
our private placement units and the underlying securities are entitled to certain registration rights. In addition,
holders of our private placement units and the underlying securities have agreed to waive their rights to liquidating
distributions from the trust account with respect to such securities if we fail to complete our initial business combination
within 18 months from the closing of this offering.
Common
Stock
Upon
the closing of this offering, 12,990,000 shares of our common stock will be outstanding (assuming no exercise of the underwriters’
over-allotment option and the corresponding forfeiture of 375,000 founder shares by our sponsor), consisting of:
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10,000,000
shares of our Class A common stock underlying the units being offered in this offering;
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50,000
representative’s shares of our Class A common stock;
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50,000
advisory compensation shares of our Class A common stock;
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2,500,000
shares of Class B common stock held by our initial stockholders; and
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390,000
shares of Class A common stock underlying the private placement units.
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If
we increase or decrease the size of this offering we will effect a stock dividend or a share contribution back to capital or another
appropriate mechanism, as applicable, with respect to our Class B common stock, immediately prior to the consummation of this
offering, in such amount as to maintain the ownership of our initial stockholders at 20% of the issued and outstanding shares
of our common stock upon the consummation of this offering (excluding the private placement shares, representative’s
shares and advisory compensation shares and assuming our initial stockholders do not purchase any units in this
offering).
Common
stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Holders of
the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted
to a vote of our stockholders, except as required by law or our amended and restated certificate of incorporation. Unless
specified in our amended and restated certificate of incorporation or bylaws, or as required by applicable provisions of the DGCL
or applicable stock exchange rules, the affirmative vote of a majority of our shares of common stock that are voted is required
to approve any such matter voted on by our stockholders. Our board of directors will be divided into two classes, with members
of each class serving staggered two-year terms (except that the terms of the initial Class I directors will expire at the
first annual meeting of our stockholders held after the completion of this offering). There is no cumulative voting with respect
to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors
can elect all of the directors. Our stockholders are entitled to receive ratable dividends when, as and if declared by the board
of directors out of funds legally available therefor.
Because
our amended and restated certificate of incorporation authorizes the issuance of up to 100,000,000 shares of Class A common stock, if
we were to enter into an initial business combination, we may (depending on the terms of such an initial business combination) be required
to increase the number of shares of Class A common stock which we are authorized to issue at the same time as our stockholders vote on
the initial business combination to the extent we seek stockholder approval in connection with our initial business combination.
In
accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until no later than one year
after our first fiscal year end following our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required to hold
an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws, unless such election is made
by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation
of our initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting.
Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination, they
may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c)
of the DGCL.
We
will provide our stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of
our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account as of two business days prior to the consummation of our initial business combination including interest earned
on the funds held in the trust account and not previously released to us to pay our franchise and income taxes, divided by
the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is
initially anticipated to be approximately $10.00 per public share. The per-share amount we will distribute to investors who
properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters.
Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive
their redemption rights with respect to any founder shares, any private placement shares and any public shares held by
them in connection with the completion of our initial business combination. Unlike many blank check companies that hold
stockholder votes and conduct proxy solicitations in conjunction with their initial business combinations and provide for
related redemptions of public shares for cash upon completion of such initial business combinations even when a vote is not
required by law, if a stockholder vote is not required by law and we do not decide to hold a stockholder vote for business or
other legal reasons, we will, pursuant to our amended and restated certificate of incorporation, conduct the redemptions
pursuant to the tender offer rules of the SEC, and file tender offer documents with the SEC prior to completing our initial
business combination. Our amended and restated certificate of incorporation will require these tender offer documents to
contain substantially the same financial and other information about the initial business combination and the redemption
rights as is required under the SEC’s proxy rules. If, however, a stockholder approval of the transaction is required
by law, or we decide to obtain stockholder approval for business or other legal reasons, we will, like many blank check
companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to
the tender offer rules. If we seek stockholder approval, we will complete our initial business combination only if a majority
of the outstanding shares of common stock voted are voted in favor of the initial business combination. A quorum for such
meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company
representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at
such meeting.
However,
the participation of our sponsor, officers, directors, advisors or their affiliates in privately negotiated transactions (as described
in this prospectus), if any, could result in the approval of our initial business combination even if a majority of our public stockholders
vote, or indicate their intention to vote, against such business combination. For purposes of seeking approval of the majority of our
outstanding shares of common stock voted, non-votes will have no effect on the approval of our initial business combination once a quorum
is obtained. We intend to give approximately 30 days (but not less than 10 days nor more than 60 days) prior written notice of any such
meeting, if required, at which a vote shall be taken to approve our initial business combination. These quorum and voting thresholds,
and the voting agreements of our initial stockholders, may make it more likely that we will consummate our initial business combination.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder,
together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate
of 15% of the shares of common stock sold in this offering, which we refer to as the Excess Shares. However, we would not be restricting
our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Our stockholders’ inability to redeem the Excess Shares will reduce their influence over our ability to complete our initial business
combination, and such stockholders could suffer a material loss in their investment if they sell such Excess Shares on the open market.
Additionally, such stockholders will not receive redemption distributions with respect to the Excess Shares if we complete the initial
business combination. And, as a result, such stockholders will continue to hold that number of shares exceeding 15% and, in order to
dispose such shares would be required to sell their stock in open market transactions, potentially at a loss.
If
we seek stockholder approval in connection with our initial business combination, pursuant to the letter agreement our sponsor,
officers and directors have agreed to vote their founder shares, private placement shares and any public shares purchased
during or after this offering (including in open market and privately negotiated transactions) in favor of our initial business
combination. As a result, in addition to our initial stockholders’ founder shares and private placement shares, we
would need only approximately 357,501, or 3.6%, of the 10,000,000 public shares sold in this offering to be voted
in favor of an initial business combination, or 257,501, or 2.6%, if the holders of the representative’s shares and the
advisory compensation shares also choose to vote in favor of the business combination (assuming only a quorum is present
at the meeting and only a majority of shares are required to approve the business combination) in order to have our initial business
combination approved (assuming the over-allotment option is not exercised). Additionally, each public stockholder may elect to
redeem its public shares irrespective of whether they vote for or against the proposed transaction (subject to the limitation
described in the preceding paragraph).
Pursuant
to our amended and restated certificate of incorporation, if we are unable to complete our initial business combination within
18 months from the closing of this offering, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but no more than ten business days thereafter subject to lawfully available funds therefor, redeem the
public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including
interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes
(less up to $150,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which
redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further
liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case
to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Our sponsor,
officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their rights
to liquidating distributions from the trust account with respect to any founder shares and private placement shares held
by them if we fail to complete our initial business combination within 18 months from the closing of this offering. However, if
our initial stockholders acquire public shares in or after this offering, they will be entitled to liquidating distributions from
the trust account with respect to such public shares if we fail to complete our initial business combination within the applicable
time period.
In
the event of a liquidation, dissolution or winding up of the company after an initial business combination, our stockholders are entitled
to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made
for each class of stock, if any, having preference over the common stock. Our stockholders have no preemptive or other subscription rights.
There are no sinking fund provisions applicable to the common stock, except that we will provide our stockholders with the opportunity
to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account, upon
the completion of our initial business combination, subject to the limitations described herein.
Founder
Shares and Private Placement Shares
The founder shares are
shares of Class B common stock. The private
placement shares are shares of Class A common stock and the shares of common stock underlying the private placement rights
are shares of Class A common stock.
The
founder shares are identical to the shares of Class A common stock included in the units being sold in this offering, and holders
of founder shares have the same stockholder rights as public stockholders, except that (i) the founder shares are subject to certain
transfer restrictions, as described in more detail below, (ii) our sponsor, officers and directors have entered into a letter
agreement with us, pursuant to which they have agreed (A) to waive their redemption rights with respect to any founder shares,
and any private placement shares and public shares held by them, in connection with the completion of our initial business
combination, (B) to waive their redemption rights with respect to their founder shares, and any private placement
shares and public shares held by them, in connection with a stockholder vote to approve an amendment to our amended and restated
certificate of incorporation (x) to modify the substance or timing of our obligation to redeem 100% of our public shares if we
do not complete our initial business combination within 18 months from the closing of this offering or (y) with respect to any
other provision relating to stockholders’ rights or pre-initial business combination activity and (C) to waive their rights
to liquidating distributions from the trust account with respect to any founder shares and private placement shares held
by them if we fail to complete our initial business combination within 18 months from the closing of this offering, although they
will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to
complete our initial business combination within such time period, (iii) the founder shares are shares of our Class B common stock
that will automatically convert into shares of our Class A common stock at the time of our initial business combination, or at
any time prior thereto at the option of the holder, on a one-for-one basis, subject to adjustment as described herein, and (iv)
the founder shares, and any private placement shares held by them are entitled to registration rights. If
we submit our initial business combination to our public stockholders for a vote, our sponsor, officers and directors have agreed
pursuant to the letter agreement to vote any founder shares and private placement shares held by them and any public shares purchased
during or after this offering (including in open market and privately negotiated transactions) in favor of our initial business
combination.
The
shares of Class B common stock will automatically convert into shares of Class A common stock at the time of our initial business
combination on a one-for-one basis (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations
and the like), and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock,
or equity-linked securities, are issued or deemed issued in excess of the amounts offered in this prospectus and related to the
closing of the initial business combination, the ratio at which shares of Class B common stock shall convert into shares of Class
A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive
such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable
upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of
the total number of all shares of common stock outstanding upon completion of this offering (excluding the private placement
shares, representative’s shares and advisory compensation shares) plus all shares of Class A common stock and equity-linked securities issued or deemed
issued in connection with the initial business combination (excluding any shares or equity-linked securities issued, or to be
issued, to any seller in the initial business combination, any private placement securities issued to our sponsor or its affiliates
upon conversion of loans made to us). We cannot determine at this time whether a majority of the holders of our Class B common
stock at the time of any future issuance would agree to waive such adjustment to the conversion ratio. They may waive such adjustment
due to (but not limited to) the following: (i) closing conditions which are part of the agreement for our initial business combination;
(ii) negotiation with Class A stockholders on structuring an initial business combination; or (iii) negotiation with parties providing
financing which would trigger the anti-dilution provisions of the Class B common stock. If such adjustment is not waived, the
issuance would not reduce the percentage ownership of holders of our Class B common stock, but would reduce the percentage ownership
of holders of our Class A common stock. If such adjustment is waived, the issuance would reduce the percentage ownership of holders
of both classes of our common stock. Holders of founder shares may also elect to convert their shares
of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment as provided above, at any
time. The term “equity-linked securities” refers to any debt or equity securities that are convertible, exercisable
or exchangeable for shares of Class A common stock issues in a financing transaction in connection with our initial business combination,
including but not limited to a private placement of equity or debt. Securities could be “deemed issued” for purposes
of the conversion rate adjustment if such shares are issuable upon the conversion or exercise of convertible securities, rights
or similar securities.
Our
initial stockholders have agreed not to transfer, assign or sell any of their founder shares until the earlier
to occur of (i) one year after the date of the consummation of our initial business combination or (ii) the date on which we consummate
a liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange
their shares of Class A common stock for cash, securities or other property (except as described herein under the section of this prospectus
entitled “Principal Stockholders — Restrictions on Transfers of Founder Shares and Private Placement Units”). Any permitted
transferees will be subject to the same restrictions and other agreements of our initial stockholders with respect to any founder shares
and private placement shares. Notwithstanding the foregoing, if the closing price of our shares of Class A common stock equals or exceeds
$12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading
days within any 30-trading day period commencing 150 days after our initial business combination, the founder shares and private placement
shares will no longer be subject to such transfer restrictions.
Preferred
Stock
Our
amended and restated certificate of incorporation will provide that shares of preferred stock may be issued from time to time in one
or more series. Our board of directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative,
participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares
of each series. Our board of directors will be able to, without stockholder approval, issue preferred stock with voting and other rights
that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects.
The ability of our board of directors to issue preferred stock without stockholder approval could have the effect of delaying, deferring
or preventing a change of control of us or the removal of existing management. We have no preferred stock outstanding at the date hereof.
Although we do not currently intend to issue any shares of preferred stock, we cannot assure you that we will not do so in the future.
No shares of preferred stock are being issued or registered in this offering.
Rights
Each holder of a right
will automatically receive one-tenth (1/10) of one share of Class A common stock upon consummation of our initial business combination,
except in cases where we are not the surviving company in a business combination or the registered holder of a certificated right
fails to tender such rights certificate. No additional consideration will be required to be paid by a holder of rights in order
to receive the additional shares upon consummation of a business combination, as the consideration related thereto has been included
in the unit purchase price paid for by investors in this offering. If we enter into a definitive agreement for a business combination
in which we will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same
per share consideration the holders of shares of Class A common stock will receive in the transaction on an as-exchanged for Class
A common stock basis, and rights holders will be required to affirmatively elect to exchange their rights for the underlying shares
as well as to return the original rights certificates to us within a fixed period of time after which period the rights will expire
worthless. Pursuant to the rights agreement, a rights holder may exchange rights only for a whole number of shares of Class A
common stock. This means that we will not issue fractional shares in connection with an exchange of rights and rights may be exchanged
only in multiples of 10 rights (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and
the like). Fractional shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with
the applicable provisions of the Delaware General Corporation Law.
The shares
issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of ours) since the issuance
of the shares underlying the rights will either be registered under an effective registration statement on Form S-4 or Form S-1,
whichever is applicable (in the case where we are not the surviving entity) or be exempt from registration pursuant to an applicable
exemption such as the exemption provided by Section 3(a)(9) (in the case where we are the surviving entity).
The
rights will be issued in certificated or book-entry form under a rights agreement between Continental Stock Transfer
& Trust Company, as rights agent, and us. The rights agreement provides that the terms of the rights may be amended without
the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval, by written consent
or vote, of the holders of a majority of the then outstanding rights in order to make any change that adversely affects the interests
of the registered holders.
In
the event we will not be the surviving company upon completion of our initial business combination, each holder of a right will
be required to affirmatively exchange his, her or its rights in order to receive shares (without paying any additional
consideration) upon consummation of the business combination. More specifically, each holder will be required to indicate his,
her or its election to exchange the rights into their underlying shares as well as to return the original rights certificates
to us within a fixed period of time after which period the rights will expire worthless. Until a holder affirmatively elects
to exchange its rights, the right certificates held by such holder will not represent the shares of common stock they are
exchangeable for but instead will simply represent the right to receive such shares.
If
we are unable to complete an initial business combination within the required time period and we liquidate the funds held in the
trust account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution
from our assets held outside of the trust account with respect to such rights, and the rights will expire worthless. Further,
there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of an initial
business combination. Additionally, in no event will we be required to net cash settle the rights. Because we will only issue
a whole number of shares, you will not receive any fractional shares to the extent the number of rights held by you upon consummation
of our initial business combination is not divisible by ten (subject to adjustment for stock splits, stock dividends, reorganizations,
recapitalizations and the like).
The
private placement rights will be identical to the rights included in the units being offered by this prospectus, except
that such rights and the shares issuable upon the exchange of such rights will be subject to certain restrictions on
transfer and will become tradable only after certain conditions are met or the resale of such rights (including underlying
securities) is registered under the Securities Act.
Dividends
We
have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of
an initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings,
if any, capital requirements and general financial conditions subsequent to completion of an initial business combination. The
payment of any cash dividends subsequent to an initial business combination will be within the discretion of our board of directors
at such time. If we increase or decrease the size of this offering we will effect a stock dividend or a share contribution back
to capital or other appropriate mechanism, as applicable, with respect to our Class B common stock immediately prior to the consummation
of this offering in such amount as to maintain the ownership of our initial stockholders at 20% of the issued and outstanding
shares of our common stock upon the consummation of this offering (excluding the private placement shares, representative’s
shares and advisory compensation shares and assuming our initial stockholders do not purchase any units in this
offering). Further, if we incur any indebtedness, our ability to declare dividends may be limited by restrictive covenants we
may agree to in connection therewith.
Our
Transfer Agent and Rights Agent
The
transfer agent for our common stock and the rights agent for our rights is Continental Stock Transfer & Trust Company.
We have agreed to indemnify Continental Stock Transfer & Trust Company in its roles as transfer agent and rights agent,
its agents and each of its stockholders, directors, officers and employees against all claims and losses that may arise out of
acts performed or omitted for its activities in that capacity, except for any liability due to any gross negligence, willful misconduct
or bad faith of the indemnified person or entity.
Our
Amended and Restated Certificate of Incorporation
Our
amended and restated certificate of incorporation will contain certain requirements and restrictions relating to this offering
that will apply to us until the completion of our initial business combination. These provisions cannot be amended without the
approval of the holders of a majority of our common stock. Our initial stockholders, who will collectively beneficially own 20%
of our common stock upon the closing of this offering (excluding the private placement shares, representative’s shares
and advisory compensation shares and assuming our initial stockholders do not purchase any units in this offering),
will participate in any vote to amend our amended and restated certificate of incorporation and will have the discretion to vote
in any manner they choose. Specifically, our amended and restated certificate of incorporation provides, among other things, that:
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If
we are unable to complete our initial business combination within 18 months from the closing of this offering, we will (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter subject to lawfully available funds therefor, redeem 100% of the public shares, at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account
and not previously released to us to pay our franchise and income taxes (less up to $150,000 of interest to pay dissolution expenses),
divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights
as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii)
as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board
of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law;
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Prior
to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to
(i) receive funds from the trust account or (ii) vote on any initial business combination;
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Although
we do not intend to enter into an initial business combination with a target business that is affiliated with our sponsor, our directors
or our officers, we are not prohibited from doing so. In the event we enter into such a transaction, we, or a committee of independent
directors, will obtain an opinion from an independent investment banking firm that is a member of FINRA or an independent accounting
firm that such an initial business combination is fair to our company from a financial point of view;
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If
a stockholder vote on our initial business combination is not required by law and we do not decide to hold a stockholder vote for
business or other legal reasons, we will offer to redeem our public shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange
Act, and will file tender offer documents with the SEC prior to completing our initial business combination which contain substantially
the same financial and other information about our initial business combination and the redemption rights as is required under Regulation
14A of the Exchange Act; whether or not we maintain our registration under the our Exchange Act or our listing on Nasdaq, we will
provide our public stockholders with the opportunity to redeem their public shares by one of the two methods listed above;
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So
long as we obtain and maintain a listing for our securities on Nasdaq, Nasdaq rules require that we must complete one or more business
combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account (excluding
the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at the time of our signing a
definitive agreement in connection with our initial business combination;
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If
our stockholders approve an amendment to our amended and restated certificate of incorporation (i) to modify the substance or timing
of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from
the closing of this offering or (ii) with respect to any other provision relating to stockholders’ rights or pre-business combination
activity, we will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common
stock upon such approval at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account,
including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income
taxes, divided by the number of then outstanding public shares; and
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We
will not effectuate our initial business combination with another blank check company or a similar company with nominal operations.
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addition, our amended and restated certificate of incorporation will provide that we will only redeem our public shares so long as (after
such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial
business combination and after payment of underwriters’ commissions.
Certain
Anti-Takeover Provisions of Delaware Law and our Amended and Restated Certificate of Incorporation and Bylaws
We
will be subject to the provisions of Section 203 of the DGCL regulating corporate takeovers upon completion of this offering. This statute
prevents certain Delaware corporations, under certain circumstances, from engaging in a “business combination” with:
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a
stockholder who owns 15% or more of our outstanding voting stock (otherwise known as an “interested stockholder”);
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an
affiliate of an interested stockholder; or
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an
associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder.
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A
“business combination” includes a merger or sale of more than 10% of our assets. However, the above provisions of Section
203 do not apply if:
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our
board of directors approves the transaction that made the stockholder an “interested stockholder,” prior to the date
of the transaction;
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after
the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at
least 85% of our voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common
stock; or
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on
or subsequent to the date of the transaction, the initial business combination is approved by our board of directors and authorized
at a meeting of our stockholders, and not by written consent, by an affirmative vote of at least two-thirds of the outstanding voting
stock not owned by the interested stockholder.
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Our
amended and restated certificate of incorporation will provide that our board of directors will be classified into two classes
of directors, with members of each class serving staggered two-year terms (except that the terms of the initial Class I
directors will expire at the first annual meeting of our stockholders held after the completion of this offering). As a result,
in most circumstances, a person can gain control of our board only by successfully engaging in a proxy contest at two or more
annual meetings.
Our
authorized but unissued common stock and preferred stock are available for future issuances without stockholder approval and could be
utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit
plans. The existence of authorized but unissued and unreserved common stock and preferred stock could render more difficult or discourage
an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
Exclusive
Forum for Certain Lawsuits
Our
amended and restated certificate of incorporation will require, to the fullest extent permitted by law, that derivative actions brought
in our name, actions against directors, officers and employees for breach of fiduciary duty and certain other actions may be brought
only in the Court of Chancery in the State of Delaware, except any action (A) as to which the Court of Chancery in the State of Delaware
determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party
does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested
in the exclusive jurisdiction of a court or forum other than the Court of Chancery or (C) for which the Court of Chancery does not have
subject matter jurisdiction. If an action is brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented
to service of process on such stockholder’s counsel. Although we believe this provision benefits us by providing increased consistency
in the application of law in the types of lawsuits to which it applies, a court may determine that this provision is unenforceable, and
to the extent it is enforceable, the provision may have the effect of discouraging lawsuits against our directors and officers.
Our
amended and restated certificate of incorporation will provide that the exclusive forum provision will be applicable to the fullest extent
permitted by applicable law, subject to certain exceptions. Section 27 of the Exchange Act creates exclusive federal jurisdiction over
all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result,
the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other
claim for which the federal courts have exclusive jurisdiction. In addition, our amended and restated certificate of incorporation provides
that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America
shall, to the fullest extent permitted by law, be the exclusive forum for the resolution of any complaint asserting a cause of action
arising under the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder. We note, however, that there
is uncertainty as to whether a court would enforce this provision and that investors cannot waive compliance with the federal securities
laws and the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for state and federal
courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
Special
Meetings of Stockholders
Our
bylaws provide that special meetings of our stockholders may be called only by a majority vote of our board of directors, by our Chief
Executive Officer or by our Chairman.
Advance
Notice Requirements for Stockholder Proposals and Director Nominations
Our
bylaws provide that stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election
as directors at our annual meeting of stockholders, must provide timely notice of their intent in writing. To be timely, a stockholder’s
notice will need to be received by the company secretary at our principal executive offices not later than the close of business on the
52nd day nor earlier than the opening of business on the 120th day prior to the anniversary date of the immediately
preceding annual meeting of stockholders. Pursuant to Rule 14a-8 of the Exchange Act, proposals seeking inclusion in our annual proxy
statement must comply with the notice periods contained therein. Our bylaws also specify certain requirements as to the form and content
of a stockholders’ meeting. These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders
or from making nominations for directors at our annual meeting of stockholders.
Action
by Written Consent
Subsequent
to the consummation of this offering, any action required or permitted to be taken by our common stockholders must be effected by a duly
called annual or special meeting of such stockholders and may not be effected by written consent of the stockholders other than with
respect to our Class B common stock.
Classified
Board of Directors
Our
board of directors will initially be divided into two classes, Class I and Class II, with members of each class serving staggered
two-year terms (except that the terms of the initial Class I directors will expire at the first annual meeting of our
stockholders held after the completion of this offering). Our amended and restated certificate of incorporation will provide
that the authorized number of directors may be changed only by resolution of the board of directors. Subject to the terms of any
preferred stock, any or all of the directors may be removed from office at any time, but only for cause and only by the affirmative
vote of holders of a majority of the voting power of all then outstanding shares of our capital stock entitled to vote generally
in the election of directors, voting together as a single class. Any vacancy on our board of directors, including a vacancy resulting
from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office.
Class
B Common Stock Consent
For
so long as any shares of Class B common stock remain outstanding, we may not, without the prior vote or written consent of the holders
of a majority of the shares of Class B common stock then outstanding, voting separately as a single class, amend, alter or repeal any
provision our certificate of incorporation, whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would
alter or change the powers, preferences or relative, participating, optional or other or special rights of the Class B common stock.
Any action required or permitted to be taken at any meeting of the holders of Class B common stock may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders
of the outstanding Class B common stock having not less than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares of Class B common stock were present and voted.
Securities
Eligible for Future Sale
Immediately
after the consummation of this offering (assuming no exercise of the underwriters’ over-allotment option) we will have 12,990,000
(or 14,910,000 if the underwriters’ over-allotment option is exercised in full) shares of common stock outstanding.
Of these shares, the 10,100,000 (or 11,615,000 if the underwriters’ over-allotment option is exercised in full) shares
of Class A common stock sold in this offering will be freely tradable without restriction or further registration under the Securities
Act, except for any shares purchased by one of our affiliates within the meaning of Rule 144 under the Securities Act, and the
2,890,000 (or 3,295,000 if the underwriters’ over-allotment option is exercised in full) shares common stock issued
as founder shares or private placement shares will be restricted securities under Rule 144, in that they were issued in
private transactions not involving a public offering. In addition, these shares of common stock are subject to contractual transfer
restrictions as set forth elsewhere in this prospectus. These securities will be entitled to registration rights as more fully
described below under “— Registration Rights.”
Rule
144
Pursuant
to Rule 144, a person who has beneficially owned restricted shares of our common stock or rights for at least six months would be entitled
to sell their securities provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time
during the three months preceding, a sale and (ii) we are subject to the Exchange Act periodic reporting requirements for at least three
months before the sale and have filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such
shorter period as we were required to file reports) preceding the sale.
Persons
who have beneficially owned restricted shares of our common stock or rights for at least six months but who are our affiliates at the
time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person
would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of:
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1%
of the total number of shares of Class A common stock then outstanding, which will equal 129,900 shares immediately after
this offering (or 149,100 if the underwriters exercise their over-allotment option in full); or
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the
average weekly reported trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form
144 with respect to the sale.
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Sales
by our affiliates under Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current
public information about us.
Restrictions
on the Use of Rule 144 by Shell Companies or Former Shell Companies
Rule
144 is not available for the resale of securities initially issued by shell companies (other than business combination related shell
companies) or issuers that have been at any time previously a shell company. However, Rule 144 also includes an important exception to
this prohibition if the following conditions are met:
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the
issuer of the securities that was formerly a shell company has ceased to be a shell company;
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the
issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
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the
issuer of the securities has filed all Exchange Act reports and materials required to be filed, as applicable, during the preceding
12 months (or such shorter period that the issuer was required to file such reports and materials), other than Current Reports on
Form 8-K; and
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at
least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status
as an entity that is not a shell company.
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As
a result, our initial stockholders will be able to sell their founder shares and private placement units, and the securities underlying
the foregoing, as applicable, pursuant to Rule 144 without registration one year after we have completed our initial business combination.
Registration
Rights
The
holders of the Class A common stock issuable upon conversion of the founder shares, shares of Class A common stock included in
the private placement units and underlying the private placement rights, representative’s shares, advisory compensation
shares, and shares of Class A common stock included in or underlying the units that may be issued upon conversion of working capital
loans will have registration rights to require us to register a sale of any share of Class A common stock held by them pursuant
to a registration rights agreement to be signed prior to or on the effective date of this offering.
The holders of the majority of these securities are entitled to make up to three demands, excluding short form demands, that we
register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration
statements filed subsequent to our completion of our initial business combination and rights to require us to register for resale
such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that we will
not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up
period as described here. Notwithstanding the foregoing, the underwriters may not exercise their demand and “piggyback”
registration rights after five (5) and seven (7) years after the effective date of the registration statement of which this prospectus
forms a part and may not exercise their demand rights on more than one occasion. We will bear the expenses incurred in connection
with the filing of any such registration statements.
Listing
of Securities
We
have applied to list our units, Class A common stock and rights on Nasdaq under the symbols “SAGAU,” “SAGA”
and “SAGAR,” respectively. We expect that our units will be listed on Nasdaq on or promptly after the effective
date of the registration statement. Following the date the shares of our Class A common stock and rights are eligible to trade
separately, we anticipate that the shares of our Class A common stock and rights will be listed separately and as a unit on Nasdaq.
We cannot guarantee that our securities will be approved for listing on Nasdaq.
MATERIAL
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The
following discussion summarizes certain U.S. federal income tax considerations generally applicable to the acquisition, ownership
and disposition of our units (each consisting of one share of our Class A common stock and one right to receive one-tenth
of one share of our Class A common stock) that are purchased in this offering by U.S. Holders (as defined below) and Non-U.S.
Holders (as defined below). Because the components of a unit are generally separable at the option of the holder, the holder of
a unit generally should be treated, for U.S. federal income tax purposes, as the owner of the underlying share of our Class A
common stock and one right components of the unit. As a result, the discussion below with respect to holders of shares of our
Class A common stock and rights should also apply to holders of units (as the deemed owners of the underlying share of our Class
A common stock and rights that constitute the units).
This
discussion is limited to certain U.S. federal income tax considerations to beneficial owners of our securities who are initial purchasers
of a unit pursuant to this offering and hold the unit and each component of the unit as capital assets within the meaning of Section
1221(a) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) (generally, property held for investment). This
discussion assumes that the shares of our Class A common stock and rights will trade separately and that any distributions made (or deemed
made) by us on the shares of our Class A common stock and any consideration received (or deemed received) by a holder in consideration
for the sale or other disposition of our securities will be in U.S. dollars. This discussion is a summary only and does not consider
all aspects of U.S. federal income taxation that may be relevant to the acquisition, ownership and disposition of a unit by a prospective
investor in light of its particular circumstances or that is subject to special rules under the U.S. federal income tax laws, including,
but not limited to:
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our
sponsor, officers, directors or other holders of our Class B common stock or private placement shares;
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banks
and other financial institutions or financial services entities;
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broker-dealers;
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mutual
funds;
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retirement
plans, individual retirement accounts or other tax-deferred accounts;
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taxpayers
that are subject to the mark-to-market tax accounting rules;
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tax-exempt
entities;
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S-corporations,
partnerships or other flow-through entities and investors therein;
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governments
or agencies or instrumentalities thereof;
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insurance
companies;
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regulated
investment companies;
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real
estate investment trusts;
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passive
foreign investment companies;
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controlled
foreign corporations;
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qualified
foreign pension funds;
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expatriates
or former long-term residents of the United States;
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persons
that actually or constructively own five percent or more of our voting shares;
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persons
that acquired our securities pursuant to an exercise of employee share options, in connection with employee share incentive plans
or otherwise as compensation or in connection with services;
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persons
required for U.S. federal income tax purposes to conform the timing of income accruals to their financial statements under Section
451 of the Code;
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persons
subject to the alternative minimum tax;
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persons
that hold our securities as part of a straddle, constructive sale, hedging, conversion or other integrated or similar transaction;
or
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U.S.
Holders (as defined below) whose functional currency is not the U.S. dollar.
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The
discussion below is based upon current provisions of the Code, applicable U.S. Treasury regulations promulgated under the Code (“Treasury
Regulations”), judicial decisions and administrative rulings of the IRS, all as in effect on the date hereof, and all of which
are subject to differing interpretations or change, possibly on a retroactive basis. Any such differing interpretations or change could
alter the U.S. federal income tax consequences discussed below. Furthermore, this discussion does not address any aspect of U.S. federal
non-income tax laws, such as gift, estate or Medicare contribution tax laws, or state, local or non-U.S. tax laws.
We
have not sought, and will not seek, a ruling from the IRS as to any U.S. federal income tax consequence described herein. The IRS may
disagree with the discussion herein, and its determination may be upheld by a court. Moreover, there can be no assurance that future
legislation, regulations, administrative rulings or court decisions will not adversely affect the accuracy of the statements in this
discussion.
As
used herein, the term “U.S. Holder” means a beneficial owner of units, shares of our Class A common stock or rights that
is for U.S. federal income tax purposes: (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or
other entity treated as a corporation for U.S. federal income tax purposes) that is created or organized (or treated as created or organized)
in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject
to U.S. federal income taxation regardless of its source or (iv) a trust if (A) a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial
decisions of the trust, or (B) it has in effect a valid election under Treasury Regulations to be treated as a United States person.
This
discussion does not consider the tax treatment of partnerships or other pass-through entities (including branches) or persons who hold
our securities through such entities. If a partnership (or other entity or arrangement classified as a partnership for U.S. federal income
tax purposes) is the beneficial owner of our securities, the U.S. federal income tax treatment of a partner in the partnership generally
will depend on the status of the partner and the activities of the partner and the partnership. If you are a partner or a partnership
holding our securities, we urge you to consult your own tax advisor.
THIS
DISCUSSION IS ONLY A SUMMARY OF CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS ASSOCIATED WITH THE ACQUISITION, OWNERSHIP AND DISPOSITION
OF OUR UNITS. EACH PROSPECTIVE INVESTOR IN OUR UNITS IS URGED TO CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES
TO SUCH INVESTOR OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR UNITS, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL,
AND NON-UNITED STATES TAX LAWS.
Personal
Holding Company Status
We
could be subject to a second level of U.S. federal income tax on a portion of our income if we are determined to be a personal holding
company (a “PHC”) for U.S. federal income tax purposes. A U.S. corporation generally will be classified as a PHC for U.S.
federal income tax purposes in a given taxable year if (i) at any time during the last half of such taxable year, five or fewer individuals
(without regard to their citizenship or residency and including as individuals for this purpose certain entities such as certain tax-exempt
organizations, pension funds and charitable trusts) own or are deemed to own (pursuant to certain constructive ownership rules) more
than 50% of the stock of the corporation by value and (ii) at least 60% of the corporation’s adjusted ordinary gross income, as
determined for U.S. federal income tax purposes, for such taxable year consists of PHC income (which includes, among other things, dividends,
interest, certain royalties, annuities and, under certain circumstances, rents).
Depending
on the date and size of our initial business combination, it is possible that at least 60% of our adjusted ordinary gross income may
consist of PHC income as discussed above. In addition, depending on the concentration of our stock in the hands of individuals, including
the members of our sponsor and certain tax-exempt organizations, pension funds and charitable trusts, it is possible that more than 50%
of our stock may be owned or deemed owned (pursuant to the constructive ownership rules) by such persons during the last half of a taxable
year. Thus, no assurance can be given that we will not be a PHC following this offering or in the future. If we are or were to become
a PHC in a given taxable year, we would be subject to an additional PHC tax, currently 20%, on our undistributed PHC income, which generally
includes our taxable income, subject to certain adjustments.
Allocation
of Purchase Price and Characterization of a Unit
No
statutory, administrative or judicial authority directly addresses the treatment of a unit or instruments similar to a unit for U.S.
federal income tax purposes, and therefore, that treatment is not entirely clear. The acquisition of a unit should be treated for U.S.
federal income tax purposes as the acquisition of one share of our Class A common stock and one right, where each right entitles the
holder thereof to receive one-tenth (1/10) of one share of Class A common stock upon consummation of our initial business combination,
and we intend to treat the acquisition of a unit in this manner. For U.S. federal income tax purposes, each holder of a unit must allocate
the purchase price paid by such holder for such unit between the one share of our Class A common stock and the one-half of one right
based on the relative fair market value of each at the time of issuance. Under U.S. federal income tax law, each investor must make its
own determination of such value based on all the relevant facts and circumstances. Therefore, we strongly urge each investor to consult
its tax advisor regarding the determination of value for these purposes. The price allocated to each share of our Class A common stock
and one right should constitute the holder’s initial tax basis in such share and one right, respectively. Any disposition of a
unit should be treated for U.S. federal income tax purposes as a disposition of the share of our Class A common stock and one right comprising
the unit, and the amount realized on the disposition should be allocated between the share of our Class A common stock and one right
based on their respective relative fair market values at the time of disposition. Neither the separation of the share of our Class A
common stock and the one right constituting a unit nor the combination of two half-rights into a single right should be a taxable event
for U.S. federal income tax purposes.
The
foregoing treatment of the shares of our Class A common stock and rights and a holder’s purchase price allocation are not binding
on the IRS or the courts. Because there are no authorities that directly address instruments that are similar to the units, no assurance
can be given that the IRS or the courts will agree with the characterization described above or the discussion below. Accordingly, each
prospective investor is urged to consult its tax advisor regarding the tax consequences of an investment in a unit (including alternative
characterizations of a unit). The balance of this discussion assumes that the characterization of the units described above is respected
for U.S. federal income tax purposes.
U.S.
Holders
Taxation
of Distributions
If
we pay distributions in cash or other property (other than certain distributions of our stock or rights to acquire our stock) to U.S.
Holders of our Class A common stock, such distributions will constitute dividends for U.S. federal income tax purposes to the extent
paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess
of current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not
below zero) the U.S. Holder’s adjusted tax basis in our shares of our Class A common stock. Any remaining excess will be treated
as gain realized on the sale or other disposition of the shares of our Class A common stock and will be treated as described under “U.S.
Holders — Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Our Class A Common Stock and Rights” below.
Dividends
we pay to a corporate U.S. Holder generally will qualify for the dividends received deduction if certain holding period requirements
are met. With certain exceptions (including, but not limited to, dividends treated as investment income for purposes of investment interest
deduction limitations), and provided certain holding period requirements are met, dividends we pay to a non-corporate U.S. Holder will
generally be taxed as qualified dividend income at the preferential tax rate for long-term capital gains. It is unclear whether the redemption
rights with respect to the shares of our Class A common stock described in this prospectus may prevent a U.S. Holder from satisfying
the applicable holding period requirements with respect to the dividends received deduction or the preferential tax rate on qualified
dividend income, as the case may be. If the holding period requirements are not met, then a corporation may not be able to qualify for
the dividends received deduction and would have taxable income equal to the entire dividend amount, and non-corporate holders may be
subject to tax on such dividend at regular ordinary income tax rates instead of the preferential rate that applies to qualified dividend
income.
Gain
or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Our Class A Common Stock and Rights
A
U.S. Holder generally will recognize capital gain or loss on a sale or other taxable disposition of our shares of Class A common stock
or rights (including on our dissolution and liquidation if we do not complete an initial business combination within the required time
period). Any such capital gain or loss generally will be long-term capital gain or loss if the U.S. Holder’s holding period for
such shares of our Class A common stock or rights exceeds one year. Long-term capital gains recognized by a non-corporate U.S. holder
are currently eligible to be taxed preferential rates. It is unclear, however, whether certain redemption rights described in this prospectus
may suspend the running of the applicable holding period for this purpose. If the running of the holding period for the Class A common
stock is suspended, then non-corporate U.S. Holders may not be able to satisfy the one-year holding period requirement for long-term
capital gain treatment, in which case any gain on a sale or taxable disposition of the shares would be subject to short-term capital
gain treatment and would be taxed at regular ordinary income tax rates. The deductibility of capital losses is subject to limitations.
The
amount of gain or loss recognized on a sale or other taxable disposition generally will be equal to the difference between (i)
the sum of the amount of cash and the fair market value of any property received in such disposition (or, if the shares of our
Class A common stock or rights are held as part of units at the time of the disposition, the portion of the amount realized on
such disposition that is allocated to the shares of our Class A common stock or rights based upon the then relative fair market
values of the shares of our Class A common stock and the rights included in the units) and (ii) the U.S. Holder’s adjusted
tax basis in its shares of our Class A common stock or rights so disposed of. A U.S. Holder’s adjusted tax basis in its
shares of our Class A common stock and rights generally will equal the U.S. Holder’s acquisition cost (that is, the portion
of the purchase price of a unit allocated to a share of our Class A common stock or one right, as described above under “—
Allocation of Purchase Price and Characterization of a Unit”) reduced, in the case of a share of our Class A common stock,
by any prior distributions treated as a return of capital. See “U.S. Holders — Acquisition of Common Stock Pursuant
to the Rights” below for a discussion regarding a U.S. Holder’s tax basis in a share of our Class A common stock
acquired pursuant to the rights.
Redemption
of Our Class A Common Stock
In
the event that a U.S. Holder’s shares of our Class A common stock are redeemed pursuant to the redemption provisions described
in this prospectus under “Description of Securities — Common Stock” or if we purchase a U.S. Holder’s shares
of our Class A common stock in an open market transaction (each referred to herein as a “redemption”), the treatment of the
redemption for U.S. federal income tax purposes will depend on whether it qualifies as a sale or exchange of the shares of our Class
A common stock under Section 302 of the Code. If the redemption qualifies as a sale or exchange of the shares of our Class A common stock
under the tests described below, the U.S. Holder will be treated as described under “U.S. Holders — Gain or Loss on Sale,
Taxable Exchange or Other Taxable Disposition of Our Class A Common Stock and Rights” above. If the redemption does not qualify
as a sale or exchange of the shares of our Class A common stock, the U.S. Holder will be treated as receiving a corporate distribution
with the tax consequences described above under “U.S. Holders — Taxation of Distributions.” Whether a redemption qualifies
for sale or exchange treatment will depend largely on the total number of our shares treated as held by the U.S. Holder (including any
shares constructively owned by the U.S. Holder as described in the following paragraph) relative to all of our shares outstanding both
before and after such redemption. The redemption of our Class A common stock generally will be treated as a sale or exchange of the shares
of our Class A common stock (rather than as a corporate distribution) if, within the meaning of Section 302 of the Code, such redemption
(i) is “substantially disproportionate” with respect to the U.S. Holder, (ii) results in a “complete termination”
of the U.S. Holder’s interest in us or (iii) is “not essentially equivalent to a dividend” with respect to the U.S.
Holder.
In
determining whether any of the foregoing tests are satisfied, a U.S. Holder must take into account not only shares of our
stock actually owned by the U.S. Holder, but also shares of our stock that are constructively owned by it. A U.S. Holder may
constructively own, in addition to stock owned directly, stock owned by certain related individuals and entities in which the
U.S. Holder has an interest or that have an interest in such U.S. Holder, as well as any stock the U.S. Holder has a right to
acquire by exercise of an option, which would possibly include shares of our Class A common stock which could be
acquired pursuant to the rights. In order to meet the “substantially disproportionate” test, the percentage of
our outstanding voting shares actually and constructively owned by the U.S. Holder immediately following the redemption of
shares of our Class A common stock must, among other requirements, be less than 80% of the percentage of our outstanding
voting stock actually and constructively owned by the U.S. Holder immediately before the redemption. Prior to our initial
business combination, the shares of our Class A common stock may not be treated as voting shares for this purpose and,
consequently, this substantially disproportionate test may not be applicable. There will be a complete termination of a U.S.
Holder’s interest if either (i) all of our shares actually and constructively owned by the U.S. Holder are redeemed or
(ii) all of our shares actually owned by the U.S. Holder are redeemed and the U.S. Holder is eligible to waive, and
effectively waives in accordance with specific rules, the attribution of shares owned by certain family members and the U.S.
Holder does not constructively own any other shares of our stock. The redemption of the shares of our Class A common stock
will not be essentially equivalent to a dividend with respect to a U.S. Holder if it results in a “meaningful
reduction” of the U.S. Holder’s proportionate interest in us. Whether the redemption will result in a meaningful
reduction in a U.S. Holder’s proportionate interest in us will depend on the particular facts and circumstances.
However, the IRS has indicated in a published ruling that even a small reduction in the proportionate interest of a small
minority stockholder in a publicly-held corporation who exercises no control over corporate affairs may constitute such a
“meaningful reduction.” A U.S. Holder should consult with its own tax advisors as to the tax consequences of a
redemption.
If
none of the foregoing tests are satisfied, then the redemption will be treated as a corporate distribution and the tax effects
will be as described under “U.S. Holders — Taxation of Distributions” above. After the application of those
rules, any remaining tax basis of the U.S. Holder in the redeemed shares of our Class A common stock will be added to the U.S.
Holder’s adjusted tax basis in its remaining shares, or, if it has none, to the U.S. Holder’s adjusted tax basis in
its rights or possibly in other stock constructively owned by it.
Acquisition
of Class A Common Stock Pursuant to the Rights
In
general, a U.S. Holder should not recognize gain or loss upon the acquisition of Class A common stock pursuant to the rights.
The tax basis of Class A common stock acquired pursuant to the rights should be equal to such U.S. Holder’s tax basis in
such rights. The holding period of such Class A common stock should begin on the day after the receipt of such
Class A common stock pursuant to such rights. The terms of each right provide for an adjustment to the number of shares of our
Class A common stock in the event of stock splits, stock dividends, reorganizations, recapitalizations and the like. The tax
treatment of a right that expires worthless is unclear. U.S. Holders of rights should consult their own tax advisors regarding the
tax treatment of any losses that result if the rights expire worthless.
Non-U.S.
Holders
This
section applies to “Non-U.S. Holders.” As used herein, the term “Non-U.S. Holder” means a beneficial owner of
our units, Class A common stock or rights that is not a U.S. Holder and is not a partnership or other entity classified as a partnership
for U.S. federal income tax purposes, but such term generally does not include an individual who is present in the United States for
183 days or more in the taxable year of disposition. If you are such an individual, you should consult your tax advisor regarding the
U.S. federal income tax consequences of the acquisition, ownership or sale or other disposition of our securities.
Taxation
of Distributions
In
general, any distributions (including constructive distributions) we make to a Non-U.S. Holder of shares of our Class A common stock,
to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles), will
constitute dividends for U.S. federal income tax purposes. Provided such dividends are not effectively connected with the Non-U.S. Holder’s
conduct of a trade or business within the United States (or, if required pursuant to an applicable income tax treaty, are not attributable
to a permanent establishment of fixed base maintained by the Non-U.S. Holder in the United States), we will be required to withhold tax
from the gross amount of the dividend at a rate of 30%, unless such Non-U.S. Holder is eligible for a reduced rate of withholding tax
under an applicable income tax treaty and provides proper certification of its eligibility for such reduced rate (usually on an IRS Form
W-8BEN or W-8BEN-E, as applicable). In the case of any constructive dividend, it is possible that this tax would be withheld from any
amount owed to a Non-U.S. Holder by the applicable withholding agent, including cash distributions on other property or sale proceeds
from rights or other property subsequently paid or credited to such holder. Any distribution not constituting a dividend will be treated
first as reducing (but not below zero) the Non-U.S. Holder’s adjusted tax basis in its shares of our Class A common stock and,
to the extent such distribution exceeds the Non-U.S. Holder’s adjusted tax basis, as gain realized from the sale or other disposition
of the shares of our Class A common stock, which will be treated as described under “Non-U.S. Holders — Gain on Sale, Taxable
Exchange or Other Taxable Disposition of Our Class A Common
Stock
and Rights” below. In addition, if we determine that we are or are likely to be classified as a “United States real
property holding corporation” (see “Non-U.S. Holders — Gain on Sale, Taxable Exchange or Other Taxable Disposition
of Our Class A Common Stock and Rights” below), we will withhold 15% of any distribution that exceeds our current and accumulated
earnings and profits, including a distribution in redemption of shares of our Class A common stock.
Dividends
that we pay to a Non-U.S. Holder that are effectively connected with such Non-U.S. Holder’s conduct of a trade or business
within the United States (and, if a tax treaty applies, are attributable to a permanent establishment or fixed base maintained
by the Non-U.S. Holder in the United States) will not be subject to U.S. withholding tax, provided such Non-U.S. Holder complies
with certain certification and disclosure requirements (usually by providing an IRS Form W-8ECI). Instead, the effectively connected
dividends will be subject to regular U.S. federal income tax as if the Non-U.S. Holder were a U.S. resident, unless an applicable
income tax treaty provides otherwise. A Non-U.S. Holder that is a foreign corporation receiving effectively connected dividends
may also be subject to an additional “branch profits tax” imposed at a rate of 30% (or a lower treaty rate).
Acquisition
of Class A Common Stock Pursuant to the Rights
The
U.S. federal income tax treatment of a Non-U.S. Holder’s acquisition of Class A Common Stock pursuant to the rights generally
will correspond to the U.S. federal income tax treatment of a U.S. Holder, as described under “U.S. Holders—Acquisition
of Common Stock Pursuant to the Rights” above.
Gain
on Sale, Taxable Exchange or Other Taxable Disposition of Our Class A Common Stock and Rights
Subject to the discussion of FATCA and backup withholding below, a Non-U.S.
Holder generally will not be subject to U.S. federal income or withholding tax in respect of gain recognized on a sale, taxable exchange
or other taxable disposition of shares of our Class A common stock (including upon a dissolution and liquidation if we do not complete
an initial business combination within the required time period) or rights (including an expiration or redemption of our rights), in each
case without regard to whether such securities were held as part of a unit, unless:
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|
●
|
the
gain is effectively connected with the conduct of a trade or business by the Non-U.S. Holder within the United States (and,
under certain income tax treaties, is attributable to a permanent establishment or fixed base maintained by the Non-U.S. Holder
in the United States); or
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|
|
|
|
|
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●
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we
are or have been a “United States real property holding corporation” for U.S. federal income tax purposes at any
time during the shorter of the five-year period ending on the date of disposition or the period that the Non-U.S. Holder held
our Class A common stock, and, in the case where shares of our Class A common stock are regularly traded on an established
securities market, the Non-U.S. Holder has owned, directly or constructively, more than 5% of our Class A common stock at
any time within the shorter of the five-year period preceding the disposition or such Non-U.S. Holder’s holding period
for the shares of our Class A common stock. There can be no assurance that our Class A common stock will be treated as regularly
traded on an established securities market for this purpose. These rules may be modified for Non-U.S. Holders of rights. If
we are or have been a “United States real property holding corporation” and you own rights, you are urged to consult
your own tax advisor regarding the application of these rules.
|
Unless
an applicable treaty provides otherwise, gain described in the first bullet point above will generally be subject to tax at the
applicable U.S. federal income tax rates as if the Non-U.S. Holder were a U.S. resident. Any gains described in the first bullet
point above of a Non-U.S. Holder that is a foreign corporation may also be subject to an additional “branch profits tax”
at a 30% rate (or lower treaty rate).
If
the second bullet point above applies to a Non-U.S. Holder, gain recognized by such holder on the sale, exchange or other disposition
of our Class A common stock or rights will generally be subject to tax at applicable U.S. federal income tax rates as if the Non-U.S.
Holder were a U.S. resident. In addition, a buyer of our Class A common stock or rights from such holder may be required to withhold
U.S. federal income tax at a rate of 15% of the amount realized upon such disposition. We cannot determine whether we will be
a United States real property holding corporation in the future until we complete an initial business combination. In general,
we would be classified as a United States real property holding corporation if the fair market value of our “United States
real property interests” equals or exceeds 50% of the sum of the fair market value of our worldwide real property interests
plus our other assets used or held for use in a trade or business, as determined for U.S. federal income tax purposes.
Redemption
of Our Class A Common Stock
The
characterization for U.S. federal income tax purposes of the redemption of a Non-U.S. Holder’s shares of our Class A common
stock pursuant to the redemption provisions described in the section of this prospectus entitled “Description of Securities
— Common Stock” will generally correspond to the U.S. federal income tax characterization of such a redemption of
a U.S. Holder’s shares of our Class A common stock, as described under “U.S. Holders — Redemption of Our Class
A Common Stock” above, and the consequences of the redemption to the Non-U.S. Holder will be as described above under “Non-U.S.
Holders — Taxation of Distributions” and “Non-U.S. Holders — Gain on Sale, Taxable Exchange or Other Taxable
Disposition of Our Class A Common Stock and Rights,” as applicable.
Information
Reporting and Backup Withholding
Dividend
payments (including constructive dividends) with respect to our Class A common stock and proceeds from the sale, exchange or redemption
of shares of our Class A common stock or rights may be subject to information reporting to the IRS and possible United States
backup withholding. Backup withholding will not apply, however, to payments made to a U.S. Holder who furnishes a correct taxpayer
identification number and makes other required certifications, or who is otherwise exempt from backup withholding and establishes
such exempt status. Payments made to a Non-U.S. Holder generally will not be subject to backup withholding if the Non-U.S. Holder
provides certification of its foreign status, under penalties of perjury, on a duly executed applicable IRS Form W-8 or by otherwise
establishing an exemption.
Backup
withholding is not an additional tax. Amounts withheld under the backup withholding rules may be credited against a holder’s
U.S. federal income tax liability, and a holder generally may obtain a refund of any excess amounts withheld by timely filing
the appropriate claim for refund with the IRS and furnishing any required information. All holders should consult their tax advisors
regarding the application of information reporting and backup withholding to them.
FATCA
Withholding Taxes
Sections
1471 through 1474 of the Code and the Treasury Regulations and administrative guidance promulgated thereunder (commonly referred
to as the “Foreign Account Tax Compliance Act” or “FATCA”) generally impose withholding of 30% in certain
circumstances on payments of dividends (including constructive dividends) and, subject to the proposed Treasury Regulations discussed
below, on proceeds from sales or other disposition of our securities paid to “foreign financial institutions” (which
is broadly defined for this purpose and includes investment vehicles) and certain other non-U.S. entities unless various U.S.
information reporting and due diligence requirements (relating to ownership by U.S. persons of interests in or accounts with those
entities) have been satisfied or an exemption applies (typically certified as to by the delivery of a properly completed IRS Form
W-8BEN-E). If FATCA withholding is imposed, a beneficial owner that is not a foreign financial institution will be entitled to
a refund of any amounts withheld by filing a U.S. federal income tax return (which may entail significant administrative burden).
Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing
FATCA may be subject to different rules. Similarly, dividends and, subject to the proposed Treasury Regulations discussed below,
proceeds from sales or other disposition in respect of our units held by an investor that is a non-financial non-U.S. entity that
does not qualify under certain exceptions generally will be subject to withholding at a rate of 30%, unless such entity either
(i) certifies to us or the applicable withholding agent that such entity does not have any “substantial United States owners”
or (ii) provides certain information regarding the entity’s “substantial United States owners,” which will in
turn be provided to the U.S. Department of the Treasury. The U.S. Department of the Treasury has proposed regulations which eliminate
the federal withholding tax of 30% applicable to the gross proceeds of a sale or other disposition of our securities. Withholding
agents may rely on the proposed Treasury Regulations until final regulations are issued. Prospective investors should consult
their tax advisors regarding the possible effects of FATCA on their investment in our securities.
THE
U.S. FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING
UPON A HOLDER’S PARTICULAR SITUATION. HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR CLASS A COMMON STOCK AND RIGHTS, INCLUDING THE TAX CONSEQUENCES
UNDER STATE, LOCAL, ESTATE, NON-U.S. AND OTHER TAX LAWS AND TAX TREATIES AND THE POSSIBLE EFFECTS OF CHANGES IN U.S. OR OTHER
TAX LAWS.
UNDERWRITING
Maxim
is acting as sole book-running manager of this offering and as the sole representative of the underwriters named below. Subject
to the terms and conditions of the underwriting agreement dated the date of this prospectus, the underwriters named below, through
their representative Maxim, have severally agreed to purchase on a firm commitment basis, and we have agreed to sell to the underwriters,
the following respective number of units set forth opposite each underwriter’s name at a public offering price less the
underwriting discounts and commissions set forth on the cover page of this prospectus.
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Underwriters
|
|
Number
of
Units
|
|
|
Maxim Group LLC
|
|
|
|
|
|
|
|
|
|
|
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Total
|
|
|
10,000,000
|
|
The
underwriting agreement provides that the obligations of the underwriters to purchase the units included in this offering are subject
to all applicable laws and regulations and certain conditions precedent such as the receipt by the underwriters of officers’
certificates and legal opinions and approval of certain legal matters by their counsel. The underwriters are obligated to purchase
all of the units (other than those covered by the over-allotment option described below) if they purchase any of the units. If
an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters
may be increased or the underwriting agreement may be terminated. We have agreed to indemnify the underwriters and certain of
their controlling persons against certain liabilities, including liabilities under the Securities Act, and to contribute to payments
that the underwriters may be required to make in respect of those liabilities.
Units
sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of
this prospectus. Upon the execution of the underwriting agreement, the underwriters will be obligated to purchase the units at
the prices and upon the terms stated therein, and, as a result, will thereafter bear any risk associated with changing the offering
price to the public or other selling terms after completion of the initial public offering. The underwriters reserve the right
to withdraw, cancel or modify offers to the public and to reject orders in whole or in part. Maxim has advised us that the underwriters
do not intend to make sales to discretionary accounts.
We
have granted to the underwriters an option, exercisable for 45 days from the date of this prospectus, to purchase up to 1,500,000
additional units at the public offering price less the underwriting discount. The underwriters may exercise this option solely
for the purpose of covering over-allotments, if any, in connection with this offering. To the extent the option is exercised,
each underwriter must purchase a number of additional units approximately proportionate to that underwriters’ initial purchase
commitment. Any units issued or sold under the option will be issued and sold on the same terms and conditions as the other units
that are the subject of this offering.
We,
our sponsor and our officers and directors have agreed that, for a period of 180 days from the date of this prospectus, we and
they will not, without the prior written consent of Maxim, offer, sell, contract to sell, grant any option to sell (including
any short sale), pledge, transfer, establish an open “put equivalent position” within the meaning of Rule 16a-l(h)
under the Exchange Act, as amended, or otherwise dispose of, directly or indirectly, any of our units, rights, shares of common
stock or any other securities convertible into, or exercisable, or exchangeable for, shares of our common stock currently or hereafter
owned either of record or beneficially, or publicly announce an intention to do any of the foregoing. Maxim in its sole discretion
may release any of the securities subject to these lock-up agreements at any time without notice. Our sponsor, officers and directors
are also subject to separate transfer restrictions on their founder shares and private placement units pursuant to the letter
agreement as described herein.
Our
initial stockholders have agreed not to transfer, assign or sell any of their founder shares until the earlier to occur of (i)
one year after the date of the consummation of our initial business combination or (ii) the date on which we consummate a liquidation,
merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their
shares of Class A common stock for cash, securities or other property (except as described herein under the section of this prospectus
entitled “Principal Stockholders — Restrictions on Transfers of Founder Shares and Private Placement Units”).
Any permitted transferees will be subject to the same restrictions and other agreements of our initial stockholders with respect
to any founder shares. Notwithstanding the foregoing, if the closing price of our shares of Class A common stock equals or exceeds
$12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading
days within any 30-trading day period commencing 150 days after our initial business combination, the founder shares will no longer
be subject to such transfer restrictions. We refer to such transfer restrictions throughout this prospectus as the lock-up. The
private placement units (including the including the Class A common stock and rights underlying such units) will not be transferable,
assignable or salable until the later of 30 days after the completion of our initial business combination and one year after
the completion of this offering (except with respect to permitted transferees as described herein under the section of this
prospectus entitled “Principal Stockholders — Restrictions on Transfers of Founder Shares and Private Placement Units”).
Prior
to this offering, there has been no public market for our securities. Consequently, the initial public offering price for the
units was determined by negotiations between us and the underwriters. Among the factors considered in determining the initial
public offering price were the history and prospects of companies whose principal business is the acquisition of other companies,
prior offerings of those companies, our management, our capital structure, and currently prevailing general conditions in the
equity securities markets, including current market valuations of publicly traded companies considered comparable to our company.
We cannot assure you, however, that the price at which the units, Class A common stock or rights will sell in the public market
after this offering will not be lower than the initial public offering price or that an active trading market in our units, Class
A common stock or rights will develop and continue after this offering.
We
have applied to list our units on Nasdaq under the symbol “SAGAU.” We cannot guarantee that our securities
will be approved for listing on Nasdaq. We expect that our units will be listed on Nasdaq on or promptly after the date of this
prospectus. We expect that our Class A common stock and rights will be listed under the symbols “SAGA” and
“SAGAR,” respectively, once the Class A common stock and rights begin separate trading.
The
following table shows the underwriting discounts and commissions that we are to pay to the underwriters in connection with this
offering. These amounts are shown assuming both no exercise and full exercise of the underwriters’ over-allotment option.
The upfront portion of the underwriting discounts and commissions will be $0.20 per unit.
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|
|
Payable by
Sagaliam Acquisition Corp.
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|
|
|
|
No Exercise
|
|
|
Full Exercise
|
|
|
Per Unit(1)
|
|
$
|
0.55
|
|
|
$
|
0.55
|
|
|
Total(1)
|
|
$
|
5,500,000
|
|
|
$
|
6,325,000
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|
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(1)
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Includes
$0.35 per unit, or $3,500,000 (or $4,025,000 if the over-allotment option is exercised in full) in the aggregate payable to the underwriters
for deferred underwriting commissions to be placed in a trust account located in the United States as described herein. The deferred
commissions will be released to the underwriters only on completion of an initial business combination, in an amount equal to $0.35 multiplied
by the number of shares of Class A common stock sold as part of the units in this offering, as described in this prospectus.
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If
we do not complete our initial business combination and subsequently liquidate, the trustee and the underwriters have agreed that
(i) they will forfeit any rights or claims to its deferred underwriting discounts and commissions, including any accrued interest
thereon, then in the trust account upon liquidation, and (ii) that the deferred underwriters’ discounts and commissions
will be distributed on a pro rata basis, including interest earned on the funds held in the trust account and not previously released
to us to pay our franchise and income taxes to the public stockholders.
For
financial advisory services provided by Palladium in connection with this offering, we have agreed to pay Palladium a fee in an
amount equal to (1) 20% of the non-deferred underwriting commission payable to the underwriter, which will be paid to Palladium
upon the closing of this offering, and (2) 20% of the deferred underwriting commission payable to the underwriter, which will
be paid to Palladium upon the closing of our initial business combination. The underwriter has agreed to reimburse us for the
fee to Palladium as it becomes payable out of the underwriting commission.
In
addition to the underwriting discount, we paid Maxim $25,000 upon the execution of the engagement letter, as an advance against
out-of-pocket accountable expenses actually anticipated to be incurred by the underwriters. We have agreed to pay or reimburse
the underwriters for the costs of any due diligence and roadshow meetings, SEC filing fees, FINRA filing fees, transfer and
warrant agent and registrar fees and any expenses and fees incurred by Maxim’s counsel, subject to a maximum amount of $60,000
(inclusive of the advance) in the event of a closing of this offering and $25,000 (inclusive of the advance) in the event there
is no closing.
No
discounts or commissions will be paid on the sale of the private placement units.
Representative’s
Shares
We
have agreed to issue to Maxim Partners LLC and/or its designees, 50,000 shares of our Class A common stock (or 57,500 shares
if the underwriters’ over-allotment option is exercised in full) upon the consummation of this offering. The holders of
these shares have agreed not to transfer, assign or sell any such shares without our prior consent until the completion of our
initial business combination. In addition, they have agreed (i) to waive their redemption rights (or right to participate in any
tender offer) with respect to such shares in connection with the completion of our initial business combination and (ii) to waive
their rights to liquidating distributions from the trust account with respect to such shares if we fail to complete our initial
business combination within 18 months from the closing of this offering. The shares will be granted customary registration rights
in compliance with FINRA Rule 5110(g)(8).
The
shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following
the commencement of sales of this offering pursuant to FINRA Rule 5110(e)(1). Pursuant to this FINRA lock-up, these securities
cannot be sold, transferred, assigned, pledged or hypothecated or the subject of any hedging, short sale, derivative, put or call
transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately
following the commencement of sales of this offering except as permitted under FINRA Rule 5110(e)(2), including to any underwriter
and selected dealer participating in this offering and their officers or partners, registered persons or affiliates.
Financial Advisor
Palladium,
a registered broker-dealer, is acting as our independent financial adviser as defined under FINRA Rule 5110(j)(9) in connection
with this offering, for which it will receive customary fees. Palladium
is engaged to represent our interests only, is independent of the underwriters and is not a party to any securities purchase agreement
with us, the underwriters or investors in relation to this offering.
Palladium is not acting as an underwriter and will not sell or offer to sell any
securities in this offering, nor will it identify or solicit potential investors in this offering, and is not participating (within
the meaning of FINRA Rule 5110(j)(16)) in this offering.
Advisory Compensation Shares
We
have agreed to issue to Palladium and/or its designees 50,000 shares of our Class A common stock (or 57,500 shares if the underwriters’
over-allotment option is exercised in full) upon the consummation of this offering, in consideration of advisory services rendered
to us. The holders of these shares have agreed not to transfer, assign or sell any such shares without our prior consent until
the completion of our initial business combination. In addition, they have agreed (i) to waive their redemption rights (or right
to participate in any tender offer) with respect to such shares in connection with the completion of our initial business combination
and (ii) to waive their rights to liquidating distributions from the trust account with respect to such shares if we fail to complete
our initial business combination within 18 months from the closing of this offering. Palladium is an independent
financial adviser (within the meaning of FINRA Rule 5110(j)(9)) providing advisory services to us and is not participating
(within the meaning of FINRA Rule 5110(j)(16)) in this offering.
Regulatory
Restrictions on Purchase of Securities
In
connection with this offering, the underwriters may purchase and sell units in the open market. The underwriters have advised
us that, in accordance with Regulation M under the Securities Exchange Act of 1934, as amended, they may engage in short sale
transactions, purchases to cover short positions, which may include purchases pursuant to the over-allotment option, stabilizing
transactions, syndicate covering transactions or the imposition of penalty bids in connection with this offering. These activities
may have the effect of stabilizing or maintaining the market price of our units at a level above that which might otherwise prevail
in the open market.
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●
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Short
sales involve secondary market sales by the underwriters of a greater number of units than it is required to purchase in the
offering.
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●
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“Covered”
short sales are sales of units in an amount up to the number of units represented by the underwriters’ over-allotment
option.
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●
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“Naked”
short sales are sales of units in an amount in excess of the number of units represented by the underwriters’ over-allotment
option.
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|
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●
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Covering
transactions involve purchases of units either pursuant to the over-allotment option or in the open market after the distribution
has been completed in order to cover short positions.
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|
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●
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To
close a naked short position, the underwriters must purchase units in the open market after the distribution has been completed.
A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure
on the price of the units in the open market after pricing that could adversely affect investors who purchase in this offering.
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●
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To
close a covered short position, the underwriters must purchase units in the open market after the distribution has been completed
or must exercise the over-allotment option. In determining the source of units to close the covered short position, the underwriters
will consider, among other things, the price of units available for purchase in the open market as compared to the price at
which they may purchase units through the over-allotment option.
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|
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●
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Stabilizing
transactions involve bids to purchase units so long as the stabilizing bids do not exceed a specified maximum.
|
Purchases
to cover short positions and stabilizing purchases, as well as other purchases by the underwriters for their own account, may
have the effect of preventing or retarding a decline in the market price of the units. They may also cause the price of the units
to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The underwriters
may conduct these transactions in the over-the-counter market or otherwise. Neither we, nor any of the underwriters make any representation
or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our
Class A common stock. The underwriters are not obligated to engage in these activities and, if commenced, any of the activities
may be discontinued at any time.
We
estimate that our portion of the total expenses of this offering payable by us will be approximately $900,000, excluding underwriting
discounts and commissions.
We
have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute
to payments the underwriters may be required to make because of any of those liabilities.
We
are not under any contractual obligation to engage any of the underwriters to provide any services for us after this offering,
and have no present intent to do so. However, any of the underwriters may introduce us to potential target businesses or assist
us in raising additional capital in the future. If any of the underwriters provide services to us after this offering, we may
pay such underwriter fair and reasonable fees that would be determined at that time in an arm’s length negotiation; provided
that no agreement will be entered into with any of the underwriters and no fees for such services will be paid to any of the underwriters
prior to the date that is 90 days from the date of this prospectus, unless FINRA determines that such payment would not be deemed
underwriters’ compensation in connection with this offering and we may pay the underwriters of this offering or any entity
with which they are affiliated a finder’s fee or other compensation for services rendered to us in connection with the completion
of an initial business combination.
Electronic
Distribution
A
prospectus in electronic format may be made available by e-mail or on the web sites or through online services maintained by one
or more of the underwriters or their affiliates. In those cases, prospective investors may view offering terms online and may
be allowed to place orders online. The underwriters may agree with us to allocate a specific number of common shares for sale
to online brokerage account holders. Any such allocation for online distributions will be made by the underwriters on the same
basis as other allocations. Other than the prospectus in electronic format, the information on the underwriters’ web sites
and any information contained in any other web site maintained by any of the underwriters is not part of this prospectus, has
not been approved and/or endorsed by us or the underwriters and should not be relied upon by investors.
Other
Activities and Relationships
The
underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may
include securities trading, commercial and investment banking, financial advisory, investment management, investment research,
principal investment, hedging. financing and brokerage activities. Certain of the underwriters and their respective affiliates
have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services
for us, for which they received or will receive customary fees and expenses.
In
addition, in the ordinary course of their various business activities, the underwriters and their respective affiliates may make
or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial
instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long
and short positions in such securities and instruments. Such investments and securities activities may involve securities and/or
instruments of ours or our affiliates. The underwriters and their respective affiliates may also make investment recommendations
and/or publish or express independent research views in respect of such securities or financial instruments and may at any time
hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Selling
Restrictions
Other
than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities
offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus
may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in
connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances
that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this
prospectus comes are advised to inform themselves about and to observe any restrictions relating to this offering and the distribution
of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered
by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.
Notice
to Prospective Investors in Canada
(A)
Resale Restrictions
The
distribution of units in Canada is being made only in the province of Ontario on a private placement basis exempt from the requirement
that we prepare and file a prospectus with the securities regulatory authorities in each province where trades of these securities
are made. Any resale of the units in Canada must be made under applicable securities laws which may vary depending on the relevant
jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary exemption
granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale
of the securities.
(B)
Representations of Canadian Purchasers
By
purchasing units in Canada and accepting delivery of a purchase confirmation, a purchaser is representing to us and the dealer
from whom the purchase confirmation is received that:
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●
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the purchaser is entitled under applicable provincial securities laws to purchase the units without the benefit of a prospectus qualified under those securities laws as it is an “accredited investor” as defined under National Instrument 45-106 — Prospectus Exemptions,
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●
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the
purchaser is a “permitted client” as defined in National Instrument 31-103 — Registration Requirements,
Exemptions and Ongoing Registrant Obligations,
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●
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where
required by law, the purchaser is purchasing as principal and not as agent, and
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●
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the purchaser has reviewed the text above under Resale Restrictions.
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(C)
Conflicts of Interest
Canadian
purchasers are hereby notified that the underwriters are relying on the exemption set out in section 3A.3 or 3A.4, if applicable,
of National Instrument 33-105 — Underwriting Conflicts from having to provide certain conflict of interest disclosure in
this document.
(D)
Statutory Rights of Action
Securities
legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if the
offering memorandum (including any amendment thereto) such as this document contains a misrepresentation, provided that the remedies
for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the
purchaser’s province or territory. The purchaser of these securities in Canada should refer to any applicable provisions
of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a
legal advisor.
(E)
Enforcement of Legal Rights
All
of our directors and officers as well as the experts named herein may be located outside of Canada and, as a result, it may not
be possible for Canadian purchasers to effect service of process within Canada upon us or those persons. All or a substantial
portion of our assets and the assets of those persons may be located outside of Canada and, as a result, it may not be possible
to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or
those persons outside of Canada.
(F)
Taxation and Eligibility for Investment
Canadian
purchasers of units should consult their own legal and tax advisors with respect to the tax consequences of an investment in the
units in their particular circumstances and about the eligibility of the units for investment by the purchaser under relevant
Canadian legislation.
Notice
to Prospective Investors in the European Economic Area
In
relation to each member state of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant
Member State”), an offer to the public of any units which are the subject of the offering contemplated by this prospectus
may not be made in that Relevant Member State except that an offer to the public in that Relevant Member State of any units may
be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant
Member State:
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(a)
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to
any legal entity which is a “qualified investor” as defined in the Prospectus Directive;
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(b)
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to
fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural
or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive,
subject to obtaining the prior consent of the underwriters or the underwriters nominated by us for any such offer; or
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(c)
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in
any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of units shall require us
or any of the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant
to Article 16 of the Prospectus Directive.
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For
the purposes of this provision, the expression an “offer units to the public” in relation to the units in any Relevant
Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the
units to be offered so as to enable an investor to decide to purchase or subscribe to the units, as the same may be varied in
that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression
“Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive,
to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member
State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.
Notice
to Prospective Investors in Hong Kong
No
securities have been offered or sold, and no securities may be offered or sold, in Hong Kong, by means of any document, other than
to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent; or to “professional
investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong (“SFO”) and any rules made
under that Ordinance; or in other circumstances which do not result in the document being a “prospectus” as defined in
the Companies Ordinance (Cap. 32) of Hong Kong (“CO”) or which do not constitute an offer or invitation to the public
for the purpose of the CO or the SFO. No document, invitation or advertisement relating to the securities has been issued or may be
issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is
directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted under the
securities laws of Hong Kong) other than with respect to securities which are or are intended to be disposed of only to persons
outside Hong Kong or only to “professional investors” as defined in the SFO and any rules made under that
Ordinance.
This
prospectus has not been registered with the Registrar of Companies in Hong Kong. Accordingly, this prospectus may not be issued,
circulated or distributed in Hong Kong, and the securities may not be offered for subscription to members of the public in Hong
Kong. Each person acquiring the securities will be required, and is deemed by the acquisition of the securities, to confirm that
he is aware of the restriction on offers of the securities described in this prospectus and the relevant offering documents and
that he is not acquiring, and has not been offered any securities in circumstances that contravene any such restrictions.
Notice
to Prospective Investors in Singapore
This
prospectus has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore. Accordingly,
this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase,
of the notes may not be circulated or distributed, nor may the notes be offered or sold, or be made the subject of an invitation
for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor
under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person
pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section
275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the
SFA.
Where
the units are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
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(a)
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a
corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold
investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor;
or
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(b)
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a
trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the
trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation
or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months
after that corporation or that trust has acquired the notes pursuant to an offer made under Section 275 of the SFA except:
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(i)
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to
an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer
referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
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(ii)
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where
no consideration is or will be given for the transfer;
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(iii)
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where
the transfer is by operation of law;
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(iv)
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as
specified in Section 276(7) of the SFA; or
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(v)
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as
specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005
of Singapore.
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Notice
to Prospective Investors in Switzerland
The
units may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any
other stock exchange or regulated trading facility in Switzerland. This prospectus has been prepared without regard to the
disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure
standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or
regulated trading facility in Switzerland. Neither this prospectus nor any other offering or marketing material relating to the
units or the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither
this prospectus nor any other offering or marketing material relating to the offering, the Company or the units have been or will
be filed with or approved by any Swiss regulatory authority. In particular, this prospectus will not be filed with, and the offer
of securities will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, and the offer of securities has
not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (“CISA”). The investor
protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of
units.
Notice
to Prospective Investors in Italy
This
prospectus has not been submitted to the Commissione Nazionale per le Società e la Borsa, the Italian Securities Exchange
Commission (“CONSOB”), for clearance and will not be subject to formal review or clearance by CONSOB.
Accordingly,
the Units may not be offered, and copies of this prospectus or any other document relating to the shares may not be distributed
in Italy except:
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(a)
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to
“qualified investors” (investitori qualificati), as defined pursuant to Article 34-ter, first paragraph, letter
b), of CONSOB regulation No. 11971 of May 14, 1999, as amended, concerning issuers (“Regulation No. 11971”), but
excluding (i) small and medium enterprises and natural persons indicated in Regulation No. 11971 that have not been included
in the register of qualified investors, (ii) management companies and financial intermediaries authorized to manage individual
portfolios on behalf of third parties and (iii) fiduciary companies managing portfolio investments regulated by Article 60,
paragraph 4 of Legislative Decree No. 415 of July 23, 1996; or
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(b)
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in
other circumstances that are exempt from the rules on public offers pursuant to Article 100 of the Legislative Decree No. 58 of February
24, 1998, as amended (the “Italian Financial Act”), and its implementing CONSOB regulations, including Regulation No. 11971.
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Any
such offer, sale or delivery of the Units offered hereby or distribution of copies of this Prospectus, or any other document relating
to the offering in the Republic of Italy must be in compliance with the selling restrictions under
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(i)
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made
by soggetti abilitati (including investment firms (imprese di investimento), banks or financial intermediaries, as defined
by Article 1, first paragraph, letter r), of the Italian Financial Act), to the extent duly authorized to engage in the offering
and/or underwriting and/or purchase of financial instruments in the Republic of Italy in accordance with the relevant provisions
of the Italian Financial Act, CONSOB Regulation 16190 of October 29, 2007, as amended, Legislative Decree No. 385 of September
1, 1993, as amended (the “Italian Banking Act”) and any other applicable laws and regulations; and
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(ii)
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in
compliance with any other applicable requirements or limitations which may be imposed by CONSOB, the Bank of Italy or any
other Italian regulatory authority.
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Any
investor purchasing the Units offered hereby is solely responsible for ensuring that any offer or resale of the shares it purchased
occurs in compliance with applicable laws and regulations.
In
accordance with Article 100-bis of the Italian Financial Act, the subsequent resale on the secondary market in the Republic of
Italy of the Units offered hereby (which were part of an offer made pursuant to an exemption from the obligation to publish a
prospectus) constitutes a distinct and autonomous offer that must be made in compliance with the public offer and prospectus requirement
rules provided under the Italian Financial Act and the Regulation No. 11971 unless an exemption applies. Failure to comply with
such rules may result in the subsequent resale of such shares being declared null and void and the intermediary transferring the
shares may be liable for any damage suffered by the investors.
Notice
to Prospective Investors in the United Kingdom
This
prospectus is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within
the meaning of Article 2(1)(e) of the Prospectus Directive that are also (i) investment professionals falling within Article 19(5)
of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) and/or (ii)
high net worth entities falling within Article 49(2)(a) to (d) of the Order and other persons to whom it may lawfully be communicated
(each such person being referred to as a “relevant person”).
This
prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed
by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant person should
not act or rely on this document or any of its contents.
LEGAL
MATTERS
Ellenoff
Grossman & Schole LLP, New York, New York, is acting as counsel in connection with the registration of our securities under
the Securities Act, and as such, will pass upon the validity of the securities offered in this prospectus. Harter Secret &
Emery LLP, Rochester, New York, advised the underwriters in connection with the offering of the securities.
EXPERTS
The
financial statements of Sagaliam Acquisition Corp. for the period from March 31, 2021 (inception) through April 6, 2021 included
in this Prospectus have been audited by Marcum LLP, independent registered public accounting firm, as set forth in their report,
thereon (which contains an explanatory paragraph relating to substantial doubt about the ability of Sagaliam Acquisition Corp.
to continue as a going concern as described in Note 1 to the financial statements), appearing elsewhere in this prospectus, and
are included in reliance on such report given upon such firm as experts in auditing and accounting.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We
have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the securities we are offering
by this prospectus. This prospectus does not contain all of the information included in the registration statement. For further
information about us and our securities, you should refer to the registration statement and the exhibits and schedules filed with
the registration statement. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents,
the references are materially complete but may not include a description of all aspects of such contracts, agreements or other
documents, and you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement
or other document.
Upon
completion of this offering, we will be subject to the information requirements of the Exchange Act and will file annual, quarterly
and current event reports, proxy statements and other information with the SEC. You can read our SEC filings, including the registration
statement, over the Internet at the SEC’s website at www.sec.gov.
SAGALIAM
ACQUISITION CORP.
INDEX
TO FINANCIAL STATEMENTS
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Stockholders and Board of Directors of
Sagaliam Acquisition Corp.
Opinion
on the Financial Statements
We
have audited the accompanying balance sheet of Sagaliam Acquisition Corp. (the “Company”) as of April 6, 2021, the related
statements of operations, changes in stockholder’s equity and cash flows for the period from March 31, 2021 (inception)
through April 6, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the
financial statements present fairly, in all material respects, the financial position of the Company as of April 6, 2021, and the results
of its operations and its cash flows for the period from March 31, 2021 (inception) through April 6, 2021, in conformity with accounting
principles generally accepted in the United States of America.
Explanatory
Paragraph — Going Concern
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described
in Note 1 to the financial statements, the Company’s ability to execute its business plan is dependent upon its completion
of the proposed public offering described in Note 3 to the financial statements. The Company has a working capital deficiency
as of April 6, 2021, and lacks financial resources it needs to sustain its operations for a reasonable period of time, which is
considered to be one year from the issuance date of the financial statements. These conditions raise substantial doubt about the
Company’s ability to continue as a going concern. Management’s plans with regard to these matters are also described
in Notes 1 and 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We
conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our
audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audit provides a reasonable basis for our opinion.
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/s/
Marcum LLP
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Marcum
LLP
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We
have served as the Company’s auditor since 2021
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Tampa,
FL
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May
25, 2021
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|
SAGALIAM
ACQUISITION CORP.
BALANCE
SHEET
APRIL
6, 2021
|
Assets:
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash
|
|
$
|
100
|
|
|
Total
current assets
|
|
|
100
|
|
|
Deferred
offering costs
|
|
|
348,616
|
|
|
Total
assets
|
|
$
|
348,716
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
|
777
|
|
|
Accrued offering
costs and expenses
|
|
|
275,114
|
|
|
Promissory
note – related party
|
|
|
48,602
|
|
|
Total
current liabilities
|
|
|
324,493
|
|
|
|
|
|
|
|
|
Stockholder’s
Equity:
|
|
|
|
|
|
Preferred stock, $0.0001 par value;
1,000,000 shares authorized; none issued and outstanding
|
|
|
—
|
|
|
Class A common stock, $0.0001 par value;
100,000,000 shares authorized; none issued and outstanding
|
|
|
—
|
|
|
Class B common stock,
$0.0001 par value; 10,000,000 shares authorized, 2,875,000 shares issued and outstanding(1)
|
|
|
288
|
|
|
Additional paid-in capital
|
|
|
24,712
|
|
|
Accumulated deficit
|
|
|
(777
|
)
|
|
Total
stockholder’s equity
|
|
|
24,223
|
|
|
Total
Liabilities and Stockholder’s Equity
|
|
$
|
348,716
|
|
|
(1)
|
On
April 5, 2021, the Company issued 2,875,000 shares of common stock to the Sponsor for $25,000 in cash in connection
with formation. Includes up to 375,000 shares subject to forfeiture by the Sponsor if the over-allotment option is
not exercised in full by the underwriters (see Note 7).
|
The
accompanying notes are an integral part of the financial statements.
SAGALIAM
ACQUISITION CORP.
STATEMENT
OF OPERATIONS
FOR
THE PERIOD FROM MARCH 31, 2021 THROUGH APRIL 6, 2021
|
Formation costs
|
|
$
|
777
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(777
|
)
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding(1)
|
|
|
2,500,000
|
|
|
Basic and diluted net loss per share
|
|
$
|
(0.00
|
)
|
|
(1)
|
On
April 5, 2021, the Company issued 2,875,000 shares of common stock to the Sponsor for $25,000 in cash in connection
with formation. Excludes up to 375,000 shares subject to forfeiture by the Sponsor if the over-allotment option is
not exercised in full by the underwriters (see Note 7).
|
The
accompanying notes are an integral part of the financial statements.
SAGALIAM
ACQUISITION CORP.
STATEMENT
OF CHANGES IN STOCKHOLDER’s EQUITY
FOR
THE PERIOD FROM MARCH 31, 2021 THROUGH APRIL 6, 2021
|
|
|
Class B
Common Stock
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Stockholder’s
|
|
|
|
|
Shares(1)
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
|
Balance as of March 31, 2021 (inception)
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Class B common stocks issued to Sponsor
|
|
|
2,875,000
|
|
|
|
288
|
|
|
|
24,712
|
|
|
|
—
|
|
|
|
25,000
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(777
|
)
|
|
|
(777
|
)
|
|
Balance as of April 6, 2021
|
|
|
2,875,000
|
|
|
$
|
288
|
|
|
$
|
24,712
|
|
|
$
|
(777
|
)
|
|
$
|
24,223
|
|
|
(1)
|
On
April 5, 2021, the Company issued 2,875,000 shares of common stock to the Sponsor for $25,000 in cash in connection
with formation. Includes up to 375,000 shares subject to forfeiture by the Sponsor if the over-allotment option is
not exercised in full or in part by the underwriters (see Note 7).
|
The
accompanying notes are an integral part of the financial statements.
SAGALIAM
ACQUISITION CORP.
STATEMENT
OF CASH FLOWS
FOR
THE PERIOD FROM MARCH 31, 2021 THROUGH APRIL 6, 2021
|
Cash flows from operating activities:
|
|
|
|
|
Net loss
|
|
$
|
(777
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
Formation costs paid by Sponsor
|
|
|
—
|
|
|
Changes in current assets and liabilities:
|
|
|
|
|
|
Accounts payable
|
|
|
777
|
|
|
Net cash used in operating activities
|
|
|
0
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Proceeds from issuance of Class B common stock to Sponsor
|
|
|
25,000
|
|
|
Proceeds from issuance of promissory note to related party
|
|
|
48,602
|
|
|
Payment of deferred offering costs
|
|
|
(73,502
|
)
|
|
Net cash provided by financing activities
|
|
|
100
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
100
|
|
|
Cash, beginning of the period
|
|
|
—
|
|
|
Cash, end of period
|
|
$
|
100
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
Non-cash financing transactions:
|
|
|
|
|
|
Accrued deferred offering costs
|
|
$
|
275,114
|
|
|
Deferred offering costs paid by promissory note to related party
|
|
$
|
48,502
|
|
The
accompanying notes are an integral part of the financial statements.
SAGALIAM
ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
Note
1 — Organization and Business Operations
Sagaliam
Acquisition Corp. (the “Company”) was incorporated in Delaware on March 31, 2021. The Company is a newly organized
blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more businesses or entities (“Business Combination”). The Company has
not selected any specific business combination target and the Company has not, nor has anyone on its behalf, initiated any substantive
discussions, directly or indirectly, with any business combination target.
The
Company has selected December 31 as its fiscal year end.
As
of April 6, 2021, the Company had not yet commenced any operations. All activity through April 6, 2021 relates to the Company’s
formation and Proposed Public Offering (as defined below). The Company will not generate any operating revenues until after the
completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest
income from the proceeds derived from the Proposed Public Offering.
The
Company’s ability to commence operations is contingent upon obtaining adequate financial resources through a proposed public
offering of 10,000,000 units at $10.00 per unit (the “Units” and, with respect to the shares of Class A Common Stock
included in the Units being offered, the “Public Shares”) (or 11,500,000 Units if the underwriters’ over-allotment
option is exercised in full), which is discussed in Note 3 (the “Proposed Public Offering”), and the sale of 390,000
Units (or 420,000 Units if the underwriters’ over-allotment option is exercised on full) (the “Private Placement Units”)
at a price of $10.00 per Unit in a private placement to the Company’s sponsor, Sagaliam Sponsor LLC (the “Sponsor”)
that will close simultaneously with the Proposed Public Offering.
The
Company’s Business Combination must be with one or more target businesses that together have a fair market value equal to
at least 80% of the balance in the Trust Account (as defined below) (net of taxes payable) at the time of the signing an agreement
to enter into a Business Combination. However, the Company will only complete a Business Combination if the post-Business Combination
entity owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest
in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There
is no assurance that the Company will be able to successfully effect a Business Combination.
Upon
the closing of the Proposed Public Offering, management has agreed that an aggregate of $10.00 per Unit sold in the Proposed Public
Offering will be held in a trust account (“Trust Account”) and invested in U.S. government securities, within the
meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in any open-ended
investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company
Act, as determined by the Company. Except with respect to interest earned on the funds held in the trust account that may be released
to the Company to pay its franchise and income tax obligations (less up to $150,000 of interest to pay dissolution expenses),
the proceeds from this offering and the sale of the Private Placement Units will not be released from the trust account until
the earliest of (a) the completion of the Company’s initial business combination, (b) the redemption of any public shares
properly submitted in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation,
and (c) the redemption of the Company’s public shares if the Company is unable to complete the initial business combination
within 18 months from the closing of this offering, subject to applicable law. The proceeds deposited in the trust account could
become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s
public stockholders.
SAGALIAM
ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
Note
1 — Organization and Business Operations (cont.)
The
Company will provide its public stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion
of the initial business combination either (i) in connection with a stockholder meeting called to approve the initial business
combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a proposed
initial business combination or conduct a tender offer will be made by the Company, solely in its discretion. The stockholders
will be entitled to redeem their shares for a pro rata portion of the amount then on deposit in the Trust Account (initially approximately
$10.00 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the
Company to pay its tax obligations).
The
shares of common stock subject to redemption will be recorded at a redemption value and classified as temporary equity upon the
completion of the Proposed Public Offering, in accordance with Accounting Standards Codification (“ASC”) Topic 480
“Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a Business Combination if the
Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks
stockholder approval, a majority of the issued and outstanding shares voted are voted in favor of the Business Combination.
The
Company will have 18 months from the closing of the Proposed Public Offering to consummate a Business Combination (the “Combination
Period”). However, if the Company is unable to complete a Business Combination within the Combination Period, the Company
will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than
ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then
on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to
the Company to pay its franchise and income taxes (less up to $150,000 of interest to pay dissolution expenses), divided by the
number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders
(including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and its board
of directors, dissolve and liquidate, subject in each case to its obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to
the Company’s Rights, which will expire worthless if the Company fail to complete an initial business combination within
the Combination Period.
The
Sponsor, officers and directors have agreed to (i) waive their redemption rights with respect to their founder shares, private
placement shares and public shares in connection with the completion of the initial business combination, (ii) waive their
redemption rights with respect to their founder shares, private placement shares and public shares in connection with a
stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation, and (iii) waive
their rights to liquidating distributions from the trust account with respect to their founder shares and private placement
shares if the Company fails to complete the initial business combination within the Combination Period.
The
Company’s Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for
services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a
written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in
the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust
account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of
the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective
target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver
is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of this offering against
certain liabilities, including liabilities under the Securities Act. However, the Company has not asked its Sponsor to reserve
for such indemnification obligations, nor has the Company independently verified whether its Sponsor has sufficient funds to satisfy
its indemnity obligations and believe that the Company’s Sponsor’s only assets are securities of the Company. Therefore,
the Company cannot assure that its Sponsor would be able to satisfy those obligations.
SAGALIAM
ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
Note
1 — Organization and Business Operations (cont.)
Going
Concern Consideration
As
of April 6, 2021, the Company had $100 in cash and a working capital deficit of $324,393 (excluding deferred offering costs).
The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern one year from the issuance
date of the financial statements. Management plans to address this uncertainty through a Proposed Public Offering as discussed
in Note 3 and issuance of an unsecured promissory note to with principal up to $300,000 to the Sponsor as discussed in Note 5.
There is no assurance that the Company’s plans to raise capital or to consummate a Business Combination will be successful
within the Combination Period. The financial statements do not include any adjustments that might result from the outcome of this
uncertainty.
Risks and Uncertainties
Management is currently
evaluating the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the
virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target
company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements
do not include any adjustments that might result from the outcome of this uncertainty.
Note
2 — Significant Accounting Policies
Basis
of Presentation
The
accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States
of America (“US GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the
“SEC”).
Emerging
Growth Company Status
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the
“Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and
it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies
that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its
periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive
compensation and stockholder approval of any golden parachute payments not previously approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that 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. The
Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and
it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the
new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s
financial statements with another public company which is neither an emerging growth company nor an emerging growth company which
has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Use
of Estimates
The
preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
SAGALIAM
ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
Note
2 — Significant Accounting Policies (cont.)
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company did not have any cash equivalents as of April 6, 2021.
Concentration
of Credit Risk
Financial instruments
that potentially subject the Company to concentration of credit risk consist of a cash account at a financial institution, the
balance in which may at times exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. The Company has not
experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Deferred
Offering Costs
Deferred
offering costs consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are
directly related to the Proposed Public Offering and that will be charged to stockholders’ equity upon the completion of
the Proposed Public Offering. Should the Proposed Public Offering prove to be unsuccessful, these deferred costs, as well as additional
expenses to be incurred, will be charged to operations.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities approximates the carrying amounts represented in the accompanying balance
sheet, primarily due to their short-term nature.
Net
Loss per Share
Net
loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the
period, excluding the shares of common stock subject to forfeiture. Weighted average shares were reduced for the effect of an
aggregate of 375,000 shares that are subject to forfeiture by the Sponsor if the over-allotment option is not exercised
by the underwriters (see Note 5). At April 6, 2021, the Company did not have any dilutive securities and other contracts that
could, potentially, be exercised or converted into shares and then share in the earnings of the Company. As a result, diluted
loss per share is the same as basic loss per share for the periods presented.
Income
Taxes
The
Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred
tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets
and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally
requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets
will not be realized.
ASC
740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and
prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not
to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest
and penalties, accounting in interim period, disclosure and transition.
The
Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized
tax benefits and no amounts accrued for interest and penalties as of April 6, 2021. The Company is currently not aware of any
issues under review that could result in significant payments, accruals or material deviation from its position.
The
Company has identified the United States as its only “major” tax jurisdiction.
The
Company is subject to income tax examinations by major taxing authorities since inception. These examinations may include questioning
the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state
tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change
over the next twelve months.
SAGALIAM
ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
Note
2 — Significant Accounting Policies (cont.)
The
provision for income taxes was deemed to be immaterial for the period from inception through April 6, 2021.
Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material
effect on the Company’s financial statements.
Note
3 — Proposed Public Offering
In
the Proposed Public Offering, the Company will offer for sale 10,000,000 Units, (or 11,500,000 Units if the underwriters’
over-allotment option is exercised in full) at a purchase price of $10.00 per Unit. Each unit that the Company is offering has
a price of $10.00 and consists of one share of Class A common stock, and one right (“Public Right”). Each Public Right
will entitle the holder to receive one-tenth of one share of Class A common stock at the closing of a Business Combination. (See
Note 7).
Note
4 — Private Placement
The
Company’s Sponsor has agreed to purchase an aggregate of 390,000 Private Placement Units (or 420,000 Private Placement Units
if the over-allotment option is exercised in full) at a price of $10.00 per Private Placement Unit, for an aggregate purchase
price of $3,900,000, or $4,200,000 if the over-allotment option is exercised in full in a private placement that will occur simultaneously
with the closing of the Proposed Public Offering. Each Private Placement Unit will consist of one share of Class A
common stock (“Private Placement Share”) and one right (“Private Placement Right”). Each Private Placement
Right will entitle the holder to receive one-tenth of one share of Class A common stock at the closing of a Business Combination.
The Company’s
Sponsor, officers and directors have agreed to (i) waive their redemption rights with respect to their Founder Shares, Private
Placement Shares and public shares in connection with the completion of the Company’s initial business combination, (ii)
waive their redemption rights with respect to their Founder Shares, Private Placement Shares and public shares in connection with
a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation (A) to modify
the substance or timing of the Company’s obligation to redeem 100% of its public shares if the Company does not complete
its initial business combination within 18 months from the closing of this offering or (B) with respect to any other provision
relating to stockholders’ rights or pre-initial business combination activity and (iii) waive their rights to liquidating
distributions from the trust account with respect to their Founder Shares and Private Placement Shares if the Company fails to
complete its initial business combination within 18 months from the closing of this offering. In addition, the Company’s
Sponsor, officers and directors have agreed to vote any Founder Shares and Private Placement Shares held by them and any public
shares purchased during or after the Proposed Public Offering (including in open market and privately negotiated transactions)
in favor of the Company’s initial business combination.
SAGALIAM
ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
Note
5 — Related Party Transactions
Promissory
Note — Related Party
On
April 6, 2021, the Company issued an unsecured promissory note to the Sponsor, pursuant to which the Company may borrow up to
an aggregate principal amount of $300,000 to be used for a portion of the expenses of this offering. This loan is non-interest
bearing, unsecured and due at the earlier of December 31, 2021 or the closing of this offering. The loan will be repaid upon the
closing of this offering out of the offering proceeds not held in the trust account. As of April 6, 2021, the Company had
drawn down $48,602 under the promissory note with the Sponsor to be used for a portion of the expenses of this offering.
Related
Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain
of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out
of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of
funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of
the proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would
be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not
been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon
consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working
Capital Loans may be convertible into units of the post-Business Combination entity at a price of $10.00 per unit. The units would
be identical to the Private Placement Units.
Administrative
Support Agreement
The
Company has agreed, commencing on the effective date of the Proposed Public Offering to pay the Company’s Sponsor a monthly fee
of an aggregate of $30,000 for the provision of officers’ cash salaries, office space, utilities and secretarial and administrative
support (plus an additional amount in respect of officers’ cash salaries payable for services provided prior to the effective
date, which the Company expects will not exceed approximately $30,000). This arrangement will terminate upon completion of a Business
Combination or the distribution of the Trust Account to the public stockholders (and in the case of officers’ cash salaries subject
to any applicable notice periods).
Founder
Shares
On
April 5, 2021, the Company issued 2,875,000 shares of Class B common stock (the “Founder Shares”) to
the Sponsor for $25,000 in cash, or approximately $0.009 per share, in connection with formation (up to 375,000 of which are subject
to forfeiture by the Sponsor if the underwriters’ over-allotment option is not exercised in full or in part).
Thereafter, the Sponsor transferred a total of 275,000 founder shares to the Company’s officers and director nominees. The
Sponsor and the Company’s officers and director nominees will collectively own 20% of the Company’s issued and
outstanding shares after the Proposed Public Offering (assuming that none of the Sponsor and the Company’s officers
and director nominees purchase any Public Shares in the Proposed Public Offering and excluding the Private Placement Shares,
Representative’s Shares (as defined below) and Advisory Compensation Shares (as defined below)). All share and per-share
amounts have been retroactively restated.
The
initial holders of the Founder Shares have agreed not to transfer, assign or sell any of the Founder Shares until the earlier
of (i) one year after the date of the consummation of the Company’s initial business combination or (ii) the date on which
the Company consummates a liquidation, merger, stock exchange or other similar transaction which results in all of its stockholders
having the right to exchange their shares of Class A common stock for cash, securities or other property. Notwithstanding the
foregoing, if the closing price of the Company’s shares of Class A common stock equals or exceeds $12.00 per share (as adjusted
for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading
day period commencing 150 days after the Company’s initial business combination, the Founder Shares will no longer be subject
to such transfer restrictions.
SAGALIAM
ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
Note
6 — Commitments
Registration
Rights
The
holders of the Class A common stock issuable upon conversion of the Founder Shares, Private Placement Shares, shares
of Class A common stock underlying the Private Placement Rights , the Representative’s Shares, Advisory Compensation
Shares and shares of Class A common stock included in or underlying the units that may be issued upon conversion of
working capital loans will have registration rights to require the Company to register a sale of any shares of Class A common
stock held by them pursuant to a registration rights agreement to be signed prior to or on the effective date of this offering.
These holders will be entitled to make up to three demands, excluding short form registration demands, that the Company registers
such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration
rights to include their securities in other registration statements filed by the Company. Notwithstanding the foregoing, the underwriters
may not exercise their demand and “piggyback” registration rights after five and seven years, respectively, after
the effective date of the registration statement of which this prospectus forms a part and may not exercise their demand rights
on more than one occasion.
Underwriting Agreement
The
underwriters have a 45-day option from the date of this prospectus to purchase up to an additional 1,500,000 units to cover over-allotments,
if any.
The
underwriters will be entitled to a cash underwriting discount of two percent (2%) of the gross proceeds of the Proposed Public
Offering, or $2,000,000 (or $2,300,000 if the underwriters’ over-allotment is exercised in full). Additionally, the underwriters
will be entitled to a deferred underwriting discount of 3.5% of the gross proceeds of the Proposed Public Offering upon the completion
of the Company’s initial business combination. The deferred fee will become payable to the underwriters from the amounts
held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting
agreement.
Representative’s Shares and Advisory
Compensation Shares
The
Company has agreed to issue to Maxim Partners LLC and/or its designees, 50,000 shares of Class A common stock (or 57,500
shares if the underwriters’ over-allotment option is exercised in full) (the “Representative’s Shares”)
upon the consummation of this offering. Maxim has agreed not to transfer, assign or sell any such shares until the completion
of our initial business combination. In addition, Maxim has agreed (i) to waive its redemption rights with respect to such shares
in connection with the completion of our initial business combination and (ii) to waive its rights to liquidating distributions
from the trust account with respect to such shares if we fail to complete our initial business combination within 18 months from
the closing of this offering.
The
Company has agreed to issue to Palladium Capital Group LLC (“Palladium”) and/or its designees, 50,000 shares
of Class A common stock (or 57,500 shares if the underwriters’ over-allotment option is exercised in full) (the “Advisory
Compensation Shares”) upon the consummation of this offering. Palladium has agreed not to transfer, assign or sell any
such shares until the completion of our initial business combination. In addition, Palladium has agreed (i) to waive its redemption
rights with respect to such shares in connection with the completion of our initial business combination and (ii) to waive its
rights to liquidating distributions from the trust account with respect to such shares if we fail to complete our initial business
combination within 18 months from the closing of this offering.
The
shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following
the date of the effectiveness of the registration statement of which this prospectus forms a part pursuant to Rule 5110(g)(1)
of FINRA’s NASD Conduct Rules. Pursuant to FINRA Rule 5110(g)(1), these securities will not be the subject of any hedging,
short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person
for a period of 180 days immediately following the effective date of the registration statement of which this prospectus forms
a part, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days immediately following the
effective date of the registration statement of which this prospectus forms a part except to any underwriter and selected dealer
participating in this offering and their bona fide officers or partners.
Advisory Fee
Palladium, is acting as the Company’s financial advisor in connection with
Proposed Public Offering, for which it will receive customary fees. The Company has agreed to pay Palladium a fee in an amount
equal to (1) 20% of the non-deferred underwriting commission payable to the underwriter, which will be paid to Palladium upon
the closing of the Proposed Public Offering, and (2) 20% of the deferred underwriting commission payable to the underwriter, which
will be paid to Palladium upon the closing of the Business Combination. The underwriters have agreed to reimburse the Company
for the fee to Palladium as it becomes payable out of the underwriting commission.
SAGALIAM
ACQUISITION CORP.
NOTES
TO FINANCIAL STATEMENTS
Note
7 — Stockholder’s Equity
Preferred
Stock — The Company is authorized to issue a total of 1,000,000 preferred shares at par value of $0.0001 each. At
April 6, 2021, there were no shares of preferred shares issued or outstanding.
Class
A Common Stock — The Company is authorized to issue a total of 100,000,000 Class A common shares at par value of
$0.0001 each. At April 6, 2021, there were no shares of Class A common shares issued or outstanding.
Class
B Common Stock — The Company is authorized to issue a total of 10,000,000 Class B common shares at par value of
$0.0001 each. On April 5, 2021, the Company issued 2,875,000 shares of Class B common shares to the Sponsor (up
to 375,000 of which are subject to forfeiture by the Sponsor if the underwriters’ over-allotment option is not exercised
in full), for $25,000, or approximately $0.009 per share. All share and per-share
amounts have been retroactively restated.
The
shares of Class B common stock will automatically convert into shares of the Company’s Class A common stock at the time
of its initial business combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations,
recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional shares of Class
A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in this prospectus and
related to the closing of the initial business combination, the ratio at which shares of Class B common stock shall convert into
shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common
stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class
A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted
basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of this offering (not
including the Private Placement Shares, Representative’s Shares and the Advisory Compensation Shares) plus all shares
of Class A common stock and equity-linked securities issued or deemed issued in connection with the initial business combination
(excluding any shares or equity-linked securities issued, or to be issued, to any seller in the initial business combination or
any units issued to the Sponsor, its affiliates or certain of officers and directors upon conversion of working
capital loans made to the Company).
Holders
of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted
to a vote of the Company’s stockholders, with each share of common stock entitling the holder to one vote, except as
required by law or the Company’s amended and restated certificate of incorporation.
Rights
– Each holder of a right will automatically receive one-tenth (1/10) of one share of Class A common
stock upon consummation of a Business Combination, except in cases where we are not the surviving company in a business combination
or the registered holder of a certificated right fails to tender their original rights certificate, and even if the holder
of such right redeemed all shares of Class A common stock held by it in connection with a Business Combination. No additional
consideration will be required to be paid by a holder of Public Rights in order to receive its additional shares upon consummation
of a Business Combination, as the consideration related thereto has been included in the unit purchase price paid for by investors
in the Proposed Public Offering. If the Company enters into a definitive agreement for a Business Combination in which the Company
will not be the surviving entity, the definitive agreement will provide for the holders of Public Rights to receive the same per
share consideration the holders of shares of Class A common stock will receive in the transaction on an as-exchanged for
Class A common stock basis, and each holder of a Public Right will be required to affirmatively exchange its Public Rights
in order to receive the 1/10 share underlying each Public Right (without paying any additional consideration) upon consummation
of a Business Combination. More specifically, the Public Rights holder will be required to indicate its election to exchange
the Public Right for the underlying shares as well as to return the original rights certificates to the Company within
a fixed period of time after which period the rights will expire worthless.
Pursuant to the rights
agreement, a rights holder may exchange rights only for a whole number of shares of Class A common stock. This means that the
Company will not issue fractional shares in connection with an exchange of rights and rights may be exchanged only in multiples
of 10 rights (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like). Fractional
shares will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions
of the Delaware General Corporation Law.
If
the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held
in the Trust Account, holders of Public Rights will not receive any such funds with respect to their Public Rights, nor will they
receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Rights,
and the Public Rights will expire worthless. Further, there are no contractual penalties for failure to deliver securities to
holders of the Public Rights upon consummation of a Business Combination. Additionally, in no event will the Company be required
to net cash settle the rights. Accordingly, the rights may expire worthless.
Note
8 — Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial
statements were issued. Based upon this review, other than as described above, the Company did not identify any subsequent events
that would have required adjustment or disclosure in the financial statements.
10,000,000
Units
Sagaliam
Acquisition Corp.
PROSPECTUS
Sole
Book-Running Manager
Maxim
Group LLC
,
2021
Until
, 2021 (25 days after the date of this prospectus), all dealers that buy, sell or trade our public securities, whether or
not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation
to deliver a prospectus when acting as underwriters and with respect to its unsold allotments or subscriptions.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution.
The
estimated expenses payable by us in connection with this offering described in this registration statement (other than the underwriting
discount and commissions) are as follows:
|
SEC expenses
|
|
$
|
12,672
|
|
|
FINRA expenses
|
|
|
17,923
|
|
|
Accounting fees and expenses
|
|
|
45,000
|
|
|
Printing expenses
|
|
|
40,000
|
|
|
Travel and road show expenses
|
|
|
25,000
|
|
|
Legal fees and expenses
|
|
|
300,000
|
|
|
Nasdaq listing fees
|
|
|
75,000
|
|
|
Director and officer liability insurance premiums(1)
|
|
|
350,000
|
|
|
Miscellaneous
|
|
|
34,405
|
|
|
Total
|
|
$
|
900,000
|
|
|
(1)
|
This
amount represents the approximate amount of annual director and officer liability insurance premiums the registrant anticipates paying
following the completion of its initial public offering and until it completes an initial business combination.
|
Item
14. Indemnification of Directors and officers.
Our
amended and restated certificate of incorporation will provide that all of our directors, officers, employees and agents shall
be entitled to be indemnified by us to the fullest extent permitted by Section 145 of the Delaware General Corporation Law (“DGCL”).
Section 145 of the Delaware General Corporation Law concerning indemnification of officers, directors, employees and agents is
set forth below.
Section
145. Indemnification of officers, directors, employees and agents; insurance.
|
|
(a)
|
A
corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or
proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe
the person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s
conduct was unlawful.
|
|
|
|
|
|
|
(b)
|
A
corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of
the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust
or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection
with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem
proper.
|
|
|
(c)
|
To
the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim,
issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and
reasonably incurred by such person in connection therewith.
|
|
|
|
|
|
|
(d)
|
Any
indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination that indemnification of the present or former director, officer,
employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made, with respect to a person who is a director or officer
at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding,
even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even
though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel
in a written opinion, or (4) by the stockholders.
|
|
|
|
|
|
|
(e)
|
Expenses
(including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses
(including attorneys’ fees) incurred by former officers and directors or other employees and agents may be so paid upon
such terms and conditions, if any, as the corporation deems appropriate.
|
|
|
|
|
|
|
(f)
|
The
indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall
not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled
under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s
official capacity and as to action in another capacity while holding such office. A right to indemnification or to advancement
of expenses arising under a provision of the certificate of incorporation or a bylaw shall not be eliminated or impaired by
an amendment to such provision after the occurrence of the act or omission that is the subject of the civil, criminal, administrative
or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision
in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission
has occurred.
|
|
|
|
|
|
|
(g)
|
A
corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against
such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether
or not the corporation would have the power to indemnify such person against such liability under this section.
|
|
|
|
|
|
|
(h)
|
For
purposes of this section, references to “the corporation” shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or
agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to
the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate
existence had continued.
|
|
|
(i)
|
For
purposes of this section, references to “other enterprises” shall include employee benefit plans; references to
“fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references
to “serving at the request of the corporation” shall include any service as a director, officer, employee or agent
of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect
to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such
person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this
section.
|
|
|
|
|
|
|
(j)
|
The
indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a person.
|
|
|
|
|
|
|
(k)
|
The
Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses
or indemnification brought under this section or under any by law, agreement, vote of stockholders or disinterested directors,
or otherwise. The Court of Chancery may summarily determine a corporation’s obligation to advance expenses (including
attorneys’ fees).
|
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling
persons pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification
is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment of expenses incurred or paid by a director, officer or controlling person in
a successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection
with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to the court of appropriate jurisdiction the question whether such indemnification by it is against public policy
as expressed in the Securities Act and will be governed by the final adjudication of such issue.
In
accordance with Section 102(b)(7) of the DGCL, our amended and restated certificate of incorporation, will provide that no director
shall be personally liable to us or any of our stockholders for monetary damages resulting from breaches of their fiduciary duty
as directors, except to the extent such limitation on or exemption from liability is not permitted under the DGCL. The effect
of this provision of our amended and restated certificate of incorporation is to eliminate our rights and those of our stockholders
(through stockholders’ derivative suits on our behalf) to recover monetary damages against a director for breach of the
fiduciary duty of care as a director, including breaches resulting from negligent or grossly negligent behavior, except, as restricted
by Section 102(b)(7) of the DGCL. However, this provision does not limit or eliminate our rights or the rights of any stockholder
to seek non-monetary relief, such as an injunction or rescission, in the event of a breach of a director’s duty of care.
If
the DGCL is amended to authorize corporate action further eliminating or limiting the liability of directors, then, in accordance
with our amended and restated certificate of incorporation, the liability of our directors to us or our stockholders will be eliminated
or limited to the fullest extent authorized by the DGCL, as so amended. Any repeal or amendment of provisions of our amended and
restated certificate of incorporation limiting or eliminating the liability of directors, whether by our stockholders or by changes
in law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise required by law) be prospective
only, except to the extent such amendment or change in law permits us to further limit or eliminate the liability of directors
on a retroactive basis.
Our
amended and restated certificate of incorporation will also provide that we will, to the fullest extent authorized or permitted
by applicable law, indemnify our current and former officers and directors, as well as those persons who, while directors or officers
of our corporation, are or were serving as directors, officers, employees or agents of another entity, trust or other enterprise,
including service with respect to an employee benefit plan, in connection with any threatened, pending or completed proceeding,
whether civil, criminal, administrative or investigative, against all expense, liability and loss (including, without limitation,
attorney’s fees, judgments, fines, ERISA excise taxes and penalties and amounts paid in settlement) reasonably incurred
or suffered by any such person in connection with any such proceeding.
Notwithstanding
the foregoing, a person eligible for indemnification pursuant to our amended and restated certificate of incorporation will be
indemnified by us in connection with a proceeding initiated by such person only if such proceeding was authorized by our board
of directors, except for proceedings to enforce rights to indemnification.
The
right to indemnification which will be conferred by our amended and restated certificate of incorporation is a contract right
that includes the right to be paid by us the expenses incurred in defending or otherwise participating in any proceeding referenced
above in advance of its final disposition, provided, however, that if the DGCL requires, an advancement of expenses incurred by
our officer or director (solely in the capacity as an officer or director of our corporation) will be made only upon delivery
to us of an undertaking, by or on behalf of such officer or director, to repay all amounts so advanced if it is ultimately determined
that such person is not entitled to be indemnified for such expenses under our amended and restated certificate of incorporation
or otherwise.
The
rights to indemnification and advancement of expenses will not be deemed exclusive of any other rights which any person covered
by our amended and restated certificate of incorporation may have or hereafter acquire under law, our amended and restated certificate
of incorporation, our bylaws, an agreement, vote of stockholders or disinterested directors, or otherwise.
Any
repeal or amendment of provisions of our amended and restated certificate of incorporation affecting indemnification rights, whether
by our stockholders or by changes in law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise
required by law) be prospective only, except to the extent such amendment or change in law permits us to provide broader indemnification
rights on a retroactive basis, and will not in any way diminish or adversely affect any right or protection existing at the time
of such repeal or amendment or adoption of such inconsistent provision with respect to any act or omission occurring prior to
such repeal or amendment or adoption of such inconsistent provision. Our amended and restated certificate of incorporation will
also permit us, to the extent and in the manner authorized or permitted by law, to indemnify and to advance expenses to persons
other that those specifically covered by our amended and restated certificate of incorporation.
Our
bylaws, which we intend to adopt immediately prior to the closing of this offering, include the provisions relating to advancement
of expenses and indemnification rights consistent with those which will be set forth in our amended and restated certificate of
incorporation. In addition, our bylaws provide for a right of indemnity to bring a suit in the event a claim for indemnification
or advancement of expenses is not paid in full by us within a specified period of time. Our bylaws also permit us to purchase
and maintain insurance, at our expense, to protect us and/or any director, officer, employee or agent of our corporation or another
entity, trust or other enterprise against any expense, liability or loss, whether or not we would have the power to indemnify
such person against such expense, liability or loss under the DGCL.
Any
repeal or amendment of provisions of our bylaws affecting indemnification rights, whether by our board of directors, stockholders
or by changes in applicable law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise required
by law) be prospective only, except to the extent such amendment or change in law permits us to provide broader indemnification
rights on a retroactive basis, and will not in any way diminish or adversely affect any right or protection existing thereunder
with respect to any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision.
We
will enter into indemnification agreements with each of our officers and directors a form of which is to be filed as an exhibit
to this registration statement. These agreements will require us to indemnify these individuals to the fullest extent permitted
under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a
result of any proceeding against them as to which they could be indemnified.
Pursuant
to the underwriting agreement to be filed as Exhibit 1.1 to this registration statement, we have agreed to indemnify the underwriters
and the underwriters have agreed to indemnify us against certain civil liabilities that may be incurred in connection with this
offering, including certain liabilities under the Securities Act.
Item
15. Recent Sales of Unregistered Securities.
On
April 5, 2021, Sagaliam Sponsor LLC, our sponsor, purchased an aggregate of 2,875,000 founder shares (up to 375,000 of
which are subject to forfeiture by our sponsor if the underwriters’ over-allotment option is not exercised in full), for
an aggregate offering price of $25,000. Our sponsor later transferred a total of 275,000 founder shares to our officers and
director nominees. The number of founder shares issued was determined based on the expectation that the founder shares would
represent 20% of the outstanding shares of common stock upon completion of this offering (excluding the private placement shares,
representative’s shares and advisory compensation shares). Such securities were issued in connection with
our organization, pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. Our sponsor
is an accredited investor for purposes of Rule 501 of Regulation D.
Our
sponsor has agreed to purchase an aggregate of 390,000 units (or 420,000 units if the over-allotment option is exercised in full)
at a price of $10.00 per unit, for an aggregate purchase price of $3,900,000 (or $4,200,000 if the over-allotment option is exercised
in full). This purchase will take place on a private placement basis simultaneously with the completion of our initial public
offering. This issuance will be made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities
Act.
We
have agreed to issue to the Maxim Group LLC and/or its designees 50,000 shares of Class A common stock (or 57,500 shares if the
underwriters’ over-allotment option is exercised in full) upon the consummation of this offering, as compensation in connection
with this offering.
We
have agreed to issue to Palladium Capital Group, LLC, an independent financial adviser not participating (within the meaning
of FINRA Rule 5110(j)(16)) in this offering, and/or its designees 50,000 shares of our Class A common stock (or 57,500 shares
if the underwriters’ over-allotment option is exercised in full) upon the consummation of this offering, in consideration
of advisory services rendered to us.
No
underwriting discounts or commissions were or will paid with respect to such sales.
Item
16. Exhibits and Financial Statement Schedules.
*
To be filed by amendment
|
|
(b)
|
Financial
Statement Schedules. See page F-1 for the index to the financial statements and schedules included in this registration
statement.
|
Item
17. Undertakings.
|
|
(a)
|
The
undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery
to each purchaser.
|
|
|
|
|
|
|
(b)
|
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final adjudication of such issue.
|
|
|
|
|
|
|
(c)
|
The
undersigned registrant hereby undertakes that:
|
|
|
(1)
|
For
purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
|
|
|
(2)
|
For
the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
|
|
(3)
|
For
the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the registrant is subject to Rule
430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to
be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however,
that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement
that was made in the registration statement or prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use.
|
|
|
|
|
|
|
(4)
|
For
the purpose of determining liability of a registrant under the Securities Act of 1933 to any purchaser in the initial distribution
of the securities, the undersigned registrant undertakes that in a primary offering of securities of an undersigned registrant
pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser,
if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
|
|
|
(i)
|
Any
preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant
to Rule 424;
|
|
|
|
|
|
|
(ii)
|
Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred
to by an undersigned registrant;
|
|
|
|
|
|
|
(iii)
|
The
portion of any other free writing prospectus relating to the offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the undersigned registrant; and
|
|
|
|
|
|
|
(iv)
|
Any
other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
|
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 25th day of May,
2021.
|
|
SAGALIAM
ACQUISITION CORP.
|
|
|
|
|
|
By:
|
/s/
Barry Kostiner
|
|
|
Name:
|
Barry
Kostiner
|
|
|
Title:
|
Chairman
and Chief Executive Officer
|
POWER
OF ATTORNEY
KNOW
ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Barry Kostiner and
Thomas W. Neukranz his true and lawful attorney-in-fact, with full power of substitution and resubstitution for him and
in his name, place and stead, in any and all capacities to sign any and all amendments including post-effective amendments to
this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute, each
acting alone, may lawfully do or cause to be done by virtue thereof.
Pursuant
to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
|
Name
|
|
Position
|
|
Date
|
|
|
|
|
|
|
|
/s/
Barry Kostiner
|
|
Chairman
and Chief Executive Officer
|
|
May
25,
2021
|
|
Barry
Kostiner
|
|
(principal
executive officer)
|
|
|
|
|
|
|
|
|
|
/s/
Thomas W. Neukranz
|
|
Chief
Financial Officer and Director
|
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May
25,
2021
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Thomas
W. Neukranz
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(principal
financial and accounting officer)
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Exhibit
3.3
BYLAWS
OF
SAGALIAM
ACQUISITION CORP.
(THE
“CORPORATION”)
ARTICLE
I
OFFICES
Section
1.1. Registered Office. The registered office of the Corporation within the State of Delaware shall be located at either (a) the
principal place of business of the Corporation in the State of Delaware or (b) the office of the corporation or individual acting as
the Corporation’s registered agent in Delaware.
Section
1.2. Additional Offices. The Corporation may, in addition to its registered office in the State of Delaware, have such other offices
and places of business, both within and outside the State of Delaware, as the Board of Directors of the Corporation (the “Board”)
may from time to time determine or as the business and affairs of the Corporation may require.
ARTICLE
II
STOCKHOLDERS
MEETINGS
Section
2.1. Annual Meetings. The annual meeting of stockholders shall be held at such place, either within or without the State of Delaware,
and time and on such date as shall be determined by the Board and stated in the notice of the meeting, provided that the Board may in
its sole discretion determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication
pursuant to Section 9.5(a). At each annual meeting, the stockholders entitled to vote on such matters shall elect those directors
of the Corporation to fill any term of a directorship that expires on the date of such annual meeting and may transact any other business
as may properly be brought before the meeting.
Section
2.2. Special Meetings. Subject to the rights of the holders of any outstanding series of the preferred stock of the Corporation (“Preferred
Stock”), and to the requirements of applicable law, special meetings of stockholders, for any purpose or purposes, may
be called only by the Chairman of the Board, Chief Executive Officer, or the Board pursuant to a resolution adopted by a majority of
the Board, and may not be called by any other person. Special meetings of stockholders shall be held at such place, either within or
without the State of Delaware, and at such time and on such date as shall be determined by the Board and stated in the Corporation’s
notice of the meeting, provided that the Board may in its sole discretion determine that the meeting shall not be held at any place,
but may instead be held solely by means of remote communication pursuant to Section 9.5(a).
Section
2.3. Notices. Written notice of each stockholders meeting stating the place, if any, date, and time of the meeting, and the means
of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting
and the record date for determining the stockholders entitled to vote at the meeting, if such date is different from the record date
for determining stockholders entitled to notice of the meeting, shall be given in the manner permitted by Section 9.3 to each
stockholder entitled to vote thereat as of the record date for determining the stockholders entitled to notice of the meeting, by the
Corporation not less than 10 nor more than 60 days before the date of the meeting unless otherwise required by the General Corporation
Law of the State of Delaware (the “DGCL”). If said notice is for a stockholders meeting other than an annual
meeting, it shall in addition state the purpose or purposes for which the meeting is called, and the business transacted at such meeting
shall be limited to the matters so stated in the Corporation’s notice of meeting (or any supplement thereto). Any meeting of stockholders
as to which notice has been given may be postponed, and any meeting of stockholders as to which notice has been given may be cancelled,
by the Board upon public announcement (as defined in Section 2.7(c)) given before the date previously scheduled for such meeting.
Section
2.4. Quorum. Except as otherwise provided by applicable law, the Corporation’s Certificate of Incorporation, as the same may
be amended or restated from time to time (the “Certificate of Incorporation”) or these Bylaws, the presence,
in person or by proxy, at a stockholders meeting of the holders of shares of outstanding capital stock of the Corporation representing
a majority of the voting power of all outstanding shares of capital stock of the Corporation entitled to vote at such meeting shall constitute
a quorum for the transaction of business at such meeting, except that when specified business is to be voted on by a class or series
of stock voting as a class, the holders of shares representing a majority of the voting power of the outstanding shares of such class
or series shall constitute a quorum of such class or series for the transaction of such business. If a quorum shall not be present or
represented by proxy at any meeting of the stockholders of the Corporation, the chairman of the meeting may adjourn the meeting from
time to time in the manner provided in Section 2.6 until a quorum shall attend. The stockholders present at a duly convened meeting
may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.
Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the voting power of the shares entitled
to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be
entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Corporation
or any such other corporation to vote shares held by it in a fiduciary capacity.
Section
2.5. Voting of Shares.
(a)
Voting Lists. The Secretary of the Corporation (the “Secretary”) shall prepare, or shall cause the officer
or agent who has charge of the stock ledger of the Corporation to prepare and make, at least 10 days before every meeting of stockholders,
a complete list of the stockholders of record entitled to vote at such meeting; provided, however, that if the record date for determining
the stockholders entitled to vote is less than 10 days before the meeting date, the list shall reflect the stockholders entitled to vote
as of the tenth day before the meeting date, arranged in alphabetical order and showing the address and the number and class of shares
registered in the name of each stockholder. Nothing contained in this Section 2.5(a) shall require the Corporation to include electronic
mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours for a period of at least 10 days prior to the meeting: (i) on a reasonably
accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the
meeting, or (ii) during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation
determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information
is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept
at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If a meeting
of stockholders is to be held solely by means of remote communication as permitted by Section 9.5(a), the list shall be open to the examination
of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to
access such list shall be provided with the notice of meeting. The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the list required by this Section 2.5(a) or to vote in person or by proxy at any meeting of stockholders.
(b)
Manner of Voting. At any stockholders meeting, every stockholder entitled to vote may vote in person or by proxy. If authorized
by the Board, the voting by stockholders or proxy holders at any meeting conducted by remote communication may be effected by a ballot
submitted by electronic transmission (as defined in Section 9.3), provided that any such electronic transmission must either set
forth or be submitted with information from which the Corporation can determine that the electronic transmission was authorized by the
stockholder or proxy holder. The Board, in its discretion, or the chairman of the meeting of stockholders, in such person’s discretion,
may require that any votes cast at such meeting shall be cast by written ballot.
(c)
Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted
or acted upon after three years from its date, unless the proxy provides for a longer period. Proxies need not be filed with the Secretary
until the meeting is called to order, but shall be filed with the Secretary before being voted. Without limiting the manner in which
a stockholder may authorize another person or persons to act for such stockholder as proxy, either of the following shall constitute
a valid means by which a stockholder may grant such authority. No stockholder shall have cumulative voting rights.
(i)
A stockholder may execute a writing authorizing another person or persons to act for such stockholder as proxy. Execution may be accomplished
by the stockholder or such stockholder’s authorized officer, director, employee or agent signing such writing or causing such person’s
signature to be affixed to such writing by any reasonable means, including, but not limited to, by facsimile signature.
(ii)
A stockholder may authorize another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission
of an electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service
organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that
any such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic
transmission was authorized by the stockholder. Any copy, facsimile telecommunication or other reliable reproduction of the writing or
transmission authorizing another person or persons to act as proxy for a stockholder may be substituted or used in lieu of the original
writing or transmission for any and all purposes for which the original writing or transmission could be used; provided that such copy,
facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.
(d)
Required Vote. Subject to the rights of the holders of one or more series of Preferred Stock, voting separately by class or series,
to elect directors pursuant to the terms of one or more series of Preferred Stock, at all meetings of stockholders at which a quorum
is present, the election of directors shall be determined by a plurality of the votes cast by the stockholders present in person or represented
by proxy at the meeting and entitled to vote thereon. All other matters presented to the stockholders at a meeting at which a quorum
is present shall be determined by the vote of a majority of the votes cast by the stockholders present in person or represented by proxy
at the meeting and entitled to vote thereon, unless the matter is one upon which, by applicable law, the Certificate of Incorporation,
these Bylaws or applicable stock exchange rules, a different vote is required, in which case such provision shall govern and control
the decision of such matter.
(e)
Inspectors of Election. The Board may, and shall if required by law, in advance of any meeting of stockholders, appoint one or
more persons as inspectors of election, who may be employees of the Corporation or otherwise serve the Corporation in other capacities,
to act at such meeting of stockholders or any adjournment thereof and to make a written report thereof. The Board may appoint one or
more persons as alternate inspectors to replace any inspector who fails to act. If no inspectors of election or alternates are appointed
by the Board, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging
his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to
the best of his or her ability. The inspectors shall ascertain and report the number of outstanding shares and the voting power of each;
determine the number of shares present in person or represented by proxy at the meeting and the validity of proxies and ballots; count
all votes and ballots and report the results; determine and retain for a reasonable period a record of the disposition of any challenges
made to any determination by the inspectors; and certify their determination of the number of shares represented at the meeting and their
count of all votes and ballots. No person who is a candidate for an office at an election may serve as an inspector at such election.
Each report of an inspector shall be in writing and signed by the inspector or by a majority of them if there is more than one inspector
acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors.
Section
2.6. Adjournments. Any meeting of stockholders, annual or special, may be adjourned by the chairman of the meeting, from time to
time, whether or not there is a quorum, to reconvene at the same or some other place. Notice need not be given of any such adjourned
meeting if the date, time, and place, if any, thereof, and the means of remote communication, if any, by which stockholders and proxy
holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the stockholders, or the holders of any class or series of stock entitled to vote separately as a
class, as the case may be, may transact any business that might have been transacted at the original meeting. If the adjournment is for
more than 30 days, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after
the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix a new record
date for notice of such adjourned meeting in accordance with Section 9.2, and shall give notice of the adjourned meeting to each
stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting.
Section
2.7. Advance Notice for Business.
(a)
Annual Meetings of Stockholders. No business may be transacted at an annual meeting of stockholders, other than business that
is either (i) specified in the Corporation’s notice of meeting (or any supplement thereto) given by or at the direction of the
Board, (ii) otherwise properly brought before the annual meeting by or at the direction of the Board or (iii) otherwise properly brought
before the annual meeting by any stockholder of the Corporation (x) who is a stockholder of record entitled to vote at such annual meeting
on the date of the giving of the notice provided for in this Section 2.7(a) and on the record date for the determination of stockholders
entitled to vote at such annual meeting and (y) who complies with the notice procedures set forth in this Section 2.7(a). Notwithstanding
anything in this Section 2.7(a) to the contrary, only persons nominated for election as a director to fill any term of a directorship
that expires on the date of the annual meeting pursuant to Section 3.2 will be considered for election at such meeting.
(i)
In addition to any other applicable requirements, for business (other than nominations) to be properly brought before an annual meeting
by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary and such business must
otherwise be a proper matter for stockholder action. Subject to Section 2.7(a)(iii), a stockholder’s notice to the Secretary
with respect to such business, to be timely, must be received by the Secretary at the principal executive offices of the Corporation
not later than the close of business on the 90th day nor earlier than the opening of business on the 120th day before the anniversary
date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is more
than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not
earlier than the opening of business on the 120th day before the meeting and not later than the later of (x) the close of business on
the 90th day before the meeting or (y) the close of business on the 10th day following the day on which public announcement of the date
of the annual meeting is first made by the Corporation. The public announcement of an adjournment or postponement of an annual meeting
shall not commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described in this
Section 2.7(a).
(ii)
To be in proper written form, a stockholder’s notice to the Secretary with respect to any business (other than nominations) must
set forth as to each such matter such stockholder proposes to bring before the annual meeting (A) a brief description of the business
desired to be brought before the annual meeting, the text of the proposal or business (including the text of any resolutions proposed
for consideration and in the event such business includes a proposal to amend these Bylaws, the language of the proposed amendment) and
the reasons for conducting such business at the annual meeting, (B) the name and record address of such stockholder and the name and
address of the beneficial owner, if any, on whose behalf the proposal is made, (C) the class or series and number of shares of capital
stock of the Corporation that are owned beneficially and of record by such stockholder and by the beneficial owner, if any, on whose
behalf the proposal is made, (D) a description of all arrangements or understandings between such stockholder and the beneficial owner,
if any, on whose behalf the proposal is made and any other person or persons (including their names) in connection with the proposal
of such business by such stockholder, (E) any material interest of such stockholder and the beneficial owner, if any, on whose behalf
the proposal is made in such business and (F) a representation that such stockholder (or a qualified representative of such stockholder)
intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.
(iii)
The foregoing notice requirements of this Section 2.7(a) shall be deemed satisfied by a stockholder as to any proposal (other
than nominations) if the stockholder has notified the Corporation of such stockholder’s intention to present such proposal at an
annual meeting in compliance with Rule 14a-8 (or any successor thereof) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and such stockholder has complied with the requirements of such rule for inclusion of such proposal in a proxy statement
prepared by the Corporation to solicit proxies for such annual meeting. No business shall be conducted at the annual meeting of stockholders
except business brought before the annual meeting in accordance with the procedures set forth in this Section 2.7(a), provided,
however, that once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section
2.7(a) shall be deemed to preclude discussion by any stockholder of any such business. If the Board or the chairman of the annual
meeting determines that any stockholder proposal was not made in accordance with the provisions of this Section 2.7(a) or that
the information provided in a stockholder’s notice does not satisfy the information requirements of this Section 2.7(a),
such proposal shall not be presented for action at the annual meeting. Notwithstanding the foregoing provisions of this Section 2.7(a),
if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting of stockholders of the Corporation
to present the proposed business, such proposed business shall not be transacted, notwithstanding that proxies in respect of such matter
may have been received by the Corporation.
(iv)
In addition to the provisions of this Section 2.7(a), a stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein. Nothing in this Section 2.7(a)
shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement
pursuant to Rule 14a-8 under the Exchange Act.
(b)
Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been
brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board may
be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting
only pursuant to Section 3.2.
(c)
Public Announcement. For purposes of these Bylaws, “public announcement” shall mean disclosure in a
press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act (or any
successor thereto).
Section
2.8. Conduct of Meetings. The chairman of each annual and special meeting of stockholders shall be the Chairman of the Board or,
in the absence (or inability or refusal to act) of the Chairman of the Board, the Chief Executive Officer (if he or she shall be a director)
or, in the absence (or inability or refusal to act of the Chief Executive Officer or if the Chief Executive Officer is not a director,
the President (if he or she shall be a director) or, in the absence (or inability or refusal to act) of the President or if the President
is not a director, such other person as shall be appointed by the Board. The date and time of the opening and the closing of the polls
for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the chairman of the meeting.
The Board may adopt such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to
the extent inconsistent with these Bylaws or such rules and regulations as adopted by the Board, the chairman of any meeting of stockholders
shall have the right and authority to convene and to adjourn the meeting, to prescribe such rules, regulations and procedures and to
do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations
or procedures, whether adopted by the Board or prescribed by the chairman of the meeting, may include, without limitation, the following:
(a) the establishment of an agenda or order of business for the meeting; (b) rules and procedures for maintaining order at the meeting
and the safety of those present; (c) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation,
their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (d) restrictions
on entry to the meeting after the time fixed for the commencement thereof; and (e) limitations on the time allotted to questions or comments
by participants. Unless and to the extent determined by the Board or the chairman of the meeting, meetings of stockholders shall not
be required to be held in accordance with the rules of parliamentary procedure. The secretary of each annual and special meeting of stockholders
shall be the Secretary or, in the absence (or inability or refusal to act) of the Secretary, an Assistant Secretary so appointed to act
by the chairman of the meeting. In the absence (or inability or refusal to act) of the Secretary and all Assistant Secretaries, the chairman
of the meeting may appoint any person to act as secretary of the meeting.
Section
2.9. Consents in Lieu of Meeting. Unless otherwise provided by the Certificate of Incorporation, until the Corporation consummates
an initial public offering (“Offering”), any action required to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock entitled to vote thereon having not less than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were present and voted, and shall be delivered to the Corporation
by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered
office shall be by hand or by certified or registered mail, return receipt requested.
Every
written consent shall bear the date of signature of each stockholder who signs the consent, and no written consent shall be effective
to take the corporate action referred to therein unless, within 60 days of the earliest dated consent delivered in the manner required
by this section and the DGCL to the Corporation, written consents signed by a sufficient number of holders entitled to vote to take action
are delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business or an officer or agent
of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s
registered office shall be by hand or by certified or registered mail, return receipt requested.
ARTICLE
III
DIRECTORS
Section
3.1. Powers; Number. The business and affairs of the Corporation shall be managed by or under the direction of the Board, which may
exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation
or by these Bylaws required to be exercised or done by the stockholders. Directors need not be stockholders or residents of the State
of Delaware. Subject to the Certificate of Incorporation, the number of directors shall be fixed exclusively by resolution of the Board.
Section
3.2. Advance Notice for Nomination of Directors.
(a)
Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation,
except as may be otherwise provided by the terms of one or more series of Preferred Stock with respect to the rights of holders of one
or more series of Preferred Stock to elect directors. Nominations of persons for election to the Board at any annual meeting of stockholders,
or at any special meeting of stockholders called for the purpose of electing directors as set forth in the Corporation’s notice
of such special meeting, may be made (i) by or at the direction of the Board or (ii) by any stockholder of the Corporation (x) who is
a stockholder of record entitled to vote in the election of directors on the date of the giving of the notice provided for in this Section
3.2 and on the record date for the determination of stockholders entitled to vote at such meeting and (y) who complies with the notice
procedures set forth in this Section 3.2.
(b)
In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely
notice thereof in proper written form to the Secretary. To be timely, a stockholder’s notice to the Secretary must be received
by the Secretary at the principal executive offices of the Corporation (i) in the case of an annual meeting, not later than the close
of business on the 90th day nor earlier than the opening of business on the 120th day before the anniversary date of the immediately
preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is more than 30 days before or
more than 60 days after such anniversary date, notice by the stockholder to be timely must be so received not earlier than the opening
of business on the 120th day before the meeting and not later than the later of (x) the close of business on the 90th day before the
meeting or (y) the close of business on the 10th day following the day on which public announcement of the date of the annual meeting
was first made by the Corporation; and (ii) in the case of a special meeting of stockholders called for the purpose of electing directors,
not later than the close of business on the 10th day following the day on which public announcement of the date of the special meeting
is first made by the Corporation. In no event shall the public announcement of an adjournment or postponement of an annual meeting or
special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described in
this Section 3.2.
(c)
Notwithstanding anything in paragraph (b) to the contrary, in the event that the number of directors to be elected to the Board at an
annual meeting is greater than the number of directors whose terms expire on the date of the annual meeting and there is no public announcement
by the Corporation naming all of the nominees for the additional directors to be elected or specifying the size of the increased Board
before the close of business on the 90th day prior to the anniversary date of the immediately preceding annual meeting of stockholders,
a stockholder’s notice required by this Section 3.2 shall also be considered timely, but only with respect to nominees for
the additional directorships created by such increase that are to be filled by election at such annual meeting, if it shall be received
by the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following
the date on which such public announcement was first made by the Corporation.
(d)
To be in proper written form, a stockholder’s notice to the Secretary must set forth (i) as to each person whom the stockholder
proposes to nominate for election as a director (A) the name, age, business address and residence address of the person, (B) the principal
occupation or employment of the person, (C) the class or series and number of shares of capital stock of the Corporation that are owned
beneficially or of record by the person and (D) any other information relating to the person that would be required to be disclosed in
a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant
to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; and (ii) as to the stockholder giving the notice
(A) the name and record address of such stockholder as they appear on the Corporation’s books and the name and address of the beneficial
owner, if any, on whose behalf the nomination is made, (B) the class or series and number of shares of capital stock of the Corporation
that are owned beneficially and of record by such stockholder and the beneficial owner, if any, on whose behalf the nomination is made,
(C) a description of all arrangements or understandings relating to the nomination to be made by such stockholder among such stockholder,
the beneficial owner, if any, on whose behalf the nomination is made, each proposed nominee and any other person or persons (including
their names), (D) a representation that such stockholder (or a qualified representative of such stockholder) intends to appear in person
or by proxy at the meeting to nominate the persons named in its notice and (E) any other information relating to such stockholder and
the beneficial owner, if any, on whose behalf the nomination is made that would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange
Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee
to being named as a nominee and to serve as a director if elected.
(e)
If the Board or the chairman of the meeting of stockholders determines that any nomination was not made in accordance with the provisions
of this Section 3.2, or that the information provided in a stockholder’s notice does not satisfy the information requirements
of this Section 3.2, then such nomination shall not be considered at the meeting in question. Notwithstanding the foregoing provisions
of this Section 3.2, if the stockholder (or a qualified representative of the stockholder) does not appear at the meeting of stockholders
of the Corporation to present the nomination, such nomination shall be disregarded, notwithstanding that proxies in respect of such nomination
may have been received by the Corporation.
(f)
In addition to the provisions of this Section 3.2, a stockholder shall also comply with all of the applicable requirements of
the Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein. Nothing in this Section 3.2
shall be deemed to affect any rights of the holders of Preferred Stock to elect directors pursuant to the Certificate of Incorporation.
Section
3.3. Compensation. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, the Board shall have the authority
to fix the compensation of directors, including for service on a committee of the Board, and may be paid either a fixed sum for attendance
at each meeting of the Board or other compensation as director. The directors may be reimbursed their expenses, if any, of attendance
at each meeting of the Board. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of committees of the Board may be allowed like compensation and reimbursement of expenses for service
on the committee.
ARTICLE
IV
BOARD
MEETINGS
Section
4.1. Annual Meetings. The Board shall meet as soon as practicable after the adjournment of each annual stockholders meeting at the
place of the annual stockholders meeting unless the Board shall fix another time and place and give notice thereof in the manner required
herein for special meetings of the Board. No notice to the directors shall be necessary to legally convene this meeting, except as provided
in this Section 4.1.
Section
4.2. Regular Meetings. Regularly scheduled, periodic meetings of the Board may be held without notice at such times, dates and places
(within or without the State of Delaware) as shall from time to time be determined by the Board.
Section
4.3. Special Meetings. Special meetings of the Board (a) may be called by the Chairman of the Board or President and (b) shall be
called by the Chairman of the Board, President or Secretary on the written request of at least a majority of directors then in office,
or the sole director, as the case may be, and shall be held at such time, date and place (within or without the State of Delaware) as
may be determined by the person calling the meeting or, if called upon the request of directors or the sole director, as specified in
such written request. Notice of each special meeting of the Board shall be given, as provided in Section 9.3, to each director
(i) at least 24 hours before the meeting if such notice is oral notice given personally or by telephone or written notice given by hand
delivery or by means of a form of electronic transmission and delivery; (ii) at least two days before the meeting if such notice is sent
by a nationally recognized overnight delivery service; and (iii) at least five days before the meeting if such notice is sent through
the United States mail. If the Secretary shall fail or refuse to give such notice, then the notice may be given by the officer who called
the meeting or the directors who requested the meeting. Any and all business that may be transacted at a regular meeting of the Board
may be transacted at a special meeting. Except as may be otherwise expressly provided by applicable law, the Certificate of Incorporation,
or these Bylaws, neither the business to be transacted at, nor the purpose of, any special meeting need be specified in the notice or
waiver of notice of such meeting. A special meeting may be held at any time without notice if all the directors are present or if those
not present waive notice of the meeting in accordance with Section 9.4.
Section
4.4. Quorum; Required Vote. A majority of the Board shall constitute a quorum for the transaction of business at any meeting of the
Board, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board, except
as may be otherwise specifically provided by applicable law, the Certificate of Incorporation or these Bylaws. If a quorum shall not
be present at any meeting, a majority of the directors present may adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum is present.
Section
4.5. Consent In Lieu of Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required
or permitted to be taken at any meeting of the Board or any committee thereof may be taken without a meeting if all members of the Board
or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic
transmission or transmissions (or paper reproductions thereof) are filed with the minutes of proceedings of the Board or committee. Such
filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained
in electronic form.
Section
4.6. Organization. The chairman of each meeting of the Board shall be the Chairman of the Board or, in the absence (or inability
or refusal to act) of the Chairman of the Board, the Chief Executive Officer (if he or she shall be a director) or, in the absence (or
inability or refusal to act) of the Chief Executive Officer or if the Chief Executive Officer is not a director, the President (if he
or she shall be a director) or in the absence (or inability or refusal to act) of the President or if the President is not a director,
a chairman elected from the directors present. The Secretary shall act as secretary of all meetings of the Board. In the absence (or
inability or refusal to act) of the Secretary, an Assistant Secretary shall perform the duties of the Secretary at such meeting. In the
absence (or inability or refusal to act) of the Secretary and all Assistant Secretaries, the chairman of the meeting may appoint any
person to act as secretary of the meeting.
ARTICLE
V
COMMITTEES
OF DIRECTORS
Section
5.1. Establishment. The Board may by resolution of the Board designate one or more committees, each committee to consist of one or
more of the directors of the Corporation. Each committee shall keep regular minutes of its meetings and report the same to the Board
when required by the resolution designating such committee. The Board shall have the power at any time to fill vacancies in, to change
the membership of, or to dissolve any such committee.
Section
5.2. Available Powers. Any committee established pursuant to Section 5.1 hereof, to the extent permitted by applicable law
and by resolution of the Board, shall have and may exercise all of the powers and authority of the Board in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it.
Section
5.3. Alternate Members. The Board may designate one or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of such committee. In the absence or disqualification of a member of the committee, the
member or members thereof present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum,
may unanimously appoint another member of the Board to act at the meeting in place of any such absent or disqualified member.
Section
5.4. Procedures. Unless the Board otherwise provides, the time, date, place, if any, and notice of meetings of a committee shall
be determined by such committee. At meetings of a committee, a majority of the number of members of the committee (but not including
any alternate member, unless such alternate member has replaced any absent or disqualified member at the time of, or in connection with,
such meeting) shall constitute a quorum for the transaction of business. The act of a majority of the members present at any meeting
at which a quorum is present shall be the act of the committee, except as otherwise specifically provided by applicable law, the Certificate
of Incorporation, these Bylaws or the Board. If a quorum is not present at a meeting of a committee, the members present may adjourn
the meeting from time to time, without notice other than an announcement at the meeting, until a quorum is present. Unless the Board
otherwise provides and except as provided in these Bylaws, each committee designated by the Board may make, alter, amend and repeal rules
for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board
is authorized to conduct its business pursuant to Article III and Article IV of these Bylaws.
ARTICLE
VI
OFFICERS
Section
6.1. Officers. The officers of the Corporation elected by the Board shall be a Chief Executive Officer, a Chief Financial Officer,
a Secretary and such other officers (including without limitation, a Chairman of the Board, Presidents, Vice Presidents, Assistant Secretaries
and a Treasurer) as the Board from time to time may determine. Officers elected by the Board shall each have such powers and duties as
generally pertain to their respective offices, subject to the specific provisions of this Article VI. Such officers shall also
have such powers and duties as from time to time may be conferred by the Board. The Chief Executive Officer or President may also appoint
such other officers (including without limitation one or more Vice Presidents and Controllers) as may be necessary or desirable for the
conduct of the business of the Corporation. Such other officers shall have such powers and duties and shall hold their offices for such
terms as may be provided in these Bylaws or as may be prescribed by the Board or, if such officer has been appointed by the Chief Executive
Officer or President, as may be prescribed by the appointing officer.
(a)
Chairman of the Board. The Chairman of the Board shall preside when present at all meetings of the stockholders and the Board.
The Chairman of the Board shall have general supervision and control of the acquisition activities of the Corporation subject to the
ultimate authority of the Board, and shall be responsible for the execution of the policies of the Board with respect to such matters.
In the absence (or inability or refusal to act) of the Chairman of the Board, the Chief Executive Officer (if he or she shall be a director)
shall preside when present at all meetings of the stockholders and the Board. The powers and duties of the Chairman of the Board shall
not include supervision or control of the preparation of the financial statements of the Corporation (other than through participation
as a member of the Board). The position of Chairman of the Board and Chief Executive Officer may be held by the same person.
(b)
Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation, shall have general
supervision of the affairs of the Corporation and general control of all of its business subject to the ultimate authority of the Board,
and shall be responsible for the execution of the policies of the Board with respect to such matters, except to the extent any such powers
and duties have been prescribed to the Chairman of the Board pursuant to Section 6.1(a) above. In the absence (or inability or
refusal to act) of the Chairman of the Board, the Chief Executive Officer (if he or she shall be a director) shall preside when present
at all meetings of the stockholders and the Board. The position of Chief Executive Officer and President may be held by the same person.
(c)
President. The President shall make recommendations to the Chief Executive Officer on all operational matters that would normally
be reserved for the final executive responsibility of the Chief Executive Officer. In the absence (or inability or refusal to act) of
the Chairman of the Board and Chief Executive Officer, the President (if he or she shall be a director) shall preside when present at
all meetings of the stockholders and the Board. The President shall also perform such duties and have such powers as shall be designated
by the Board. The position of President and Chief Executive Officer may be held by the same person.
(d)
Vice Presidents. In the absence (or inability or refusal to act) of the President, the Vice President (or in the event there be
more than one Vice President, the Vice Presidents in the order designated by the Board) shall perform the duties and have the powers
of the President. Any one or more of the Vice Presidents may be given an additional designation of rank or function.
(e)
Secretary.
(i)
The Secretary shall attend all meetings of the stockholders, the Board and (as required) committees of the Board and shall record the
proceedings of such meetings in books to be kept for that purpose. The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders and special meetings of the Board and shall perform such other duties as may be prescribed by the Board, the Chairman
of the Board, Chief Executive Officer or President. The Secretary shall have custody of the corporate seal of the Corporation and the
Secretary, or any Assistant Secretary, shall have authority to affix the same to any instrument requiring it, and when so affixed, it
may be attested by his or her signature or by the signature of such Assistant Secretary. The Board may give general authority to any
other officer to affix the seal of the Corporation and to attest the affixing thereof by his or her signature.
(ii)
The Secretary shall keep, or cause to be kept, at the principal executive office of the Corporation or at the office of the Corporation’s
transfer agent or registrar, if one has been appointed, a stock ledger, or duplicate stock ledger, showing the names of the stockholders
and their addresses, the number and classes of shares held by each and, with respect to certificated shares, the number and date of certificates
issued for the same and the number and date of certificates cancelled.
(f)
Assistant Secretaries. The Assistant Secretary or, if there be more than one, the Assistant Secretaries in the order determined
by the Board shall, in the absence (or inability or refusal to act) of the Secretary, perform the duties and have the powers of the Secretary.
(g)
Chief Financial Officer. The Chief Financial Officer shall perform all duties commonly incident to that office (including, without
limitation, the care and custody of the funds and securities of the Corporation, which from time to time may come into the Chief Financial
Officer’s hands and the deposit of the funds of the Corporation in such banks or trust companies as the Board, the Chief Executive
Officer or the President may authorize).
(h)
Treasurer. The Treasurer shall, in the absence (or inability or refusal to act) of the Chief Financial Officer, perform the duties
and exercise the powers of the Chief Financial Officer.
Section
6.2. Term of Office; Removal; Vacancies. The elected officers of the Corporation shall be appointed by the Board and shall hold office
until their successors are duly elected and qualified by the Board or until their earlier death, resignation, retirement, disqualification,
or removal from office. Any officer may be removed, with or without cause, at any time by the Board. Any officer appointed by the Chief
Executive Officer or President may also be removed, with or without cause, by the Chief Executive Officer or President, as the case may
be, unless the Board otherwise provides. Any vacancy occurring in any elected office of the Corporation may be filled by the Board. Any
vacancy occurring in any office appointed by the Chief Executive Officer or President may be filled by the Chief Executive Officer, or
President, as the case may be, unless the Board then determines that such office shall thereupon be elected by the Board, in which case
the Board shall elect such officer.
Section
6.3. Other Officers. The Board may delegate the power to appoint such other officers and agents, and may also remove such officers
and agents or delegate the power to remove same, as it shall from time to time deem necessary or desirable.
Section
6.4. Multiple Officeholders; Stockholder and Director Officers. Any number of offices may be held by the same person unless the Certificate
of Incorporation or these Bylaws otherwise provide. Officers need not be stockholders or residents of the State of Delaware.
ARTICLE
VII
SHARES
Section
7.1. Certificated and Uncertificated Shares. The shares of the Corporation may be certificated or uncertificated, subject to the
sole discretion of the Board and the requirements of the DGCL.
Section
7.2. Multiple Classes of Stock. If the Corporation shall be authorized to issue more than one class of stock or more than one series
of any class, the Corporation shall (a) cause the powers, designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights
to be set forth in full or summarized on the face or back of any certificate that the Corporation issues to represent shares of such
class or series of stock or (b) in the case of uncertificated shares, within a reasonable time after the issuance or transfer of such
shares, send to the registered owner thereof a written notice containing the information required to be set forth on certificates as
specified in clause (a) above; provided, however, that, except as otherwise provided by applicable law, in lieu of the foregoing requirements,
there may be set forth on the face or back of such certificate or, in the case of uncertificated shares, on such written notice a statement
that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions
of such preferences or rights.
Section
7.3. Signatures. Each certificate representing capital stock of the Corporation shall be signed by or in the name of the Corporation
by (a) the Chairman of the Board, Chief Executive Officer, the President or a Vice President and (b) the Treasurer, an Assistant Treasurer,
the Secretary or an Assistant Secretary of the Corporation. Any or all the signatures on the certificate may be a facsimile. In case
any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is issued, such certificate may be issued by the Corporation
with the same effect as if such person were such officer, transfer agent or registrar on the date of issue.
Section
7.4. Consideration and Payment for Shares.
(a)
Subject to applicable law and the Certificate of Incorporation, shares of stock may be issued for such consideration, having in the case
of shares with par value a value not less than the par value thereof, and to such persons, as determined from time to time by the Board.
The consideration may consist of any tangible or intangible property or any benefit to the Corporation including cash, promissory notes,
services performed, contracts for services to be performed or other securities, or any combination thereof.
(b)
Subject to applicable law and the Certificate of Incorporation, shares may not be issued until the full amount of the consideration has
been paid, unless upon the face or back of each certificate issued to represent any partly paid shares of capital stock or upon the books
and records of the Corporation in the case of partly paid uncertificated shares, there shall have been set forth the total amount of
the consideration to be paid therefor and the amount paid thereon up to and including the time said certificate representing certificated
shares or said uncertificated shares are issued.
Section
7.5. Lost, Destroyed or Wrongfully Taken Certificates.
(a)
If an owner of a certificate representing shares claims that such certificate has been lost, destroyed or wrongfully taken, the Corporation
shall issue a new certificate representing such shares or such shares in uncertificated form if the owner: (i) requests such a new certificate
before the Corporation has notice that the certificate representing such shares has been acquired by a protected purchaser; (ii) if requested
by the Corporation, delivers to the Corporation a bond sufficient to indemnify the Corporation against any claim that may be made against
the Corporation on account of the alleged loss, wrongful taking or destruction of such certificate or the issuance of such new certificate
or uncertificated shares; and (iii) satisfies other reasonable requirements imposed by the Corporation.
(b)
If a certificate representing shares has been lost, apparently destroyed or wrongfully taken, and the owner fails to notify the Corporation
of that fact within a reasonable time after the owner has notice of such loss, apparent destruction or wrongful taking and the Corporation
registers a transfer of such shares before receiving notification, the owner shall be precluded from asserting against the Corporation
any claim for registering such transfer or a claim to a new certificate representing such shares or such shares in uncertificated form.
Section
7.6. Transfer of Stock.
(a)
If a certificate representing shares of the Corporation is presented to the Corporation with an endorsement requesting the registration
of transfer of such shares or an instruction is presented to the Corporation requesting the registration of transfer of uncertificated
shares, the Corporation shall register the transfer as requested if:
(i)
in the case of certificated shares, the certificate representing such shares has been surrendered;
(ii)
(A) with respect to certificated shares, the endorsement is made by the person specified by the certificate as entitled to such shares;
(B) with respect to uncertificated shares, an instruction is made by the registered owner of such uncertificated shares; or (C) with
respect to certificated shares or uncertificated shares, the endorsement or instruction is made by any other appropriate person or by
an agent who has actual authority to act on behalf of the appropriate person;
(iii)
the Corporation has received a guarantee of signature of the person signing such endorsement or instruction or such other reasonable
assurance that the endorsement or instruction is genuine and authorized as the Corporation may request;
(iv)
the transfer does not violate any restriction on transfer imposed by the Corporation that is enforceable in accordance with Section
7.8(a); and
(v)
such other conditions for such transfer as shall be provided for under applicable law have been satisfied.
(b)
Whenever any transfer of shares shall be made for collateral security and not absolutely, the Corporation shall so record such fact in
the entry of transfer if, when the certificate for such shares is presented to the Corporation for transfer or, if such shares are uncertificated,
when the instruction for registration of transfer thereof is presented to the Corporation, both the transferor and transferee request
the Corporation to do so.
Section
7.7. Registered Stockholders. Before due presentment for registration of transfer of a certificate representing shares of the Corporation
or of an instruction requesting registration of transfer of uncertificated shares, the Corporation may treat the registered owner as
the person exclusively entitled to inspect for any proper purpose the stock ledger and the other books and records of the Corporation,
vote such shares, receive dividends or notifications with respect to such shares and otherwise exercise all the rights and powers of
the owner of such shares, except that a person who is the beneficial owner of such shares (if held in a voting trust or by a nominee
on behalf of such person) may, upon providing documentary evidence of beneficial ownership of such shares and satisfying such other conditions
as are provided under applicable law, may also so inspect the books and records of the Corporation.
Section
7.8. Effect of the Corporation’s Restriction on Transfer.
(a)
A written restriction on the transfer or registration of transfer of shares of the Corporation or on the amount of shares of the Corporation
that may be owned by any person or group of persons, if permitted by the DGCL and noted conspicuously on the certificate representing
such shares or, in the case of uncertificated shares, contained in a notice, offering circular or prospectus sent by the Corporation
to the registered owner of such shares within a reasonable time prior to or after the issuance or transfer of such shares, may be enforced
against the holder of such shares or any successor or transferee of the holder including an executor, administrator, trustee, guardian
or other fiduciary entrusted with like responsibility for the person or estate of the holder.
(b)
A restriction imposed by the Corporation on the transfer or the registration of shares of the Corporation or on the amount of shares
of the Corporation that may be owned by any person or group of persons, even if otherwise lawful, is ineffective against a person without
actual knowledge of such restriction unless: (i) the shares are certificated and such restriction is noted conspicuously on the certificate;
or (ii) the shares are uncertificated and such restriction was contained in a notice, offering circular or prospectus sent by the Corporation
to the registered owner of such shares within a reasonable time prior to or after the issuance or transfer of such shares.
Section
7.9. Regulations. The Board shall have power and authority to make such additional rules and regulations, subject to any applicable
requirement of law, as the Board may deem necessary and appropriate with respect to the issue, transfer or registration of transfer of
shares of stock or certificates representing shares. The Board may appoint one or more transfer agents or registrars and may require
for the validity thereof that certificates representing shares bear the signature of any transfer agent or registrar so appointed.
ARTICLE
VIII
INDEMNIFICATION
Section
8.1. Right to Indemnification. To the fullest extent permitted by applicable law, as the same exists or may hereafter be amended,
the Corporation shall indemnify and hold harmless each person who was or is made a party or is threatened to be made a party to or is
otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a “proceeding”), by reason of the fact that he or she is or was a director or officer of the Corporation
or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee
or agent of another corporation or of a partnership, joint venture, trust, other enterprise or nonprofit entity, including service with
respect to an employee benefit plan (hereinafter an “Indemnitee”), whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent, or in any other capacity while serving as a director,
officer, employee or agent, against all liability and loss suffered and expenses (including, without limitation, attorneys’ fees,
judgments, fines, ERISA excise taxes and penalties and amounts paid in settlement) reasonably incurred by such Indemnitee in connection
with such proceeding; provided, however, that, except as provided in Section 8.3 with respect to proceedings to enforce rights
to indemnification, the Corporation shall indemnify an Indemnitee in connection with a proceeding (or part thereof) initiated by such
Indemnitee only if such proceeding (or part thereof) was authorized by the Board.
Section
8.2. Right to Advancement of Expenses. In addition to the right to indemnification conferred in Section 8.1, an Indemnitee
shall also have the right to be paid by the Corporation to the fullest extent not prohibited by applicable law the expenses (including,
without limitation, attorneys’ fees) incurred in defending or otherwise participating in any such proceeding in advance of its
final disposition (hereinafter an “advancement of expenses”); provided, however, that, if the DGCL requires,
an advancement of expenses incurred by an Indemnitee in his or her capacity as a director or officer of the Corporation (and not in any
other capacity in which service was or is rendered by such Indemnitee, including, without limitation, service to an employee benefit
plan) shall be made only upon the Corporation’s receipt of an undertaking (hereinafter an “undertaking”),
by or on behalf of such Indemnitee, to repay all amounts so advanced if it shall ultimately be determined that such Indemnitee is not
entitled to be indemnified under this Article VIII or otherwise.
Section
8.3. Right of Indemnitee to Bring Suit. If a claim under Section 8.1 or Section 8.2 is not paid in full by the Corporation
within 60 days after a written claim therefor has been received by the Corporation, except in the case of a claim for an advancement
of expenses, in which case the applicable period shall be 20 days, the Indemnitee may at any time thereafter bring suit against the Corporation
to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation
to recover an advancement of expenses pursuant to the terms of an undertaking, the Indemnitee shall also be entitled to be paid the expense
of prosecuting or defending such suit. In (a) any suit brought by the Indemnitee to enforce a right to indemnification hereunder (but
not in a suit brought by an Indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (b) in any suit
brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled
to recover such expenses upon a final judicial decision from which there is no further right to appeal (hereinafter a “final
adjudication”) that, the Indemnitee has not met any applicable standard for indemnification set forth in the DGCL. Neither
the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent
legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the Indemnitee
is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in the DGCL, nor an actual
determination by the Corporation (including a determination by its directors who are not parties to such action, a committee of such
directors, independent legal counsel, or its stockholders) that the Indemnitee has not met such applicable standard of conduct, shall
create a presumption that the Indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the
Indemnitee, shall be a defense to such suit. In any suit brought by the Indemnitee to enforce a right to indemnification or to an advancement
of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden
of proving that the Indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article VIII
or otherwise shall be on the Corporation.
Section
8.4. Non-Exclusivity of Rights. The rights provided to any Indemnitee pursuant to this Article VIII shall not be exclusive
of any other right, which such Indemnitee may have or hereafter acquire under applicable law, the Certificate of Incorporation, these
Bylaws, an agreement, a vote of stockholders or disinterested directors, or otherwise.
Section
8.5. Insurance. The Corporation may maintain insurance, at its expense, to protect itself and/or any director, officer, employee
or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability
or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the
DGCL.
Section
8.6. Indemnification of Other Persons. This Article VIII shall not limit the right of the Corporation to the extent and in
the manner authorized or permitted by law to indemnify and to advance expenses to persons other than Indemnitees. Without limiting the
foregoing, the Corporation may, to the extent authorized from time to time by the Board, grant rights to indemnification and to the advancement
of expenses to any employee or agent of the Corporation and to any other person who is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including
service with respect to an employee benefit plan, to the fullest extent of the provisions of this Article VIII with respect to
the indemnification and advancement of expenses of Indemnitees under this Article VIII.
Section
8.7. Amendments. Any repeal or amendment of this Article VIII by the Board or the stockholders of the Corporation or by changes
in applicable law, or the adoption of any other provision of these Bylaws inconsistent with this Article VIII, will, to the extent
permitted by applicable law, be prospective only (except to the extent such amendment or change in applicable law permits the Corporation
to provide broader indemnification rights to Indemnitees on a retroactive basis than permitted prior thereto), and will not in any way
diminish or adversely affect any right or protection existing hereunder in respect of any act or omission occurring prior to such repeal
or amendment or adoption of such inconsistent provision; provided however, that amendments or repeals of this Article VIII shall
require the affirmative vote of the stockholders holding at least 66.7% of the voting power of all outstanding shares of capital stock
of the Corporation.
Section
8.8. Certain Definitions. For purposes of this Article VIII, (a) references to “other enterprise”
shall include any employee benefit plan; (b) references to “fines” shall include any excise taxes assessed
on a person with respect to an employee benefit plan; (c) references to “serving at the request of the Corporation”
shall include any service that imposes duties on, or involves services by, a person with respect to any employee benefit plan, its participants,
or beneficiaries; and (d) a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interest
of the Corporation” for purposes of Section 145 of the DGCL.
Section
8.9. Contract Rights. The rights provided to Indemnitees pursuant to this Article VIII shall be contract rights and such rights
shall continue as to an Indemnitee who has ceased to be a director, officer, agent or employee and shall inure to the benefit of the
Indemnitee’s heirs, executors and administrators.
Section
8.10. Severability. If any provision or provisions of this Article VIII shall be held to be invalid, illegal or unenforceable
for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Article VIII shall
not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Article VIII (including,
without limitation, each such portion of this Article VIII containing any such provision held to be invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.
ARTICLE
IX
MISCELLANEOUS
Section
9.1. Place of Meetings. If the place of any meeting of stockholders, the Board or committee of the Board for which notice is required
under these Bylaws is not designated in the notice of such meeting, such meeting shall be held at the principal business office of the
Corporation; provided, however, if the Board has, in its sole discretion, determined that a meeting shall not be held at any place, but
instead shall be held by means of remote communication pursuant to Section 9.5 hereof, then such meeting shall not be held at
any place.
Section
9.2. Fixing Record Dates.
(a)
In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof,
the Board may fix a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the
Board, and which record date shall not be more than 60 nor less than 10 days before the date of such meeting. If the Board so fixes a
date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines,
at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination.
If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of and to vote at a meeting
of stockholders shall be at the close of business on the business day next preceding the day on which notice is given, or, if notice
is waived, at the close of business on the business day next preceding the day on which the meeting is held. A determination of stockholders
of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board may fix a new record date for the adjourned meeting, and in such case shall also fix as the record date for stockholders
entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to
vote in accordance with the foregoing provisions of this Section 9.2(a) at the adjourned meeting.
(b)
In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed,
the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts
the resolution relating thereto.
Section
9.3. Means of Giving Notice.
(a)
Notice to Directors. Whenever under applicable law, the Certificate of Incorporation or these Bylaws notice is required to be
given to any director, such notice shall be given either (i) in writing and sent by mail, or by a nationally recognized delivery service,
(ii) by means of facsimile telecommunication or other form of electronic transmission, or (iii) by oral notice given personally or by
telephone. A notice to a director will be deemed given as follows: (i) if given by hand delivery, orally, or by telephone, when actually
received by the director, (ii) if sent through the United States mail, when deposited in the United States mail, with postage and fees
thereon prepaid, addressed to the director at the director’s address appearing on the records of the Corporation, (iii) if sent
for next day delivery by a nationally recognized overnight delivery service, when deposited with such service, with fees thereon prepaid,
addressed to the director at the director’s address appearing on the records of the Corporation, (iv) if sent by facsimile telecommunication,
when sent to the facsimile transmission number for such director appearing on the records of the Corporation, (v) if sent by electronic
mail, when sent to the electronic mail address for such director appearing on the records of the Corporation, or (vi) if sent by any
other form of electronic transmission, when sent to the address, location or number (as applicable) for such director appearing on the
records of the Corporation.
(b)
Notice to Stockholders. Whenever under applicable law, the Certificate of Incorporation or these Bylaws notice is required to
be given to any stockholder, such notice may be given (i) in writing and sent either by hand delivery, through the United States mail,
or by a nationally recognized overnight delivery service for next day delivery, or (ii) by means of a form of electronic transmission
consented to by the stockholder, to the extent permitted by, and subject to the conditions set forth in Section 232 of the DGCL. A notice
to a stockholder shall be deemed given as follows: (i) if given by hand delivery, when actually received by the stockholder, (ii) if
sent through the United States mail, when deposited in the United States mail, with postage and fees thereon prepaid, addressed to the
stockholder at the stockholder’s address appearing on the stock ledger of the Corporation, (iii) if sent for next day delivery
by a nationally recognized overnight delivery service, when deposited with such service, with fees thereon prepaid, addressed to the
stockholder at the stockholder’s address appearing on the stock ledger of the Corporation, and (iv) if given by a form of electronic
transmission consented to by the stockholder to whom the notice is given and otherwise meeting the requirements set forth above, (A)
if by facsimile transmission, when directed to a number at which the stockholder has consented to receive notice, (B) if by electronic
mail, when directed to an electronic mail address at which the stockholder has consented to receive notice, (C) if by a posting on an
electronic network together with separate notice to the stockholder of such specified posting, upon the later of (1) such posting and
(2) the giving of such separate notice, and (D) if by any other form of electronic transmission, when directed to the stockholder. A
stockholder may revoke such stockholder’s consent to receiving notice by means of electronic communication by giving written notice
of such revocation to the Corporation. Any such consent shall be deemed revoked if (1) the Corporation is unable to deliver by electronic
transmission two consecutive notices given by the Corporation in accordance with such consent and (2) such inability becomes known to
the Secretary or an Assistant Secretary or to the Corporation’s transfer agent, or other person responsible for the giving of notice;
provided, however, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.
(c)
Electronic Transmission. “Electronic transmission” means any form of communication, not directly involving
the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that
may be directly reproduced in paper form by such a recipient through an automated process, including but not limited to transmission
by telex, facsimile telecommunication, electronic mail, telegram and cablegram.
(d)
Notice to Stockholders Sharing Same Address. Without limiting the manner by which notice otherwise may be given effectively by
the Corporation to stockholders, any notice to stockholders given by the Corporation under any provision of the DGCL, the Certificate
of Incorporation or these Bylaws shall be effective if given by a single written notice to stockholders who share an address if consented
to by the stockholders at that address to whom such notice is given. A stockholder may revoke such stockholder’s consent by delivering
written notice of such revocation to the Corporation. Any stockholder who fails to object in writing to the Corporation within 60 days
of having been given written notice by the Corporation of its intention to send such a single written notice shall be deemed to have
consented to receiving such single written notice.
(e)
Exceptions to Notice Requirements. Whenever notice is required to be given, under the DGCL, the Certificate of Incorporation or
these Bylaws, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there
shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action
or meeting that shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force
and effect as if such notice had been duly given. In the event that the action taken by the Corporation is such as to require the filing
of a certificate with the Secretary of State of Delaware, the certificate shall state, if such is the fact and if notice is required,
that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.
Whenever
notice is required to be given by the Corporation, under any provision of the DGCL, the Certificate of Incorporation or these Bylaws,
to any stockholder to whom (1) notice of two consecutive annual meetings of stockholders and all notices of stockholder meetings or of
the taking of action by written consent of stockholders without a meeting to such stockholder during the period between such two consecutive
annual meetings, or (2) all, and at least two payments (if sent by first-class mail) of dividends or interest on securities during a
12-month period, have been mailed addressed to such stockholder at such stockholder’s address as shown on the records of the Corporation
and have been returned undeliverable, the giving of such notice to such stockholder shall not be required. Any action or meeting that
shall be taken or held without notice to such stockholder shall have the same force and effect as if such notice had been duly given.
If any such stockholder shall deliver to the Corporation a written notice setting forth such stockholder’s then current address,
the requirement that notice be given to such stockholder shall be reinstated. In the event that the action taken by the Corporation is
such as to require the filing of a certificate with the Secretary of State of Delaware, the certificate need not state that notice was
not given to persons to whom notice was not required to be given pursuant to Section 230(b) of the DGCL. The exception in subsection
(1) of the first sentence of this paragraph to the requirement that notice be given shall not be applicable to any notice returned as
undeliverable if the notice was given by electronic transmission.
Section
9.4. Waiver of Notice. Whenever any notice is required to be given under applicable law, the Certificate of Incorporation, or these
Bylaws, a written waiver of such notice, signed by the person or persons entitled to said notice, or a waiver by electronic transmission
by the person entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to such required notice.
All such waivers shall be kept with the books of the Corporation. Attendance at a meeting shall constitute a waiver of notice of such
meeting, except where a person attends for the express purpose of objecting to the transaction of any business on the ground that the
meeting was not lawfully called or convened.
Section
9.5. Meeting Attendance via Remote Communication Equipment.
(a)
Stockholder Meetings. If authorized by the Board in its sole discretion, and subject to such guidelines and procedures as the
Board may adopt, stockholders entitled to vote at such meeting and proxy holders not physically present at a meeting of stockholders
may, by means of remote communication:
(i)
participate in a meeting of stockholders; and
(ii)
be deemed present in person and vote at a meeting of stockholders, whether such meeting is to be held at a designated place or solely
by means of remote communication, provided that (A) the Corporation shall implement reasonable measures to verify that each person deemed
present and permitted to vote at the meeting by means of remote communication is a stockholder or proxy holder, (B) the Corporation shall
implement reasonable measures to provide such stockholders and proxy holders a reasonable opportunity to participate in the meeting and,
if entitled to vote, to vote on matters submitted to the applicable stockholders, including an opportunity to read or hear the proceedings
of the meeting substantially concurrently with such proceedings, and (C) if any stockholder or proxy holder votes or takes other action
at the meeting by means of remote communication, a record of such votes or other action shall be maintained by the Corporation.
(b)
Board Meetings. Unless otherwise restricted by applicable law, the Certificate of Incorporation or these Bylaws, members of the
Board or any committee thereof may participate in a meeting of the Board or any committee thereof by means of conference telephone or
other communications equipment by means of which all persons participating in the meeting can hear each other. Such participation in
a meeting shall constitute presence in person at the meeting, except where a person participates in the meeting for the express purpose
of objecting to the transaction of any business on the ground that the meeting was not lawfully called or convened.
Section
9.6. Dividends. The Board may from time to time declare, and the Corporation may pay, dividends (payable in cash, property or shares
of the Corporation’s capital stock) on the Corporation’s outstanding shares of capital stock, subject to applicable law and
the Certificate of Incorporation.
Section
9.7. Reserves. The Board may set apart out of the funds of the Corporation available for dividends a reserve or reserves for any
proper purpose and may abolish any such reserve.
Section
9.8. Contracts and Negotiable Instruments. Except as otherwise provided by applicable law, the Certificate of Incorporation or these
Bylaws, any contract, bond, deed, lease, mortgage or other instrument may be executed and delivered in the name and on behalf of the
Corporation by such officer or officers or other employee or employees of the Corporation as the Board may from time to time authorize.
Such authority may be general or confined to specific instances as the Board may determine. The Chairman of the Board, the Chief Executive
Officer, the President, the Chief Financial Officer, the Treasurer or any Vice President may execute and deliver any contract, bond,
deed, lease, mortgage or other instrument in the name and on behalf of the Corporation. Subject to any restrictions imposed by the Board,
the Chairman of the Board Chief Executive Officer, President, the Chief Financial Officer, the Treasurer or any Vice President may delegate
powers to execute and deliver any contract, bond, deed, lease, mortgage or other instrument in the name and on behalf of the Corporation
to other officers or employees of the Corporation under such person’s supervision and authority, it being understood, however,
that any such delegation of power shall not relieve such officer of responsibility with respect to the exercise of such delegated power.
Section
9.9. Fiscal Year. The fiscal year of the Corporation shall be fixed by the Board.
Section
9.10. Seal. The Board may adopt a corporate seal, which shall be in such form as the Board determines. The seal may be used by causing
it or a facsimile thereof to be impressed, affixed or otherwise reproduced.
Section
9.11. Books and Records. The books and records of the Corporation may be kept within or outside the State of Delaware at such place
or places as may from time to time be designated by the Board.
Section
9.12. Resignation. Any director, committee member or officer may resign by giving notice thereof in writing or by electronic transmission
to the Chairman of the Board, the Chief Executive Officer, the President or the Secretary. The resignation shall take effect at the time
it is delivered unless the resignation specifies a later effective date or an effective date determined upon the happening of an event
or events. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
Section
9.13. Surety Bonds. Such officers, employees and agents of the Corporation (if any) as the Chairman of the Board, Chief Executive
Officer, President or the Board may direct, from time to time, shall be bonded for the faithful performance of their duties and for the
restoration to the Corporation, in case of their death, resignation, retirement, disqualification or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in their possession or under their control belonging to the Corporation,
in such amounts and by such surety companies as the Chairman of the Board, Chief Executive Officer, President or the Board may determine.
The premiums on such bonds shall be paid by the Corporation and the bonds so furnished shall be in the custody of the Secretary.
Section
9.14. Securities of Other Corporations. Powers of attorney, proxies, waivers of notice of meeting, consents in writing and other
instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the Chairman
of the Board, Chief Executive Officer, President, any Vice President or any officers authorized by the Board. Any such officer, may,
in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by
proxy at any meeting of security holders of any corporation in which the Corporation may own securities, or to consent in writing, in
the name of the Corporation as such holder, to any action by such corporation, and at any such meeting or with respect to any such consent
shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof,
the Corporation might have exercised and possessed. The Board may from time to time confer like powers upon any other person or persons.
Section
9.15. Amendments. The Board shall have the power to adopt, amend, alter or repeal the Bylaws. The affirmative vote of a majority
of the Board shall be required to adopt, amend, alter or repeal the Bylaws. The Bylaws also may be adopted, amended, altered or repealed
by the stockholders; provided, however, that in addition to any vote of the holders of any class or series of capital stock of the Corporation
required by applicable law or the Certificate of Incorporation, the affirmative vote of the holders of at least a majority of the voting
power (except as otherwise provided in Section 8.7)of all outstanding shares of capital stock of the Corporation entitled to vote generally
in the election of directors, voting together as a single class, shall be required for the stockholders to adopt, amend, alter or repeal
the Bylaws.
Exhibit
10.3
INVESTMENT
MANAGEMENT TRUST AGREEMENT
This
Investment Management Trust Agreement (this “Agreement”) is made effective as of [ ], 2021, by and between
Sagaliam Acquisition Corp., a Delaware corporation (the “Company”), and Continental Stock Transfer & Trust
Company, a New York corporation (the “Trustee”).
WHEREAS,
the Company’s registration statement on Form S-1, File No. 333-[ ] (the “Registration Statement”) and
prospectus (the “Prospectus”) for the initial public offering of the Company’s units (the “Units”),
each of which consists of one share of the Company’s Class A common stock, par value $0.0001 per share (the “Common
Stock”), and one right to receive one-tenth (1/10) of one share of Common Stock (such initial public offering hereinafter
referred to as the “Offering”), has been declared effective as of the date hereof by the U.S. Securities and
Exchange Commission; and
WHEREAS,
the Company has entered into an Underwriting Agreement (the “Underwriting Agreement”) with Maxim Group LLC,
as representative (the “Representative”) of the several underwriters (the “Underwriters”)
named therein; and
WHEREAS,
as described in the Prospectus, $100,000,000 of the gross proceeds of the Offering and sale of the Private Placement Units (as defined
in the Underwriting Agreement) (or $115,000,000, if the Underwriters’ over-allotment option is exercised in full) will be delivered
to the Trustee to be deposited and held in a segregated trust account located at all times in the United States (the “Trust
Account”) for the benefit of the Company and the holders of the Common Stock included in the Units issued in the Offering
as hereinafter provided (the amount to be delivered to the Trustee (and any interest subsequently earned thereon) is referred to herein
as the “Property,” the stockholders for whose benefit the Trustee shall hold the Property will be referred
to as the “Public Stockholders,” and the Public Stockholders and the Company will be referred to together as
the “Beneficiaries”); and
WHEREAS,
pursuant to the Underwriting Agreement, a portion of the Property equal to $3,500,000, or $4,025,000 if the Underwriters’ over-allotment
option is exercised in full, is attributable to deferred underwriting discounts and commissions that will be payable by the Company to
the Underwriters upon and concurrently with the consummation of the Business Combination (as defined below) (the “Deferred
Discount”); and
WHEREAS,
the Company and the Trustee desire to enter into this Agreement to set forth the terms and conditions pursuant to which the Trustee shall
hold the Property.
NOW
THEREFORE, IT IS AGREED:
1.
Agreements and Covenants of Trustee. The Trustee hereby agrees and covenants to:
(a)
Hold the Property in trust for the Beneficiaries in accordance with the terms of this Agreement in the Trust Account established by the
Trustee in the United States at JPMorgan Chase Bank N.A. (or at another U.S. chartered commercial bank with consolidated assets of $100
billion or more) and at a brokerage institution selected by the Trustee that is reasonably satisfactory to the Company;
(b)
Manage, supervise and administer the Trust Account subject to the terms and conditions set forth herein;
(c)
In a timely manner, upon the written instruction of the Company, invest and reinvest the Property solely in United States government
securities within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, having a maturity of 185 days or
less, or in money market funds meeting the conditions of Rule 2a-7(d) promulgated under the Investment Company Act of 1940, as amended
(or any successor rule), which invest only in direct U.S. government treasury obligations, as determined by the Company; it being understood
that the Trust Account will earn no interest while account funds are uninvested awaiting the Company’s instructions hereunder and
the Trustee may earn bank credits or other consideration;
(d)
Collect and receive, when due, all interest or other income arising from the Property, which shall become part of the “Property,”
as such term is used herein;
(e)
Promptly notify the Company and the Representative of all communications received by the Trustee with respect to any Property requiring
action by the Company;
(f)
Supply any necessary information or documents as may be requested by the Company (or its authorized agents) in connection with the Company’s
preparation of the tax returns relating to assets held in the Trust Account;
(g)
Participate in any plan or proceeding for protecting or enforcing any right or interest arising from the Property if, as and when instructed
by the Company to do so;
(h)
Render to the Company monthly written statements of the activities of, and amounts in, the Trust Account reflecting all receipts and
disbursements of the Trust Account;
(i)
Commence liquidation of the Trust Account only after and promptly after (x) receipt of, and only in accordance with, the terms of a letter
from the Company (“Termination Letter”) in a form substantially similar to that attached hereto as either Exhibit
A or Exhibit B, as applicable, signed on behalf of the Company by at least two of its Chief Executive Officer, Chief Financial
Officer, President, Executive Vice President, Vice President, Secretary or Chairman of the board of directors of the Company (the “Board”)
or other authorized officer of the Company, and, in the case of a Termination Letter in a form substantially similar to the attached
hereto as Exhibit A, acknowledged and agreed to by the Representative, and complete the liquidation of the Trust Account and distribute
the Property in the Trust Account, including interest not previously released to the Company to pay its taxes (less up to $150,000 of
interest that may be released to the Company to pay dissolution expenses), only as directed in the Termination Letter and the other documents
referred to therein, or (y) the date which is the later of (1) 18 months after the closing of the Offering and (2) such later date as
may be approved by the Company’s stockholders in accordance with the Company’s amended and restated certificate of incorporation
(“Charter”) if a Termination Letter has not been received by the Trustee prior to such date, in which case
the Trust Account shall be liquidated in accordance with the procedures set forth in the Termination Letter attached as Exhibit B
and the Property in the Trust Account, including interest not previously released to the Company to pay its taxes (less up to $150,000
of interest that may be released to the Company to pay dissolution expenses) shall be distributed to the Public Stockholders of record
as of such date;
(j)
Upon written request from the Company, which may be given from time to time in a form substantially similar to that attached hereto as
Exhibit C, withdraw from the Trust Account and distribute to the Company the amount of interest earned on the Property requested
by the Company to cover any tax obligation owed by the Company as a result of assets of the Company or interest or other income earned
on the Property, which amount shall be delivered directly to the Company by electronic funds transfer or other method of prompt payment,
and the Company shall forward such payment to the relevant taxing authority; provided, however, that to the extent there
is not sufficient cash in the Trust Account to pay such tax obligation, the Trustee shall liquidate such assets held in the Trust Account
as shall be designated by the Company in writing to make such distribution, so long as there is no reduction in the principal amount
per share initially deposited in the Trust Account; provided, further, that if the tax to be paid is a franchise tax, the
written request by the Company to make such distribution shall be accompanied by a copy of the franchise tax bill from the State of Delaware
for the Company (it being acknowledged and agreed that any such amount in excess of interest income earned on the Property shall not
be payable from the Trust Account). The written request of the Company referenced above shall constitute presumptive evidence that the
Company is entitled to said funds, and the Trustee shall have no responsibility to look beyond said request;
(k)
Upon written request from the Company, which may be given from time to time in a form substantially similar to that attached hereto as
Exhibit D, the Trustee shall distribute on behalf of the Company the amount requested by the Company to be used to redeem shares
of Common Stock from Public Stockholders properly submitted in connection with a stockholder vote to approve an amendment to the Charter
to modify the substance or timing of the ability of Public Stockholders to seek redemption in connection with an initial Business Combination
or amendments to the Charter prior thereto or the Company’s obligation to redeem 100% of its public shares of Common Stock if the
Company has not consummated an initial Business Combination within such time as is described in clause (y) of Section 1(i) of the Agreement.
The written request of the Company referenced above shall constitute presumptive evidence that the Company is entitled to distribute
said funds, and the Trustee shall have no responsibility to look beyond said request; and
(l)
Not make any withdrawals or distributions from the Trust Account other than pursuant to Section 1(i), (j) or (k) above.
2.
Agreements and Covenants of the Company. The Company hereby agrees and covenants to:
(a)
Give all instructions to the Trustee hereunder in writing, signed by at least two of the Company’s Chairman of the Board, Chief
Executive Officer, Chief Financial Officer, President, Executive Vice President, Vice President or Secretary. In addition, except with
respect to its duties under Sections 1(i), 1(j) and 1(k) hereof, the Trustee shall be entitled to rely on, and shall
be protected in relying on, any verbal or telephonic advice or instruction which it, in good faith and with reasonable care, believes
to be given by any one of the persons authorized above to give written instructions, provided that the Company shall promptly confirm
such instructions in writing;
(b)
Subject to Section 4 hereof, hold the Trustee harmless and indemnify the Trustee from and against any and all expenses, including
reasonable counsel fees and disbursements, or losses suffered by the Trustee in connection with any action taken by it hereunder and
in connection with any action, suit or other proceeding brought against the Trustee involving any claim, or in connection with any claim
or demand, which in any way arises out of or relates to this Agreement, the services of the Trustee hereunder, or the Property or any
interest earned on the Property, except for expenses and losses resulting from the Trustee’s gross negligence, fraud or willful
misconduct. Promptly after the receipt by the Trustee of notice of demand or claim or the commencement of any action, suit or proceeding,
pursuant to which the Trustee intends to seek indemnification under this Section 2(b), it shall notify the Company in writing
of such claim (hereinafter referred to as the “Indemnified Claim”). The Trustee shall have the right to conduct
and manage the defense against such Indemnified Claim; provided that the Trustee shall obtain the consent of the Company with
respect to the selection of counsel, which consent shall not be unreasonably withheld. The Trustee may not agree to settle any Indemnified
Claim without the prior written consent of the Company, which such consent shall not be unreasonably withheld. The Company may participate
in such action with its own counsel;
(c)
Pay the Trustee the fees set forth on Schedule A hereto, including an initial acceptance fee, annual administration fee, and transaction
processing fee which fees shall be subject to modification by the parties from time to time. It is expressly understood that the Property
shall not be used to pay such fees unless and until the closing of the Business Combination (defined below). The Company shall pay the
Trustee the initial acceptance fee and the first annual administration fee at the consummation of the Offering. The Trustee shall refund
to the Company the annual administration fee (on a pro rata basis) with respect to any period after the liquidation of the Trust Account.
The Company shall not be responsible for any other fees or charges of the Trustee except as set forth in this Section 2(c), Schedule
A and as may be provided in Section 2(b) hereof;
(d)
In connection with any vote of the Company’s stockholders regarding a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination involving the Company and one or more businesses (the “Business
Combination”), provide to the Trustee an affidavit or certificate of the inspector of elections for the stockholder meeting
verifying the vote of such stockholders regarding such Business Combination;
(e)
Provide the Representative with a copy of any Termination Letter(s) and/or any other correspondence that is sent to the Trustee with
respect to any proposed withdrawal from the Trust Account promptly after it issues the same;
(f)
Unless otherwise agreed between the Company and the Representative, ensure that any Instruction Letter (as defined in Exhibit A)
delivered in connection with a Termination Letter in the form of Exhibit A expressly provides that the Deferred Discount is paid
directly to the account or accounts directed by the Representative on behalf of the Underwriters prior to any transfer of the funds held
in the Trust Account to the Company or any other person;
(g)
Instruct the Trustee to make only those distributions that are permitted under this Agreement, and refrain from instructing the Trustee
to make any distributions that are not permitted under this Agreement; and
(h)
Within four (4) business days after the Underwriters exercise the over-allotment option (or any unexercised portion thereof) or such
over-allotment expires, provide the Trustee with a notice in writing of the total amount of the Deferred Discount, which shall in no
event be less than $3,500,000.
3.
Limitations of Liability. The Trustee shall have no responsibility or liability to:
(a)
Imply obligations, perform duties, inquire or otherwise be subject to the provisions of any agreement or document other than this Agreement
and that which is expressly set forth herein;
(b)
Take any action with respect to the Property, other than as directed in Section 1 hereof, and the Trustee shall have no liability
to any third party except for liability arising out of the Trustee’s gross negligence, fraud or willful misconduct;
(c)
Institute any proceeding for the collection of any principal and income arising from, or institute, appear in or defend any proceeding
of any kind with respect to, any of the Property unless and until it shall have received instructions from the Company given as provided
herein to do so and the Company shall have advanced or guaranteed to it funds sufficient to pay any expenses incident thereto;
(d)
Refund any depreciation in principal of any Property;
(e)
Assume that the authority of any person designated by the Company to give instructions hereunder shall not be continuing unless provided
otherwise in such designation, or unless the Company shall have delivered a written revocation of such authority to the Trustee;
(f)
The other parties hereto or to anyone else for any action taken or omitted by it, or any action suffered by it to be taken or omitted,
in good faith and in the Trustee’s best judgment, except for the Trustee’s gross negligence, fraud or willful misconduct.
The Trustee may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of
counsel (including counsel chosen by the Trustee, which counsel may be the Company’s counsel), statement, instrument, report or
other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth
and acceptability of any information therein contained) which the Trustee believes, in good faith and with reasonable care, to be genuine
and to be signed or presented by the proper person or persons. The Trustee shall not be bound by any notice or demand, or any waiver,
modification, termination or rescission of this Agreement or any of the terms hereof, unless evidenced by a written instrument delivered
to the Trustee, signed by the proper party or parties and, if the duties or rights of the Trustee are affected, unless it shall give
its prior written consent thereto;
(g)
Verify the accuracy of the information contained in the Registration Statement;
(h)
Provide any assurance that any Business Combination entered into by the Company or any other action taken by the Company is as contemplated
by the Registration Statement;
(i)
File information returns with respect to the Trust Account with any local, state or federal taxing authority or provide periodic written
statements to the Company documenting the taxes payable by the Company, if any, relating to any interest income earned on the Property;
(j)
Prepare, execute and file tax reports, income or other tax returns and pay any taxes with respect to any income generated by, and activities
relating to, the Trust Account, regardless of whether such tax is payable by the Trust Account or the Company, including, but not limited
to, franchise and income tax obligations, except pursuant to Section 1(j) hereof; or
(k)
Verify calculations, qualify or otherwise approve the Company’s written requests for distributions pursuant to Sections 1(i),
1(j) or 1(k) hereof.
4.
Trust Account Waiver. The Trustee has no right of set-off or any right, title, interest or claim of any kind (“Claim”)
to, or to any monies in, the Trust Account, and hereby irrevocably waives any Claim to, or to any monies in, the Trust Account that it
may have now or in the future. In the event the Trustee has any Claim against the Company under this Agreement, including, without limitation,
under Section 2(b) or Section 2(c) hereof, the Trustee shall pursue such Claim solely against the Company and its assets
outside the Trust Account and not against the Property or any monies in the Trust Account.
5.
Termination. This Agreement shall terminate as follows:
(a)
If the Trustee gives written notice to the Company that it desires to resign under this Agreement, the Company shall use its reasonable
efforts to locate a successor trustee, pending which the Trustee shall continue to act in accordance with this Agreement. At such time
that the Company notifies the Trustee that a successor trustee has been appointed and has agreed to become subject to the terms of this
Agreement, the Trustee shall transfer the management of the Trust Account to the successor trustee, including but not limited to the
transfer of copies of the reports and statements relating to the Trust Account, whereupon this Agreement shall terminate; provided,
however, that in the event that the Company does not locate a successor trustee within ninety (90) days of receipt of the resignation
notice from the Trustee, the Trustee may submit an application to have the Property deposited with any court in the State of New York
or with the United States District Court for the Southern District of New York and upon such deposit, the Trustee shall be immune from
any liability whatsoever; or
(b)
At such time that the Trustee has completed the liquidation of the Trust Account and its obligations in accordance with the provisions
of Section 1(i) hereof (which section may not be amended under any circumstances) and distributed the Property in accordance with
the provisions of the Termination Letter, this Agreement shall terminate except with respect to Section 2(b).
6.
Miscellaneous.
(a)
The Company and the Trustee each acknowledge that the Trustee will follow the security procedures set forth below with respect to funds
transferred from the Trust Account. The Company and the Trustee will each restrict access to confidential information relating to such
security procedures to authorized persons. Each party must notify the other party immediately if it has reason to believe unauthorized
persons may have obtained access to such confidential information, or of any change in its authorized personnel. In executing funds transfers,
the Trustee shall rely upon all information supplied to it by the Company, including, account names, account numbers, and all other identifying
information relating to a Beneficiary, Beneficiary’s bank or intermediary bank. Except for any liability arising out of the Trustee’s
gross negligence, fraud or willful misconduct, the Trustee shall not be liable for any loss, liability or expense resulting from any
error in the information or transmission of the funds.
(b)
This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect
to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. This Agreement may
be executed in several original or facsimile counterparts, each one of which shall constitute an original, and together shall constitute
but one instrument.
(c)
This Agreement contains the entire agreement and understanding of the parties hereto with respect to the subject matter hereof. This
Agreement or any provision hereof may only be changed, amended or modified (other than to correct a typographical error) by a writing
signed by each of the parties hereto; provided, however, that no such change, amendment or modification to Section 1(i), 2(f) or Exhibit
A may be made without the prior written consent of the Representative.
(d)
This Agreement or any provision hereof may only be changed, amended or modified pursuant to Section 6(c) hereof with the Consent
of the Stockholders. For purposes of this Section 6(d), the “Consent of the Stockholders” means receipt
by the Trustee of a certificate from the inspector of elections of the stockholder meeting certifying that the Company’s stockholders
of record as of a record date established in accordance with Section 213(a) of the Delaware General Corporation Law, as amended (“DGCL”)
(or any successor rule), who hold sixty-five percent (65%) or more of all then outstanding shares of the Common Stock and Class B common
stock, par value $0.0001 per share, of the Company voting together as a single class, have voted in favor of such change, amendment or
modification. No such amendment will affect any Public Stockholder who has otherwise indicated his election to redeem his shares of Common
Stock in connection with a stockholder vote sought to amend this Agreement to modify the substance or timing of the Company’s obligation
to redeem 100% of the Common Stock if the Company does not complete its initial Business Combination within the time frame specified
in the Charter. Except for any liability arising out of the Trustee’s gross negligence, fraud or willful misconduct, the Trustee
may rely conclusively on the certification from the inspector or elections referenced above and shall be relieved of all liability to
any party for executing the proposed amendment in reliance thereon.
(e)
The parties hereto consent to the jurisdiction and venue of any state or federal court located in the City of New York, State of New
York, for purposes of resolving any disputes hereunder. AS TO ANY CLAIM, CROSS-CLAIM OR COUNTERCLAIM IN ANY WAY RELATING TO THIS AGREEMENT,
EACH PARTY WAIVES THE RIGHT TO TRIAL BY JURY.
(f)
Any notice, consent or request to be given in connection with any of the terms or provisions of this Agreement shall be in writing and
shall be sent by express mail or similar private courier service, by certified mail (return receipt requested), by hand delivery or by
electronic mail:
if
to the Trustee, to:
Continental
Stock Transfer & Trust Company
1
State Street, 30th Floor
New
York, NY 10004
Attn:
Francis Wolf and Celeste Gonzalez
Email:
fwolf@continentalstock.com; cgonzalez@continentalstock.com
if
to the Company, to:
Sagaliam
Acquisition Corp.
Barry
Kostiner
Chief Executive Officer
1800
Avenue of the Stars, Suite 1475
Los
Angeles, CA 90067
in
each case, with copies to:
Ellenoff
Grossman & Schole LLP
1345
Avenue of the Americas
New
York, NY 10105
Attn:
Richard Baumann, Esq.
Telephone:
(212) 370-1300
and
Maxim
Group LLC
405
Lexington Ave
New
York, NY 10174
Attn.:
[ ]
and
Harter
Secret & Emery LLP
1600
Bausch & Lomb Place
Rochester,
NY 14604
Attn.:
C. Christopher Murillo, Esq.
Telephone:
(212) 407-4000
(g)
Each of the Company and the Trustee hereby represents that it has the full right and power and has been duly authorized to enter into
this Agreement and to perform its respective obligations as contemplated hereunder. The Trustee acknowledges and agrees that it shall
not make any claims or proceed against the Trust Account, including by way of set-off, and shall not be entitled to any funds in the
Trust Account under any circumstance.
(h)
This Agreement is the joint product of the Trustee and the Company and each provision hereof has been subject to the mutual consultation,
negotiation and agreement of such parties and shall not be construed for or against any party hereto.
(i)
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts
shall together constitute one and the same instrument. Delivery of a signed counterpart of this Agreement by facsimile or electronic
transmission shall constitute valid and sufficient delivery thereof.
(j)
Each of the Company and the Trustee hereby acknowledges and agrees that Maxim Group LLC, on behalf of the Underwriters, is a third party
beneficiary of this Agreement.
(k)
Except as specified herein, no party to this Agreement may assign its rights or delegate its obligations hereunder to any other person
or entity.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the parties have duly executed this Investment Management Trust Agreement as of the date first written above.
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CONTINENTAL
STOCK TRANSFER & TRUST COMPANY, as Trustee
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By:
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Name:
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Francis
Wolf
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Title:
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Vice
President
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SAGALIAM
ACQUISITION CORP.
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By:
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Name:
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Barry
Kostiner
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Title:
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Chief
Executive Officer
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[Signature
Page to Investment Management Trust Agreement]
SCHEDULE
A
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Fee Item
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Time and method of payment
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Amount
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Initial set-up fee.
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Initial closing of Offering by wire transfer.
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$
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3,500.00
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Trustee administration fee
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Payable annually. First year fee payable, at initial closing of Offering by wire transfer, thereafter by wire transfer or check.
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$
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10,000.00
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Transaction processing fee for disbursements to Company under Sections 1(i) and (j)
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Billed to Company following disbursement made to Company under Section 1
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$
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250.00
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Paying Agent services as required pursuant to Sections 1(i) and 1(k)
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Billed to Company upon delivery of service pursuant to Section 1(i) and 1(k)
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Prevailing rates
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EXHIBIT
A
[Letterhead
of Company]
[Insert
date]
Continental
Stock Transfer & Trust Company
1
State Street, 30th Floor
New
York, New York 10004
Attn:
Francis Wolf and Celeste Gonzalez
Re: Trust
Account - Termination Letter
Dear
Mr. Wolf and Ms. Gonzalez:
Pursuant
to Section 1(i) of the Investment Management Trust Agreement between Sagaliam Acquisition Corp. (the “Company”)
and Continental Stock Transfer & Trust Company (the “Trustee”), dated as of [ ], 2021 (the “Trust
Agreement”), this is to advise you that the Company has entered into an agreement with (the “Target Business”)
to consummate a business combination with Target Business (the “Business Combination”) on or about [insert
date]. The Company shall notify you at least seventy-two (72) hours in advance of the actual date of the consummation of the Business
Combination (the “Consummation Date”). Capitalized terms used but not defined herein shall have the meanings
set forth in the Trust Agreement.
In
accordance with the terms of the Trust Agreement, we hereby authorize you to commence to liquidate all of the assets of the Trust Account
and transfer the proceeds to a segregated account held by you on behalf of the Beneficiaries to the effect that, on the Consummation
Date, all of the funds held in the Trust Operating Account at JPMorgan Chase Bank N.A. will be immediately available for transfer to
the account or accounts that the Company shall direct on the Consummation Date (including as directed to it by the Representative on
behalf of the Underwriters (with respect to the Deferred Discount)). It is acknowledged and agreed that while the funds are on deposit
in the trust operating account at JPMorgan Chase Bank, N.A. awaiting distribution, the Company will not earn any interest or dividends.
On
the Consummation Date, (i) counsel for the Company shall deliver to you written notification that the Business Combination has been consummated,
or will be consummated concurrently with your transfer of funds to the accounts as directed by the Company (the “Notification”)
and (ii) the Company shall deliver to you (a) a certificate by the Chief Executive Officer, which verifies that the Business Combination
has been approved by a vote of the Company’s stockholders, if a vote is held and (b) a joint written instruction signed by the
Company and the Representative with respect to the transfer of the funds held in the Trust Account, including payment of amounts owed
to public stockholders who have properly exercised their redemption rights and payment of the Deferred Discount to the Representative
from the Trust Account (the “Instruction Letter”). You are hereby directed and authorized to transfer the funds
held in the Trust Account immediately upon your receipt of the Notification and the Instruction Letter, in accordance with the terms
of the Instruction Letter. In the event that certain deposits held in the Trust Account may not be liquidated by the Consummation Date
without penalty, you will notify the Company in writing of the same and the Company shall direct you as to whether such funds should
remain in the Trust Account and be distributed after the Consummation Date to the Company. Upon the distribution of all the funds, net
of any payments necessary for reasonable unreimbursed expenses related to liquidating the Trust Account, your obligations under the Trust
Agreement shall be terminated.
In
the event that the Business Combination is not consummated on the Consummation Date described in the notice thereof and we have not notified
you on or before the original Consummation Date of a new Consummation Date, then upon receipt by the Trustee of written instructions
from the Company, the funds held in the Trust Account shall be reinvested as provided in Section 1(c) of the Trust Agreement on the business
day immediately following the Consummation Date as set forth in such notice as soon thereafter as possible.
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Very
truly yours,
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Sagaliam
Acquisition Corp.
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By:
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Name:
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Title:
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Acknowledged
& Agreed by: Maxim Group LLC
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By:
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Name:
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Title:
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EXHIBIT
B
[Letterhead
of Company]
[Insert
date]
Continental
Stock Transfer & Trust Company
1
State Street, 30th Floor
New
York, New York 10004
Attn:
Francis Wolf and Celeste Gonzalez
Re: Trust
Account -Termination Letter
Dear
Mr. Wolf and Ms. Gonzalez:
Pursuant
to Section 1(i) of the Investment Management Trust Agreement between Sagaliam Acquisition Corp. (the “Company”)
and Continental Stock Transfer & Trust Company (the “Trustee”), dated as of [ ], 2021 (the “Trust
Agreement”), this is to advise you that the Company has been unable to effect a business combination with a Target Business
(the “Business Combination”) within the time frame specified in Section 1(i) of the Trust Agreement. Capitalized
terms used but not defined herein shall have the meanings set forth in the Trust Agreement.
In
accordance with the terms of the Trust Agreement, we hereby authorize you to liquidate all of the assets in the Trust Account and to
transfer the total proceeds into a segregated account held by you on behalf of the Beneficiaries to await distribution to the Public
Stockholders. The Company has selected (1) as the effective date for the purpose of determining when the Public Stockholders
will be entitled to receive their share of the liquidation proceeds. You agree to be the Paying Agent of record and, in your separate
capacity as Paying Agent, agree to distribute said funds directly to the Company’s Public Stockholders in accordance with the terms
of the Trust Agreement and the Amended and Restated Certificate of Incorporation of the Company. Upon the distribution of all the funds,
net of any payments necessary for reasonable unreimbursed expenses related to liquidating the Trust Account, your obligations under the
Trust Agreement shall be terminated, except to the extent otherwise provided in Section 1(j) of the Trust Agreement.
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(1)
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18
months from the closing of the Offering, or at a later date, if extended.
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Very
truly yours,
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Sagaliam
Acquisition Corp.
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By:
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Name:
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Title:
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EXHIBIT
C
[Letterhead
of Company]
[Insert
date]
Continental
Stock Transfer & Trust Company
1
State Street, 30th Floor
New
York, New York 10004
Attn:
Francis Wolf and Celeste Gonzalez
Re: Trust
Account - Withdrawal Instruction
Dear
Mr. Wolf and Ms. Gonzalez:
Pursuant
to Section 1(j) of the Investment Management Trust Agreement between Sagaliam Acquisition Corp. (the “Company”)
and Continental Stock Transfer & Trust Company (the “Trustee”), dated as of [ ], 2021 (the “Trust
Agreement”), the Company hereby requests that you deliver to the Company $ of the interest income earned on the Property
as of the date hereof. Capitalized terms used but not defined herein shall have the meanings set forth in the Trust Agreement.
The
Company needs such funds to pay for the tax obligations as set forth on the attached tax return or tax statement. In accordance with
the terms of the Trust Agreement, you are hereby directed and authorized to transfer (via wire transfer) such funds promptly upon your
receipt of this letter to the Company’s operating account at:
[WIRE
INSTRUCTION INFORMATION]
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Very
truly yours,
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Sagaliam
Acquisition Corp.
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By:
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Name:
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Title:
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EXHIBIT
D
[Letterhead
of Company]
[Insert
date]
Continental
Stock Transfer & Trust Company
1
State Street, 30th Floor
New
York, New York 10004
Attn:
Mr. Wolf and Ms. Gonzalez
Re: Trust
Account - Stockholder Redemption Withdrawal Instruction
Dear
Mr. Wolf and Ms. Gonzalez:
Pursuant
to Section 1(k) of the Investment Management Trust Agreement between Sagaliam Acquisition Corp. (the “Company”)
and Continental Stock Transfer & Trust Company (the “Trustee”), dated as of [ ], 2021 (the “Trust
Agreement”), the Company hereby requests that you deliver to the redeeming Public Stockholders of the Company $ of the
principal and interest income earned on the Property as of the date hereof to a segregated account held by you on behalf of the Beneficiaries
for distribution to the Stockholders who have requested redemption of their Common Stock. Capitalized terms used but not defined herein
shall have the meanings set forth in the Trust Agreement.
The
Company needs such funds to pay its Public Stockholders who have properly elected to have their shares of Common Stock redeemed by the
Company in connection with a stockholder vote to approve an amendment to the Company’s Amended and Restated Certificate of Incorporation
to modify the substance or timing of the Company’s obligation to redeem 100% of public shares of Common Stock if the Company has
not consummated an initial Business Combination within such time as is described in Section 1(i) of the Trust Agreement. As such, you
are hereby directed and authorized to transfer (via wire transfer) such funds promptly upon your receipt of this letter.
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Very
truly yours,
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Sagaliam
Acquisition Corp.
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By:
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Name:
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Title:
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Exhibit
10.4
REGISTRATION
RIGHTS AGREEMENT
THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of [ ], 2021, is made and entered into by and among
Sagaliam Acquisition Corp., a Delaware corporation (the “Company”) and Sagaliam Sponsor LLC, a Delaware limited
liability company (the “Sponsor,” together with any person or entity who hereafter becomes a party to this
Agreement pursuant to Section 5.2 of this Agreement, a “Holder” and collectively the “Holders”).
RECITALS
WHEREAS,
on April 7, 2021, the Sponsor purchased an aggregate of 2,875,000 Founder Shares outstanding, up to 375,000 of which would be forfeited
to the Company for no consideration depending on the extent to which the underwriters of the Company’s initial public offering
exercise their over-allotment option;
WHEREAS,
the Founder Shares are convertible into shares of the Company’s Class A common stock, par value $0.0001 per share (the “Common
Stock”), on the terms and conditions provided in the Company’s amended and restated certificate of incorporation;
WHEREAS,
on [ ], 2021, the Company and the Sponsor entered into that certain Private Placement Units Purchase Agreement, pursuant to which the
Sponsor agreed to purchase 390,000 units (or 420,000 units if the over-allotment option is exercised in full) at a price of $10.00 per
unit (the “Private Placement Units”), in a private placement transaction occurring simultaneously with the
closing of the Company’s initial public offering;
WHEREAS,
each Private Unit consisting of one share of Common Stock (“Private Common Stock”), and one right (the “Private
Right”). Each Right entitles the holder thereof to receive one-tenth (1/10) of one ordinary share upon the consummation
of the Company’s it initial business combination;
WHEREAS,
in order to finance the Company’s transaction costs in connection with an intended initial Business Combination (as defined below)
the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may loan to the Company funds as
the Company may require, of which up to $1,500,000 of such loans may be convertible into private placement units (“Working
Capital Units”) at a price of $10.00 per unit; and
WHEREAS,
the Company and the Holders desire to enter into this Agreement, pursuant to which the Company shall grant the Holders certain registration
rights with respect to certain securities of the Company, as set forth in this Agreement.
NOW,
THEREFORE, in consideration of the representations, covenants and agreements contained herein, and certain other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:
ARTICLE
I
DEFINITIONS
1.1
Definitions. The terms defined in this Article I shall, for all purposes of this Agreement, have the respective
meanings set forth below:
“Adverse
Disclosure” shall mean any public disclosure of material non-public information, which disclosure, in the good faith judgment
of the Chief Executive Officer or principal financial officer of the Company, after consultation with counsel to the Company, (i) would
be required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not
to contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein
(in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading,
(ii) would not be required to be made at such time if the Registration Statement were not being filed, and (iii) the Company has a bona
fide business purpose for not making such information public.
“Agreement”
shall have the meaning given in the Preamble.
“Board”
shall mean the Board of Directors of the Company.
“Business
Combination” shall mean any merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other
similar business combination with one or more businesses, involving the Company.
“Commission”
shall mean the Securities and Exchange Commission.
“Common
Stock” shall have the meaning given in the Recitals hereto.
“Company”
shall have the meaning given in the Preamble.
“Demand
Registration” shall have the meaning given in subsection 2.1.1.
“Demanding
Holder” shall have the meaning given in subsection 2.1.1.
“Exchange
Act” shall mean the Securities Exchange Act of 1934, as it may be amended from time to time.
“Form
S-1” shall have the meaning given in subsection 2.1.1.
“Form
S-3” shall have the meaning given in subsection 2.3.
“Founder
Shares” shall have the meaning given in the Recitals hereto and shall be deemed to include the shares of Common Stock issuable
upon conversion thereof.
“Founder
Shares Lock-up Period” shall mean, with respect to the Founder Shares, the period ending on the earlier of (A) one year
after the completion of the Company’s initial Business Combination or (B) subsequent to the Business Combination, (x) if the last
sale price of the Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Company’s initial
Business Combination or (y) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or
other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of Common
Stock for cash, securities or other property.
“Holders”
shall have the meaning given in the Preamble.
“Insider
Letter” shall mean that certain letter agreement, dated as of [ ], 2021, by and among the Company, the Sponsor and each
of the Company’s officers, directors, director nominees and advisors.
“Maximum
Number of Securities” shall have the meaning given in subsection 2.1.4.
“Misstatement”
shall mean an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement
or Prospectus, or necessary to make the statements in a Registration Statement or Prospectus (in the light of the circumstances under
which they were made) not misleading.
“Permitted
Transferees” shall mean any person or entity to whom a Holder of Registrable Securities is permitted to transfer such Registrable
Securities prior to the expiration of the Founder Shares Lock-up Period or Private Placement Lock-up Period, as the case may be, under
the Insider Letter, this Agreement and any other applicable agreement between such Holder and the Company, and to any transferee thereafter.
“Piggyback
Registration” shall have the meaning given in subsection 2.2.1.
“Private
Placement Lock-up Period” shall mean, with respect to Private Placement Units that are held by the initial purchasers of
such Private Placement Units or their Permitted Transferees, and any of the securities underlying the Private Placement Units, including
the Private Units issued or issuable upon the conversion of any such Private Rights), that are held by the initial purchasers of the
Private Placement Units or their Permitted Transferees, the period ending 30 days after the completion of the Company’s initial
Business Combination.
“Private
Placement Units” shall have the meaning given in the Recitals hereto.
“Pro
Rata” shall have the meaning given in subsection 2.1.4.
“Prospectus”
shall mean the prospectus included in any Registration Statement, as supplemented by any and all prospectus supplements and as amended
by any and all post-effective amendments and including all material incorporated by reference in such prospectus.
“Registrable
Security” shall mean (a) the Founder Shares and the shares of Common Stock issued or issuable upon the conversion of any
Founder Shares, (b) the Private Placement Units and the Common Stock issued or issuable upon the exercise of the Private Placement Units,
(c) any outstanding share of the Common Stock or any other equity security (including the shares of Common Stock issued or issuable upon
the exercise of any other equity security) of the Company held by a Holder as of the date of this Agreement, (d) any Working Capital
Units (including the Common Stock issued or issuable upon the exercise of the Working Capital Units), and (e) any other equity security
of the Company issued or issuable with respect to any such share of the Common Stock by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation or reorganization; provided, however,
that, as to any particular Registrable Security, such securities shall cease to be Registrable Securities when: (A) a Registration Statement
with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been
sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (B) such securities shall have been otherwise
transferred, new certificates for such securities not bearing a legend restricting further transfer shall have been delivered by the
Company and subsequent public distribution of such securities shall not require registration under the Securities Act; (C) such securities
shall have ceased to be outstanding; (D) such securities may be sold without registration pursuant to Rule 144 promulgated under the
Securities Act (or any successor rule promulgated thereafter by the Commission) (but with no volume or other restrictions or limitations);
or (E) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities
transaction.
“Registration”
shall mean a registration effected by preparing and filing a registration statement or similar document in compliance with the requirements
of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective.
“Registration
Expenses” shall mean the out-of-pocket expenses of a Registration, including, without limitation, the following:
(A)
all registration and filing fees (including fees with respect to filings required to be made with the Financial Industry Regulatory Authority,
Inc.) and any securities exchange on which the Common Stock is then listed;
(B)
fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel for the Underwriters
in connection with blue sky qualifications of Registrable Securities);
(C)
printing, messenger, telephone and delivery expenses;
(D)
reasonable fees and disbursements of counsel for the Company;
(E)
reasonable fees and disbursements of all independent registered public accountants of the Company incurred specifically in connection
with such Registration; and
(F)
reasonable fees and expenses of one (1) legal counsel selected by the majority-in-interest of the Demanding Holders initiating a Demand
Registration to be registered for offer and sale in the applicable Registration.
“Registration
Statement” shall mean any registration statement that covers the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements
to such registration statement, and all exhibits to and all material incorporated by reference in such registration statement.
“Requesting
Holder” shall have the meaning given in subsection 2.1.1.
“Securities
Act” shall mean the Securities Act of 1933, as amended from time to time.
“Sponsor”
shall have the meaning given in the Recitals hereto.
“Underwriter”
shall mean a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part of such
dealer’s market-making activities.
“Underwritten
Registration” or “Underwritten Offering” shall mean a Registration in which securities of the
Company are sold to an Underwriter in a firm commitment underwriting for distribution to the public.
“Working
Capital Units” shall have the meaning given in the Recitals hereto.
ARTICLE
II
REGISTRATIONS
2.1
Demand Registration.
2.1.1
Request for Registration. Subject to the provisions of subsection 2.1.4 and Section 2.4 hereof, at any time and from time
to time on or after the date the Company consummates the Business Combination, the Holders of at least a majority in interest of the
then-outstanding number of Registrable Securities (the “Demanding Holders”) may make a written demand for Registration
of all or part of their Registrable Securities, which written demand shall describe the amount and type of securities to be included
in such Registration and the intended method(s) of distribution thereof (such written demand a “Demand Registration”).
The Company shall, within ten (10) days of the Company’s receipt of the Demand Registration, notify, in writing, all other Holders
of Registrable Securities of such demand, and each Holder of Registrable Securities who thereafter wishes to include all or a portion
of such Holder’s Registrable Securities in a Registration pursuant to a Demand Registration (each such Holder that includes all
or a portion of such Holder’s Registrable Securities in such Registration, a “Requesting Holder”) shall
so notify the Company, in writing, within five (5) days after the receipt by the Holder of the notice from the Company. Upon receipt
by the Company of any such written notification from a Requesting Holder(s) to the Company, such Requesting Holder(s) shall be entitled
to have their Registrable Securities included in a Registration pursuant to a Demand Registration and the Company shall effect, as soon
thereafter as practicable, but not more than forty five (45) days immediately after the Company’s receipt of the Demand Registration,
the Registration of all Registrable Securities requested by the Demanding Holders and Requesting Holders pursuant to such Demand Registration.
Under no circumstances shall the Company be obligated to effect more than an aggregate of three (3) Registrations pursuant to a Demand
Registration under this subsection 2.1.1 with respect to any or all Registrable Securities; provided, however, that
a Registration shall not be counted for such purposes unless a Form S-1 or any similar long-form registration statement that may be available
at such time (“Form S-1”) has become effective and all of the Registrable Securities requested by the Requesting
Holders to be registered on behalf of the Requesting Holders in such Form S-1 Registration have been sold, in accordance with Section
3.1 of this Agreement.
2.1.2
Effective Registration. Notwithstanding the provisions of subsection 2.1.1 above or any other part of this Agreement, a
Registration pursuant to a Demand Registration shall not count as a Registration unless and until (i) the Registration Statement filed
with the Commission with respect to a Registration pursuant to a Demand Registration has been declared effective by the Commission and
(ii) the Company has complied with all of its obligations under this Agreement with respect thereto; provided, further,
that if, after such Registration Statement has been declared effective, an offering of Registrable Securities in a Registration pursuant
to a Demand Registration is subsequently interfered with by any stop order or injunction of the Commission, federal or state court or
any other governmental agency the Registration Statement with respect to such Registration shall be deemed not to have been declared
effective, unless and until, (i) such stop order or injunction is removed, rescinded or otherwise terminated, and (ii) a majority-in-interest
of the Demanding Holders initiating such Demand Registration thereafter affirmatively elect to continue with such Registration and accordingly
notify the Company in writing, but in no event later than five (5) days, of such election; and provided, further, that
the Company shall not be obligated or required to file another Registration Statement until the Registration Statement that has been
previously filed with respect to a Registration pursuant to a Demand Registration becomes effective or is subsequently terminated.
2.1.3
Underwritten Offering. Subject to the provisions of subsection 2.1.4 and Section 2.4 hereof, if a majority-in-interest
of the Demanding Holders so advise the Company as part of their Demand Registration that the offering of the Registrable Securities pursuant
to such Demand Registration shall be in the form of an Underwritten Offering, then the right of such Demanding Holder or Requesting Holder
(if any) to include its Registrable Securities in such Registration shall be conditioned upon such Holder’s participation in such
Underwritten Offering and the inclusion of such Holder’s Registrable Securities in such Underwritten Offering to the extent provided
herein. All such Holders proposing to distribute their Registrable Securities through an Underwritten Offering under this subsection
2.1.3 shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering
by the majority-in-interest of the Demanding Holders initiating the Demand Registration.
2.1.4
Reduction of Underwritten Offering. If the managing Underwriter or Underwriters in an Underwritten Registration pursuant to a
Demand Registration, in good faith, advises the Company, the Demanding Holders and the Requesting Holders (if any) in writing that the
dollar amount or number of Registrable Securities that the Demanding Holders and the Requesting Holders (if any) desire to sell, taken
together with all other Common Stock or other equity securities that the Company desires to sell and the Common Stock, if any, as to
which a Registration has been requested pursuant to separate written contractual piggy-back registration rights held by any other stockholders
who desire to sell, exceeds the maximum dollar amount or maximum number of equity securities that can be sold in the Underwritten Offering
without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering
(such maximum dollar amount or maximum number of such securities, as applicable, the “Maximum Number of Securities”),
then the Company shall include in such Underwritten Offering, as follows: (i) first, the Registrable Securities of the Demanding Holders
and the Requesting Holders (if any) (pro rata based on the respective number of Registrable Securities that each Demanding Holder and
Requesting Holder (if any) has requested be included in such Underwritten Registration and the aggregate number of Registrable Securities
that the Demanding Holders and Requesting Holders have requested be included in such Underwritten Registration (such proportion is referred
to herein as “Pro Rata”)) that can be sold without exceeding the Maximum Number of Securities; (ii) second,
to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the Registrable Securities of
Holders (Pro Rata, based on the respective number of Registrable Securities that each Holder has so requested) exercising their rights
to register their Registrable Securities pursuant to subsection 2.2.1 hereof, without exceeding the Maximum Number of Securities;
and (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the
Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities;
and (iv) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i), (ii) and (iii),
the Common Stock or other equity securities of other persons or entities that the Company is obligated to register in a Registration
pursuant to separate written contractual arrangements with such persons and that can be sold without exceeding the Maximum Number of
Securities.
2.1.5
Demand Registration Withdrawal. A majority-in-interest of the Demanding Holders initiating a Demand Registration or a majority-in-interest
of the Requesting Holders (if any), pursuant to a Registration under subsection 2.1.1 shall have the right to withdraw from a
Registration pursuant to such Demand Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter
or Underwriters (if any) of their intention to withdraw from such Registration prior to the effectiveness of the Registration Statement
filed with the Commission with respect to the Registration of their Registrable Securities pursuant to such Demand Registration. Notwithstanding
anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with
a Registration pursuant to a Demand Registration prior to its withdrawal under this subsection 2.1.5.
2.2
Piggyback Registration.
2.2.1
Piggyback Rights. If, at any time on or after the date the Company consummates a Business Combination, the Company proposes to
file a Registration Statement under the Securities Act with respect to an offering of equity securities, or securities or other obligations
exercisable or exchangeable for, or convertible into equity securities, for its own account or for the account of stockholders of the
Company (or by the Company and by the stockholders of the Company including, without limitation, pursuant to Section 2.1 hereof),
other than a Registration Statement (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange
offer or offering of securities solely to the Company’s existing stockholders, (iii) for an offering of debt that is convertible
into equity securities of the Company or (iv) for a dividend reinvestment plan, then the Company shall give written notice of such proposed
filing to all of the Holders of Registrable Securities as soon as practicable but not less than ten (10) days before the anticipated
filing date of such Registration Statement, which notice shall (A) describe the amount and type of securities to be included in such
offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, in such
offering, and (B) offer to all of the Holders of Registrable Securities the opportunity to register the sale of such number of Registrable
Securities as such Holders may request in writing within five (5) days after receipt of such written notice (such Registration a “Piggyback
Registration”). The Company shall, in good faith, cause such Registrable Securities to be included in such Piggyback Registration
and shall use its best efforts to cause the managing Underwriter or Underwriters of a proposed Underwritten Offering to permit the Registrable
Securities requested by the Holders pursuant to this subsection 2.2.1 to be included in a Piggyback Registration on the same terms
and conditions as any similar securities of the Company included in such Registration and to permit the sale or other disposition of
such Registrable Securities in accordance with the intended method(s) of distribution thereof. All such Holders proposing to distribute
their Registrable Securities through an Underwritten Offering under this subsection 2.2.1 shall enter into an underwriting agreement
in customary form with the Underwriter(s) selected for such Underwritten Offering by the Company.
2.2.2
Reduction of Piggyback Registration. If the managing Underwriter or Underwriters in an Underwritten Registration that is to be
a Piggyback Registration, in good faith, advises the Company and the Holders of Registrable Securities participating in the Piggyback
Registration in writing that the dollar amount or number of the Common Stock that the Company desires to sell, taken together with (i)
the Common Stock, if any, as to which Registration has been demanded pursuant to separate written contractual arrangements with persons
or entities other than the Holders of Registrable Securities hereunder (ii) the Registrable Securities as to which registration has been
requested pursuant to Section 2.2 hereof, and (iii) the Common Stock, if any, as to which Registration has been requested pursuant
to separate written contractual piggy-back registration rights of other stockholders of the Company, exceeds the Maximum Number of Securities,
then:
(a)
If the Registration is undertaken for the Company’s account, the Company shall include in any such Registration (A) first, the
Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities;
(B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable
Securities of Holders exercising their rights to register their Registrable Securities pursuant to subsection 2.2.1 hereof, Pro
Rata, which can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities
has not been reached under the foregoing clauses (A) and (B), the Common Stock, if any, as to which Registration has been requested pursuant
to written contractual piggy-back registration rights of other stockholders of the Company, which can be sold without exceeding the Maximum
Number of Securities;
(b)
If the Registration is pursuant to a request by persons or entities other than the Holders of Registrable Securities, then the Company
shall include in any such Registration (A) first, the Common Stock or other equity securities, if any, of such requesting persons or
entities, other than the Holders of Registrable Securities, which can be sold without exceeding the Maximum Number of Securities; (B)
second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities
of Holders exercising their rights to register their Registrable Securities pursuant to subsection 2.2.1, pro rata based on the
number of Registrable Securities that each Holder has requested be included in such Underwritten Registration and the aggregate number
of Registrable Securities that the Holders have requested to be included in such Underwritten Registration, which can be sold without
exceeding the Maximum Number of Securities; (C) third, to the extent that the Maximum Number of Securities has not been reached under
the foregoing clauses (A) and (B), the Common Stock or other equity securities that the Company desires to sell, which can be sold without
exceeding the Maximum Number of Securities; and (D) fourth, to the extent that the Maximum Number of Securities has not been reached
under the foregoing clauses (A), (B) and (C), the Common Stock or other equity securities for the account of other persons or entities
that the Company is obligated to register pursuant to separate written contractual arrangements with such persons or entities, which
can be sold without exceeding the Maximum Number of Securities.
2.2.3
Piggyback Registration Withdrawal. Any Holder of Registrable Securities shall have the right to withdraw from a Piggyback Registration
for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of his, her or
its intention to withdraw from such Piggyback Registration prior to the effectiveness of the Registration Statement filed with the Commission
with respect to such Piggyback Registration. The Company (whether on its own good faith determination or as the result of a request for
withdrawal by persons pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission
in connection with a Piggyback Registration at any time prior to the effectiveness of such Registration Statement. Notwithstanding anything
to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback
Registration prior to its withdrawal under this subsection 2.2.3.
2.2.4
Unlimited Piggyback Registration Rights. For purposes of clarity, any Registration effected pursuant to Section 2.2 hereof
shall not be counted as a Registration pursuant to a Demand Registration effected under Section 2.1 hereof.
2.3
Registrations on Form S-3. Any Holder of Registrable Securities may at any time, and from time to time, request in writing that
the Company, pursuant to Rule 415 under the Securities Act (or any successor rule promulgated thereafter by the Commission), register
the resale of any or all of their Registrable Securities on Form S-3 or any similar short form registration statement that may be available
at such time (“Form S-3”); provided, however, that the Company shall not be obligated to effect
such request through an Underwritten Offering. Within five (5) days of the Company’s receipt of a written request from a Holder
or Holders of Registrable Securities for a Registration on Form S-3, the Company shall promptly give written notice of the proposed Registration
on Form S-3 to all other Holders of Registrable Securities, and each Holder of Registrable Securities who thereafter wishes to include
all or a portion of such Holder’s Registrable Securities in such Registration on Form S-3 shall so notify the Company, in writing,
within ten (10) days after the receipt by the Holder of the notice from the Company. As soon as practicable thereafter, but not more
than twelve (12) days after the Company’s initial receipt of such written request for a Registration on Form S-3, the Company shall
register all or such portion of such Holder’s Registrable Securities as are specified in such written request, together with all
or such portion of Registrable Securities of any other Holder or Holders joining in such request as are specified in the written notification
given by such Holder or Holders; provided, however, that the Company shall not be obligated to effect any such Registration
pursuant to Section 2.3 hereof if (i) a Form S-3 is not available for such offering; or (ii) the Holders of Registrable Securities,
together with the Holders of any other equity securities of the Company entitled to inclusion in such Registration, propose to sell the
Registrable Securities and such other equity securities (if any) at any aggregate price to the public of less than $1,000,000.
2.4
Restrictions on Registration Rights. If (A) during the period starting with the date sixty (60) days prior to the Company’s
good faith estimate of the date of the filing of, and ending on a date one hundred and twenty (120) days after the effective date of,
a Company initiated Registration and provided that the Company has delivered written notice to the Holders prior to receipt of a Demand
Registration pursuant to subsection 2.1.1 and it continues to actively employ, in good faith, all reasonable efforts to cause
the applicable Registration Statement to become effective; (B) the Holders have requested an Underwritten Registration and the Company
and the Holders are unable to obtain the commitment of underwriters to firmly underwrite the offer; or (C) in the good faith judgment
of the Board such Registration would be seriously detrimental to the Company and the Board concludes as a result that it is essential
to defer the filing of such Registration Statement at such time, then in each case the Company shall furnish to such Holders a certificate
signed by the Chairman of the Board stating that in the good faith judgment of the Board it would be seriously detrimental to the Company
for such Registration Statement to be filed in the near future and that it is therefore essential to defer the filing of such Registration
Statement. In such event, the Company shall have the right to defer such filing for a period of not more than thirty (30) days; provided,
however, that the Company shall not defer its obligation in this manner more than once in any 12-month period.
ARTICLE
III
COMPANY
PROCEDURES
3.1
General Procedures. If at any time on or after the date the Company consummates a Business Combination the Company is required
to effect the Registration of Registrable Securities, the Company shall use its best efforts to effect such Registration to permit the
sale of such Registrable Securities in accordance with the intended plan of distribution thereof, and pursuant thereto the Company shall,
as expeditiously as possible:
3.1.1
prepare and file with the Commission as soon as practicable a Registration Statement with respect to such Registrable Securities and
use its reasonable best efforts to cause such Registration Statement to become effective and remain effective until all Registrable Securities
covered by such Registration Statement have been sold;
3.1.2
prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements
to the Prospectus, as may be requested by any Holder or any Underwriter of Registrable Securities or as may be required by the rules,
regulations or instructions applicable to the registration form used by the Company or by the Securities Act or rules and regulations
thereunder to keep the Registration Statement effective until all Registrable Securities covered by such Registration Statement are sold
in accordance with the intended plan of distribution set forth in such Registration Statement or supplement to the Prospectus;
3.1.3
prior to filing a Registration Statement or prospectus, or any amendment or supplement thereto, furnish without charge to the Underwriters,
if any, and each Holder of Registrable Securities included in such Registration, and each such Holder’s legal counsel, copies of
such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including
all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including
each preliminary Prospectus), and such other documents as the Underwriters and each Holder of Registrable Securities included in such
Registration or the legal counsel for any such Holders may request in order to facilitate the disposition of the Registrable Securities
owned by such Holders;
3.1.4
prior to any public offering of Registrable Securities, use its best efforts to (i) register or qualify the Registrable Securities covered
by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as any
Holder of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request
and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with
or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do
any and all other acts and things that may be necessary or advisable to enable the Holders of Registrable Securities included in such
Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however,
that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required
to qualify or take any action to which it would be subject to general service of process or taxation in any such jurisdiction where it
is not then otherwise so subject;
3.1.5
cause all such Registrable Securities to be listed on each securities exchange or automated quotation system on which similar securities
issued by the Company are then listed;
3.1.6
provide a transfer agent or warrant agent, as applicable, and registrar for all such Registrable Securities no later than the effective
date of such Registration Statement;
3.1.7
advise each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance
of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any
proceeding for such purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal
if such stop order should be issued;
3.1.8
at least five (5) days prior to the filing of any Registration Statement or Prospectus or any amendment or supplement to such Registration
Statement or Prospectus or any document that is to be incorporated by reference into such Registration Statement or Prospectus, furnish
a copy thereof to each seller of such Registrable Securities and its counsel, including, without limitation, providing copies promptly
upon receipt of any comment letters received with respect to any such Registration Statement or Prospectus;
3.1.9
notify the Holders at any time when a Prospectus relating to such Registration Statement is required to be delivered under the Securities
Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes
a Misstatement, and then to correct such Misstatement as set forth in Section 3.4 hereof;
3.1.10
permit a representative of the Holders (such representative to be selected by a majority of the participating Holders), the Underwriters,
if any, and any attorney or accountant retained by such Holders or Underwriter to participate, at each such person’s own expense,
in the preparation of the Registration Statement, and cause the Company’s officers, directors and employees to supply all information
reasonably requested by any such representative, Underwriter, attorney or accountant in connection with the Registration; provided,
however, that such representatives or Underwriters enter into a confidentiality agreement, in form and substance reasonably satisfactory
to the Company, prior to the release or disclosure of any such information; and provided further, the Company may not include
the name of any Holder or Underwriter or any information regarding any Holder or Underwriter in any Registration Statement or Prospectus,
any amendment or supplement to such Registration Statement or Prospectus, any document that is to be incorporated by reference into such
Registration Statement or Prospectus, or any response to any comment letter, without the prior written consent of such Holder or Underwriter
and providing each such Holder or Underwriter a reasonable amount of time to review and comment on such applicable document, which comments
the Company shall include unless contrary to applicable law;
3.1.11
obtain a “cold comfort” letter from the Company’s independent registered public accountants in the event of an Underwritten
Registration which the participating Holders may rely on, in customary form and covering such matters of the type customarily covered
by “cold comfort” letters as the managing Underwriter may reasonably request, and reasonably satisfactory to a majority-in-interest
of the participating Holders;
3.1.12
on the date the Registrable Securities are delivered for sale pursuant to such Registration, obtain an opinion, dated such date, of counsel
representing the Company for the purposes of such Registration, addressed to the Holders, the placement agent or sales agent, if any,
and the Underwriters, if any, covering such legal matters with respect to the Registration in respect of which such opinion is being
given as the Holders, placement agent, sales agent, or Underwriter may reasonably request and as are customarily included in such opinions
and negative assurance letters, and reasonably satisfactory to a majority in interest of the participating Holders;
3.1.13
in the event of any Underwritten Offering, enter into and perform its obligations under an underwriting agreement, in usual and customary
form, with the managing Underwriter of such offering;
3.1.14
make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve
(12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration
Statement which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any successor rule
promulgated thereafter by the Commission);
3.1.15
if the Registration involves the Registration of Registrable Securities involving gross proceeds in excess of $[10,000,000, use its reasonable
efforts to make available senior executives of the Company to participate in customary “road show” presentations that may
be reasonably requested by the Underwriter in any Underwritten Offering; and
3.1.16
otherwise, in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the Holders, in
connection with such Registration.
3.2
Registration Expenses. The Registration Expenses of all Registrations shall be borne by the Company. It is acknowledged by the
Holders that the Holders shall bear all incremental selling expenses relating to the sale of Registrable Securities, such as Underwriters’
commissions and discounts, brokerage fees, Underwriter marketing costs and, other than as set forth in the definition of “Registration
Expenses,” all reasonable fees and expenses of any legal counsel representing the Holders.
3.3
Requirements for Participation in Underwritten Offerings. No person may participate in any Underwritten Offering for equity securities
of the Company pursuant to a Registration initiated by the Company hereunder unless such person (i) agrees to sell such person’s
securities on the basis provided in any underwriting arrangements approved by the Company and (ii) completes and executes all customary
questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting agreements and other customary documents as may be
reasonably required under the terms of such underwriting arrangements.
3.4
Suspension of Sales; Adverse Disclosure. Upon receipt of written notice from the Company that a Registration Statement or Prospectus
contains a Misstatement, each of the Holders shall forthwith discontinue disposition of Registrable Securities until it has received
copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to
prepare and file such supplement or amendment as soon as practicable after the time of such notice), or until it is advised in writing
by the Company that the use of the Prospectus may be resumed. If the filing, initial effectiveness or continued use of a Registration
Statement in respect of any Registration at any time would require the Company to make an Adverse Disclosure or would require the inclusion
in such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s control,
the Company may, upon giving prompt written notice of such action to the Holders, delay the filing or initial effectiveness of, or suspend
use of, such Registration Statement for the shortest period of time, but in no event more than thirty (30) days, determined in good faith
by the Company to be necessary for such purpose. In the event the Company exercises its rights under the preceding sentence, the Holders
agree to suspend, immediately upon their receipt of the notice referred to above, their use of the Prospectus relating to any Registration
in connection with any sale or offer to sell Registrable Securities. The Company shall immediately notify the Holders of the expiration
of any period during which it exercised its rights under this Section 3.4.
3.5
Reporting Obligations. As long as any Holder shall own Registrable Securities, the Company, at all times while it shall be a reporting
company under the Exchange Act, covenants to file timely (or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof pursuant to Sections 13(a) or 15(d) of the
Exchange Act and to promptly furnish the Holders with true and complete copies of all such filings. The Company further covenants that
it shall take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder
to sell shares of the Common Stock held by such Holder without registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission), including
providing any legal opinions. Upon the request of any Holder, the Company shall deliver to such Holder a written certification of a duly
authorized officer as to whether it has complied with such requirements.
ARTICLE
IV
INDEMNIFICATION
AND CONTRIBUTION
4.1
Indemnification.
4.1.1
The Company agrees to indemnify, to the extent permitted by law, each Holder of Registrable Securities, its officers and directors and
each person who controls such Holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and
expenses (including attorneys’ fees) caused by any untrue or alleged untrue statement of material fact contained in any Registration
Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of
a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same
are caused by or contained in any information furnished in writing to the Company by such Holder expressly for use therein. The Company
shall indemnify the Underwriters, their officers and directors and each person who controls such Underwriters (within the meaning of
the Securities Act) to the same extent as provided in the foregoing with respect to the indemnification of the Holder.
4.1.2
In connection with any Registration Statement in which a Holder of Registrable Securities is participating, such Holder shall furnish
to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration
Statement or Prospectus and, to the extent permitted by law, shall indemnify the Company, its directors and officers and agents and each
person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses
(including without limitation reasonable attorneys’ fees) resulting from any untrue statement of material fact contained in the
Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission of a material
fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in any information or affidavit so furnished in writing by such Holder expressly for use therein;
provided, however, that the obligation to indemnify shall be several, not joint and several, among such Holders of Registrable
Securities, and the liability of each such Holder of Registrable Securities shall be in proportion to and limited to the net proceeds
received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. The Holders of Registrable Securities
shall indemnify the Underwriters, their officers, directors and each person who controls such Underwriters (within the meaning of the
Securities Act) to the same extent as provided in the foregoing with respect to indemnification of the Company.
4.1.3
Any person entitled to indemnification herein shall (i) 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 right to indemnification
hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) 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 (plus local 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, 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 so paid by the indemnifying party pursuant to the terms of such
settlement) or which settlement 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.
4.1.4
The indemnification provided for under this 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 of such indemnified party and shall survive the transfer
of securities. The Company and each Holder of Registrable Securities participating in an offering also agrees to make such provisions
as are reasonably requested by any indemnified party for contribution to such party in the event the Company’s or such Holder’s
indemnification is unavailable for any reason.
4.1.5
If the indemnification provided under Section 4.1 hereof 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. 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 relates to information
supplied by, 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; provided, however, that the
liability of any Holder under this subsection 4.1.5 shall be limited to the amount of the net proceeds received by such Holder
in such offering giving rise to such liability. 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 subsections 4.1.1, 4.1.2 and 4.1.3
above, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if contribution pursuant to this subsection 4.1.5 were determined
by pro rata allocation or by any other method of allocation, which does not take account of the equitable considerations referred to
in this subsection 4.1.5. 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 subsection 4.1.5 from any person who was not guilty of such
fraudulent misrepresentation.
ARTICLE
V
MISCELLANEOUS
5.1
Notices. Any notice or communication under this Agreement must be in writing and given by (i) deposit in the United States mail,
addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested, (ii) delivery in person
or by courier service providing evidence of delivery, or (iii) transmission by hand delivery, or facsimile. Each notice or communication
that is mailed, delivered, or transmitted in the manner described above shall be deemed sufficiently given, served, sent, and received,
in the case of mailed notices, on the third business day following the date on which it is mailed and, in the case of notices delivered
by courier service, hand delivery, or facsimile, at such time as it is delivered to the addressee (with the delivery receipt or the affidavit
of messenger) or at such time as delivery is refused by the addressee upon presentation. Any notice or communication under this Agreement
must be addressed, if to the Company, to: 1800 Avenue of the Stars, Suite 1475, Los Angeles, CA 90067, and, if to any Holder, at such
Holder’s address or contact information as set forth in the Company’s books and records. Any party may change its address
for notice at any time and from time to time by written notice to the other parties hereto, and such change of address shall become effective
thirty (30) days after delivery of such notice as provided in this Section 5.1.
5.2
Assignment; No Third Party Beneficiaries.
5.2.1
This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole
or in part.
5.2.2
Prior to the expiration of the Founder Shares Lock-up Period or the Private Placement Lock-up Period, as the case may be, no Holder may
assign or delegate such Holder’s rights, duties or obligations under this Agreement, in whole or in part, except in connection
with a transfer of Registrable Securities by such Holder to a Permitted Transferee but only if such Permitted Transferee agrees to become
bound by the transfer restrictions set forth in this Agreement.
5.2.3
This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors
and the permitted assigns of the Holders, which shall include Permitted Transferees.
5.2.4
This Agreement shall not confer any rights or benefits on any persons that are not parties hereto, other than as expressly set forth
in this Agreement and Section 5.2 hereof.
5.2.5
No assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the
Company unless and until the Company shall have received (i) written notice of such assignment as provided in Section 5.1 hereof
and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions
of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement). Any transfer or assignment
made other than as provided in this Section 5.2 shall be null and void.
5.3
Counterparts. This Agreement may be executed in multiple counterparts (including facsimile or PDF counterparts), each of which
shall be deemed an original, and all of which together shall constitute the same instrument, but only one of which need be produced.
5.4
Governing Law; Venue. NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES
EXPRESSLY AGREE THAT (I) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO AGREEMENTS
AMONG NEW YORK RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS
OF SUCH JURISDICTION AND (II) THE VENUE FOR ANY ACTION TAKEN WITH RESPECT TO THIS AGREEMENT SHALL BE ANY STATE OR FEDERAL COURT IN NEW
YORK COUNTY IN THE STATE OF NEW YORK.
5.5
Amendments and Modifications. Upon the written consent of the Company and the Holders of at least a majority in interest of the
Registrable Securities at the time in question, compliance with any of the provisions, covenants and conditions set forth in this Agreement
may be waived, 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 one Holder, solely in its capacity as a holder of the shares
of capital stock of the Company, in a manner that is materially different from the other Holders (in such capacity) shall require the
consent of the Holder so affected. No course of dealing between any Holder or the Company and any other party hereto or any failure or
delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any
rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party
shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.
5.6
Other Registration Rights. The Company represents and warrants that no person, other than a Holder of Registrable Securities,
has any right to require the Company to register any securities of the Company for sale or to include such securities of the Company
in any Registration filed by the Company for the sale of securities for its own account or for the account of any other person. Further,
the Company represents and warrants that this Agreement supersedes any other registration rights agreement or agreement with similar
terms and conditions and in the event of a conflict between any such agreement or agreements and this Agreement, the terms of this Agreement
shall prevail.
5.7
Term. This Agreement shall terminate upon the earlier of (i) the tenth anniversary of the date of this Agreement or (ii) the date
as of which (A) all of the Registrable Securities have been sold pursuant to a Registration Statement (but in no event prior to the applicable
period referred to in Section 4(a)(3) of the Securities Act and Rule 174 thereunder (or any successor rule promulgated thereafter by
the Commission)) or (B) the Holders of all Registrable Securities are permitted to sell the Registrable Securities under Rule 144 (or
any similar provision) under the Securities Act without limitation on the amount of securities sold or the manner of sale. The provisions
of Section 3.5 and Article IV shall survive any termination.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above.
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COMPANY:
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SAGALIAM
ACQUISITION CORP., a Delaware corporation
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By:
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Name:
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Barry
Kostiner
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Title:
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Chief
Executive Officer
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HOLDER:
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SAGALIAM
SPONSOR LLC, a Delaware limited liability company
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By:
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Name:
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Barry
Kostiner
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Title:
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Managing
Member
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[Signature
Page to Registration Rights Agreement]
Exhibit
10.7
INDEMNITY
AGREEMENT
THIS
INDEMNITY AGREEMENT (this “Agreement”) is made as of [ ], 2021, by and between Sagaliam Acquisition Corp.,
a Delaware corporation (the “Company”), and [ ] (“Indemnitee”).
RECITALS
WHEREAS,
highly competent persons have become more reluctant to serve publicly-held corporations as directors, officers or in other capacities
unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and
actions against them arising out of their service to and activities on behalf of such corporations;
WHEREAS,
the Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified
individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving
the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread
practice among publicly traded corporations and other business enterprises, the Company believes that, given current market conditions
and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors,
officers and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming
litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise
itself. The Amended and Restated Certificate of Incorporation (the “Charter”) and Bylaws of the Company require
indemnification of the officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant to applicable
provisions of the Delaware General Corporation Law, as amended (“DGCL”). The Charter, Bylaws and the DGCL expressly
provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered
into between the Company and members of the board of directors, officers and other persons with respect to indemnification, hold harmless,
exoneration, advancement and reimbursement rights;
WHEREAS,
the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;
WHEREAS,
the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests
of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of
such protection in the future;
WHEREAS,
it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, hold harmless, exonerate and to
advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to
serve the Company free from undue concern that they will not be so protected against liabilities;
WHEREAS,
this Agreement is a supplement to and in furtherance of the Charter and Bylaws of the Company and any resolutions adopted pursuant thereto,
and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;
WHEREAS,
Indemnitee may not be willing to serve as an officer or director, advisor or in another capacity without adequate protection, and the
Company desires Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service
for or on behalf of the Company on the condition that he be so indemnified; and
NOW,
THEREFORE, in consideration of the promises and the covenants contained herein and subject to the provisions of the letter agreement
dated as of [ ], 2021 between the Company and the Indemnitee pursuant to the Underwriting Agreement between the Company and the Underwriters
in connection with the Company’s initial public offering, the Company and Indemnitee do hereby covenant and agree as follows:
TERMS
AND CONDITIONS
1.
SERVICES TO THE COMPANY. Indemnitee will serve or continue to serve as an officer, director, advisor, key employee or in any other
capacity of the Company, as applicable, for so long as Indemnitee is duly elected, appointed or retained or until Indemnitee tenders
his resignation.
2.
DEFINITIONS. As used in this Agreement:
2.1.
References to “agent” shall mean any person who is or was a director, officer or employee of the Company or
a subsidiary of the Company or other person authorized by the Company to act for the Company, to include such person serving in such
capacity as a director, officer, employee, advisor, fiduciary or other official of another corporation, partnership, limited liability
company, joint venture, trust or other enterprise at the request of, for the convenience of, or to represent the interests of the Company
or a subsidiary of the Company.
2.2.
The terms “Beneficial Owner” and “Beneficial Ownership” shall have the meanings set
forth in Rule 13d-3 promulgated under the Exchange Act (as defined below) as in effect on the date hereof.
2.3.
A “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement
of any of the following events:
2.3.1.
Acquisition of Stock by Third Party. Any Person (as defined below) is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Company representing fifteen percent (15%) or more of the combined voting power of the Company’s then outstanding
securities entitled to vote generally in the election of directors, unless (1) the change in the relative Beneficial Ownership of the
Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities
entitled to vote generally in the election of directors, or (2) such acquisition was approved in advance by the Continuing Directors
(as defined below) and such acquisition would not constitute a Change in Control under part 2.3.3 of this definition;
2.3.2.
Change in Board of Directors. Individuals who, as of the date hereof, constitute the Board, and any new director whose election
by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two thirds of the directors
then still in office who were directors on the date hereof or whose election for nomination for election was previously so approved (collectively,
the “Continuing Directors”), cease for any reason to constitute at least a majority of the members of the Board;
2.3.3.
Corporate Transactions. The effective date of a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination, involving the Company and one or more businesses (a “Business Combination”),
in each case, unless, following such Business Combination: (1) all or substantially all of the individuals and entities who were the
Beneficial Owners of securities entitled to vote generally in the election of directors immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 51% of the combined voting power of the then outstanding securities of the Company
entitled to vote generally in the election of directors resulting from such Business Combination (including, without limitation, a corporation
which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through
one or more Subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination, of
the securities entitled to vote generally in the election of directors; (2) no Person (excluding any corporation resulting from such
Business Combination) is the Beneficial Owner, directly or indirectly, of 15% or more of the combined voting power of the then outstanding
securities entitled to vote generally in the election of directors of the surviving corporation except to the extent that such ownership
existed prior to the Business Combination; and (3) at least a majority of the Board of Directors of the corporation resulting from such
Business Combination were Continuing Directors at the time of the execution of the initial agreement, or of the action of the Board of
Directors, providing for such Business Combination.
2.3.4.
Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement or series
of agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than factoring
the Company’s current receivables or escrows due (or, if such approval is not required, the decision by the Board to proceed with
such a liquidation, sale, or disposition in one transaction or a series of related transactions); or
2.3.5.
Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule
14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined
below), whether or not the Company is then subject to such reporting requirement.
2.4.
“Corporate Status” describes the status of a person who is or was a director, officer, trustee, general partner,
managing member, fiduciary, employee or agent of the Company or of any other Enterprise (as defined below) which such person is or was
serving at the request of the Company.
2.5.
“Disinterested Director” shall mean a director of the Company who is not and was not a party to the Proceeding
(as defined below) in respect of which indemnification is sought by Indemnitee.
2.6.
“Enterprise” shall mean the Company and any other corporation, constituent corporation (including any constituent
of a constituent) absorbed in a consolidation or merger to which the Company (or any of its wholly owned subsidiaries) is a party, limited
liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving
at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent.
2.7.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
2.8.
“Expenses” shall include all direct and indirect costs, fees and expenses of any type or nature whatsoever,
including, without limitation, all attorneys’ fees and costs, retainers, court costs, transcript costs, fees of experts, witness
fees, travel expenses, fees of private investigators and professional advisors, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees, fax transmission charges, secretarial services and all other disbursements, obligations or expenses
in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, settlement
or appeal of, or otherwise participating in, a Proceeding (as defined below), including reasonable compensation for time spent by the
Indemnitee for which he or she is not otherwise compensated by the Company or any third party. Expenses also shall include Expenses incurred
in connection with any appeal resulting from any Proceeding (as defined below), including without limitation the principal, premium,
security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent. Expenses, however,
shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
2.9.
“Independent Counsel” shall mean a law firm or a member of a law firm with significant experience in matters
of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee
in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of
other indemnitees under similar indemnification agreements); or (ii) any other party to the Proceeding (as defined below) giving rise
to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include
any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing
either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
2.10.
References to “fines” shall include any excise tax assessed on Indemnitee with respect to any employee benefit
plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee, agent
or fiduciary of the Company which imposes duties on, or involves services by, such director, officer, employee, agent or fiduciary with
respect to an employee benefit plan, its participants or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be
deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.
2.11.
“Delaware Court” shall mean the Court of Chancery of the State of Delaware.
2.12.
The term “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act as in
effect on the date hereof; provided, however, that “Person” shall exclude: (i) the Company; (ii) any Subsidiaries (as defined
below) of the Company; (iii) any employment benefit plan of the Company or of a Subsidiary (as defined below) of the Company or of any
corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership
of stock of the Company; and (iv) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or
of a Subsidiary (as defined below) of the Company or of a corporation owned directly or indirectly by the stockholders of the Company
in substantially the same proportions as their ownership of stock of the Company.
2.13.
The term “Proceeding” shall include any threatened, pending or completed action, suit, arbitration, mediation,
alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding,
whether brought in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims),
criminal, administrative, or investigative or related nature, in which Indemnitee was, is, will or might be involved as a party or otherwise
by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any action (or failure to act) taken
by him or of any action (or failure to act) on his part while acting as a director or officer of the Company, or by reason of the fact
that he is or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary,
employee or agent of any other Enterprise, in each case whether or not serving in such capacity at the time any liability or expense
is incurred for which indemnification, reimbursement, or advancement of expenses can be provided under this Agreement.
2.14.
The term “Subsidiary,” with respect to any Person, shall mean any corporation or other entity of which a majority
of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by that Person.
3.
INDEMNITY IN THIRD-PARTY PROCEEDINGS.
To
the fullest extent permitted by applicable law, the Company shall indemnify, hold harmless and exonerate Indemnitee in accordance with
the provisions of this Section 3 if Indemnitee was, is, or is threatened to be made, a party to or a participant (as a witness
or otherwise) in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant
to this Section 3, Indemnitee shall be indemnified, held harmless and exonerated against all Expenses, judgments, liabilities,
fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection
with or in respect of such Expenses, judgments, fines, penalties and amounts paid in settlement) actually and reasonably incurred by
Indemnitee or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding,
had no reasonable cause to believe that his conduct was unlawful.
4.
INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY.
To
the fullest extent permitted by applicable law, the Company shall indemnify, hold harmless and exonerate Indemnitee in accordance with
the provisions of this Section 4 if Indemnitee was, is, or is threatened to be made, a party to or a participant (as a witness
or otherwise) in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4,
Indemnitee shall be indemnified, held harmless and exonerated against all Expenses actually and reasonably incurred by him or on his
behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Company. No indemnification, hold harmless or exoneration for
Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally
adjudged by a court to be liable to the Company, unless and only to the extent that any court in which the Proceeding was brought or
the Delaware Court shall determine upon application that, despite the adjudication of liability but in view of all the circumstances
of the case, Indemnitee is fairly and reasonably entitled to indemnification, to be held harmless or to exoneration.
5.
INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL.
Notwithstanding
any other provisions of this Agreement except for Section 27, to the extent that Indemnitee is a party to (or a participant in)
and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in
part, the Company shall, to the fullest extent permitted by applicable law, indemnify, hold harmless and exonerate Indemnitee against
all Expenses actually and reasonably incurred by him in connection therewith. If Indemnitee is not wholly successful in such Proceeding
but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the
Company shall, to the fullest extent permitted by applicable law, indemnify, hold harmless and exonerate Indemnitee against all Expenses
actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. If the
Indemnitee is not wholly successful in such Proceeding, the Company also shall, to the fullest extent permitted by applicable law, indemnify,
hold harmless and exonerate Indemnitee against all Expenses reasonably incurred in connection with a claim, issue or matter related to
any claim, issue, or matter on which the Indemnitee was successful. For purposes of this Section 5 and without limitation, the
termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.
6.
INDEMNIFICATION FOR EXPENSES OF A WITNESS.
Notwithstanding
any other provision of this Agreement except for Section 27, to the extent that Indemnitee is, by reason of his Corporate Status,
a witness in any Proceeding to which Indemnitee is not a party, he shall, to the fullest extent permitted by applicable law, be indemnified,
held harmless and exonerated against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.
7.
ADDITIONAL INDEMNIFICATION, HOLD HARMLESS AND EXONERATION RIGHTS.
Notwithstanding
any limitation in Sections 3, 4, or 5, except for Section 27, the Company shall, to the fullest extent permitted
by applicable law, indemnify, hold harmless and exonerate Indemnitee if Indemnitee is a party to or threatened to be made a party to
any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments,
fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection
with or in respect of such Expenses, judgments, fines, penalties and amounts paid in settlement) actually and reasonably incurred by
Indemnitee in connection with the Proceeding. No indemnification, hold harmless or exoneration rights shall be available under this Section
7 on account of Indemnitee’s conduct which constitutes a breach of Indemnitee’s duty of loyalty to the Company or its
stockholders or is an act or omission not in good faith or which involves intentional misconduct or a knowing violation of the law.
8.
CONTRIBUTION IN THE EVENT OF JOINT LIABILITY.
8.1.
To the fullest extent permissible under applicable law, if the indemnification, hold harmless and/or exoneration rights provided for
in this Agreement are unavailable to Indemnitee in whole or in part for any reason whatsoever, the Company, in lieu of indemnifying,
holding harmless or exonerating Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for judgments,
liabilities, fines, penalties, amounts paid or to be paid in settlement and/or for Expenses, in connection with any Proceeding without
requiring Indemnitee to contribute to such payment, and the Company hereby waives and relinquishes any right of contribution it may have
at any time against Indemnitee.
8.2.
The Company shall not, without Indemnitee’s consent, enter into any settlement of any Proceeding in which the Company is jointly
liable with Indemnitee (or would be if joined in such Proceeding) unless such settlement provides for a full and final release of all
claims asserted against Indemnitee and no admission of guilt by, or injunctive relief against, Indemnitee, is included.
8.3.
The Company hereby agrees to fully indemnify, hold harmless and exonerate Indemnitee from any claims for contribution which may be brought
by officers, directors or employees of the Company other than Indemnitee who may be jointly liable with Indemnitee.
9.
EXCLUSIONS.
Notwithstanding
any provision in this Agreement except for Section 27, the Company shall not be obligated under this Agreement to make any indemnification,
hold harmless or exoneration payment in connection with any claim made against Indemnitee:
(a)
for which payment has actually been received by or on behalf of Indemnitee under any insurance policy or other indemnity provision, except
with respect to any excess beyond the amount actually received under any insurance policy, contract, agreement, other indemnity provision
or otherwise;
(b)
for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within
the meaning of Section 16(b) of the Exchange Act or similar provisions of state statutory law or common law; or
(c)
except as otherwise provided in Sections 14.5 and 14.6 hereof, prior to a Change in Control, in connection with any Proceeding
(or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee
against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any
part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, hold harmless or exoneration payment,
in its sole discretion, pursuant to the powers vested in the Company under applicable law.
10.
ADVANCES OF EXPENSES; DEFENSE OF CLAIM.
10.1.
Notwithstanding any provision of this Agreement to the contrary except for Section 27, and to the fullest extent not prohibited
by applicable law, the Company shall pay the Expenses incurred by Indemnitee (or reasonably expected by Indemnitee to be incurred by
Indemnitee within three months) in connection with any Proceeding within ten (10) days after the receipt by the Company of a statement
or statements requesting such advances from time to time, prior to the final disposition of any Proceeding. Advances shall be unsecured
and interest free. Advances shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s
ultimate entitlement to be indemnified, held harmless or exonerated under the other provisions of this Agreement. Advances shall include
any and all reasonable Expenses incurred pursuing a Proceeding to enforce this right of advancement, including Expenses incurred preparing
and forwarding statements to the Company to support the advances claimed. If required by applicable law or the Charter or the Bylaws
of the Company, such payments of Expenses in advance of the final disposition of the Proceeding shall be made only upon the Company’s
receipt of an undertaking, by or on behalf of the Indemnitee, to repay the advance to the extent that it is ultimately determined that
Indemnitee is not entitled to be indemnified by the Company under the provisions of this Agreement, the Charter, the Bylaws of the Company,
applicable law or otherwise. This Section 10.1 shall not apply to any claim made by Indemnitee for which an indemnification, hold
harmless or exoneration payment is excluded pursuant to Section 9.
10.2.
The Company will be entitled to participate in the Proceeding at its own expense.
10.3.
The Company shall not settle any action, claim or Proceeding (in whole or in part) which would impose any Expense, judgment, fine, penalty
or limitation on the Indemnitee without the Indemnitee’s prior written consent.
11.
PROCEDURE FOR NOTIFICATION AND APPLICATION FOR INDEMNIFICATION.
11.1.
Indemnitee agrees to notify promptly the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment,
information or other document relating to any Proceeding or matter which may be subject to indemnification, hold harmless or exoneration
rights, or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company
of any obligation which it may have to the Indemnitee under this Agreement, or otherwise.
11.2.
Indemnitee may deliver to the Company a written application to indemnify, hold harmless or exonerate Indemnitee in accordance with this
Agreement. Such application(s) may be delivered from time to time and at such time(s) as Indemnitee deems appropriate in his or her sole
discretion. Following such a written application for indemnification by Indemnitee, the Indemnitee’s entitlement to indemnification
shall be determined according to Section 12.1 of this Agreement.
12.
PROCEDURE UPON APPLICATION FOR INDEMNIFICATION.
12.1.
A determination, if required by applicable law, with respect to Indemnitee’s entitlement to indemnification shall be made in the
specific case by one of the following methods, which shall be at the election of Indemnitee: (i) by a majority vote of the Disinterested
Directors, even though less than a quorum of the Board; (ii) by Independent Counsel in a written opinion to the Board, a copy of which
shall be delivered to Indemnitee; or (iii) by vote of the stockholders. The Company promptly will advise Indemnitee in writing with respect
to any determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which
indemnification has been denied. If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be
made within ten (10) days after such determination. Indemnitee shall reasonably cooperate with the person, persons or entity making such
determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity
upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which
is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or Expenses (including attorneys’
fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be
borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby
indemnifies and agrees to hold Indemnitee harmless therefrom.
12.2.
In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12.1
hereof, the Independent Counsel shall be selected as provided in this Section 12.2. The Independent Counsel shall be selected
by Indemnitee (unless Indemnitee shall request that such selection be made by the Board), and Indemnitee shall give written notice to
the Company advising it of the identity of the Independent Counsel so selected and certifying that the Independent Counsel so selected
meets the requirements of “Independent Counsel” as defined in Section 2 of this Agreement. If the Independent Counsel
is selected by the Board, the Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel
so selected and certifying that the Independent Counsel so selected meets the requirements of “Independent Counsel” as defined
in Section 2 of this Agreement. In either event, Indemnitee or the Company, as the case may be, may, within ten (10) days after
such written notice of selection shall have been received, deliver to the Company or to Indemnitee, as the case may be, a written objection
to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected
does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection
shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected
shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not
serve as Independent Counsel unless and until such objection is withdrawn or a court of competent jurisdiction has determined that such
objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant
to Section 11.2 hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee
may petition the Delaware Court for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s
selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Delaware Court, and the
person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section
12.1 hereof. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 14.1 of this Agreement,
Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards
of professional conduct then prevailing).
12.3.
The Company agrees to pay the reasonable fees and expenses of Independent Counsel and to fully indemnify and hold harmless such Independent
Counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement
pursuant hereto.
13.
PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
13.1.
In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination
shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification
in accordance with Section 11.2 of this Agreement, and the Company shall have the burden of proof to overcome that presumption
in connection with the making by any person, persons or entity of any determination contrary to that presumption. Neither the failure
of the Company (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action
pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of
conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard
of conduct.
13.2.
If the person, persons or entity empowered or selected under Section 12 of this Agreement to determine whether Indemnitee is entitled
to indemnification shall not have made a determination within thirty (30) days after receipt by the Company of the request therefor,
the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such
indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for indemnification, or (ii) a final judicial determination that
any or all such indemnification is expressly prohibited under applicable law; provided, however, that such 30-day period may be extended
for a reasonable time, not to exceed an additional fifteen (15) days, if the person, persons or entity making the determination with
respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation
and/or information relating thereto.
13.3.
The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect
the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee
had reasonable cause to believe that his conduct was unlawful.
13.4.
For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action
is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee
by the directors or officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise, its
Board, any committee of the Board or any director, or on information or records given or reports made to the Enterprise, its Board, any
committee of the Board or any director, by an independent certified public accountant or by an appraiser or other expert selected by
the Enterprise, its Board, any committee of the Board or any director. The provisions of this Section 13.4 shall not be deemed
to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed or found to have met the applicable
standard of conduct set forth in this Agreement.
13.5.
The knowledge and/or actions, or failure to act, of any other director, officer, trustee, partner, managing member, fiduciary, agent
or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this
Agreement.
14.
REMEDIES OF INDEMNITEE.
14.1.
In the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification
under this Agreement, (ii) advancement of Expenses, to the fullest extent permitted by applicable law, is not timely made pursuant to
Section 10 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section
12.1 of this Agreement within thirty (30) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification
is not made pursuant to Sections 5, 6, 7 or the last sentence of Section 12.1 of this Agreement within ten
(10) days after receipt by the Company of a written request therefor, (v) a contribution payment is not made in a timely manner pursuant
to Section 8 of this Agreement, (vi) payment of indemnification pursuant to Section 3 or 4 of this Agreement is
not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, or (vii) payment to
Indemnitee pursuant to any hold harmless or exoneration rights under this Agreement or otherwise is not made within ten (10) days after
receipt by the Company of a written request therefor, Indemnitee shall be entitled to an adjudication by the Delaware Court to such indemnification,
hold harmless, exoneration, contribution or advancement rights. Alternatively, Indemnitee, at his option, may seek an award in arbitration
to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Except as
set forth herein, the provisions of Delaware law (without regard to its conflict of laws rules) shall apply to any such arbitration.
The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.
14.2.
In the event that a determination shall have been made pursuant to Section 12.1 of this Agreement that Indemnitee is not entitled
to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 14 shall be conducted in all respects
as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In
any judicial proceeding or arbitration commenced pursuant to this Section 14, Indemnitee shall be presumed to be entitled to be
indemnified, held harmless, exonerated to receive advances of Expenses under this Agreement and the Company shall have the burden of
proving Indemnitee is not entitled to be indemnified, held harmless, exonerated and to receive advances of Expenses, as the case may
be, and the Company may not refer to or introduce into evidence any determination pursuant to Section 12.1 of this Agreement adverse
to Indemnitee for any purpose. If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 14, Indemnitee
shall not be required to reimburse the Company for any advances pursuant to Section 10 until a final determination is made with
respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed).
14.3.
If a determination shall have been made pursuant to Section 12.1 of this Agreement that Indemnitee is entitled to indemnification,
the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 14,
absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement
not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable
law.
14.4.
The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14
that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or
before any such arbitrator that the Company is bound by all the provisions of this Agreement.
14.5.
The Company shall indemnify and hold harmless Indemnitee to the fullest extent permitted by law against all Expenses and, if requested
by Indemnitee, shall (within ten (10) days after the Company’s receipt of such written request) pay to Indemnitee, to the fullest
extent permitted by applicable law, such Expenses which are incurred by Indemnitee in connection with any judicial proceeding or arbitration
brought by Indemnitee (i) to enforce his rights under, or to recover damages for breach of, this Agreement or any other indemnification,
hold harmless, exoneration, advancement or contribution agreement or provision of the Charter, or the Company’s Bylaws now or hereafter
in effect; or (ii) for recovery or advances under any insurance policy maintained by any person for the benefit of Indemnitee, regardless
of the outcome and whether Indemnitee ultimately is determined to be entitled to such indemnification, hold harmless or exoneration right,
advancement, contribution or insurance recovery, as the case may be (unless such judicial proceeding or arbitration was not brought by
Indemnitee in good faith).
14.6.
Interest shall be paid by the Company to Indemnitee at the legal rate under Delaware law for amounts which the Company indemnifies, holds
harmless or exonerates, or is obliged to indemnify, hold harmless or exonerate for the period commencing with the date on which Indemnitee
requests indemnification, to be held harmless, exonerated, contribution, reimbursement or advancement of any Expenses and ending with
the date on which such payment is made to Indemnitee by the Company.
15.
SECURITY.
Notwithstanding
anything herein to the contrary except for Section 27, to the extent requested by the Indemnitee, the Company may at any time
and from time to time provide security to the Indemnitee for the Company’s obligations hereunder through an irrevocable bank line
of credit, funded trust or other collateral. Any such security, once provided to the Indemnitee, may not be revoked or released without
the prior written consent of the Indemnitee.
16.
NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.
16.1.
The rights of Indemnitee as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any
time be entitled under applicable law, the Charter, the Company’s Bylaws, any agreement, a vote of stockholders or a resolution
of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any
right of Indemnitee under this Agreement in respect of any Proceeding (regardless of when such Proceeding is first threatened, commenced
or completed) arising out of, or related to, any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment,
alteration or repeal. To the extent that a change in applicable law, whether by statute or judicial decision, permits greater indemnification,
hold harmless or exoneration rights or advancement of Expenses than would be afforded currently under the Charter, the Company’s
Bylaws or this Agreement, then this Agreement (without any further action by the parties hereto) shall automatically be deemed to be
amended to require that the Company indemnify Indemnitee to the fullest extent permitted by law. No right or remedy herein conferred
is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
16.2.
The DGCL, the Charter and the Company’s Bylaws permit the Company to purchase and maintain insurance or furnish similar protection
or make other arrangements including, but not limited to, providing a trust fund, letter of credit, or surety bond (“Indemnification
Arrangements”) on behalf of Indemnitee against any liability asserted against him or incurred by or on behalf of him or
in such capacity as a director, officer, employee or agent of the Company, or arising out of his status as such, whether or not the Company
would have the power to indemnify him against such liability under the provisions of this Agreement or under the DGCL, as it may then
be in effect. The purchase, establishment, and maintenance of any such Indemnification Arrangement shall not in any way limit or affect
the rights and obligations of the Company or of the Indemnitee under this Agreement except as expressly provided herein, and the execution
and delivery of this Agreement by the Company and the Indemnitee shall not in any way limit or affect the rights and obligations of the
Company or the other party or parties thereto under any such Indemnification Arrangement.
16.3.
To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, trustees,
partners, managing members, fiduciaries, employees, or agents of the Company or of any other Enterprise which such person serves at the
request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent
of the coverage available for any such director, officer, trustee, partner, managing member, fiduciary, employee or agent under such
policy or policies. If, at the time the Company receives notice from any source of a Proceeding as to which Indemnitee is a party or
a participant (as a witness or otherwise), the Company has director and officer liability insurance in effect, the Company shall give
prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company
shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable
as a result of such Proceeding in accordance with the terms of such policies.
16.4.
In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution
of such documents as are necessary to enable the Company to bring suit to enforce such rights.
16.5.
The Company’s obligation to indemnify, hold harmless, exonerate or advance Expenses hereunder to Indemnitee who is or was serving
at the request of the Company as a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other Enterprise
shall be reduced by any amount Indemnitee has actually received as indemnification, hold harmless or exoneration payments or advancement
of expenses from such Enterprise. Notwithstanding any other provision of this Agreement to the contrary except for Section 27, (i) Indemnitee
shall have no obligation to reduce, offset, allocate, pursue or apportion any indemnification, hold harmless, exoneration, advancement,
contribution or insurance coverage among multiple parties possessing such duties to Indemnitee prior to the Company’s satisfaction
and performance of all its obligations under this Agreement, and (ii) the Company shall perform fully its obligations under this Agreement
without regard to whether Indemnitee holds, may pursue or has pursued any indemnification, advancement, hold harmless, exoneration, contribution
or insurance coverage rights against any person or entity other than the Company.
17.
DURATION OF AGREEMENT.
All
agreements and obligations of the Company contained herein shall continue during the period Indemnitee serves as a director or officer
of the Company or as a director, officer, trustee, partner, managing member, fiduciary, employee or agent of any other corporation, partnership,
joint venture, trust, employee benefit plan or other Enterprise which Indemnitee serves at the request of the Company and shall continue
thereafter so long as Indemnitee shall be subject to any possible Proceeding (including any rights of appeal thereto and any Proceeding
commenced by Indemnitee pursuant to Section 14 of this Agreement) by reason of his Corporate Status, whether or not he is acting
in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement.
18.
SEVERABILITY.
If
any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the
validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any
Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is
not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the
fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable
law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision
held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifested thereby.
19.
ENFORCEMENT AND BINDING EFFECT.
19.1.
The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in
order to induce Indemnitee to serve as a director, officer or key employee of the Company, and the Company acknowledges that Indemnitee
is relying upon this Agreement in serving as a director, officer or key employee of the Company.
19.2.
Without limiting any of the rights of Indemnitee under the Charter or Bylaws of the Company as they may be amended from time to time,
this Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.
19.3.
The indemnification, hold harmless, exoneration and advancement of expenses rights provided by or granted pursuant to this Agreement
shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall
continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or of any other Enterprise at
the Company’s request, and shall inure to the benefit of Indemnitee and his or her spouse, assigns, heirs, devisees, executors
and administrators and other legal representatives.
19.4.
The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all,
substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory
to the Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company
would be required to perform if no such succession had taken place.
19.5.
The Company and Indemnitee agree herein that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable
and difficult of proof, and further agree that such breach may cause Indemnitee irreparable harm. Accordingly, the parties hereto agree
that Indemnitee may enforce this Agreement by seeking, among other things, injunctive relief and/or specific performance hereof, without
any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, Indemnitee
shall not be precluded from seeking or obtaining any other relief to which he may be entitled. The Company and Indemnitee further agree
that Indemnitee shall be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, without the necessity of posting bonds or other undertaking in connection therewith. The Company
acknowledges that in the absence of a waiver, a bond or undertaking may be required of Indemnitee by a Court of competent jurisdiction
and the Company hereby waives any such requirement of such a bond or undertaking.
20.
MODIFICATION AND WAIVER.
No
supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties hereto. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor
shall any waiver constitute a continuing waiver.
21.
NOTICES.
All
notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given
(i) if delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii)
mailed by certified or registered mail with postage prepaid, on the third (3rd) business day after the date on which it is so mailed:
(a)
If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide
in writing to the Company.
(b)If
to the Company, to:
Sagaliam
Acquisition Corp.
1395
Brickell Ave., Suite 1475
Los
Angeles, CA 90067
Attn:
Barry Kostiner
Chief
Executive Officer
With
a copy, which shall not constitute notice, to:
Ellenoff
Grossman & Schole LLP
1345
Avenue of the Americas
New
York, New York 10105
Attn:
Richard Baumann, Esq.
Fax
No.: (212) 370-7889
or
to any other address as may have been furnished to Indemnitee in writing by the Company.
22.
APPLICABLE LAW AND CONSENT TO JURISDICTION.
This
Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of
the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant
to Section 14.1 of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally: (a) agree that any action
or proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Court and not in any other state
or federal court in the United States of America or any court in any other country; (b) consent to submit to the exclusive jurisdiction
of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement; (c) waive any objection
to the laying of venue of any such action or proceeding in the Delaware Court; and (d) waive, and agree not to plead or to make, any
claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum, or is subject
(in whole or in part) to a jury trial.
23.
IDENTICAL COUNTERPARTS.
This
Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which
together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought
needs to be produced to evidence the existence of this Agreement.
24.
MISCELLANEOUS.
Use
of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the paragraphs of
this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction
thereof.
25.
PERIOD OF LIMITATIONS.
No
legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against Indemnitee, Indemnitee’s
spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause
of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing
of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to
any such cause of action such shorter period shall govern.
26.
ADDITIONAL ACTS.
If
for the validation of any of the provisions in this Agreement any act, resolution, approval or other procedure is required, the Company
undertakes to cause such act, resolution, approval or other procedure to be affected or adopted in a manner that will enable the Company
to fulfill its obligations under this Agreement.
27.
WAIVER OF CLAIMS TO TRUST ACCOUNT.
Indemnitee
hereby agrees that it does not have any right, title, interest or claim of any kind (each, a “Claim”) in or to any monies
in the trust account established in connection with the Company’s initial public offering for the benefit of the Company and holders
of shares issued in such offering, and hereby waives any Claim it may have in the future as a result of, or arising out of, any services
provided to the Company and will not seek recourse against such trust account for any reason whatsoever.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the parties hereto have caused this Indemnity Agreement to be signed as of the day and year first above written.
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SAGALIAM
ACQUISITION CORP.
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By:
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Name:
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Barry
Kostiner
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Title:
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Chief
Executive Officer
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INDEMNITEE:
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Name:
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Address:
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