NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
1. Organization and Business Operations
Incorporation
Diamond Eagle Acquisition
Corp. (the “Company”) was incorporated as a Delaware corporation on March 27, 2019.
Sponsor
The Company’s
sponsor is Eagle Equity Partners, LLC, a Delaware limited liability company (the “Sponsor”). Jeff Sagansky, the Company’s
Chief Executive Officer and Chairman, and Eli Baker, the Company’s President, Chief Financial Officer and Secretary, are
members of the Sponsor.
Fiscal Year End
The Company has selected
December 31 as its fiscal year end.
Business Purpose
The Company was formed
for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar
business combination with one or more operating businesses that it has not yet selected (“Business Combination”). The
Company has neither engaged in any operations nor generated significant revenue to date.
The Company’s
management has broad discretion with respect to the specific application of the net proceeds of its initial public offering of
Units (the “Public Offering”), although substantially all of the net proceeds of the Public Offering are intended to
be generally applied toward completing a Business Combination. Furthermore, there is no assurance that the Company will be able
to successfully complete a Business Combination.
Financing
The Sponsor intends
to finance a Business Combination in part with proceeds from the $400,000,000 Public Offering and an approximately $9,500,000 private
placement (the “Private Placement”), see Notes 3 and 4. The registration statement for the Public Offering was declared
effective by the U.S. Securities and Exchange Commission (“SEC”) on May 10, 2019. The Company consummated the Public
Offering of 40,000,000 units, including the issuance of 5,000,000 units as a result of the underwriters’ exercise of their
over-allotment option in full (the “Units”), at $10.00 per Unit on May 14, 2019, generating gross proceeds of $400,000,000.
Simultaneously with the closing of the Public Offering, the Company consummated the Private Placement of an aggregate of 6,333,334
warrants (the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant. Upon the closing of
the Public Offering and Private Placement, $400,000,000 from the net proceeds of the Public Offering and the Private Placement
was placed in a U.S.-based trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee (the “Trust
Account”).
Trust Account
The proceeds held in
the Trust Account were invested in permitted United States “government securities” within the meaning of Section 2(a)(16)
of the Investment Company Act of 1940, as amended (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 that invest
only in direct U.S. government treasury obligations.
The Company’s
amended and restated certificate of incorporation (the “Charter”) provides that, other than the withdrawal of interest
earned on the funds that may be released to the Company to fund working capital requirements (subject to an annual limit of
$250,000) and/or to pay taxes, none of the funds held in the Trust Account will be released until the earlier of: (i) the completion
of the Business Combination; (ii) the redemption of any of the shares of Class A common stock, par value $0.0001 per share (the
“Class A Common Stock”) included in the Units sold in the Public Offering properly submitted in connection with a stockholder
vote to amend the Charter to modify the substance or timing of the Company’s obligation to redeem 100% of the common stock
included in the Units being sold in the Public Offering if the Company does not complete the Business Combination within 24 months
from the closing of the Public Offering or with respect to any other material provisions relating to stockholders’ rights
or pre-initial Business Combination activity or (iii) the redemption of 100% of the shares of Class A Common Stock included in
the Units sold in the Public Offering if the Company is unable to complete a Business Combination within 24 months from the closing
of the Public Offering.
The Company, after signing
a definitive agreement for a Business Combination, will either (i) seek stockholder approval of the Business Combination at a meeting
called for such purpose in connection with which stockholders may seek to redeem their shares, regardless of whether they vote
for or against the Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the
Trust Account calculated as of two business days prior to the consummation of the Business Combination, including interest earned
on the funds held in the Trust Account and not previously released to the Company to fund its working capital requirements (subject
to an annual limit of $250,000) and/or to pay taxes, or (ii) provide stockholders with the opportunity to sell their shares
to the Company by means of a tender offer for an amount in cash equal to their pro rata share of the aggregate amount then on deposit
in the Trust Account calculated as of two business days prior to commencement of the tender offer, including interest earned on
the funds held in the Trust Account and not previously released to the Company to fund its working capital requirements and/or
to pay taxes. However, in no event will the Company redeem its public shares in an amount that would cause its net tangible assets
to be less than $5,000,001 upon consummation of the Company’s initial Business Combination and after payment of underwriters’
fees and commissions. In such case, the Company would not proceed with the redemption of its public shares and the related Business
Combination, and instead may search for an alternate Business Combination.
If the Company holds
a stockholder vote in connection with a Business Combination, a public stockholder will have the right to redeem its shares for
an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account calculated as of two
business days prior to the consummation of the Business Combination, including interest earned on the funds held in the Trust Account
but not previously released to the Company to fund its working capital requirements (subject to an annual limit of $250,000)
and/or to pay taxes. As a result, such common stock will be recorded at redemption amount and classified as temporary equity upon
the completion of the Public Offering, in accordance with FASB, ASC 480, “Distinguishing Liabilities from Equity.”
The Company has 24 months
from the closing of the Public Offering to complete its Business Combination (or until May 14, 2021). If the Company does not complete
a Business Combination within this period of time, it will (i) cease all operations except for the purposes of winding up, (ii)
as promptly as reasonably possible, but not more than ten business days thereafter, redeem the public shares for a per share pro
rata portion of the Trust Account, including interest, but less income taxes payable (less up to $100,000 of such net interest
to pay dissolution expenses) and (iii) as promptly as possible following such redemption, dissolve and liquidate the balance of
the Company’s net assets to its remaining stockholders, as part of its plan of dissolution and liquidation. The Sponsor,
Harry E. Sloan and the Company’s executive officers and independent directors (the “initial stockholders”) entered
into a letter agreement with the Company, pursuant to which they waived their rights to participate in any redemption with respect
to their Founder Shares (as defined below); however, if the initial stockholders or any of the Company’s officers, directors
or affiliates acquire shares of Class A Common Stock, they will be entitled to a pro rata share of the Trust Account upon the Company’s
redemption or liquidation in the event the Company does not complete a Business Combination within the required time period. In
the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution
(including Trust Account assets) will be less than the initial public offering price per Unit in the Public Offering.
Emerging Growth Company
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 of 1933, as amended (the “Securities Act”)
registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of
1934, as amended (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 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 accountant standards used.
2. Significant Accounting Policies
Basis of Presentation
These unaudited financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in
the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. The interim financial information
provided is unaudited, but includes all adjustments which management considers necessary for the fair presentation of the results
for these periods. Operating results for interim periods are not necessarily indicative of the results that may be expected for
the full year period and should be read in conjunction with the Company’s audited financial statements and notes thereto
included in the Company’s prospectus filed with the SEC on May 10, 2019, and the Company’s audited balance sheet and
notes thereto included in the Company’s Form 8-K filed with the SEC on May 14, 2019.
Net Income (Loss) Per Share
Net income (loss) per common share is computed by dividing net
income (loss) by the weighted average number of common shares outstanding for the period. The Company has not considered the effect
of the warrants sold in the Public Offering (including the over-allotment) and private placement warrants to purchase approximately
13,333,333 and 6,333,334 shares of the Company’s Class A common stock, respectively, in the calculation of diluted income
per share, since their inclusion would be anti-dilutive.
The Company’s statement of operations includes a presentation
of net income per share for common shares subject to redemption in a manner similar to the two-class method of net income (loss)
per share. Net income (loss) per common share for basic and diluted Class A common stock is calculated by dividing the interest
income earned on the Trust Account, net of applicable franchise taxes of $133,334, working capital up to $250,000 annually,
and income taxes, by the weighted average number of Class A common stock since issuance. Net loss per common share for basic and
diluted for Class B common stock is calculated by dividing the net loss, which excludes income attributable to Class A common stock,
by the weighted average number of Class B common stock outstanding for the period.
Concentration of Credit Risk
Financial instruments
that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which,
at times, may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts
and management believes the Company is not exposed to significant risks on such accounts.
Fair Value of Financial Instruments
The fair value of the
Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements
and Disclosures,” approximates the carrying amounts represented in the balance sheet with the exception of investments in
the Trust Account which are carried at amortized cost.
Use of Estimates
The preparation of financial
statements in conformity with 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.
Offering Costs
The Company complies
with the requirements of the ASC 340-10-S99-1. Offering costs of $22,555,870 consisting principally of underwriters’ discounts
of $22,000,000 (including $14,000,000 of which payment is deferred) and $555,870 of professional, printing, filing, regulatory
and other costs were charged to additional paid-in capital upon completion of the Public Offering.
Income Taxes
The Company complies
with the accounting and reporting requirements of Financial Accounting Standards Board Accounting Standard Codification, or FASB
ASC, 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for
income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases
of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable
to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized.
There were
no unrecognized tax benefits as of September 30, 2019. FASB ASC 740 prescribes a recognition threshold and a
measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken
in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon
examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits
as income tax expense. No amounts were accrued for the payment of interest and penalties at September 30, 2019. The Company
is currently not aware of any issues under review that could result in significant payments, accruals or material deviation
from its position. The Company is subject to income tax examinations by major taxing authorities since inception. The
Company's currently taxable income primarily consists of interest income on the Trust Account. The Company's general and
administrative costs are generally considered start-up costs and are not currently deductible. During the three months ended
September 30, 2019, and the period from March 27, 2019 (inception) to September 30, 2019, the Company recorded income tax
expense of $409,209 and $620,995, respectively.
Recent Accounting Pronouncements
Management does not
believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material
effect on the Company’s financial statements.
3. Public Offering
Public Units
In the Public Offering,
which closed May 14, 2019, the Company sold 40,000,000 Units at a price of $10.00 per Unit. Each Unit consists of one share of
Class A Common Stock and one-third of one redeemable warrant (each whole warrant, a “Warrant”). Each whole Warrant
entitles the holder to purchase one share of Class A Common Stock at a price of $11.50 per share. Each Warrant will become exercisable
on the later of 30 days after the completion of our initial business combination and 12 months from the closing of the Public Offering.
The exercise price and number of shares of Class A Common Stock issuable upon exercise of the Warrants may be adjusted in certain
circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation.
The Company granted
the underwriters a 45-day option to purchase up to 5,250,000 additional Units to cover any over-allotment, at the Public Offering
price less the underwriting discounts and commissions. The Company issued 5,000,000 Units in connection with the underwriters’
partial exercise of the over-allotment option.
Underwriting Commissions
The Company paid an
underwriting discount of $8,000,000 ($0.20 per Unit sold) to the underwriters at the closing of the Public Offering on May 14,
2019, with an additional fee (“Deferred Discount”) of $14,000,000 ($0.35 per Unit sold) payable upon the Company’s
completion of an initial Business Combination. The Deferred Discount will become payable to the underwriters from the amounts held
in the Trust Account solely in the event the Company completes its initial Business Combination.
4. Related Party Transactions
Founder Shares
On March 28, 2019, the
Sponsor received 10,062,500 shares of Class B common stock (the “Founder Shares”) in exchange for a capital contribution
of $25,000, or approximately $0.002 per share.
The Founder Shares are
identical to the shares of Class A Common Stock included in the Units sold in the Public Offering except that the Founder Shares
are subject to certain transfer restrictions, as described in more detail below.
On April 10, 2019, the
Sponsor transferred 4,930,625 Founder Shares to Harry E. Sloan (together with the Sponsor, the “initial stockholders”)
for a purchase price of $12,250 (the same per-share price initially paid by the Sponsor), resulting in the Sponsor holding 5,131,875
Founder Shares. On May 10, 2019, the Sponsor and Mr. Sloan each forfeited at no cost 31,875 and 30,625 Founder Shares, respectively,
to the Company in connection with the election by the underwriters of the Public Offering to exercise their over-allotment option
in part and not in full, resulting in an aggregate of 10,000,000 Founder Shares outstanding.
The initial stockholders
have agreed not to transfer, assign or sell any of their Founder Shares until the earlier of (A) one year after the completion
of the Company’s initial Business Combination, or earlier if, subsequent to the Company’s initial Business Combination,
the closing price of the Company’s common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations,
reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150
days after the Company’s initial Business Combination, and (B) the date on which the Company completes a liquidation, merger,
capital stock exchange or other similar transaction after the initial Business Combination that results in all of the Company’s
stockholders having the right to exchange their common stock for cash, securities or other property.
Private Placement Warrants
In conjunction with
the Public Offering, the Sponsor and Harry E. Sloan purchased an aggregate of 6,333,334 Private Placement Warrants, at a price
of $1.50 per warrant (approximately $9,500,000 in the aggregate) in the Private Placement. Each Private Placement Warrant entitles
the holder to purchase one share of Class A Common Stock at $11.50 per share. A portion of the purchase price of the Private Placement
Warrants was added to the proceeds from the Public Offering to be held in the Trust Account such that at closing of the Public
Offering, $400,000,000 was placed in the Trust Account.
The Private Placement
Warrants (including the shares of common stock issuable upon exercise of the Private Placement Warrants) are not transferable,
assignable or salable until 30 days after the completion of the initial Business Combination and they are non-redeemable for cash
so long as they are held by the initial purchasers of the Private Placement Warrants or their permitted transferees. If the Private
Placement Warrants are held by someone other than the initial purchasers of the Private Placement Warrants or their permitted transferees,
the Private Placement Warrants will be redeemable for cash by the Company and exercisable by such holders on the same basis as
the warrants included in the Units sold in the Public Offering. Otherwise, the Private Placement Warrants have terms and provisions
that are identical to those of the Warrants sold as part of the Units in the Public Offering and have no net cash settlement provisions.
If the Company does
not complete a Business Combination, then the proceeds will be part of the liquidating distribution to the public stockholders
and the Warrants issued to the Sponsor and Harry E. Sloan will expire worthless.
Registration Rights
The holders of the Founder
Shares, Private Placement Warrants and Warrants that may be issued upon conversion of working capital loans (and any Class A common
stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of working capital
loans and upon conversion of the Founder Shares) are entitled to registration rights pursuant to a registration rights agreement,
requiring the Company to register such securities for resale. The holders 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.
The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Sponsor Loans
The Sponsor agreed
to loan the Company up to an aggregate of $300,000 by the issuance of an unsecured promissory note (the “Note”) to
cover expenses related to the Public Offering. The Note was payable without interest on the earlier of December 31, 2019 or the
completion of the Public Offering. Upon completion of
the Public Offering, $60,875 under the Note was repaid in full. As of September 30, 2019, there was no outstanding balance under the
Note.
Administrative Services Agreement
The Company entered
into an administrative services agreement in which the Company will reimburse an affiliate of the Sponsor for office space, utilities
and secretarial and administrative services provided to members of the Company’s management team in an amount not to exceed
$15,000 per month. For the three months ended September 30, 2019 and the period from March 27, 2019 (inception) to September 30, 2019, the
Company incurred $45,000 and $90,000, respectively, of administrative services expenses under the arrangement.
Working Capital Loans
In order to finance
transaction costs in connection with an intended initial 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. Up to $1,500,000
of such loans may be convertible into warrants of the post-Business Combination entity at a price of $1.50 per warrant at the option
of the lender. Such warrants would be identical to the private placement warrants. The terms of such loans have not been determined
and no written agreements exist with respect to such loans.
5. Commitments and Contingencies
The Company is committed
to pay the Deferred Discount totaling $14,000,000, or 3.5% of the gross offering proceeds of the Public Offering, to the underwriters
upon the Company’s consummation of a Business Combination. The underwriters will not be entitled to any interest accrued
on the Deferred Discount, and no Deferred Discount is payable to the underwriters if there is no Business Combination.
6. Trust Account
As of September 30, 3019,
investment securities in the Company’s Trust Account consisted of $402,622,630 in United States Treasury Bills and another
$1,579 held as cash. The Company classifies its Treasury Instruments and equivalent securities as held-to-maturity
in accordance with FASB ASC 320 “Investments – Debt and Equity Securities”. Held-to-maturity securities are those
securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded
at amortized cost on the accompanying balance sheet and adjusted for the amortization or accretion of premiums or discounts. The
following table presents fair value information as of September 30, 2019 and indicates the fair value hierarchy of the valuation techniques
the Company utilized to determine such fair value. In addition, the table presents the carrying value (held to maturity), excluding
accrued interest income and gross unrealized holding gain. Since all of the Company’s permitted investments consist of U.S.
government treasury bills and cash, fair values of its investments are determined by Level 1 inputs utilizing quoted prices (unadjusted)
in active markets for identical assets as follows:
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Carrying Value
|
|
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Gross
Unrealized
Holding Gain
|
|
|
Quoted Prices in
Active Markets
(Level 1)
|
|
U.S. Government Treasury Securities as of September 30, 2019(1)
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$
|
402,622,630
|
|
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$
|
34,420
|
|
|
$
|
402,657,050
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|
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(1)
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Maturity date October 8, 2019. Reinvested on October 9, 2019.
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7. Stockholders’ Equity
Class A Common
Stock - The Company is authorized to issue 380,000,000 shares of Class A common stock with a par value of
$0.0001 per share. At September 30, 2019, there were 40,000,000 shares of Class A common stock issued and outstanding of which, 38,430,525
were classified outside of permanent equity.
Class B Common
Stock - The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of
$0.0001 per share. Holders of the Company’s Class B common stock are entitled to one vote for each share. At September 30, 2019,
there were 10,000,000 shares of Class B common stock issued and outstanding.
Preferred stock - The
Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share. At September 30, 2019, there
were no shares of preferred stock issued or outstanding.
Warrants — Public
Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the
Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days
after the completion of a Business Combination or (b) 12 months from the closing of the Public Offering; provided in
each case that the Company has an effective registration statement under the Securities Act covering the shares of Class A
Common Stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company
permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under
the Securities Act). The Company has agreed that as soon as practicable, but in no event later than 15 business days after the
closing of a Business Combination, the Company will use its best efforts to file with the SEC a registration statement for the
registration, under the Securities Act, of the shares of Class A Common Stock issuable upon exercise of the Public Warrants.
The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration
statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions
of the warrant agreement relating to the Warrants. If a registration statement covering the shares of Class A Common Stock
issuable upon exercise of the Warrants is not effective by the sixtieth (60th) day after the closing of the initial Business Combination,
warrant holders may, until such time as there is an effective registration statement and during any period when the Company will
have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance
with Section 3(a)(9) of the Securities Act or another exemption. The Public Warrants will expire five years after the
completion of a Business Combination or earlier upon redemption or liquidation.
The Private Placement
Warrants are identical to the Public Warrants underlying the Units sold in the Public Offering, except that the Private Placement
Warrants and the shares of Class A Common Stock issuable upon exercise of the Private Placement Warrants will not be transferable,
assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions.
Additionally, the Private Placement Warrants will be non-redeemable so long as they are held by the initial purchasers or such
purchasers’ permitted transferees. If the Private Placement Warrants are held by someone other than their initial purchasers
or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders
on the same basis as the Public Warrants.
The Company may call
the Warrants for redemption (except with respect to the Private Placement Warrants):
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·
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in whole and not in part;
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·
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at a price of $0.01 per warrant;
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·
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upon a minimum of 30 days’ prior written notice of redemption;
and
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·
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if, and only if, the last reported closing price of the Class A
Common Stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading
day prior to the date on which the Company sends the notice of redemption to the warrant holders.
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Additionally, commencing
ninety days after the Warrants become exercisable, the Company may redeem its outstanding Warrants in whole and not in part, for
the number of Class A ordinary shares determined by reference to the table set forth in the Company’s prospectus relating
to the Public Offering based on the redemption date and the “fair market value” of the Class A Common Stock, upon
a minimum of 30 days’ prior written notice of redemption and if, and only if, the last sale price of the Class A ordinary
shares equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and
the like) on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders, if,
and only if, the Private Placement Warrants are also concurrently exchanged at the same price (equal to a number of shares of Class
A Common Stock) as the outstanding Warrants, as described above and if, and only if, there is an effective registration statement
covering the shares of Class A Common Stock issuable upon exercise of the Warrants and a current prospectus relating thereto available
throughout the 30-day period after written notice of redemption is given. The “fair market value” of the shares of
Class A Common Stock is the average last reported sale price of the Class A Common Stock for the 10 trading days ending on
the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants.
If the Company calls
the Warrants for redemption, management will have the option to require all holders that wish to exercise the Warrants to do so
on a “cashless basis,” as described in the warrant agreement.
The exercise price
and number of shares of Class A Common Stock issuable upon exercise of the Warrants may be adjusted in certain circumstances.
If the Company is unable to complete a Business Combination within the required time period and the Company liquidates the funds
held in the Trust Account, holders of Warrants will not receive any of such funds with respect to their Warrants, nor will they
receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such Warrants. Accordingly,
the Warrants may expire worthless.
In addition, if
(x) the Company issues additional shares of Class A Common Stock or equity-linked securities for capital raising purposes in connection
with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per share of
Class A Common Stock (with such issue price or effective issue price to be determined in good faith by the Company’s board
of directors and, in the case of any such issuance to the initial stockholders or their affiliates, without taking into account
any Founder Shares held by the initial stockholders or such affiliates, as applicable, prior to such issuance), (y) the aggregate
gross proceeds from such issuances represent more than 50% of the total equity proceeds, and interest thereon, available for the
funding of the initial Business Combination, and (z) the volume weighted average trading price of the Class A Common Stock during
the 10 trading day period starting on the trading day after the day on which the Company consummates the initial Business Combination
(such price, the “Market Value”) is below $9.20 per share, the exercise price of the Warrants will be adjusted (to
the nearest cent) to be equal to 115% of the Market Value, and the $18.00 per share redemption trigger price of the Warrants will
be adjusted (to the nearest cent) to be equal to 180% of the Market Value. However, if the Company does not complete its initial
Business Combination on or prior to May 14, 2021, the Warrants will expire at the end of such period.