As filed with the Securities and Exchange Commission on September 14, 2020
Registration No. [●]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Gores Metropoulos, Inc.
(Exact Name of Registrant as Specified in its Certificate of Incorporation)
Delaware | 6770 | 83-1804317 | ||
(State or Other Jurisdiction of Incorporation or Organization) |
(Primary Standard Industrial Classification Code Number) |
(IRS Employer Identification Number) |
9800 Wilshire Blvd.
Beverly Hills, CA 90212
(310) 209-3010
(Address, including Zip Code, and Telephone Number, including Area Code, of Principal Executive Offices)
Dean Metropoulos
Chairman
200 Greenwich Avenue
Greenwich, CT 06830
Telephone: (203) 629-6644
Facsimile: (203) 629-6660
(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)
Copies to:
James R. Griffin, Esq. Weil, Gotshal & Manges LLP 200 Crescent Court, Suite 300 Dallas, TX 75201 (214) 746-7779 |
Kyle C. Krpata, Esq. Weil, Gotshal & Manges LLP 201 Redwood Shores Parkway Redwood Shores, CA 94065 (650) 802-3093 |
Daniel S. Kim, Esq. Mitchell Zuklie, Esq. Hari Raman, Esq. Albert Vanderlaan, Esq. Orrick, Herrington & Sutcliffe LLP 631 Wilshire Boulevard Santa Monica, CA 90401 (301) 633-2800 |
Austin Russell President and Chief Executive Officer Luminar Technologies, Inc. 2603 Discovery Drive, Suite 100 Orlando, FL 32826 (407) 900-5259 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effectiveness of this registration statement.
If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, 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, 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 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.
Large accelerated filer | ☐ | Accelerated filer | ☒ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☒ | |||
Emerging Growth Company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) |
☐ | |
Exchange Act Rule 14d-1(d) (Cross Border Third-Party Tender Offer) |
☐ |
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Securities to be Registered |
Amount to be Registered |
Proposed Maximum Offering Price Per Public Unit |
Proposed Maximum Aggregate Offering Price |
Amount of Registration Fee | ||||
Class A common stock to be issued in the Business Combination |
220,234,292(1)(2) | N/A | $2,647,216,190(3) | $343,609(4) | ||||
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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 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.
(1) | Represents the estimated maximum number of shares of Class A common stock, par value $0.0001 per share (Class A Stock), of the Company following the Business Combination (as defined herein) (such Company, the Post-Combination Company) to be issued to Post-Combination Company stockholders upon completion of the Business Combination, estimated solely for the purpose of calculating the registration fee, and is based on an amount equal to the sum of (a) the product of (i) the sum of (A) 3,739,295 issued and outstanding shares of Luminar Class A Common Stock, par value $0.00001 per share (the Luminar Class A Stock), (B) 240,000 issued and outstanding shares of Luminar Founders Preferred Stock, par value $0.00001 per share, (C) 1,754,755 issued and outstanding shares of Luminar Series A Preferred Stock, par value $0.00001 per share, (D) 163,306 issued and outstanding shares of Luminar Series A-1 Preferred Stock, par value $0.00001 per share, (E) 1,322,780 issued and outstanding shares of Luminar Series A-2 Preferred Stock, par value $0.00001 per share, (F) 223,548 issued and outstanding shares of Luminar Series A-3 Preferred Stock, par value $0.00001 per share, (G) 49,827 issued and outstanding shares of Luminar Series A-4 Preferred Stock, par value $0.00001 per share, (H) 137,715 issued and outstanding shares of Luminar Series A-5 Preferred Stock, par value $0.00001 per share, (I) 247,420 issued and outstanding shares of Luminar Series A-6 Preferred Stock, par value $0.00001 per share, (J) 1,459,656 issued and outstanding shares of Luminar Series A-7 Preferred Stock, par value $0.00001 per share, (K) 385,777 issued and outstanding shares of Luminar Series A-8 Preferred Stock, par value $0.00001 per share, (L) 748,674 issued and outstanding shares of Luminar Series A-9 Preferred Stock, par value $0.00001 per share, (M) 252,801 issued and outstanding shares of Luminar Series A-10 Preferred Stock, par value $0.00001 per share, (N) 317,404 issued and outstanding shares of Luminar Series A-11 Preferred Stock, par value $0.00001 per share, and (O) 1,251,971 issued and outstanding shares of Luminar Series X Preferred Stock, par value $0.00001 per share (the Luminar Series X Preferred Stock), in each case, as of September 14, 2020, and (P) 220,934 shares of Luminar Series X Preferred Stock, representing the maximum number of additional shares of Luminar Series X Preferred Stock that may be issued in exchange for the Subsequent Series X Financing Amount (as defined under the Merger Agreement) multiplied by (ii) 13.5787, the estimated Per Share Company Stock Consideration (as defined herein) under the Merger Agreement, equal to (A) (I) (x) $2,928,828,692 plus (y) $30,000,000, the maximum Subsequent Series X Financing Amount, divided by (II) $10.00, divided by (B) the sum of (without duplication) (x) 20,265,546, the maximum aggregate number of shares of Luminar Stock that will be outstanding as of immediately prior to the effective time of the First Merger (as defined herein) and (y) 1,524,704, the aggregate number of shares of Luminar Stock issuable upon exercise of all (I) Luminar Stock Options (as defined herein) and (II) Luminar Warrants (as defined herein), in each case, that will be outstanding as of immediately prior to the effective time of the First Merger; (b) 15,308,450 shares of Class A Stock that may be issued as contingent consideration in the Business Combination pursuant to the Merger Agreement; and (c) 35,000,000 shares representing the estimated maximum amount to be held in reserve for future issuance. |
(2) | Pursuant to Rule 416(a) promulgated under the Securities Act, there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from share splits, share dividends or similar transactions. |
(3) | Pursuant to Rules 457(c), 457(f)(1) and 457(f)(3) promulgated under the Securities Act and solely for the purpose of calculating the registration fee, the proposed aggregate maximum offering price is (i) $12.02 (the average of the high and low prices of Public Shares as reported on Nasdaq on September 8, 2020) multiplied by (ii) 220,234,292 shares of Class A Stock to be registered. |
(4) | Computed in accordance with Rule 457(f) under the Securities Act to be $343,608.66, which is equal to 0.0001298 multiplied by the proposed maximum aggregate offering price of shares of Class A Stock of $2,647,216,190. |
EXPLANATORY NOTE
This proxy statement/consent solicitation statement/prospectus relates to an Agreement and Plan of Merger, dated as of August 24, 2020 (as it may be amended from time to time, the Merger Agreement), by and among Gores Metropoulos, Inc., a Delaware corporation (we, us, our or the Company), Dawn Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of the Company (First Merger Sub), Dawn Merger Sub II, LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of the Company (Second Merger Sub), and Luminar Technologies, Inc., a Delaware corporation (Luminar), a copy of which is attached to this proxy statement/consent solicitation statement/prospectus as Annex A.
Pursuant to the Merger Agreement and in connection therewith, among other things and subject to the terms and conditions contained therein:
| at the closing of the Business Combination, First Merger Sub will merge with and into Luminar, with Luminar continuing as the Surviving Corporation (the First Merger); |
| immediately following the First Merger and as part of the same overall transaction as the First Merger, the Surviving Corporation will merge with and into Second Merger Sub, with Second Merger Sub continuing as the Surviving Entity (the Second Merger and, together with the First Merger and the other transactions contemplated by the Merger Agreement, the Business Combination); |
| prior to the consummation of the Business Combination (and subject to approval by our stockholders), we will adopt the proposed Second Amended and Restated Certificate of Incorporation (the Second Amended and Restated Certificate of Incorporation), which is attached to this proxy statement/consent solicitation statement/prospectus as Annex B, to provide for, among other things the authorization of the Class B Stock to be issued in connection with the Business Combination; |
| in connection with the Business Combination, the Luminar Equityholders will receive in exchange for their Luminar equity, a number of shares of Class A common stock, par value $0.0001 per share (Class A Stock), or Class B common stock, par value $0.0001 per share (Class B Stock), (deemed to have a value of $10.00 per share) or options/warrants thereof equal to $2,928,828,692, plus an aggregate amount of up to $30,000,000 depending on the amount of additional capital in excess of $170,000,000 that is raised by Luminar pursuant to the Series X Financing prior to the closing of the Business Combination, divided by $10.00 (the Aggregate Company Stock Consideration). Holders of shares of (a) Luminars Class A common stock, par value $0.00001 per share (Luminar Class A Stock), each class of Luminars Preferred Stock, par value of $0.00001 per share (the Luminar Preferred Stock), and Luminar s Founders Preferred Stock, par value $0.00001 per share (the Luminar Founders Preferred Stock), will be entitled to receive a number of shares of newly-issued Class A Stock equal to (i) the Aggregate Company Stock Consideration, divided by (ii) the sum of, without duplication, (A) the aggregate number of shares of capital stock of Luminar outstanding as of immediately prior to the effective time of the First Merger (including all restricted shares of Luminar Class A Stock granted pursuant to Luminars 2015 Stock Plan (such restricted shares the Luminar Restricted Stock and such stock plan, the Luminar Stock Plan)), whether vested or unvested, (B) the aggregate number of shares of Luminar Class A Stock issuable upon exercise of all options to purchase Luminar Class A Stock granted pursuant to the Luminar Stock Plan (the Luminar Stock Options), whether vested or unvested, that are outstanding as of immediately prior to the effective time of the First Merger and (C) the aggregate number of shares of Luminar Stock issuable upon exercise of all warrants exercisable for Luminar Stock (the Luminar Warrants), whether vested or unvested, that are outstanding as of immediately prior to the effective time of the First Merger (the Company Stock Adjusted Fully Diluted Shares and, such quotient, the Per Share Company Stock Consideration), for each such share of Luminar Class A Stock, Luminar Preferred Stock or Luminar Founders Preferred Stock, as applicable, and (b) Luminars Class B common stock, par value $0.00001 per share (Luminar Class B Stock and, together with the Luminar Class A Stock, the Luminar Preferred Stock and the Luminar Founders Preferred Stock, the Luminar Stock), will be entitled to receive a number |
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of shares of newly-issued Class B Stock equal to the Per Share Company Stock Consideration for each such share of Luminar Class B Stock. The foregoing consideration to be paid to the Luminar Stockholders may be further increased by amounts payable as earn-out shares of Class A Stock or Class B Stock, as applicable (the Earn-Out Shares), of up to 7.5% of the sum of (x) the total outstanding capital stock of the Company and (y) the total shares subject to outstanding Rollover Options and Assumed Warrants in each case, as of the closing of the Business Combination; |
| at the closing of the Business Combination, the Company, our Sponsor, Randall Bort, Michael Cramer, Joseph Gatto, Austin Russell, GVA Auto, LLC, a Delaware limited liability company (GVA), and G2VP I, LLC, a Delaware limited liability company, for itself and as nominee for G2VP Founders Fund I, LLC, a Delaware limited liability company (G2VP and, together with Mr. Russell and GVA, the Luminar Holders and, together with our Sponsor, Messrs. Bort, Cramer and Gatto, the Registration Rights Holders) will enter into an amended and restated registration rights agreement (the Registration Rights Agreement), pursuant to which (a) any (i) outstanding shares of Class A Stock or any Private Placement Warrants, (ii) shares of Class A Stock issued or issuable upon the exercise of any other equity security of the Company (including shares of Class A Stock issued or issuable upon the conversion of the Class F Stock or the Class B Stock and upon exercise of the Private Placement Warrants), and (iii) shares of Class A Stock issued as Earn-Out Shares or issuable upon the conversion of any Earn-Out Shares, in each case, held by the Luminar Holders, and (b) any other equity security of the Company issued or issuable with respect to any such share of Class A Stock by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise, will be entitled to registration rights; and |
| our Initial Stockholders have agreed, and their permitted transferees will agree, to vote their Founder Shares, as well as any Public Shares purchased during or after the Company IPO, in favor of the Business Combination. |
In addition and in connection with the foregoing, we entered into a Support Agreement with Mr. Austin Russell concurrently upon the execution of the Merger Agreement (the Support Agreement), pursuant to which Mr. Russell agreed, on (or effective as of) the third business day following the mailing of the consent solicitation to the Luminar Stockholders, to execute and deliver a written consent with respect to the outstanding shares of Luminar Class A Stock and Luminar Founders Preferred Stock held by Mr. Russell, adopting the Merger Agreement and approving the Business Combination, unless the Merger Agreement is no longer recommended by the Luminar board of directors in accordance with the Merger Agreement, in which case, the number of shares with respect to which Mr. Russell is committed to execute such written consent will be reduced to 35% of the total number of outstanding shares of Luminar Stock (on an as-converted basis). The shares of Luminar Class A Stock and Luminar Founders Preferred Stock that are owned by Mr. Russell and subject to the Support Agreement represent approximately 38% of the outstanding voting power of Luminar Stock (on an as-converted basis). In addition, the Support Agreement prohibits Mr. Russell from engaging in activities that have the effect of soliciting a competing acquisition proposal.
In connection with the foregoing, our Initial Stockholders have also agreed to waive their right to a conversion price adjustment with respect to any shares of our Class A Stock or Class F Stock they may hold in connection with the consummation of the Business Combination as set forth in the Amended and Restated Certificate of Incorporation of the Company, dated January 31, 2019 (the Current Company Certificate).
In addition, and in connection with the foregoing and concurrently with the execution of the Merger Agreement, Luminar entered into that certain Series X Preferred Stock Purchase Agreement and other related agreements (collectively the Series X Agreements) with certain investors (the Series X Investors) that are accredited investors (as defined by Rule 501 of Regulation D). Pursuant to the Series X Agreements, the Series X Investors agreed to purchase approximately 1,250,000 shares of Luminar Series X Preferred Stock, par value $0.00001 per share (the Series X Preferred Stock), for a purchase price of $135.7860 per share, or an aggregate of approximately $170,000,000 (collectively, the Series X Financing). The initial closing of the Series X
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Financing occurred concurrently with the execution of the Merger Agreement (the Initial Closing). Pursuant to the Series X Agreements, Luminar has the right to sell up to approximately 221,000 additional shares of the Luminar Series X Preferred Stock for up to 45 days following the Initial Closing. The Luminar Series X Preferred Stock to be issued pursuant to the Series X Agreements was not registered under the Securities Act in reliance upon the exemption provided under Section 4(a)(2) of the Securities Act / Regulation D promulgated thereunder.
This proxy statement/consent solicitation statement/prospectus serves as:
| a proxy statement for the special meeting of the Company in lieu of the 2020 annual meeting of the Company being held on [●], 2020, (the Special Meeting), where Company stockholders will vote on, among other things, proposals to (i) approve the Merger Agreement and the transactions contemplated thereby, including the Business Combination, (ii) approve the issuance of the Class A Stock and Class B Stock in connection with the Business Combination and (iii) adopt the proposed Second Amended and Restated Certificate of Incorporation under the DGCL to be effective upon the consummation of the Business Combination; |
| a consent solicitation statement for Luminar, where Luminar will solicit the written consent of the Luminar Stockholders with respect to the adoption of the Merger Agreement; and |
| a prospectus for the Class A Stock that Luminar Stockholders will receive in the Business Combination. |
This proxy statement/consent solicitation statement/prospectus does not serve as a prospectus for the Class A Stock that our Initial Stockholders will receive in the Business Combination.
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The information contained in this document is subject to completion or amendment. A registration statement relating to these securities has been filed with the United States Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This document is not an offer to sell these securities and it is not soliciting an offer to buy these securities, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale is not permitted or would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
PRELIMINARY SUBJECT TO COMPLETION, DATED SEPTEMBER 14, 2020
LETTER TO STOCKHOLDERS OF GORES METROPOULOS, INC.
9800 Wilshire Blvd.
Beverly Hills, CA 90212
(310) 209-3010
Dear Gores Metropoulos, Inc. Stockholder:
We cordially invite you to attend a special meeting in lieu of the 2020 annual meeting of the stockholders of Gores Metropoulos, Inc., a Delaware corporation (we, us, our or the Company), which, in light of public health concerns regarding the coronavirus (COVID-19) pandemic, will be held via live webcast at https://www.cstproxy.com/goresmetropoulos/sm2020, on [●], 2020, at [●]. The Special Meeting can be accessed by visiting https://www.cstproxy.com/goresmetropoulos/sm2020, where you will be able to listen to the meeting live and vote during the meeting. Additionally, you have the option to listen only to the Special Meeting by dialing +1 877-770-3647 (toll-free within the U.S. and Canada) or +1 312-780-0854 (outside of the U.S. and Canada, standard rates apply). The passcode for telephone access is 11499529#, but please note that you cannot vote or ask questions if you choose to participate telephonically. Please note that you will only be able to access the Special Meeting by means of remote communication.
On August 24, 2020, the Company, Dawn Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of the Company (First Merger Sub), Dawn Merger Sub II, LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of the Company (Second Merger Sub), and Luminar Technologies, Inc., a Delaware corporation (Luminar), entered into an Agreement and Plan of Merger (as it may be amended from time to time, the Merger Agreement), which provides for, among other things, (i) the merger of First Merger Sub with and into Luminar, with Luminar continuing as the surviving corporation (the First Merger), and (ii) immediately following the First Merger and as part of the same overall transaction as the First Merger, the merger of Luminar with and into Second Merger Sub, with Second Merger Sub continuing as the surviving entity (the Second Merger and, together with the First Merger, the Mergers and, together with the other transactions contemplated by the Merger Agreement, the Business Combination). As a result of the First Merger, each share of Luminar Stock will be cancelled and converted into the right to receive the merger consideration in accordance with the terms of the Merger Agreement and the Company will thereafter own 100% of the outstanding capital stock of Luminar as the surviving corporation of the First Merger (the Surviving Corporation). As a result of the Second Merger, the Company will own 100% of the outstanding interests in the surviving entity of the Second Merger (the Surviving Entity). Following the closing of the Business Combination, the Company will own, directly or indirectly, all of the issued and outstanding equity interests in the Surviving Entity and its subsidiaries, and the stockholders of Luminar as of immediately prior to the effective time of the First Merger (the Luminar Stockholders) will hold a portion of our Class A common stock, par value $0.0001 per share (the Class A Stock) and our newly-authorized Class B common stock, par value $0.0001 per share (the Class B Stock), as applicable. You are being asked to vote on the Business Combination.
Subject to the terms of the Merger Agreement, the aggregate merger consideration to be paid in connection with the Business Combination is expected to be a number of shares of Class A Stock and Class B Stock of the Company (deemed to have a value of $10.00 per share) equal to $2,928,828,692, plus an aggregate amount of up to $30,000,000 depending on the amount of additional capital in excess of $170,000,000 that is raised by Luminar pursuant to the Series X Financing prior to the closing of the Business Combination, divided by $10.00 (the Aggregate Company Stock Consideration). Holders of shares of (a) Luminars Class A common stock, par value $0.00001 per share (Luminar Class A Stock), each class of Luminars Preferred Stock, par value of $0.00001 per share (the Luminar Preferred Stock), and Luminars Founders Preferred Stock, par value $0.00001 per share (Luminar Founders Preferred Stock), will be entitled to receive a number of shares of newly-issued Class A Stock equal to (i) the Aggregate Company Stock Consideration, divided by (ii) the sum of, without duplication, (A) the aggregate number of shares of capital stock of Luminar outstanding as of immediately prior to the effective time of the First Merger (including all restricted shares of Luminar Class A
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Stock granted pursuant to the Luminars 2015 Stock Plan (such restricted shares the Luminar Restricted Stock and such stock plan, the Luminar Stock Plan)), whether vested or unvested, (B) the aggregate number of shares of Luminar Class A Stock issuable upon exercise of all options to purchase Luminar Class A Stock granted pursuant to the Luminar Stock Plan (the Luminar Stock Options), whether vested or unvested, that are outstanding as of immediately prior to the effective time of the First Merger and (C) the aggregate number of shares of Luminar Preferred Stock issuable upon exercise of all warrants exercisable for Luminar Preferred Stock that are outstanding as of immediately prior to the consummation of the Business Combination (the Luminar Warrants), whether vested or unvested, that are outstanding as of immediately prior to the effective time of the First Merger (the Company Stock Adjusted Fully Diluted Shares and, such quotient, the Per Share Company Stock Consideration) for each such share of Luminar Class A Stock, Luminar Preferred Stock or Luminar Founders Preferred Stock, as applicable, issuable in Class A Stock and (b) Luminars Class B common stock, par value $0.00001 per share (Luminar Class B Stock), will be entitled to receive a number of shares of newly-issued Class B Stock equal to the Per Share Company Stock Consideration for each such share of Luminar Class B Stock. The foregoing consideration to be paid to the Luminar Stockholders may be further increased by amounts payable as earn-out shares of Class A Stock or Class B Stock, as applicable (the Earn-Out Shares), of up to 7.5% of the sum of (x) the total outstanding capital stock of the Company and (y) the total shares subject to outstanding Rollover Options and Assumed Warrants, in each case, as of the closing of the Business Combination.
In connection with the closing of the Business Combination, the shares of Class F common stock of the Company, par value $0.0001 per share (the Class F Stock and, together with the Class A Stock and, following the Business Combination, the Class B Stock of the Post-Combination Company, the Common Stock), issued prior to the Company IPO (the Founder Shares), held by our sponsor, Gores Metropoulos Sponsor, LLC (the Sponsor), and certain other Company stockholders will automatically convert into shares of Class A Stock on a one-for-one basis and will continue to be subject to the transfer restrictions applicable to the Founder Shares.
In addition, and in connection with the foregoing and concurrently with the execution of the Merger Agreement, Luminar entered into that certain Series X Preferred Stock Purchase Agreement and other related agreements (collectively the Series X Agreements) with certain investors (the Series X Investors) that are accredited investors (as defined by Rule 501 of Regulation D). Pursuant to the Series X Agreements, the Series X Investors agreed to purchase approximately 1,250,000 shares of Luminar Series X Preferred Stock, par value $0.00001 per share (the Luminar Series X Preferred Stock), for a purchase price of $135.7860 per share, or an aggregate of approximately $170,000,000 (collectively, the Series X Financing). The initial closing of the Series X Financing occurred concurrently with the execution of the Merger Agreement (the Initial Closing). Pursuant to the Series X Agreements, Luminar has the right to sell up to approximately 221,000 additional shares of the Luminar Series X Preferred Stock for up to 45 days following the Initial Closing. The Luminar Series X Preferred Stock to be issued pursuant to the Series X Agreements was not, and will not be, registered under the Securities Act in reliance upon the exemption provided under Section 4(a)(2) of the Securities Act/Regulation D promulgated thereunder.
At the Special Meeting, our stockholders will be asked to consider and vote upon a proposal (the Transaction Proposal or Proposal No. 1) to approve the Merger Agreement, a copy of which is attached to the accompanying proxy statement/consent solicitation statement/prospectus as Annex A, and the transactions contemplated thereby, including the Business Combination. In addition, you are being asked to consider and vote upon: (i) a proposal to approve, for purposes of complying with applicable Nasdaq listing rules, the issuance of more than 20% of the Companys issued and outstanding Common Stock in connection with the Business Combination (the Issuance Proposal or Proposal No. 2); (ii) a proposal to adopt the Second Amended and Restated Certificate of Incorporation in the form attached hereto as Annex B (the Amendment Proposal or Proposal No. 3); (iii) a separate proposal with respect to certain governance provisions in the Second Amended and Restated Certificate of Incorporation, which are being separately presented in accordance with SEC requirements and which will be voted upon on a non-binding advisory basis (the Governance Proposal or Proposal No. 4); (iv) a proposal to approve the Management Longer Term Equity Incentive Plan (the
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Management Longer Term Equity Incentive Plan), including the authorization of the initial share reserve under the Management Longer Term Equity Incentive Plan (the Management Longer Term Equity Incentive Plan Proposal or Proposal No. 5); (v) a proposal to approve the 2020 Equity Incentive Plan (the Omnibus Incentive Plan), including the authorization of the initial share reserve under the Omnibus Incentive Plan (the Omnibus Incentive Plan Proposal or Proposal No. 6); (vi) a proposal to approve the 2020 Employee Stock Purchase Plan (the Employee Stock Purchase Plan), including the authorization of the initial share reserve under the Employee Stock Purchase Plan (the Employee Stock Purchase Plan Proposal or Proposal No. 7); (vii) a proposal to elect seven directors to serve staggered terms on our Board until the first, second and third annual meetings of stockholders following the date of the filing of the Second Amended and Restated Certificate of Incorporation, as applicable, and until their respective successors are duly elected and qualified (the Director Election Proposal or Proposal No. 8) and (vii) a proposal to allow the chairman of the Special Meeting to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if there are insufficient votes for, or otherwise in connection with, the approval of the Transaction Proposal, the Issuance Proposal, the Amendment Proposal, the Management Longer Term Equity Incentive Plan Proposal or the Omnibus Incentive Plan Proposal but no other proposal if the Transaction Proposal, the Issuance Proposal and the Amendment Proposal, the Management Longer Term Equity Incentive Plan and the Omnibus Incentive Plan are approved (the Adjournment Proposal or Proposal No. 9).
Each of these proposals is more fully described in this proxy statement/consent solicitation statement/prospectus, which each stockholder is encouraged to read carefully.
Our Public Shares, Public Units and Public Warrants are currently listed on the Nasdaq Capital Market under the symbols GMHI, GMHIU and GMHIW, respectively. We intend to apply to continue the listing of our Class A Stock and Public Warrants on the Nasdaq Capital Market under the symbols LAZR and LAZRW, respectively, upon the closing of the Business Combination.
Pursuant to the Current Company Certificate, we are providing our Public Stockholders with the opportunity to redeem, upon the closing of the Business Combination, shares of Class A Stock then held by them for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the closing of the Business Combination) in the Trust Account that holds the proceeds of the Company IPO (including interest not previously released to the Company to fund regulatory compliance requirements and other costs related thereto, subject to an annual limit of $750,000, for a maximum of 24 months, using funds released to the Company from the Trust Account (Regulatory Withdrawals) and/or to pay its franchise and income taxes). The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the Deferred Discount totaling $14,000,000 that we will pay to the underwriters of the Company IPO or transaction expenses incurred in connection with the Business Combination. For illustrative purposes, based on the balance of the Trust Account of $406,397,612 as of June 30, 2020, the estimated per share redemption price would have been approximately $10.16. Public Stockholders may elect to redeem their shares even if they vote for the Business Combination. A Public Stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a group (as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the groups shares, in excess of 20% of the shares of Class A Stock included in the Public Units sold in the Company IPO. We refer to this as the 20% threshold. We have no specified maximum redemption threshold under the Current Company Certificate, other than the aforementioned 20% threshold. Each redemption of shares of Class A Stock by our Public Stockholders will reduce the amount in the Trust Account. In no event will we redeem shares of our Class A Stock in an amount that would result in the Companys failure to have net tangible assets equaling or exceeding $5,000,001. Holders of our outstanding Public Warrants do not have redemption rights in connection with the Business Combination. Unless otherwise specified, the information in the accompanying proxy statement/consent solicitation statement/prospectus assumes that none of our Public Stockholders exercise their redemption rights with respect to their shares of Class A Stock. Our Sponsor and current independent directors (collectively, our Initial Stockholders), as well as our officers and other current directors, have agreed to waive their redemption rights with respect to their shares of Common Stock in
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connection with the consummation of the Business Combination, and the Founder Shares will be excluded from the pro rata calculation used to determine the per-share redemption price. Our Initial Stockholders have also agreed to waive their right to a conversion price adjustment with respect to any shares of our Common Stock they may hold in connection with the consummation of the Business Combination. Currently, our Initial Stockholders own 20% of our issued and outstanding shares of Common Stock, including all of the Founder Shares. Our Initial Stockholders, directors and officers have agreed to vote any shares of our Common Stock owned by them in favor of the Business Combination. The Founder Shares are subject to transfer restrictions.
We are providing the accompanying proxy statement/consent solicitation statement/prospectus and accompanying proxy card to our stockholders in connection with the solicitation of proxies to be voted at the Special Meeting (including following any adjournments or postponements of the Special Meeting). Information about the Special Meeting, the Business Combination and other related business to be considered by our stockholders at the Special Meeting is included in this proxy statement/consent solicitation statement/prospectus. Whether or not you plan to attend the Special Meeting via the virtual meeting platform, we urge all our stockholders to read this proxy statement/consent solicitation statement/prospectus, including the Annexes and the accompanying financial statements of the Company and Luminar, carefully and in their entirety. In particular, we urge you to read carefully the section entitled Risk Factors beginning on page 62 of this proxy statement/consent solicitation statement/prospectus.
After careful consideration, our Board has unanimously approved the Merger Agreement and the transactions contemplated therein, and unanimously recommends that our stockholders vote FOR the approval of the Merger Agreement and approval of the transactions contemplated thereby, including the Business Combination, and FOR all other proposals presented to our stockholders in the accompanying proxy statement/consent solicitation statement/prospectus. When you consider our Boards recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that may conflict with your interests as a stockholder. Please see the section entitled The Business Combination Interests of Certain Persons in the Business Combination Interests of the Company Initial Stockholders and the Companys Other Current Officers and Directors for additional information.
Approval of the Transaction Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote at the Special Meeting. Approval of the Issuance Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote at the Special Meeting. Approval of the Amendment Proposal requires (i) the affirmative vote of holders of a majority of our outstanding shares of Common Stock entitled to vote thereon at the Special Meeting and (ii) the affirmative vote of holders of a majority of our outstanding shares of Class F Stock, voting separately as a single class, entitled to vote thereon at the Special Meeting. Approval of the Governance Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Approval of the Management Longer Term Equity Incentive Plan Proposal, the Omnibus Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote at the Special Meeting. Directors are elected by a plurality of the votes cast in the Director Election Proposal; this means that the seven individuals nominated for election to our Board who receive the most FOR votes (among the shares of our Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting) will be elected. Approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote at the Special Meeting.
Your vote is very important. Whether or not you plan to attend the Special Meeting, please vote as soon as possible by following the instructions in this proxy statement/consent solicitation statement/prospectus to make sure
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that your shares are represented at the Special Meeting. If you hold your shares in street name through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the Special Meeting. The transactions contemplated by the Merger Agreement will be consummated only if the Transaction Proposal, the Issuance Proposal and the Amendment Proposal are approved at the Special Meeting. Unless waived by the parties to the Merger Agreement, the closing of the Business Combination is conditioned upon the approval of the Transaction Proposal, the Issuance Proposal and the Amendment Proposal. If we fail to obtain the requisite stockholder approval for any of the Transaction Proposal, the Issuance Proposal or the Amendment Proposal, we will not satisfy the conditions to closing of the Merger Agreement and we may be prevented from closing the Business Combination. Each of the proposals other than the Transaction Proposal, the Issuance Proposal and the Amendment Proposal, is conditioned on the approval of the Transaction Proposal, the Issuance Proposal and the Amendment Proposal, other than the Governance Proposal and the Adjournment Proposal, which are not conditioned on the approval of any other proposal set forth in this proxy statement/consent solicitation statement/prospectus.
If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted FOR each of the proposals presented at the Special Meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not attend the Special Meeting in person via the virtual meeting platform, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting. If you are a stockholder of record and you attend the Special Meeting and wish to vote in person via the virtual meeting platform, you may withdraw your proxy and vote in person via the virtual meeting platform.
TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND THAT THE COMPANY REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO THE COMPANYS TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT SUCH MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING DEPOSITORY TRUST COMPANYS DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.
On behalf of our Board, I would like to thank you for your support of Gores Metropoulos, Inc. and look forward to a successful completion of the Business Combination.
Sincerely, |
|
Dean Metropoulos |
Chairman of the Board of Directors |
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT/CONSENT SOLICITATION STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROXY STATEMENT/CONSENT SOLICITATION STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.
This proxy statement/consent solicitation statement/prospectus is dated [●], 2020, and is expected to be first mailed or otherwise delivered to Company stockholders on or about [●], 2020.
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ADDITIONAL INFORMATION
No person is authorized to give any information or to make any representation with respect to the matters that this proxy statement/consent solicitation statement/prospectus describes other than those contained in this proxy statement/consent solicitation statement/prospectus, and, if given or made, the information or representation must not be relied upon as having been authorized by the Company or Luminar. This proxy statement/consent solicitation statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy securities or a solicitation of a proxy in any jurisdiction where, or to any person to whom, it is unlawful to make such an offer or a solicitation. Neither the delivery of this proxy statement/consent solicitation statement/prospectus nor any distribution of securities made under this proxy statement/consent solicitation statement/prospectus will, under any circumstances, create an implication that there has been no change in the affairs of the Company or Luminar since the date of this proxy statement/consent solicitation statement/prospectus or that any information contained herein is correct as of any time subsequent to such date.
NOTICE OF SPECIAL MEETING OF GORES METROPOULOS, INC.
IN LIEU OF 2020 ANNUAL GENERAL MEETING OF GORES METROPOULOS, INC.
TO BE HELD [●], 2020
To the Stockholders of Gores Metropoulos, Inc.:
NOTICE IS HEREBY GIVEN that a special meeting (the Special Meeting) in lieu of the 2020 annual meeting of the stockholders of Gores Metropoulos, Inc., a Delaware corporation (we, us, our or the Company), which, in light of public health concerns regarding the coronavirus (COVID-19) pandemic, will be held via live webcast at https://www.cstproxy.com/goresmetropoulos/sm2020, on [●], 2020, at [●]. The Special Meeting can be accessed by visiting https://www.cstproxy.com/goresmetropoulos/sm2020, where you will be able to listen to the meeting live and vote during the meeting. Additionally, you have the option to listen only to the Special Meeting by dialing +1 877-770-3647 (toll-free within the U.S. and Canada) or +1 312-780-0854 (outside of the U.S. and Canada, standard rates apply). The passcode for telephone access is 11499529#, but please note that you cannot vote or ask questions if you choose to participate telephonically. Please note that you will only be able to access the Special Meeting by means of remote communication. You are cordially invited to attend the Special Meeting to conduct the following items of business:
1. | Transaction Proposal To consider and vote upon a proposal to approve the Agreement and Plan of Merger, dated as of August 24, 2020 (as it may be amended from time to time, the Merger Agreement), by and among the Company, Dawn Merger Sub, Inc. , a Delaware corporation and a direct, wholly-owned subsidiary of the Company (First Merger Sub), Dawn Merger Sub II, LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of the Company (Second Merger Sub), and Luminar Technologies, Inc., a Delaware corporation (Luminar), a copy of which is attached to this proxy statement/consent solicitation statement/prospectus as Annex A, and approve the transactions contemplated thereby, including, among other things, the merger of First Merger Sub with and into Luminar, with Luminar continuing as the Surviving Corporation (the First Merger), and immediately following the First Merger and as part of the same overall transaction as the First Merger, the merger of Luminar with and into Second Merger Sub, with Second Merger Sub continuing as the Surviving Entity (the Second Merger and, together with the First Merger and the other transactions contemplated by the Merger Agreement, the Business Combination) (Proposal No. 1); |
2. | Issuance ProposalTo consider and vote upon a proposal to approve, for purposes of complying with applicable Nasdaq listing rules, the issuance of more than 20% of the Companys issued and outstanding shares of Class A common stock, par value $0.0001 per share, of the Company (the Class A Stock) and Class F common stock, par value $0.0001 per share, of the Company (the Class F Stock and, together with the Class A Stock, and following the Business Combination, the Class B common stock, par value $0.0001 per share, of the Post-Combination Company, the Common Stock) in connection with the Business Combination (as defined below) (Proposal No. 2); |
3. | Amendment ProposalTo consider and act upon a proposal to adopt the proposed Second Amended and Restated Certificate of Incorporation of the Company in the form attached hereto as Annex B (Proposal No. 3); |
4. | Governance ProposalTo consider and act upon, on a non-binding advisory basis, a separate proposal with respect to certain governance provisions in the Second Amended and Restated Certificate of Incorporation in accordance with the United States Securities and Exchange Commission (SEC) requirements (Proposal No. 4); |
5. | Management Longer Term Equity Incentive Plan ProposalTo consider and vote upon a proposal to approve the Management Longer Term Equity Incentive Plan (the Management Longer Term Equity Incentive Plan), including the authorization of the initial share reserve under the Management Longer Term Equity Incentive Plan (Proposal No. 5); |
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6. | Omnibus Incentive Plan ProposalTo consider and vote upon a proposal to approve the 2020 Equity Incentive Plan (the Omnibus Incentive Plan), including the authorization of the initial share reserve under the Omnibus Incentive Plan (Proposal No. 6); |
7. | Employee Stock Purchase Plan ProposalTo consider and vote upon a proposal to approve the 2020 Employee Stock Purchase Plan (the Employee Stock Purchase Plan), including the authorization of the initial share reserve under the Employee Stock Purchase Plan (Proposal No. 7); |
8. | Director Election ProposalTo consider and vote upon a proposal to elect seven directors to serve staggered terms on the Companys Board until the first, second and third annual meetings of stockholders following the date of the filing of the Second Amended and Restated Certificate of Incorporation, as applicable, and until their respective successors are duly elected and qualified (Proposal No. 8); and |
9. | Adjournment ProposalTo consider and vote upon a proposal to allow the chairman of the Special Meeting to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Transaction Proposal, the Issuance Proposal, the Amendment Proposal, the Management Longer Term Equity Incentive Plan Proposal or the Omnibus Incentive Plan Proposal but no other proposal if the Transaction Proposal, the Issuance Proposal, the Amendment Proposal, the Management Longer Term Equity Incentive Plan Proposal and the Omnibus Incentive Plan Proposal are approved (Proposal No. 9). |
The above matters are more fully described in this proxy statement/consent solicitation statement/prospectus, which also includes, as Annex A, a copy of the Merger Agreement. We urge you to read carefully this proxy statement/consent solicitation statement/prospectus in its entirety, including the Annexes and accompanying financial statements of the Company and Luminar.
The record date for the Special Meeting is [●], 2020. Only stockholders of record at the close of business on that date may vote at the Special Meeting or any adjournment thereof. A complete list of our stockholders of record entitled to vote at the Special Meeting will be available for ten days before the Special Meeting at our principal executive offices for inspection by stockholders during ordinary business hours for any purpose germane to the Special Meeting.
Gores Metropoulos Sponsor, LLC , a Delaware limited liability company (our Sponsor), and Mr. Randall Bort, Mr. Michael Cramer and Mr. Joseph Gatto, the Companys independent directors (collectively, together with our Sponsor, our Initial Stockholders), officers and other current directors have agreed to vote any of the shares of Class F Stock that are currently owned by our Initial Stockholders (the Founder Shares) and any Public Shares purchased during or after our initial public offering (the Company IPO) in favor of the Business Combination. Currently, our Initial Stockholders own 20% of our issued and outstanding shares of Common Stock, including all of the Founder Shares.
Pursuant to the Current Company Certificate, we will provide our Public Stockholders with the opportunity to redeem, upon the closing of the Business Combination, shares of the Companys Class A Stock then held by them for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the closing of the Business Combination) in our trust account (the Trust Account) that holds the proceeds of the Company IPO (including interest not previously released to the Company to fund regulatory compliance requirements and other costs related thereto, subject to an annual limit of $750,000, for a maximum of 24 months, using funds released to the Company from the Trust Account (Regulatory Withdrawals) and/or to pay its franchise and income taxes). The per-share amount we will distribute to our stockholders who properly redeem their shares will not be reduced by the Deferred Discount totaling $14,000,000 that we will pay to the underwriters of the Company IPO, as well as other transaction expenses incurred in connection with the Business Combination. For illustrative purposes, based on the balance of our Trust Account of $406,397,612 as of June 30, 2020, the estimated per share redemption price would have been approximately $10.16. Public Stockholders may elect to redeem their shares even if they vote FOR the Business Combination. A Public Stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a group
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(as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the groups shares, in excess of 20% of the shares of Common Stock included in the Public Units sold in the Company IPO. We have no specified maximum redemption threshold under the Current Company Certificate, other than the aforementioned 20% threshold. Each redemption of shares of Class A Stock by our Public Stockholders will reduce the amount in the Trust Account. In no event will we redeem shares of our Class A Stock in an amount that would result in the Companys failure to have net tangible assets in equaling or exceeding $5,000,001. Holders of our outstanding Public Warrants do not have redemption rights in connection with the Business Combination.
Our Initial Stockholders, current officers and other current directors have agreed to waive their redemption rights with respect to their shares of our Common Stock in connection with the consummation of the Business Combination, and the Founder Shares will be excluded from the pro rata calculation used to determine the per-share redemption price. Our Initial Stockholders have also agreed to waive their right to a conversion price adjustment with respect to any shares of our Common Stock they may hold in connection with the consummation of the Business Combination.
Subject to the approval by our stockholders of the Transaction Proposal, the Issuance Proposal and the Amendment Proposal, the Post-Combination Company will adopt a dual class stock structure comparable to the one that will be in effect at Luminar immediately prior to the closing, comprised of Class A Stock, which will carry one vote per share, and Class B Stock, which will carry 10 votes per share. Austin Russell, Luminars Founder, Chairperson of the board of the Post-Combination Company, President and Chief Executive Officer, will hold all of the issued and outstanding shares of the Post-Combination Companys Class B Stock following the closing. Accordingly, as of the closing of the Business Combination (and assuming no redemptions by our Public Stockholders), Mr. Russell is expected to hold approximately 83% of the voting power of the Post-Combination Companys outstanding capital stock, and will be able to control matters submitted to its stockholders for approval, including the election of directors, amendments of its organizational documents and any merger, consolidation, sale of all or substantially all of the Post-Combination Companys assets or other major corporate transactions. For information about the Post-Combination Companys dual class structure, see the section titled Description of Securities.
The Business Combination is conditioned on the approval of the Transaction Proposal, the Issuance Proposal and the Amendment Proposal at the Special Meeting. If we fail to obtain sufficient votes for any of the Transaction Proposal, the Issuance Proposal or the Amendment Proposal, we will not satisfy the conditions to closing of the Merger Agreement and we may be prevented from closing the Business Combination. Each of the proposals other than the Transaction Proposal, the Issuance Proposal and the Amendment Proposal is conditioned on the approval of the Transaction Proposal, the Issuance Proposal and the Amendment Proposal, other than the Governance Proposal and the Adjournment Proposal, which are not conditioned on the approval of any other proposal set forth in this proxy statement/consent solicitation statement/prospectus.
A majority of the issued and outstanding shares of our Common Stock entitled to vote as of the record date at the Special Meeting must be present, in person via the virtual meeting platform or represented by proxy, at the Special Meeting to constitute a quorum and in order to conduct business at the Special Meeting. The approval of the Transaction Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote at the Special Meeting. The approval of the Issuance Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote at the Special Meeting. The approval of the Amendment Proposal requires (i) the affirmative vote of holders of a majority of our outstanding shares of Common Stock entitled to vote thereon at the Special Meeting and (ii) the affirmative vote of holders of a majority of our outstanding shares of Class F Stock, voting separately as a single class, entitled to vote thereon at the Special Meeting. The approval of the Governance Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Approval of the Management Longer Term Equity
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Incentive Plan Proposal, the Omnibus Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote at the Special Meeting. Directors are elected by a plurality of the votes cast in the Director Election Proposal; this means that the seven individuals nominated for election to our Board who receive the most FOR votes (among the shares of our Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting) will be elected. Approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote at the Special Meeting. Our Board unanimously recommends that you vote FOR each of these proposals.
By Order of the Board of Directors |
Dean Metropoulos |
Chairman of the Board of Directors |
Beverly Hills, California |
[●], 2020 |
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LUMINAR TECHNOLOGIES, INC.
2603 Discovery Drive, Suite 100
Orlando, Florida 32826
NOTICE OF SOLICITATION OF WRITTEN CONSENT OF THE STOCKHOLDERS OF LUMINAR
To the Stockholders of Luminar Technologies, Inc.:
Pursuant to an Agreement and Plan of Merger, dated as of August 24, 2020 (as it may be amended from time to time, the Merger Agreement), by and among Gores Metropoulos, Inc., a Delaware corporation (the Company), Dawn Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of the Company (First Merger Sub), Dawn Merger Sub II, LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of the Company (Second Merger Sub), and Luminar Technologies, Inc., a Delaware corporation (Luminar), First Merger Sub will merge with and into Luminar (the First Merger), with Luminar being the surviving corporation of the First Merger (the Surviving Corporation), and immediately following the First Merger and as part of the same overall transaction as the First Merger, the Surviving Corporation will merge with and into Second Merger Sub, (the Second Merger and, collectively with the First Merger and the other transactions contemplated by the Merger Agreement, the Business Combination), with Second Merger Sub being the Surviving Entity of the Second Merger.
The enclosed proxy statement/consent solicitation statement/prospectus is being delivered to you on behalf of Luminars board of directors to request that holders of Luminar Stock, Luminar Preferred Stock or Luminar Founders Preferred Stock as of the record date of [●], 2020 execute and return written consents to (i) adopt the Merger Agreement and approve the Business Combination and (ii) approve, on a non-binding advisory basis, each of the amendments described in Proposal No. 4 of this proxy statement/consent solicitation statement/prospectus with respect to the Second Amended and Restated Certificate of Incorporation (the Unbundled Governance Proposals).
The proxy statement/consent solicitation statement/prospectus describes the proposed Business Combination and the actions to be taken in connection with the Business Combination and provides additional information about the parties involved. Please give this information your careful attention. A copy of the Merger Agreement is attached as Annex A to the proxy statement/consent solicitation statement/prospectus.
A summary of the appraisal rights that may be available to you is described in the proxy statement/consent solicitation statement/prospectus in the section entitled Appraisal Rights. Please note that if you wish to exercise appraisal rights, you must not sign and return a written consent adopting the Merger Agreement. However, so long as you do not return a consent form at all, it is not necessary to affirmatively vote against or disapprove the Business Combination. In addition, you must take all other steps necessary to perfect your appraisal rights, as described in the aforementioned section of the proxy statement/consent solicitation statement/prospectus.
Luminars board of directors has considered the Business Combination and the terms of the Merger Agreement and has unanimously determined that the Business Combination and the Merger Agreement are fair to and in the best interests of Luminar and Luminar Stockholders and recommends that Luminar Stockholders adopt the Merger Agreement and approve the Unbundled Governance Proposals by submitting a written consent.
Please complete, date, and sign the written consent furnished with the proxy statement/consent solicitation statement/prospectus and return it promptly to Luminar by one of the means described in the section entitled Luminar Solicitation of Written Consents.
If you have any questions concerning the Merger Agreement, the Business Combination, the consent solicitation or the accompanying proxy statement/consent solicitation statement/prospectus, or if you have any questions about how to deliver your written consent, please contact Luminars agent in connection with the consent solicitation, Morrow Sodali LLC, toll-free at (800) 662-5200.
By Order of the Board of Directors,
Austin Russell
President and Chief Executive Officer
[●], 2020
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SPECIAL MEETING OF THE STOCKHOLDERS OF THE COMPANY IN LIEU OF THE 2020 ANNUAL MEETING OF THE COMPANY |
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION |
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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA |
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COMPANY MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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LUMINAR MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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PROPOSAL NO. 5THE MANAGEMENT LONGER TERM EQUITY INCENTIVE PLAN PROPOSAL |
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F-1 |
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ANNEXES
A-1 | ||||
Annex BSecond Amended and Restated Certificate of Incorporation of Gores Metropoulos, Inc. |
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C-1 | ||||
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I-1 | ||||
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K-1 |
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In this proxy statement/consent solicitation statement/prospectus:
Aggregate Company Stock Consideration means a number of shares of Class A Stock and Class B Stock of the Company (deemed to have a value of $10.00 per share) equal to (a) $2,928,828,692, plus an aggregate amount of up to $30,000,000 depending on the amount of additional capital in excess of $170,000,000 that is raised by Luminar pursuant to the Series X Financing prior to the closing of the Business Combination, divided by (b) $10.00.
Amended and Restated Bylaws means the proposed Amended and Restated Bylaws of the Post-Combination Company, a form of which is attached hereto as Annex C, which will become the Post-Combination Companys bylaws assuming the consummation of the Business Combination.
Antitrust Division means the Antitrust Division of the U.S. Department of Justice.
Assumed Warrants means the resulting warrants from the automatic conversion at the effective time of the First Merger of each Luminar Warrant outstanding and unexercised at the effective time of the First Merger into a warrant to acquire Class A Stock at an adjusted exercise price per share, subject to the terms and conditions as were applicable to such Luminar Warrant immediately prior to the effective time of the First Merger, including applicable vesting conditions.
Board means the board of directors of the Company.
Business Combination means the transactions contemplated by the Merger Agreement, including among other things the Mergers.
Class A Stock means the shares of Class A common stock, par value $0.0001 per share, of the Company, and following the Business Combination, of the Post-Combination Company.
Class B Stock means the shares of Class B common stock, par value $0.0001 per share, of the Company, and following the Business Combination, of the Post-Combination Company.
Class F Stock means the shares of Class F common stock, par value $0.0001 per share, of the Company, and following the Business Combination, of the Post-Combination Company.
Common Stock means the Class A Stock and the Class F Stock of the Company and, following the Business Combination, the Class B Stock of the Post-Combination Company.
Company means Gores Metropoulos, Inc. prior to the Business Combination.
Company IPO means the Companys initial public offering, consummated on February 5, 2019, through the sale of 40,000,000 Public Units (including 2,500,000 Public Units sold pursuant to the underwriters partial exercise of their over-allotment option) at $10.00 per Public Unit.
Company Stock Adjusted Fully Diluted Shares means the sum of (a) aggregate number of shares of capital stock of Luminar outstanding as of immediately prior to the effective time of the First Merger (including all shares of Luminar restricted stock, whether vested or unvested), and (b) the aggregate number of shares of Luminar Class A Stock issuable upon exercise of all Luminar Stock Options and Luminar Warrants, whether vested or unvested, outstanding as of immediately prior to the effective time of the First Merger.
Company Warrants means, collectively, the Private Placement Warrants and the Public Warrants.
Continental Warrant Agreement means that certain Warrant Agreement, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent, dated as of January 31, 2019, which is attached hereto as Annex D.
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Court of Chancery means the Court of Chancery of the State of Delaware.
Current Company Certificate means the Amended and Restated Certificate of Incorporation of the Company, dated January 31, 2019.
Deferred Discount means any deferred underwriting commissions, which amount will be payable upon consummation of an initial business combination.
DGCL means the General Corporation Law of the State of Delaware.
DT means Deloitte & Touche LLP, independent auditors to Luminar.
Employee Stock Purchase Plan means the 2020 Employee Stock Purchase Plan, a copy of which is attached hereto as Annex K.
Earn Out Period means the time period between the Lockup Expiration Date and the fifth anniversary of the Lockup Expiration Date.
Exchange Act means the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.
FINRA means the Financial Industry Regulatory Authority.
First Merger means the merger of First Merger Sub with and into Luminar, with Luminar continuing as the Surviving Corporation.
First Merger Sub means Dawn Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of the Company.
Founder Shares means the 10,000,000 shares of Class F Stock that are currently owned by our Initial Stockholders, of which 9,925,000 shares are held by our Sponsor and 25,000 shares are held by each of Mr. Randall Bort, Mr. Michael Cramer and Mr. Joseph Gatto.
FTC means the U.S. Federal Trade Commission.
GVA means GVA Auto, LLC, a Delaware limited liability company.
G2VP means G2VP Founders Fund I, LLC, a Delaware limited liability company.
HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
initial business combination means a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company and one or more businesses.
Initial Closing means the initial closing of the Series X Financing, which occurred on August 24, 2020, concurrently with the execution of the Merger Agreement.
Initial Stockholders means our Sponsor and Mr. Randall Bort, Mr. Michael Cramer and Mr. Joseph Gatto, the Companys independent directors.
Investment Company Act means the Investment Company Act of 1940, as amended.
IPO Closing Date means February 5, 2019.
IRS means the U.S. Internal Revenue Service.
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JOBS Act means the Jumpstart Our Business Startups Act of 2012.
KPMG means KPMG LLP, an independent registered public accounting firm.
Lock-Up Agreements means those certain Lock-Up Agreements to be entered into prior to the closing of the Business Combination, by and among the Company, Luminar and certain Luminar Stockholders.
Lockup Expiration Date means 180 days following the closing date of the Business Combination.
Luminar means Luminar Technologies, Inc., a Delaware corporation, and, unless the context otherwise requires, its consolidated subsidiaries.
Luminar Class A Stock means the shares of Class A common stock, par value $0.00001 per share, of Luminar.
Luminar Class B Stock means the shares of Class B common stock, par value $0.00001 per share, of Luminar.
Luminar Equityholders means the stockholders of Luminar and the holders of other equity interests in Luminar (including Luminar Stock Options and Luminar Warrants).
Luminar Founders Preferred Stock means the shares of the Founders Preferred Stock, par value $0.00001 per share, of Luminar.
Luminar Holders means Mr. Austin Russell, GVA and G2VP.
Luminar Preferred Stock means the (a) Luminar Series A Preferred Stock, (b) Luminar Series A-1 Preferred Stock, (c) Luminar Series A-2 Preferred Stock, (d) Luminar Series A-3 Preferred Stock, (e) Luminar Series A-4 Preferred Stock, (f) Luminar Series A-5 Preferred Stock, (g) Luminar Series A-6 Preferred Stock, (h) Luminar Series A-7 Preferred Stock, (i) Luminar Series A-8 Preferred Stock, (j) Luminar Series A-9 Preferred Stock, (k) Luminar Series A-10 Preferred Stock, (l) Luminar Series A-11 Preferred Stock and (m) Luminar Series X Preferred Stock.
Luminar Restricted Stock means the restricted shares of the Luminar Class A Stock granted pursuant to the Luminar Stock Plan.
Luminar Series A Preferred Stock means the shares of the Series A Preferred Stock, par value $0.00001 per share, of Luminar.
Luminar Series A-1 Preferred Stock means the shares of the Series A-1 Preferred Stock, par value $0.00001 per share, of Luminar.
Luminar Series A-2 Preferred Stock means the shares of the Series A-2 Preferred Stock, par value $0.00001 per share, of Luminar.
Luminar Series A-3 Preferred Stock means the shares of the Series A-3 Preferred Stock, par value $0.00001 per share, of Luminar.
Luminar Series A-4 Preferred Stock means the shares of the Series A-4 Preferred Stock, par value $0.00001 per share, of Luminar.
Luminar Series A-5 Preferred Stock means the shares of the Series A-5 Preferred Stock, par value $0.00001 per share, of Luminar.
Luminar Series A-6 Preferred Stock means the shares of the Series A-6 Preferred Stock, par value $0.00001 per share, of Luminar.
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Luminar Series A-7 Preferred Stock means the shares of the Series A-7 Preferred Stock, par value $0.00001 per share, of Luminar.
Luminar Series A-8 Preferred Stock means the shares of the Series A-8 Preferred Stock, par value $0.00001 per share, of Luminar.
Luminar Series A-9 Preferred Stock means the shares of the Series A-9 Preferred Stock, par value $0.00001 per share, of Luminar.
Luminar Series A-10 Preferred Stock means the shares of the Series A-10 Preferred Stock, par value $0.00001 per share, of Luminar.
Luminar Series A-11 Preferred Stock means the shares of the Series A-11 Preferred Stock, par value $0.00001 per share, of Luminar.
Luminar Series X Preferred Stock means the shares of the Series X Preferred Stock, par value $0.00001 per share, of Luminar.
Luminar Stock means the Luminar Class A Stock, the Luminar Class B Stock, the Luminar Preferred Stock and the Luminar Founders Preferred Stock.
Luminar Stockholders means the stockholders of Luminar.
Luminar Stock Options means the options to purchase Luminar Class A Stock granted pursuant to the Luminar Stock Plan.
Luminar Stock Plan means Luminars 2015 Stock Plan.
Luminar Warrant Amendments means that certain (a) Amendment to Stock Purchase Warrant, dated as of August 24, 2020, by and between Luminar and SQN Venture Income Fund, L.P., a Delaware limited partnership, and (b) Omnibus Amendment to Stock Purchase Warrants, dated as of August 24, 2020, by and among Luminar and the other parties thereto.
Luminar Warrants means the warrants exercisable for Luminar Preferred Stock that are outstanding as of immediately prior to the consummation of the Business Combination.
Management Longer Term Equity Incentive Plan means the Management Longer Term Equity Incentive Plan, a copy of which is attached hereto as Annex I.
Merger Agreement means that certain Agreement and Plan of Merger, dated as of August 24, 2020 (as it may be further amended from time to time), by and among the Company, First Merger Sub, Second Merger Sub and Luminar, which is attached hereto as Annex A.
Mergers means the First Merger and the Second Merger.
Moelis means Moelis & Company LLC.
Nasdaq means the National Association of Securities Dealers Automated Quotations Capital Market.
Omnibus Incentive Plan means the 2020 Equity Incentive Plan, a copy of which is attached hereto as Annex J.
Orrick means Orrick, Herrington & Sutcliff LLP, counsel to Luminar.
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Per Share Company Stock Consideration means the Aggregate Company Stock Consideration divided by the Company Stock Adjusted Fully Diluted Shares.
Post-Combination Company means the Company following the Business Combination.
Preferred Stock means the preferred stock, par value of $0.0001 per share, of the Company, and following the Business Combination, of the Post-Combination Company.
Preferred Stock Designation means any resolution or resolution adopted by the Post-Combination board providing for the issuance of one or more series of Preferred Stock stating the voting rights, if any, designations, powers, preferences and relative, participating, optional, special and other rights, if any, of each such series and any qualifications, limitations and restrictions thereof and included in a certificate of designation.
Private Placement Warrants means the warrants held by our Sponsor that were issued to our Sponsor on the Company IPO Closing Date, each of which is exercisable, at an exercise price of $11.50, for one share of Class A Stock, in accordance with its terms.
Public Shares means the shares of Class A Stock included in the Public Units issued in the Company IPO.
Public Stockholders means holders of Public Shares, including our Initial Stockholders to the extent our Initial Stockholders hold Public Shares; provided, that our Initial Stockholders are considered a Public Stockholder only with respect to any Public Shares held by them.
Public Unit means one share of Class A Stock and one-third of one Public Warrant, whereby each whole Public Warrant entitles the holder thereof to purchase one share of Class A Stock at an exercise price of $11.50 per share of Class A Stock, sold in the Company IPO.
Public Warrants means the warrants included in the Public Units issued in the Company IPO, each of which is exercisable, at an exercise price of $11.50, for one share of Class A Stock, in accordance with its terms.
Registration Rights Agreement means that certain Amended and Restated Registration Rights Agreement to be entered into at the closing of the Business Combination, by and among the Company and the Registration Rights Holders, and in substantially the form attached hereto as Annex F.
Registration Rights Holders means, our Sponsor, Mr. Bort, Mr. Cramer, Mr. Gatto and the Luminar Holders.
Regulatory Withdrawals means funds released to the Company from the Trust Account to fund regulatory compliance requirements and other costs related thereto, subject to an annual limit of $750,000, for a maximum of 24 months.
Related Agreements means, collectively, the Registration Rights Agreement, the Lock-Up Agreements, the Support Agreement, the Second Amended and Restated Certificate of Incorporation and the Amended and Restated Bylaws.
Rollover Options means the options to acquire Class A Stock resulting from the automatic conversion at the effective time of the First Merger of each Luminar Stock Option that is outstanding and unexercised as of immediately prior to the effective time of the First Merger into an option to acquire Class A Stock at an adjusted exercise price per share, subject to the terms and conditions as were applicable to the corresponding Luminar Stock Option immediately prior to the effective time of the First Merger, including applicable vesting conditions, except to the extent such terms or conditions are rendered inoperative by the Business Combination.
Rule 144 means Rule 144 of the Securities Act.
Sarbanes-Oxley Act means the Sarbanes-Oxley Act of 2002.
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SEC means the United States Securities and Exchange Commission.
Second Amended and Restated Certificate of Incorporation means the proposed Second Amended and Restated Certificate of Incorporation of the Post-Combination Company, a form of which is attached hereto as Annex B, which will become the Post-Combination Companys certificate of incorporation upon the approval of the Amendment Proposal, assuming the consummation of the Business Combination.
Second Merger means the merger of Second Merger Sub with and into the Surviving Corporation, with Second Merger Sub continuing as the Surviving Entity.
Second Merger Sub means Dawn Merger Sub II, LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of the Company.
Second Request means a request for additional information or documentary material issued by the Antitrust Division or the FTC, which will extend the initial waiting period under the HSR Act until 30 days after each of the parties has substantially complied with the Second Request.
Section 203 means Section 203 of the DGCL.
Securities Act means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
Series X Agreements means that certain Series X Preferred Stock Purchase Agreement and other related agreements entered into by Luminar and the Series X Investors concurrently with the execution of the Merger Agreement.
Series X Financing means the issuance and sale of Luminar Series X Preferred Stock to the Series X Investors for a purchase price of $135.7860 per share, including (i) approximately 1,250,000 shares of Luminar Series X Preferred Stock that the Series X Investors committed to purchase at the Initial Closing for an aggregate purchase price of approximately $170,000,000 and (ii) up to an additional approximately 221,000 shares of the Luminar Series X Preferred Stock that Luminar has the right to sell within 45 days following the Initial Closing.
Series X Investors means certain investors that are accredited investors (as defined by Rule 501 of Regulation D) who have entered or may enter into that certain Series X Preferred Stock Purchase Agreement and other related agreements with Luminar.
Special Meeting means the special meeting of the Company in lieu of the 2020 annual meeting of the stockholders of the Company that is the subject of this proxy statement/consent solicitation statement/prospectus.
Sponsor means Gores Metropoulos Sponsor, LLC, an affiliate of Mr. Dean Metropoulos, the Companys Chairman and Mr. Alec E. Gores, the Companys Chief Executive Officer.
Support Agreement means the Support Agreement, dated as of August 24, 2020, among the Company, First Merger Sub, Second Merger Sub and Austin Russell; and in substantially the form attached hereto as Annex E.
Surviving Corporation means Luminar, in its capacity as the surviving corporation of the First Merger.
Surviving Entity means Luminar, in its capacity as the surviving entity of the Second Merger.
The Gores Group means The Gores Group LLC, an affiliate of our Sponsor.
Trust Account means the trust account of the Company that holds the proceeds from the Company IPO.
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Trustee or Transfer Agent, as applicable, means Continental Stock Transfer & Trust Company.
U.S. Tax Code means the U.S. Internal Revenue Code of 1986, as amended.
Weil means Weil, Gotshal & Manges LLP, counsel to the Company.
Whole Board means the total number of authorized directors, whether or not there exist any vacancies or unfilled seats in previously authorized directorships.
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GLOSSARY OF CERTAIN TECHNICAL TERMS
The following is a glossary of technical terms used in this proxy statement/consent solicitation statement/prospectus:
ADASAdvanced driver-assistance systems.
Autonomous drivingThere are five levels of autonomous driving systems (in addition to no automation):
| Level 1 (Driver Assistance): Vehicle is controlled by the driver, but some driving assistance features may be included. |
| Level 2 (Partial Automation): Vehicle has combined automated functions like acceleration and steering, but the driver must remain fully engaged and monitor the driving environment at all times. |
| Level 3 (Conditional Automation): Driver is necessary, but is not required to monitor the environment. The driver must be ready to take control of the vehicle at all times with notice. |
| Level 4 (High Automation): The vehicle is capable of performing all driving functions under certain conditions. The driver may have the option to control the vehicle. |
| Level 5 (Full Automation): The vehicle is capable of performing all driving functions under all conditions. The driver may have the option to control the vehicle. |
Emitter or TransmitterA laser emits pulses of light through optics which transmit those pulses into the field for range measurements.
Field of viewThe angular size of the scene captured by a sensor, including lidar. Abbreviated as FoV or FOV and measured in vertical and horizontal angular extent, but often simplified to horizontal angular extent for driving applications.
InterferenceThe false detection of information in a sensor due to external signal sources. For camera and lidar, these are external signal sources of light, for example sunlight, headlights, and other lidar sensors.
LidarLiDAR or lidar is an acronym for Light Detection And Ranging. It is a remote sensing method that uses light to measure the distance, or range of objects from the lidar sensor. Lidar for automotive can be one-dimensional (single point), two-dimensional (horizontal cross-section) or three-dimensional (full three-dimensional maps of the scene including the full shape of objects and their surface characteristics). Luminars lidar is 3D and uses 1550nm wavelength (color) light to measure the time it takes for pulses to reach objects and bounce back in order to determine each pixels range. A scanner moves this range-finder throughout the scene to assemble a 3D scene called a point-cloud.
Point-cloudThe lidar equivalent to a cameras image. Point-clouds are, in the case of 3D lidar, three dimensional pixelated maps that can be viewed like a camera image from the sensors perspective or from any other perspective because depth information is built into each pixel. Point-clouds can have other pixel attributes, like cameras have multiple color channels, for example target reflectance which allows for a grey-scale, 3D pixel map.
ProcessorInterpret digital signals from the receiver, transmitter, and scanner to create point-clouds and ultimately interpret what and where the detected objects are in the scene. Commonly used terms for processing hardware components are the System on Chip (SoC) and the Application Specific Integrated Circuit (ASIC).
Passenger vehicleAny vehicle occupied by a human, most commonly consumer-owned vehicles like cars, trucks, vans, and SUVs.
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Range performanceThe quantified ability of a sensor to detect the distance of targets. For lidar, the distance to an object and the reflectivity of that object are critical to assessing the sensors performance as they both directly impact how much light energy is not capturable by the sensor for detection.
ReceiverTurns light energy into electrical signals interpretable by processors.
Robo-taxiA passenger vehicle which operates commercially as a taxi or ride-hailing service vehicle, and that requires no driver to operate in its defined set of locations.
ScannerMoves the range-finding systems light-beams throughout the scene in order to create a 3D point-cloud.
Semantic segmentationA machine learning application that attributes each point in the point cloud with a class label (e.g., pedestrian, vehicle, road) and is the first step in processing the data in perception.
State estimationThe understanding of the self vehicle, often referred to as ego in reference to the psychological self. It is the location, position, orientation, and speed of the ego-vehicle.
Trucking and commercial vehicleVehicles, like tractor-trailers (trucks) and delivery vans, intended for commercial use, not consumer.
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TRADEMARKS, TRADE NAMES AND SERVICE MARKS
The Company, Luminar and Luminars subsidiaries own or have rights to trademarks, trade names and service marks that they use in connection with the operation of their business. In addition, their names, logos and website names and addresses are their trademarks or service marks. Other trademarks, trade names and service marks appearing in this proxy statement/consent solicitation statement/prospectus are the property of their respective owners. Solely for convenience, in some cases, the trademarks, trade names and service marks referred to in this proxy statement/consent solicitation statement/prospectus are listed without the applicable ®, and SM symbols, but they will assert, to the fullest extent under applicable law, their rights to these trademarks, trade names and service marks.
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The questions and answers below highlight only selected information from this proxy statement/consent solicitation statement/prospectus and only briefly address some commonly asked questions about the Special Meeting and the proposals to be presented at the Special Meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that is important to our stockholders. Stockholders are urged to read carefully this entire proxy statement/consent solicitation statement/prospectus, including the Annexes and the other documents referred to herein, to fully understand the proposed Business Combination and the voting procedures for the Special Meeting, which, in light of public health concerns regarding the coronavirus (COVID-19) pandemic, will be held via live webcast at https://www.cstproxy.com/goresmetropoulos/sm2020, on [●], 2020, at [●]. The Special Meeting can be accessed by visiting https://www.cstproxy.com/goresmetropoulos/sm2020, where you will be able to listen to the meeting live and vote during the meeting. Additionally, you have the option to listen only to the Special Meeting by dialing +1 877-770-3647 (toll-free within the U.S. and Canada) or +1 312-780-0854 (outside of the U.S. and Canada, standard rates apply). The passcode for telephone access is 11499529#, but please note that you cannot vote or ask questions if you choose to participate telephonically. Please note that you will only be able to access the Special Meeting by means of remote communication.
QUESTIONS AND ANSWERS ABOUT THE COMPANYS SPECIAL STOCKHOLDER MEETING AND THE BUSINESS COMBINATION
Q: | Why am I receiving this proxy statement/consent solicitation statement/prospectus? |
A: | Our stockholders are being asked to consider and vote upon a proposal to approve the Merger Agreement and the transactions contemplated thereby, including the Business Combination, among other proposals. We have entered into the Merger Agreement, providing for, among other things, the merger of First Merger Sub with and into Luminar, with Luminar continuing as the Surviving Corporation (the First Merger), and immediately following the First Merger and as part of the same overall transaction as the First Merger, the merger of Luminar with and into Second Merger Sub with Second Merger Sub continuing as the Surviving Entity (the Second Merger and, together with the First Merger and the other transactions contemplated by the Merger Agreement, the Business Combination). You are being asked to vote on the Business Combination. Subject to the terms of the Merger Agreement, the aggregate merger consideration to be paid in connection with the Business Combination is expected to be a number of shares of Class A Stock and Class B Stock, with an implied value (based on assumed value of $10.00 per share) equal to approximately $2,928,828,692, plus an aggregate amount of up to $30,000,000 depending on the amount of additional capital in excess of $170,000,000 that is raised by Luminar pursuant to the Series X Financing prior to the closing of the Business Combination. A copy of the Merger Agreement is attached to this proxy statement/consent solicitation statement/prospectus as Annex A. |
This proxy statement/consent solicitation statement/prospectus and its Annexes contain important information about the proposed Business Combination and the other matters to be acted upon at the Special Meeting. You should read this proxy statement/consent solicitation statement/prospectus and its Annexes carefully and in their entirety.
Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement/consent solicitation statement/prospectus and its Annexes.
Q: | When and where is the Special Meeting? |
A: | In light of public health concerns regarding the coronavirus (COVID-19) pandemic, the Special Meeting will be held via live webcast at https://www.cstproxy.com/goresmetropoulos/sm2020, on [●], 2020, at [●]. The Special Meeting can be accessed by visiting https://www.cstproxy.com/goresmetropoulos/sm2020, where you will be able to listen to the meeting live and vote during the meeting. Additionally, you have the |
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option to listen only to the Special Meeting by dialing +1 877-770-3647 (toll-free within the U.S. and Canada) or +1 312-780-0854 (outside of the U.S. and Canada, standard rates apply). The passcode for telephone access is 11499529#, but please note that you cannot vote or ask questions if you choose to participate telephonically. Please note that you will only be able to access the Special Meeting by means of remote communication. |
Q: | What are the specific proposals on which I am being asked to vote at the Special Meeting? |
A: | Our stockholders are being asked to approve the following proposals: |
1. | Transaction Proposal To consider and vote upon a proposal to approve the Merger Agreement, a copy of which is attached to this proxy statement/consent solicitation statement/prospectus as Annex A, and the transactions contemplated thereby, including, among other things, the Business Combination (Proposal No. 1); |
2. | Issuance ProposalTo consider and vote upon a proposal to approve, for purposes of complying with applicable Nasdaq listing rules, the issuance of more than 20% of the Companys issued and outstanding shares of Common Stock in connection with the Business Combination (Proposal No. 2); |
3. | Amendment ProposalTo consider and act upon a proposal to adopt the proposed Second Amended and Restated Certificate of Incorporation in the form attached hereto as Annex B (Proposal No. 3); |
4. | Governance ProposalTo consider and act upon, on a non-binding advisory basis, a separate proposal with respect to certain governance provisions in the Second Amended and Restated Certificate of Incorporation in accordance with SEC requirements (Proposal No. 4); |
5. | Management Longer Term Equity Incentive Plan ProposalTo consider and vote upon a proposal to approve the Management Longer Term Equity Incentive Plan, including the authorization of the initial share reserve under the Management Longer Term Equity Incentive Plan (Proposal No. 5); |
6. | Omnibus Incentive Plan ProposalTo consider and vote upon a proposal to approve the Omnibus Incentive Plan, including the authorization of the initial share reserve under the Omnibus Incentive Plan (Proposal No. 6); |
7. | Employee Stock Purchase Plan ProposalTo consider and vote upon a proposal to approve the Employee Stock Purchase Plan, including the authorization of the initial share reserve under the Employee Stock Purchase Plan (Proposal No. 7); |
8. | Director Election ProposalTo consider and vote upon a proposal to elect seven directors to serve staggered terms on the Board until the first, second and third annual meetings of stockholders following the date of the filing of the Second Amended and Restated Certificate of Incorporation, as applicable, and until their respective successors are duly elected and qualified (Proposal No. 8); and |
9. | Adjournment ProposalTo consider and vote upon a proposal to allow the chairman of the Special Meeting to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event there are insufficient votes for, or otherwise in connection with, the approval of the Transaction Proposal, the Issuance Proposal, the Amendment Proposal, the Management Longer Term Equity Incentive Plan Proposal or the Omnibus Incentive Plan Proposal but no other proposal if the Transaction Proposal, the Issuance Proposal, the Amendment Proposal, the Management Longer Term Equity Incentive Plan Proposal and the Omnibus Incentive Plan Proposal are approved (Proposal No. 9). |
Q: | Are the proposals conditioned on one another? |
A: | Yes. The Business Combination is conditioned on the approval of the Transaction Proposal, the Issuance Proposal, and the Amendment Proposal at the Special Meeting. If we fail to obtain sufficient votes for the |
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Transaction Proposal, the Issuance Proposal or the Amendment Proposal, we will not satisfy the conditions to closing of the Merger Agreement and we may be prevented from closing the Business Combination. Each of the proposals other than the Transaction Proposal, the Issuance Proposal and the Amendment Proposal is conditioned on the approval of the Transaction Proposal, the Issuance Proposal and the Amendment Proposal, other than the Governance Proposal and the Adjournment Proposal, which are not conditioned on the approval of any other proposal set forth in this proxy statement/consent solicitation statement/prospectus. It is important for you to note that in the event that the Transaction Proposal, the Issuance Proposal, or the Amendment Proposal do not receive the requisite vote for approval, we will not consummate the Business Combination. If we do not consummate the Business Combination and fail to complete an initial business combination by February 5, 2021 we will be required to dissolve and liquidate our Trust Account by returning the then remaining funds in such account to the Public Stockholders. |
Q: | Why is the Company proposing the Business Combination? |
A: | We are a blank check company incorporated as a Delaware corporation on August 28, 2018 and incorporated for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (an initial business combination). Our acquisition plan is not limited to a particular industry or geographic region for purposes of consummating an initial business combination. However, we (a) must complete an initial business combination with one or more target businesses that together have a fair market value of at least 80% of the assets held in the Trust Account (excluding the Deferred Discount and taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into the initial business combination and (b) are not, under the Current Company Certificate, permitted to effect an initial business combination with a blank check company or a similar company with nominal operations. |
We have identified several criteria and guidelines we believe are important for evaluating acquisition opportunities. We use these criteria and guidelines in evaluating acquisition opportunities, but we can decide to enter into the Business Combination with a target business that does not meet these criteria and guidelines. We are seeking to acquire companies that we believe: (a) can utilize the extensive networks we have built in the consumer products and services industries; (b) have a defensible core business, sustainable revenues and established customer relationships; (c) are undergoing change in capital structure, strategy, operations or growth; (d) can benefit from our operational and strategic approach; (e) offer a unique value proposition with transformational potential that can be substantiated during our detailed due diligence process; and (f) have reached a transition point in their lifecycle presenting an opportunity for transformation. Based on our due diligence investigations of Luminar and the industry in which it operates, including the financial and other information provided by Luminar in the course of negotiations, we believe that Luminar meets the criteria and guidelines listed above. Please see the section entitled The Business CombinationRecommendation of Our Board of Directors and Reasons for the Business Combination for additional information.
Q: | Why is the Company providing stockholders with the opportunity to vote on the Business Combination? |
A: | Under the Current Company Certificate, we must provide all holders of Public Shares with the opportunity to have their Public Shares redeemed upon the consummation of our initial business combination either in conjunction with a tender offer or in conjunction with a stockholder vote. For business and other reasons, we have elected to provide our stockholders with the opportunity to have their Public Shares redeemed in connection with a stockholder vote rather than a tender offer. Therefore, we are seeking to obtain the approval of our stockholders of the Transaction Proposal in order to allow our Public Stockholders to effectuate redemptions of their Public Shares in connection with the closing of the Business Combination. The approval of the Business Combination is required under the Current Company Certificate. In addition, such approval is also a condition to the closing of the Business Combination under the Merger Agreement. |
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Q: | What revenues and profits/losses has Luminar generated in the last two years? |
A: | Luminars gross loss was $4.1 million for the year ended December 31, 2019, and Luminars gross profit was $0.8 million for the year ended December 31, 2018. Luminars revenue was $12.6 million and $11.7 million for the years ended December 31, 2019 and 2018, respectively. |
Q: | What will happen in the Business Combination? |
A: | Pursuant to the Merger Agreement, and upon the terms and subject to the conditions set forth therein, the Company will acquire Luminar in a series of transactions we collectively refer to as the Business Combination. At the closing of the Business Combination contemplated by the Merger Agreement, among other things, First Merger Sub will merge with and into Luminar, with Luminar continuing as the Surviving Corporation, and Second Merger Sub will merge with and into the Surviving Corporation, with Second Merger Sub continuing as the Surviving Entity. As a result of the Mergers, at the closing of the Business Combination, the Post-Combination Company will own 100% of the outstanding stock of Luminar, and each share of Luminar Stock will be cancelled and converted into the right to receive the Per Share Company Stock Consideration and their respective share of Earn-Out Shares that may become issuable. |
Q: | How has the announcement of the Business Combination affected the trading price of the Public Shares? |
A: | On August 21, 2020, the last trading date before the public announcement of the Business Combination, the Public Shares, Public Warrants and Public Units closed at $10.51, $1.59 and $11.75, respectively. On [●], 2020, the trading date immediately prior to the date of this proxy statement/consent solicitation statement/prospectus, the Public Shares, Public Warrants and Public Units closed at $[●], $[●] and $[●], respectively. |
Q: | Following the Business Combination, will the Companys securities continue to trade on a stock exchange? |
A: | Yes. The Public Shares, Public Units and Public Warrants are currently listed on Nasdaq under the symbols GMHI, GMHIU and GMHIW, respectively. We intend to apply to continue the listing of the Post-Combination Companys Class A Stock and Public Warrants on the Nasdaq Capital Market under the symbols LAZR and LAZRW, respectively, upon the closing of the Business Combination. |
Q: | Is the Business Combination the first step in a going private transaction? |
A: | No. We do not intend for the Business Combination to be the first step in a going private transaction. One of the primary purposes of the Business Combination is to provide a platform for Luminar to access the U.S. public markets. |
Q: | Will the management of the Company change in the Business Combination? |
A: | Following the closing of the Business Combination, it is expected that the current senior management of Luminar will comprise the senior management of the Post-Combination Company, and, assuming the election of the nominees at the Special Meeting as set forth in the Director Election Proposal, the Post-Combination Companys board of directors will consist of Austin Russell, Alec Gores, Matthew J. Simoncini, Scott A. McGregor, Benjamin J. Kortlang, [●] and [●]. |
Please see the sections entitled Proposal No. 8The Director Election Proposal, and Management of the Post-Combination Company for additional information.
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Q: | How will the Business Combination impact the shares of the Company outstanding following the closing of the Business Combination? |
A: | As a result of the Business Combination and the consummation of the transactions contemplated thereby, the amount of Common Stock outstanding will increase by approximately 585.77% to approximately 342,883,000 shares of Common Stock (assuming that no shares of Class A Stock are redeemed but inclusive of shares issuable under the Rollover Options and any Assumed Warrants). Additional shares of Common Stock may be issuable in the future as a result of the issuance of additional shares that are not currently outstanding, including issuance of shares of Class A Stock upon exercise of the Public Warrants and Private Placement Warrants following the closing of the Business Combination. The issuance and sale of such shares in the public market could adversely impact the market price of our Common Stock, even if our business is doing well. |
Q: | What will Luminar Stockholders receive in the Business Combination? |
A: | Subject to the terms of the Merger Agreement and customary adjustments set forth therein, the aggregate merger consideration to be paid in connection with the Business Combination is expected to be a number of shares of Company common stock (deemed to have a value of $10.00 per share) with an implied value equal to the Aggregate Company Stock Consideration. Holders of shares of (a) Luminar Class A Stock, Luminar Preferred Stock and Luminar Founders Preferred Stock will be entitled to receive a number of shares of newly-issued Class A Stock equal to the Per Share Company Stock Consideration for each such share of Luminar Stock, and (b) Luminar Class B Stock will be entitled to receive a number of shares of newly-issued Class B Stock equal to the Per Share Company Stock Consideration for each such share of Luminar Class B Stock. The foregoing consideration to be paid to the Luminar Stockholders may be further increased by Earn-Out Shares of up to 7.5% of the sum of (x) the total outstanding capital stock of the Company and (y) the total shares subject to outstanding Rollover Options and Assumed Warrants, in each case as of the closing of the Business Combination. |
Q. | What will holders of Luminar equity awards receive in the Business Combination? |
A: | Effective as of the effective time of the First Merger, each outstanding unexercised Luminar Stock Option and each outstanding unvested award of Luminar Restricted Stock will automatically be converted into, respectively, an option to acquire a number of shares of our Class A Stock or a number of shares of our Class A Stock, in each case, determined by multiplying the number of shares of Luminar Stock subject to such award as of immediately prior thereto by the Per Share Company Stock Consideration (determined in accordance with the Merger Agreement), rounded down to the nearest whole number of shares, subject to the same terms as were applicable thereto immediately prior thereto (including applicable vesting conditions), except to the extent such terms are rendered inoperative by the transactions contemplated by the Merger Agreement. Each such converted stock option will be exercisable solely for shares of our Class A Stock, and the per share exercise price for the stock issuable upon exercise thereof will be determined by dividing the per share exercise price for the shares of Luminar Class A Stock subject to the Luminar Stock Option immediately prior thereto by the Per Share Company Stock Consideration, rounded up to the nearest whole cent. |
Q: | What equity stake will the current stockholders of the Company and the Luminar Equityholders hold in the Post-Combination Company after the consummation of the Business Combination? |
A: | It is anticipated that, upon completion of the Business Combination: (i) our Public Stockholders will retain an ownership interest of approximately 11.7% in the Post-Combination Company; (ii) our Initial Stockholders (including our Sponsor) will own approximately 4.2% of the Post-Combination Company (inclusive of merger consideration received in respect of our Initial Stockholders Series X investment); and (iii) the Luminar Equityholders (including the Series X Investors but excluding our Initial Stockholders) will own approximately 84.1 % of the Post-Combination Company. |
The foregoing ownership percentages are calculated inclusive of the Rollover Options and Assumed Warrants and assume (i) no exercise of redemption rights by our Public Stockholders; (ii) no inclusion of any Public Shares issuable upon the exercise of the Company Warrants; and (iii) no shares of Class A Stock
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or Class B Stock are issued as Earn-Out Shares. For more information, please see the sections entitled SummaryImpact of the Business Combination on the Companys Public Float and Unaudited Pro Forma Condensed Combined Financial Information.
Q: | Will the Company obtain new financing in connection with the Business Combination? |
A: | No. We will not obtain new financing in connection with the Business Combination. However, concurrently with the execution of the Merger Agreement, Luminar entered into the Series X Agreements with the Series X Investors. Pursuant to the Series X Agreements, the Series X Investors agreed to purchase and Luminar agreed to issue and sell to such Series X Investors approximately 1,250,000 shares of Luminar Series X Preferred Stock for a purchase price of $135.7860 per share, or an aggregate of approximately $170,000,000 (collectively, the Series X Financing). Pursuant to the Series X Agreements, Luminar has the right to sell up to an additional approximately 221,000 shares of the Luminar Series X Preferred Stock for up to 45 days following the Initial Closing. The Luminar Series X Preferred Stock to be issued pursuant to the Series X Agreements was not registered under the Securities Act in reliance upon the exemption provided under Section 4(a)(2) of the Securities Act/Regulation D promulgated thereunder. |
Q: | Are there any arrangements to help ensure that the Company will have sufficient funds, together with the proceeds in its Trust Account, to fund the aggregate purchase price? |
A: | No. However, concurrently with the execution of the Merger Agreement, Luminar completed the Initial Closing of the Series X Financing. Additionally, pursuant the Series X Agreements, Luminar has the right to sell up to an additional approximately 221,000 shares of the Luminar Series X Preferred Stock for up to 45 days following the Initial Closing. The Company did not consider financing arrangements other than the Series X Financing, as the Company believes that cash generated from the additional equity invested in connection with the Series X financing is preferable to other financing arrangements. |
Q: | Why is the Company proposing the Issuance Proposal? |
A: | We are proposing the Issuance Proposal in order to comply with Nasdaq Listing Rules 5635(a) and (d), which require stockholder approval of certain transactions that result in the issuance of 20% or more of the outstanding voting power or shares of Common Stock outstanding before the issuance of stock or securities. |
In connection with the Business Combination (excluding any potential Earn-Out Shares that may be issued and inclusive of the conversion of our outstanding shares of Class F Stock to shares of Class A Stock), we expect to issue approximately 198,168,000 shares of Class A Stock (or options or warrants with respect thereto) and approximately 104,715,000 shares of Class B Stock in the Business Combination. Because we may issue 20% or more of our outstanding Common Stock when considering together the Per Share Company Stock Consideration, we are required to obtain stockholder approval of such issuance pursuant to Nasdaq Listing Rules 5635(a) and (d). For more information, please see the section entitled Proposal No. 2The Issuance Proposal.
Q: | Why is the Company proposing the Amendment Proposal? |
A: | The Second Amended and Restated Certificate of Incorporation that we are asking our stockholders to adopt in connection with the Business Combination (the Amendment Proposal or Proposal No. 3) provides for certain amendments to the Current Company Certificate. Pursuant to Delaware law and the Merger Agreement, we are required to submit the Amendment Proposal to our stockholders for adoption. For additional information please see the section entitled Proposal No. 3The Amendment Proposal. |
Q: | Why is the Company proposing the Governance Proposals? |
A: | As required by applicable SEC guidance, we are requesting that our stockholders vote upon, on a non-binding advisory basis, a proposal to approve certain governance provisions contained in the Second |
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Amended and Restated Certificate of Incorporation that materially affect stockholder rights. This separate vote is not otherwise required by Delaware law separate and apart from Proposal No. 3, but pursuant to SEC guidance, we are required to submit these provisions to its stockholders separately for approval. However, the stockholder vote regarding this proposal is an advisory vote, and is not binding on us or our Board (separate and apart from the approval of the Amendment Proposal). Furthermore, the Business Combination is not conditioned on the separate approval of the Governance Proposal (separate and apart from approval of the Amendment Proposal). For additional information, please see the section entitled Proposal No. 4The Governance Proposals. |
Q: | Why is the Company proposing the Management Longer Term Equity Incentive Plan Proposal? |
A: | Our Board believes that it would be in the best interests of the Post-Combination Company to adopt the Management Longer Term Equity Incentive Plan to assist us in promoting our interests by (a) aligning the interests of eligible participants with those of our stockholders by providing long-term incentive compensation opportunities tied to our performance and the Class A Stock, and (b) attracting, retaining and motivating key personnel upon whose judgment, initiative and effort the successful conduct of our business is largely dependent. The Management Longer Term Equity Incentive Plan will be adopted following the consummation of the Business Combination. For additional information, please see the section entitled Proposal No. 5The Management Longer Term Equity Incentive Plan Proposal. For additional information, please see the section entitled Proposal No. 5The Management Longer Term Equity Incentive Plan Proposal. |
Q: | Why is the Company proposing the Omnibus Incentive Plan Proposal? |
A: | Our Board believes that it would be in the best interests of the Post-Combination Company to adopt the Omnibus Incentive Plan to assist us in promoting our interests by (a) aligning the interests of eligible participants with those of our stockholders by providing long-term incentive compensation opportunities tied to our performance and the Class A Stock, and (b) attracting, retaining and motivating key personnel upon whose judgment, initiative and effort the successful conduct of our business is largely dependent. The Omnibus Incentive Plan will be adopted following the consummation of the Business Combination. For additional information, please see the section entitled Proposal No. 6The Omnibus Incentive Plan Proposal. |
Q: | Why is the Company proposing the Employee Stock Purchase Plan Proposal? |
A: | Our Board believes that it would be in the best interests of the Post-Combination Company to adopt the Employee Stock Purchase Plan to assist us in promoting our interests by (a) enabling eligible employees of the Post-Combination Company and certain of our subsidiaries to use payroll deductions to purchase shares of Class A Stock and thereby acquire an ownership interest in the Post-Combination Company, and (b) attracting, retaining and motivating key personnel upon whose judgment, initiative and effort the successful conduct of our business is largely dependent. The Employee Stock Purchase Plan will be adopted following the consummation of the Business Combination. For additional information, please see the section entitled Proposal No. 7The Employee Stock Purchase Plan Proposal. |
Q: | Why is the Company proposing the Adjournment Proposal? |
A: | We are proposing the Adjournment Proposal to allow the chairman of the Special Meeting to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Transaction Proposal, the Issuance Proposal, the Charter Approval Proposal, the Management Longer Term Equity Incentive Plan Proposal or the Omnibus Incentive Plan Proposal, but no other proposal if the Transaction Proposal, the Issuance Proposal, the Charter Approval Proposal, the Management Longer Term Equity |
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Incentive Plan Proposal and the Omnibus Incentive Plan Proposal are approved. For additional information, please see the section entitled Proposal No.9The Adjournment Proposal. |
Q: | What happens if I sell my shares of Class A Stock before the Special Meeting? |
A: | The record date for the Special Meeting is earlier than the date that the Business Combination is expected to be completed. If you transfer your shares of Class A Stock after the record date, but before the Special Meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the Special Meeting. However, you will not be able to seek redemption of your shares of Class A Stock because you will no longer be able to deliver them for cancellation upon consummation of the Business Combination. If you transfer your shares of Class A Stock prior to the record date, you will have no right to vote those shares at the Special Meeting or redeem those shares for a pro rata portion of the proceeds held in our Trust Account. |
Q: | What vote is required to approve the proposals presented at the Special Meeting? |
A: | The approval of the Transaction Proposal requires the affirmative vote of at least a majority of the votes cast by holders of outstanding shares of our Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Failure to vote by proxy or to vote in person via the virtual meeting platform at the Special Meeting and broker non-votes will have no effect on the Transaction Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will have no effect on the Transaction Proposal. Our Initial Stockholders have agreed to vote their shares of Common Stock in favor of the Transaction Proposal. |
The approval of the Issuance Proposal requires the affirmative vote of holders of at least a majority of the votes cast by holders of outstanding shares of our Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Failure to vote by proxy or to vote in person via the virtual meeting platform at the Special Meeting and broker non-votes will have no effect on the Issuance Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will have no effect on the Issuance Proposal.
The approval of the Amendment Proposal requires (i) the affirmative vote of holders of a majority of our outstanding shares of Common Stock entitled to vote thereon at the Special Meeting and (ii) the affirmative vote of holders of a majority of our outstanding shares of Class F Stock, voting separately as a single class, entitled to vote thereon at the Special Meeting. Accordingly, a Company stockholders failure to vote by proxy or to vote in person via the virtual meeting platform at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Amendment Proposal will have the same effect as a vote AGAINST such Amendment Proposal.
The approval of the Governance Proposal requires the affirmative vote of at least a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Accordingly, a Company stockholders failure to vote by proxy or to vote in person via the virtual meeting platform at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Governance Proposal will have no effect on the Governance Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will have no effect on the Governance Proposal.
The approval of this Management Longer Term Equity Incentive Plan Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote at the Special Meeting. Accordingly, a Company stockholders failure to vote by proxy or to vote in person via the virtual meeting platform at the Special Meeting, as well as a broker non-vote with regard to the Management Longer Term Equity Incentive
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Plan Proposal will have no effect on the Management Longer Term Equity Incentive Plan Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will have no effect on the Management Longer Term Equity Incentive Plan Proposal.
The approval of the Omnibus Incentive Plan Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote at the Special Meeting. Accordingly, a Company stockholders failure to vote by proxy or to vote in person via the virtual meeting platform at the Special Meeting, as well as a broker non-vote with regard to the Omnibus Incentive Plan Proposal will have no effect on the Omnibus Incentive Plan Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will have no effect on the Omnibus Incentive Plan Proposal.
The approval of the Employee Stock Purchase Plan Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote at the Special Meeting. Accordingly, a Company stockholders failure to vote by proxy or to vote in person via the virtual meeting platform at the Special Meeting, as well as a broker non-vote with regard to the Employee Stock Purchase Plan Proposal will have no effect on the Employee Stock Purchase Plan Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will have no effect on the Employee Stock Purchase Plan Proposal.
If a quorum is present, directors are elected by a plurality of the votes cast, in person via the virtual meeting platform or by proxy. This means that the seven director nominees who receive the most affirmative votes will be elected. Votes marked FOR a nominee will be counted in favor of that nominee. Proxies will have full discretion to cast votes for other persons in the event any nominee is unable to serve. Failure to vote by proxy or to vote in person via the virtual meeting platform at the Special Meeting, abstentions and broker non-votes will have no effect on the vote.
The approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by holders of outstanding shares of our Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Accordingly, a Company stockholders failure to vote by proxy or to vote in person via the virtual meeting platform at the Special Meeting, as well as a broker non-vote with regard to the Adjournment Proposal will have no effect on the Adjournment Proposal. Abstentions will be counted in connection with the determination of whether a valid quorum is established but will have no effect on the Adjournment Proposal.
Q: | What happens if the Transaction Proposal is not approved? |
A: | If the Transaction Proposal is not approved and we do not consummate an initial business combination by February 5, 2021, we will be required to dissolve and liquidate the Trust Account. |
Q: | How many votes do I have at the Special Meeting? |
A: | Our stockholders are entitled to one vote on each proposal presented at the Special Meeting for each share of Common Stock held of record as of [●], 2020, the record date for the Special Meeting. As of the close of business on the record date, there were [●] outstanding shares of Common Stock. |
Q: | What constitutes a quorum at the Special Meeting? |
A: | A majority of the issued and outstanding shares of Common Stock entitled to vote as of the record date at the Special Meeting must be present, in person via the virtual meeting platform or represented by proxy, at the Special Meeting to constitute a quorum and in order to conduct business at the Special Meeting. Abstentions will be counted as present for the purpose of determining a quorum. Our Initial Stockholders, |
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who currently own 20% of our issued and outstanding shares of Common Stock, will count towards this quorum. In the absence of a quorum, the chairman of the Special Meeting has power to adjourn the Special Meeting. As of the record date for the Special Meeting, 25,000,001 shares of Common Stock would be required to achieve a quorum. |
Q: | How will the Companys Sponsor, directors and officers vote? |
A: | Prior to the Company IPO, we entered into agreements with our Sponsor and each of our directors and officers, pursuant to which each agreed to vote any shares of Common Stock owned by them in favor of the Transaction Proposal. None of our Sponsor, directors or officers has purchased any shares of our Common Stock during or after the Company IPO and, as of the date of this proxy statement/consent solicitation statement/prospectus, neither we nor our Sponsor, directors or officers have entered into agreements, and are not currently in negotiations, to purchase shares prior to the consummation of the Business Combination. Currently, our Initial Stockholders own 20% of our issued and outstanding shares of Common Stock, including all of the Founder Shares, and will be able to vote all such shares at the Special Meeting. |
Q: | What interests does the Sponsor and the Companys current officers and directors have in the Business Combination? |
A: | The Sponsor, certain members of our Board and our officers may have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interests. You should take these interests into account in deciding whether to approve the Business Combination. These interests include: |
| the fact that our Initial Stockholders have agreed not to redeem any of the Founder Shares in connection with a stockholder vote to approve a proposed initial business combination; |
| the fact that our Initial Stockholders have agreed to waive their rights to conversion price adjustments with respect to any shares of our Common Stock they may hold in connection with the consummation of the Business Combination; |
| the fact that our Sponsor paid an aggregate of $25,000 for 10,781,250 Founder Shares and (after giving effect to the cancellation of 781,250 Founder Shares on March 18, 2019, the remaining 10,000,000 Founder Shares will have a significantly higher value at the time of the Business Combination, which if unrestricted and freely tradable would be valued at approximately $100,000,000 but, given the restrictions on such shares, we believe such shares have less value; |
| the fact that our Initial Stockholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if we fail to complete an initial business combination by February 5, 2021; |
| the fact that our Sponsor paid an aggregate of approximately $10,000,000 for its 6,666,666 Private Placement Warrants to purchase shares of Class A Stock and that such Private Placement Warrants will expire worthless if a business combination is not consummated by February 5, 2021; |
| the continued right of our Sponsor to hold our Class A Stock and the shares of Class A Stock to be issued to our Sponsor upon exercise of its Private Placement Warrants following the Business Combination, subject to certain lock-up periods; |
| if the Trust Account is liquidated, including in the event we are unable to complete an initial business combination within the required time period, our Sponsor has agreed to indemnify us to ensure that the proceeds in the Trust Account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which we have entered into an acquisition agreement or claims of any third party (other than our independent public accountants) for services rendered or products sold to us, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account; |
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| the continued indemnification of our existing directors and officers and the continuation of our directors and officers liability insurance following the closing of the Business Combination; |
| the fact that our Sponsor, officers and directors will lose their entire investment in us and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by February 5, 2021; |
| that affiliates of our Sponsor, Mr. Alec E. Gores and Mr. Dean Metropoulos participated in the Series X Financing and, thereafter, will receive the Per Share Company Stock Consideration for each share of Luminar Series X Preferred Stock that they hold in connection with the closing of the Business Combination; and |
| that, at the closing of the Business Combination, we will enter into the Registration Rights Agreement with the Registration Rights Holders (in which certain members of our Board and affiliates are included), which provides for registration rights to the Registration Rights Holders and their permitted transferees. |
These interests may influence our Board in making their recommendation that you vote in favor of the approval of the Business Combination.
Q: | Did our Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination? |
A: | Yes. Although our current certificate of incorporation does not require our Board to seek a third-party valuation or fairness opinion in connection with a business combination unless the target business is affiliated with our Sponsor, directors or officers, our Board received a fairness opinion from Moelis as to the fairness, from a financial point of view and as of the date of such opinion, of the consideration to be paid by the Company to the Luminar Stockholders in the Business Combination. Please see the section entitled Opinion of the Companys Financial Advisor and the opinion of Moelis attached hereto as Annex H for additional information. |
Q: | What happens if I vote against the Transaction Proposal? |
A: | If you vote against the Transaction Proposal but the Transaction Proposal still obtains the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote at the Special Meeting, then the Transaction Proposal will be approved and, assuming the approval of the Issuance Proposal and the Amendment Proposal and the satisfaction or waiver of the other conditions to closing, the Business Combination will be consummated in accordance with the terms of the Merger Agreement. |
If you vote against the Transaction Proposal and the Transaction Proposal does not obtain the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote at the Special Meeting, then the Transaction Proposal will fail and we will not consummate the Business Combination. If we do not consummate the Business Combination, we may continue to try to complete an initial business combination with a different target business until February 5, 2021. If we fail to complete an initial business combination by February 5, 2021, then we will be required to dissolve and liquidate the Trust Account by returning the then-remaining funds in such account to our Public Stockholders.
Q: | Do I have redemption rights? |
A: | If you are a Public Stockholder, you may redeem your Public Shares for cash at the applicable redemption price per share equal to the quotient obtained by dividing (i) the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest |
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not previously released to us to fund Regulatory Withdrawals and/or to pay its franchise and income taxes, by (ii) the total number of then-outstanding Public Shares; provided that we may not redeem any shares of Class A Stock issued in the Company IPO to the extent that such redemption would result in our failure to have net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) in excess of $5,000,000. A Public Stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a group (as defined under Section 13 of the Exchange Act), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the groups shares, in excess of 20% of the shares of Class A Stock included in the Public Units sold in the Company IPO. Holders of our outstanding Public Warrants do not have redemption rights in connection with the Business Combination. Our Sponsor, directors and officers have agreed to waive their redemption rights with respect to their shares of Common Stock in connection with the consummation of the Business Combination, and the Founder Shares will be excluded from the pro rata calculation used to determine the per-share redemption price. Our Initial Stockholders have also agreed to waive their right to a conversion price adjustment with respect to any shares of our Common Stock they may hold in connection with the consummation of the Business Combination. For illustrative purposes, based on the balance of our Trust Account of $406,397,612 as of June 30, 2020, the estimated per share redemption price would have been approximately $10.16. Additionally, shares properly tendered for redemption will only be redeemed if the Business Combination is consummated; otherwise holders of such shares will only be entitled to a pro rata portion of the Trust Account (including interest not previously released to the Company to fund Regulatory Withdrawals and/or to pay its franchise and income taxes) in connection with the liquidation of the Trust Account, unless we complete an alternative initial business combination prior to February 5, 2021. |
Q: | Can our Initial Stockholders redeem their Founder Shares in connection with consummation of the Business Combination? |
A: | No. Our Initial Stockholders, officers and other current directors have agreed to waive their redemption rights, with respect to their Founder Shares and any Public Shares they may hold, in connection with the consummation of the Business Combination. |
Q: | Is there a limit on the number of shares I may redeem? |
A: | Yes. 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), is restricted from exercising redemption rights with respect to more than an aggregate of 20% of the shares sold in the Company IPO. Accordingly, all shares in excess of 20% owned by a holder or group of holders will not be redeemed for cash. On the other hand, a Public Stockholder who holds less than 20% of the Public Shares and is not a member of a group may redeem all of the Public Shares held by such stockholder for cash. |
In no event is your ability to vote all of your shares (including those shares held by you or by a group in excess of 20% of the shares sold in the Company IPO) for or against the Business Combination restricted.
We have no specified maximum redemption threshold under the Current Company Certificate, other than the aforementioned 20% threshold. Each redemption of shares of Class A Stock by our Public Stockholders will reduce the amount in our Trust Account, which held cash and investment securities with a fair value of $406,397,612 as of June 30, 2020. However, in no event will we redeem shares of our Class A Stock in an amount that would result in our failure to have net tangible assets equaling or exceeding $5,000,001.
Q: | Is there a limit on the total number of Public Shares that may be redeemed? |
A: | Yes. The Current Company Certificate provides that we may not redeem our Public Shares in an amount that would result in our failure to have net tangible assets in excess of $5,000,000 (such that we are not |
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subject to the SECs penny stock rules) or any greater net tangible asset or cash requirement which may be contained in the Merger Agreement. Other than this limitation, the Current Company Certificate does not provide a specified maximum redemption threshold. In the event the aggregate cash consideration we would be required to pay for all shares of Class A Stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the Merger Agreement exceeds the aggregate amount of cash available to us, we may not complete the Business Combination or redeem any shares, all shares of Class A Stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate initial business combination. |
Based on the amount of $406,397,612 in our Trust Account as of June 30, 2020, approximately 39,507,871 shares of Class A Stock may be redeemed and still enable us to have sufficient cash to satisfy the cash closing conditions in the Merger Agreement. We refer to this as the maximum redemption scenario.
Q: | Will how I vote affect my ability to exercise redemption rights? |
A: | No. You may exercise your redemption rights whether you vote your Public Shares for or against, or whether you abstain from voting on, Transaction Proposal, Issuance Proposal, the Amendment Proposal or any of the Governance Proposals or any other proposal described by this proxy statement/consent solicitation statement/prospectus. As a result, the Merger Agreement can be approved by stockholders who will redeem their shares and no longer remain stockholders, leaving stockholders who choose not to redeem their shares holding shares in a company with a potentially less-liquid trading market, fewer stockholders, potentially less cash and the potential inability to meet the listing standards of Nasdaq. |
Q: | How do I exercise my redemption rights? |
A: | In order to exercise your redemption rights, you must (i) if you hold Public Units, separate the underlying Public Shares and Public Warrants, and (ii) prior to 5:00 P.M., Eastern Time on [●], 2020 (two business days before the Special Meeting), tender your shares physically or electronically and submit a request in writing that the Company redeem your Public Shares for cash to Continental Stock Transfer & Trust Company, the Transfer Agent, at the following address: |
Continental Stock Transfer & Trust Company
1 State Street 30th Floor
New York, New York 10004
Attention: Isaac Kagan
Email: ikagan@continentalstock.com
Please check the box on the enclosed proxy card marked Stockholder Certification if you are not acting in concert or as a group (as defined in Section 13d-3 of the Exchange Act) with any other stockholder with respect to the Public Shares. Notwithstanding the foregoing, a holder of the Public Shares, together with any affiliate of his or any other person with whom he is acting in concert or as a group (as defined in Section 13d-3 of the Exchange Act) will be restricted from seeking redemption rights with respect to more than 20% of the Public Shares included in the Public Units sold in the Company IPO. Accordingly, all Public Shares in excess of the aforementioned 20% threshold beneficially owned by a Public Stockholder or group will not be redeemed for cash.
Company stockholders seeking to exercise their redemption rights and opting to deliver physical certificates should allot sufficient time to obtain physical certificates from the Transfer Agent and time to effect delivery. It is our understanding that Company stockholders should generally allot at least two weeks to obtain physical certificates from the Transfer Agent. However, we do not have any control over this process and it may take longer than two weeks. Company stockholders who hold their shares in street name will have to coordinate with their bank, broker or other nominee to have the shares certificated or delivered electronically.
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Company stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in street name are required to either tender their certificates to the Transfer Agent prior to the date set forth in this proxy statement/consent solicitation statement/prospectus, or up to two business days prior to the vote on the proposal to approve the Business Combination at the Special Meeting, or to deliver their shares to the Transfer Agent electronically using Depository Trust Companys (DTC) Deposit/Withdrawal At Custodian (DWAC) system, at such stockholders option. The requirement for physical or electronic delivery prior to the Special Meeting ensures that a redeeming stockholders election to redeem is irrevocable once the Business Combination is approved.
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 a tendering broker a fee and it is in the brokers discretion whether or not to pass this cost on to the redeeming stockholder. However, this fee would be incurred regardless of whether or not stockholders seeking to exercise redemption rights are required to tender their shares, as the need to deliver shares is a requirement to exercising redemption rights, regardless of the timing of when such delivery must be effectuated.
Q: | What are the U.S. federal income tax consequences of exercising my redemption rights? |
A: | The U.S. federal income tax consequences of the redemption depends on particular facts and circumstances. Please see the section entitled Material Tax ConsiderationsMaterial U.S. Federal Income Tax Considerations for Holders of Class A Stock for additional information. You are urged to consult your tax advisors regarding the tax consequences of exercising your redemption rights. |
Q: | If I am a Public Warrant holder, can I exercise redemption rights with respect to my Public Warrants? |
A: | No. The holders of Public Warrants have no redemption rights with respect to such Public Warrants. |
Q: | Do I have appraisal rights or dissenters rights if I object to the proposed Business Combination? |
A: | No. Appraisal rights or dissenters rights are not available to holders of shares of Common Stock in connection with the Business Combination. |
Q: | What happens to the funds held in the Trust Account upon consummation of the Business Combination? |
A: | If the Business Combination is consummated, the funds held in the Trust Account will be used to: (i) pay our Public Stockholders who properly exercise their redemption rights; (ii) pay the $14,000,000 Deferred Discount to the underwriters of the Company IPO, in connection with the Business Combination; (iii) pay certain other fees, costs and expenses (including regulatory fees, legal fees, accounting fees, printer fees and other professional fees) that were incurred by the Company and other parties to the Merger Agreement in connection with the transactions contemplated by the Merger Agreement, including the Business Combination, and pursuant to the terms of the Merger Agreement and (iv) assuming a minimum level of cash available at the Company and Luminar as of the effective time of the First Merger, repay all Luminars outstanding indebtedness. Any remaining funds will be used by the Post-Combination Company for general corporate purposes. |
Q: | What conditions must be satisfied to complete the Business Combination? |
A: | There are a number of closing conditions in the Merger Agreement, including the expiration of the applicable waiting period under the HSR Act, the approval and adoption by the Luminar Stockholders of the Merger Agreement and the transactions contemplated thereby and the approval by the stockholders of the |
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Company of the Transaction Proposal, the Issuance Proposal and the Amendment Proposal. For a summary of the conditions that must be satisfied or waived prior to completion of the Business Combination, please see the section entitled The Merger Agreement and Related Agreements. |
Q: | What happens if the Business Combination is not consummated? |
A: | There are certain circumstances under which the Merger Agreement may be terminated. Please see the section entitled The Merger Agreement and Related Agreements for information regarding the parties specific termination rights. |
If we do not consummate the Business Combination, we may continue to try to complete an initial business combination with a different target business until February 5, 2021. Unless we amend the Current Company Certificate (which requires the affirmative vote of 65% of all then outstanding shares of Class A Stock) and amend certain other agreements into which we have entered to extend the life of the Company, if we fail to complete an initial business combination by February 5, 2021, then 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 our Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest not previously released to us to fund Regulatory Withdrawals and/or to pay its franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish our 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, 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 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 Company IPO. Please see the section entitled Risk FactorsRisks Related to the Company and the Business Combination.
Holders of our Founder Shares have waived any right to any liquidation distribution with respect to such shares. In addition, if we fail to complete a business combination by February 5, 2021, there will be no redemption rights or liquidating distributions with respect to our outstanding warrants, which will expire worthless.
Q: | When is the Business Combination expected to be completed? |
A: | The closing of the Business Combination is expected to take place on or prior to the third business day following the satisfaction or waiver of the conditions described below in the subsection entitled The Merger Agreement and Related AgreementsThe Merger AgreementConditions to Closing of the Business Combination. Following the closing of the Business Combination, Luminar will merge with and into First Merger Sub, with Luminar surviving the First Merger as the Surviving Corporation. Following the First Merger, the Surviving Corporation will merge with and into Second Merger Sub, with Second Merger Sub surviving the Second Merger as the Surviving Entity. The Mergers will become effective at the time and on the date specified in the certificate of mergers in accordance with the DGCL and the Delaware Limited Liability Company Act. The completion of the Business Combination is expected to occur in the fourth quarter of 2020. The Merger Agreement may be terminated by the Company if the closing of the Business Combination has not occurred by February 5, 2021 (the Termination Date). |
For a description of the conditions to the completion of the Business Combination, see the section entitled The Merger Agreement and Related AgreementsThe Merger AgreementConditions to Closing of the Business Combination.
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Q: | What do I need to do now? |
A: | You are urged to read carefully and consider the information contained in this proxy statement/consent solicitation statement/prospectus, including the Annexes, and to consider how the Business Combination will affect you as a stockholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/consent solicitation statement/prospectus and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee. |
Q: | How do I vote? |
A: | If you were a holder of record of shares of our Common Stock on [●], 2020, the record date for the Special Meeting, you may vote with respect to the proposals in person via the virtual meeting platform at the Special Meeting, or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. |
Voting by Mail. By signing the proxy card and returning it in the enclosed prepaid and addressed envelope, you are authorizing the individuals named on the proxy card to vote your shares at the Special Meeting in the manner you indicate. You are encouraged to sign and return the proxy card even if you plan to attend the Special Meeting so that your shares will be voted if you are unable to attend the Special Meeting. If you receive more than one proxy card, it is an indication that your shares are held in multiple accounts. Please sign and return all proxy cards to ensure that all of your shares are voted. Votes submitted by mail must be received by [●] on [●].
Voting at the Special Meeting via the Virtual Meeting Platform. If you attend the Special Meeting and plan to vote in person via the virtual meeting platform, you will be provided with explicit instructions on how to vote in person via the virtual meeting platform. If your shares are registered directly in your name, you are considered the stockholder of record and you have the right to vote in person via the virtual meeting platform at the Special Meeting. If you hold your shares in street name, which means your shares are held of record by a broker, bank or other nominee, you should follow the instructions provided by your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to attend the Special Meeting and vote in person via the virtual meeting platform, you will need to contact your broker, bank or nominee to obtain a legal proxy that will authorize you to vote these shares. For additional information, please see the section entitled Special Meeting of the Stockholders of the Company in lieu of the 2020 Annual Meeting of the Company.
Q: | What will happen if I abstain from voting or fail to vote at the Special Meeting? |
A: | At the Special Meeting, we will count a properly executed proxy marked ABSTAIN with respect to a particular proposal as present for purposes of determining whether a quorum is present. For purposes of approval, a failure to vote or an abstention will have no effect on the Transaction Proposal, the Issuance Proposal, the Governance Proposal, the Management Longer Term Equity Incentive Plan Proposal, the Omnibus Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal, the Director Election Proposal or the Adjournment Proposal; a failure to vote or abstention will have the same effect as a vote AGAINST the Charter Approval Proposal. |
Q: | What will happen if I sign and return my proxy card without indicating how I wish to vote? |
A: | Signed and dated proxies we receive without an indication of how the stockholder intends to vote on a proposal will be voted FOR each proposal presented to the stockholders. The proxyholders may use their discretion to vote on any other matters that properly come before the Special Meeting. |
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Q: | If I am not going to attend the Special Meeting via the virtual meeting platform, should I return my proxy card instead? |
A: | Yes. Whether you plan to attend the Special Meeting or not, please read the enclosed proxy statement/consent solicitation statement/prospectus carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. |
Q: | If my shares are held in street name, will my broker, bank or nominee automatically vote my shares for me? |
A: | No. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. We believe that all of the proposals presented to the stockholders at this Special Meeting will be considered non-discretionary and, therefore, your broker, bank, or nominee cannot vote your shares without your instruction on any of the proposals presented at the Special Meeting. If you do not provide instructions with your proxy, your broker, bank, or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a broker, bank, or nominee is not voting your shares is referred to as a broker non-vote. Broker non-votes will not be counted for the purposes of determining the existence of a quorum or for purposes of determining the number of votes cast at the Special Meeting. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide. |
Q: | How will a broker non-vote impact the results of each proposal? |
A: | Broker non-votes will count as a vote AGAINST the Amendment Proposal but will not have any effect on the outcome of any other proposals. |
Q: | May I change my vote after I have mailed my signed proxy card? |
A: | Yes. You may change your vote by sending a later-dated, signed proxy card to our Secretary at the address listed below so that it is received by our Secretary prior to the Special Meeting or attend the Special Meeting in person via the virtual meeting platform and vote. You also may revoke your proxy by sending a notice of revocation to our Secretary, which must be received by our Secretary prior to the Special Meeting. |
Q: | What should I do if I receive more than one set of voting materials? |
A: | You may receive more than one set of voting materials, including multiple copies of this proxy statement/consent solicitation statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares. |
Q: | Who will solicit and pay the cost of soliciting proxies for the Special Meeting? |
A: | We will pay the cost of soliciting proxies for the Special Meeting. We have engaged Morrow Sodali LLC (Morrow) to assist in the solicitation of proxies for the Special Meeting. We have agreed to pay Morrow a fee of $32,500, plus disbursements, and will reimburse Morrow for its reasonable out-of-pocket expenses and indemnify Morrow and its affiliates against certain claims, liabilities, losses, damages and expenses. We will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial |
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owners of shares of our Common Stock for their expenses in forwarding soliciting materials to beneficial owners of shares of our Common Stock and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies. |
Q: | Who can help answer my questions? |
A: | If you have questions about the proposals or if you need additional copies of this proxy statement/consent solicitation statement/prospectus or the enclosed proxy card you should contact: |
Gores Metropoulos, Inc.
9800 Wilshire Blvd.
Beverly Hills, CA 90212
(310) 209-3010
Email: jskarzenski@gores.com
You may also contact the proxy solicitor for the Company at:
Morrow Sodali LLC
470 West Avenue
Stamford, Connecticut 06902
Individuals, please call toll-free: (800) 662-5200
Banks and brokerage, please call: (203) 658-9400
Email: gmhi.info@investor.morrowsodali.com
To obtain timely delivery, Company stockholders must request the materials no later than [●], 2020, or five business days prior to the Special Meeting.
You may also obtain additional information about the Company from documents filed with the SEC by following the instructions in the section entitled Where You Can Find More Information.
If you intend to seek redemption of your Public Shares, you will need to send a letter demanding redemption and deliver your Public Shares (either physically or electronically) to the Transfer Agent prior to the Special Meeting in accordance with the procedures detailed under the question How do I exercise my redemption rights? If you have questions regarding the certification of your position or delivery of your Public Shares, please contact the Transfer Agent:
Continental Stock Transfer & Trust Company
1 State Street 30th Floor
New York, New York 10004
Attention: Isaac Kagan
Email: ikagan@continentalstock.com
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QUESTIONS AND ANSWERS ABOUT LUMINARS CONSENT SOLICITATION
Q: | Why am I receiving this proxy statement/consent solicitation statement/prospectus? |
A: | Luminar Stockholders are being asked to adopt the Merger Agreement and approve the transactions contemplated thereby, including the Mergers (the Luminar Proposal), by executing and delivering the written consent furnished with this proxy statement/consent solicitation statement/prospectus. As a result of the Business Combination, the Company will acquire Luminar. Subject to the terms of the Merger Agreement, holders of Luminar equity interests (and convertible securities) will be entitled to receive shares of the Companys Class A Stock or Class B Stock at a deemed value of $10.00 per share as consideration following the Merger. For more information about the consideration payable to the holders of Luminar equity interests (and convertible securities), please see the section entitled The Business Combination Consideration in the Business Combination beginning on page [●] of this proxy statement/consent solicitation statement/prospectus. |
A copy of the Merger Agreement is attached to this proxy statement/consent solicitation statement/prospectus as Annex A. This proxy statement/consent solicitation statement/prospectus and its annexes contain important information about the proposed Business Combination and the solicitation of written consents. You should read this proxy statement/consent solicitation statement/prospectus and its annexes carefully and in their entirety.
Luminar Stockholders are encouraged to return their written consent as soon as possible after carefully reviewing this proxy statement/consent solicitation statement/prospectus and its annexes.
Q: | What are the specific proposals on which I am being asked to approve in the written consent furnished with this proxy statement/consent solicitation statement/prospectus? |
A. | Luminar Stockholders are being asked to approve the following proposals: |
1. | Luminar Proposala proposal to adopt the Merger Agreement, a copy of which is attached to this proxy statement/consent solicitation statement/prospectus as Annex A and approve the transactions contemplated thereby, including the Mergers. |
2. | Unbundled Governance Proposalon a non-binding advisory basis, a separate proposal with respect to certain governance provisions in the Second Amended and Restated Certificate of Incorporation described in Proposal No. 4 beginning on page [●] (the Unbundled Governance Proposal) of this proxy statement/consent solicitation statement/prospectus. |
Q: | Who is entitled to act by written consent? |
A: | Luminar Stockholders of record holding shares of Luminar Stock at the close of business on the record date of [●], 2020 (the Luminar Record Date), will be notified of and be entitled to execute and deliver a written consent with respect to the Luminar Proposal. |
Q: | How can I give my consent? |
A: | Luminar Stockholders may give their consent by completing, dating and signing the written consent enclosed with this proxy statement/consent solicitation statement/prospectus and returning it to Luminar by emailing a .pdf copy to Luminars consent solicitor, Morrow Sodali LLC, at luminar.info@investor.morrowsodali.com or by mailing your written consent to Morrow Sodali LLC at 470 West Avenue, Suite 3000, Stamford, CT 06902. |
Q: | What approval is required to adopt the Merger Agreement? |
A: | Written consents from the holders of at least a majority of the outstanding voting power of the issued and outstanding shares of Luminar Stock (voting as a single class and on an as-converted basis) are required to adopt the Luminar Proposal. |
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Concurrently with entry by the parties into the Merger Agreement, Mr. Austin Russell entered into the Support Agreement with the Company, First Merger Sub and Second Merger Sub substantially in the form attached as Annex E to this proxy statement/consent solicitation statement/prospectus. Under the Support Agreement, Mr. Russell agreed, on (or effective as of) the third business day following the mailing of the consent solicitation to the Luminar Stockholders, to execute and deliver a written consent with respect to the outstanding shares of Luminar Class A Stock and Luminar Founders Preferred Stock held by Mr. Russell, adopting the Merger Agreement and approving the Business Combination, unless the Merger Agreement is no longer recommended by the Luminar board of directors in accordance with the Merger Agreement, in which case, the number of shares with respect to which Mr. Russell is committed to execute such written consent will be reduced to 35% of the total number of outstanding shares of Luminar stock (on an as-converted basis). In addition, the Support Agreement prohibits Mr. Russell from engaging in activities that have the effect of soliciting a competing acquisition proposal. The shares of Luminar Class A Stock and Luminar Founders Preferred Stock that are owned by Mr. Russell and subject to the Support Agreement represent approximately 62% of the aggregate issued and outstanding shares of Luminar Class A Stock and 88% of the shares of the aggregate issued and outstanding Luminar Founders Preferred Stock, or approximately 38% of the total voting power of Luminar capital stock.
Q: | Do Luminar Stockholders have appraisal rights if they object to the Mergers? |
A: | Yes. Pursuant to Section 262 of the DGCL, Luminar Stockholders who comply with the applicable requirements of Section 262 of the DGCL and do not otherwise fail to perfect, waive, withdraw or lose the right to appraisal under Delaware law have the right to seek appraisal of the fair value of their shares of Luminar Stock, as determined by the Court of Chancery, if the First Merger is completed. The fair value of your shares of Luminar Stock as determined by the Court of Chancery may be more or less than, or the same as, the value of the consideration that you are otherwise entitled to receive under the Merger Agreement. Luminar Stockholders who do not consent to the adoption of the Merger Agreement and who wish to preserve their appraisal rights must so advise Luminar by submitting a demand for appraisal within the period prescribed by Section 262 of the DGCL after receiving a notice from Luminar or the Post-Combination Company that appraisal rights are available to them, and must otherwise precisely follow the procedures prescribed by Section 262 of the DGCL. Failure to follow any of the statutory procedures set forth in Section 262 of the DGCL will result in the loss or waiver of appraisal rights under Delaware law. In view of the complexity of Section 262 of the DGCL, Luminar Stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors. For additional information on appraisal rights available to Luminar Stockholders, see the section entitled Appraisal Rights beginning on page [●] of this proxy statement/consent solicitation statement/prospectus. |
Q: | What are the material U.S. federal income tax consequences of the Mergers to Luminar Stockholders that are United States Persons? |
A: | Luminar and the Company intend for the Mergers to qualify as a reorganization within the meaning of Section 368(a) of the U.S. Tax Code. Assuming that the Mergers qualify as a reorganization, a Luminar Stockholder that is a United States Person that receives Class A Stock in exchange for Luminar Class A Stock, Luminar Preferred Stock or Luminar Founders Preferred Stock, or receives Class B Stock in exchange for Luminar Class B Stock in the Mergers generally will not recognize gain or loss for U.S. federal income tax purposes (except with respect to any cash received in lieu of a fractional share of Class A Stock or Class B Stock or imputed interest). However, there are many requirements that must be satisfied in order for the Mergers to qualify as a reorganization, some of which are based upon factual determinations. Neither the Company nor Luminar has requested or received a ruling from the IRS or an opinion of counsel that the Mergers will qualify as a reorganization. If it is determined that the Mergers are not treated as a reorganization within the meaning of Section 368(a) of the U.S. Tax Code, unless the First Merger qualifies as a tax-free exchange of property for stock under Section 351 of the U.S. Tax Code, the exchange of Luminar Stock for Class A Stock or Class B Stock in the Mergers will be a fully taxable transaction. |
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The U.S. federal income tax consequences of the Mergers depend on particular facts and circumstances. Please see the section entitled Material Tax ConsiderationsCertain Material U.S. Federal Income Tax Considerations of the Mergers to Holders of Luminar Stock that are United States Persons for additional information. Luminar Stockholders should consult with their own tax advisors as to the tax consequences to them of the Mergers.
Q: | What is the deadline for returning my written consent? |
A: | Luminars board of directors has set 12:00 noon, New York City time, on [●], 2020, as the target date for the receipt of written consents, which is the date on which Luminar expects to receive the written consent of Austin Russell, Luminars President and Chief Executive Officer, in accordance with the Support Agreement. Luminar reserves the right to extend the final date for receipt of written consents beyond such date. Any such extension may be made without notice to Luminar Stockholders. Once a sufficient number of consents to adopt the Merger Agreement has been received, the consent solicitation will conclude. |
Q: | Who can help answer my questions? |
A: | If you have any questions about the Mergers or how to return your written consent, or if you need additional copies of this proxy statement/consent solicitation statement/prospectus or a replacement written consent, you should contact Luminars agent in connection with the consent solicitation, Morrow Sodali LLC, by phone at (800) 662-5200 or by email at luminar.info@investor.morrowsodali.com. |
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This summary highlights selected information contained in this proxy statement/consent solicitation statement/prospectus and does not contain all of the information that is important to you. You should read carefully this entire proxy statement/consent solicitation statement/prospectus, including the Annexes and accompanying financial statements of the Company and Luminar, to fully understand the proposed Business Combination (as described below) before voting on the proposals to be considered at the Special Meeting (as described below). Please see the section entitled Where You Can Find More Information beginning on page [●] of this proxy statement/consent solicitation statement/prospectus.
Unless otherwise specified, all share calculations assume (i) no exercise of redemption rights by our Public Stockholders; (ii) no inclusion of any Public Shares issuable upon the exercise of the Company Warrants; and (iii) no shares of Class A Stock or Class B Stock are issued as Earn-Out Shares.
Company
The Company is a blank check company incorporated on August 28, 2018 as a Delaware corporation and formed for the purpose of effecting an initial business combination with one or more target businesses.
The Public Shares, Public Units and Public Warrants are traded on the Nasdaq Capital Market under the ticker symbols GMHI, GMHIU and GMHIW, respectively. The Company intends to apply to continue the listing of its Class A Stock and Public Warrants on the Nasdaq Capital Market under the symbols LAZR and LAZRW, respectively, upon the closing of the Business Combination.
The mailing address of the Companys principal executive office is 9800 Wilshire Blvd., Beverly Hills, California 90212.
First Merger Sub
First Merger Sub, a Delaware corporation, is a wholly-owned subsidiary of the Company, formed by the Company on August 20, 2020, to consummate the Business Combination. In the Business Combination, First Merger Sub will merge with and into Luminar, with Luminar continuing as the Surviving Corporation.
The mailing address of First Merger Subs principal executive office is 9800 Wilshire Blvd., Beverly Hills, California 90212.
Second Merger Sub
Second Merger Sub, a Delaware limited liability company, is a wholly-owned subsidiary of the Company, formed by the Company on August 20, 2020, to consummate the Business Combination. In the Business Combination, the Surviving Corporation will merge with and into Second Merger Sub, with Second Merger Sub continuing as the Surviving Entity.
The mailing address of Second Merger Subs principal executive office is 9800 Wilshire Blvd., Beverly Hills, California 90212.
Luminar
Founded in 2012 by President and Chief Executive Officer, Austin Russell, Luminar built a new type of lidar from the chip-level up, with technological breakthroughs across all core components. As a result, Luminar
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has created the only lidar sensor that meets the demanding performance, safety, and cost requirements to enable Level 3 through Level 5 autonomous vehicles in production, bypassing the traditional limitations of legacy lidar technology. Luminars vision is to make autonomous transportation safe and ubiquitous. Launching this bold vision forward, Luminar entered into a landmark deal with Volvo for the first automotive series production award for autonomy in the industry, which was announced in May 2020. As a global leader in lidar autonomous driving technology, Luminar is enabling the worlds first autonomous solutions for automotive series production in passenger cars and commercial trucks, and it now counts seven of the top ten passenger vehicle OEMs as partners and in parallel is also powering the substantial majority of autonomous trucking programs.
The mailing address of Luminars principal executive office is 2603 Discovery Drive, Suite 100, Orlando, FL 32826.
The Business Combination
General
On August 24, 2020, the Company entered into the Merger Agreement with First Merger Sub, Second Merger Sub and Luminar. Pursuant to the Merger Agreement and in connection therewith, among other things and subject to the terms and conditions contained therein:
| at the closing of the Business Combination, First Merger Sub will merge with and into Luminar, with Luminar continuing as the Surviving Corporation of the First Merger; |
| immediately following the First Merger and as part of the same overall transaction as the First Merger, the Surviving Corporation will merge with and into Second Merger Sub, with Second Merger Sub continuing as the Surviving Entity of the Second Merger; |
| prior to the consummation of the Business Combination (and subject to approval by our stockholders), we will adopt the proposed Second Amended and Restated Certificate of Incorporation, to provide for, among other things, the authorization of the Class B Stock to be issued in connection with the Business Combination; |
| in connection with the Business Combination, the Luminar Stockholders will receive, in exchange for their Luminar Stock, the Aggregate Company Stock Consideration. Holders of shares of (a) Luminar Class A Stock, Luminar Preferred Stock and Luminar Founders Preferred Stock will be entitled to receive a number of shares of newly-issued Class A Stock equal to the Per Share Company Stock Consideration for each such share of Luminar Class A Stock, Luminar Preferred Stock or Luminar Founders Preferred Stock, as applicable, and (b) Luminar Class B Stock will be entitled to receive a number of shares of newly-issued Class B Stock equal to the Per Share Company Stock Consideration for each such share of Luminar Class B Stock. The foregoing consideration to be paid to the Luminar Stockholders may be further increased by amounts payable as Earn-Out Shares, of up to 7.5% of the sum of (x) the total outstanding capital stock of the Company and (y) the total shares subject to outstanding Rollover Stock Options and Assumed Warrants, in each case, as of the closing of the Business Combination; |
| at the closing of the Business Combination, the Registration Rights Holders will enter into the Registration Rights Agreement, pursuant to which, (a) any (i) outstanding share of Class A Stock or any Private Placement Warrants, (ii) shares of Class A Stock issued or issuable upon the exercise of any other equity security of the Company (including shares of Class A Stock issued or issuable upon the conversion of the Class F Stock or the Class B Stock and upon exercise of the Private Placement Warrants), and (iii) shares of Class A Stock issued as Earn-Out Shares or issuable upon the conversion of any Earn-Out Shares, in each case, held by the Luminar Holders, and (b) any other equity security of the Company issued or issuable with respect to any such share of Class A Stock by way of a stock |
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dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise, will be entitled to registration rights; |
| our Initial Stockholders have agreed, and their permitted transferees will agree, to vote their Founder Shares, as well as any Public Shares purchased during or after the Company IPO, in favor of the Business Combination. |
In addition and in connection with the foregoing, we entered into the Support Agreement with Mr. Austin Russell concurrently upon the execution of the Merger Agreement, pursuant to which Mr. Russell agreed, on (or effective as of) the third business day following the mailing of the consent solicitation to the Luminar Stockholders, to execute and deliver a written consent with respect to the outstanding shares of Luminar Class A Stock and Luminar Founders Preferred Stock held by Mr. Russell, adopting the Merger Agreement and approving the Business Combination, unless the Merger Agreement is no longer recommended by the Luminar board of directors in accordance with the Merger Agreement, in which case, the number of shares with respect to which Mr. Russell is committed to execute such written consent will be reduced to 35% of the total number of outstanding shares of Luminar Stock (on an as-converted basis). The shares of Luminar Class A Stock and Luminar Founders Preferred Stock that are owned by Mr. Russell and subject to the Support Agreement represent approximately 38% of the outstanding voting power of Luminar Stock (on an as-converted basis). In addition, the Support Agreement prohibits Mr. Russell from engaging in activities that have the effect of soliciting a competing acquisition proposal.
In connection with the foregoing, our Initial Stockholders have also agreed to waive their right to a conversion price adjustment with respect to any shares of our Common Stock they may hold in connection with the consummation of the Business Combination as set forth Current Company Certificate.
In addition, and in connection with the foregoing and concurrently with the execution of the Merger Agreement, Luminar entered into the Series X Agreements with the Series X Investors. Pursuant to the Series X Agreements, the Series X Investors agreed to purchase approximately 1,250,000 shares of Luminar Series X Preferred Stock for a purchase price of $135.7860 per share, or an aggregate of approximately $170,000,000 (collectively, the Series X Financing). The Initial Closing of the Series X Financing occurred at the Initial Closing. Pursuant to the Series X Agreements, Luminar has the right to sell up to an additional approximately 221,000 shares of the Luminar Series X Preferred Stock for up to 45 days following the Initial Closing. The Luminar Series X Preferred Stock to be issued pursuant to the Series X Agreements was not registered under the Securities Act in reliance upon the exemption provided under Section 4(a)(2) of the Securities Act / Regulation D promulgated thereunder.
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Organizational Structure
The following diagram shows the current ownership structure of the Company:
(1) | For more information about the ownership interests of our Initial Stockholders, including our Sponsor, prior to the Business Combination, please see the section entitled Beneficial Ownership of Securities. |
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The following diagram shows the current ownership structure of Luminar:
(1) | Stockholders of Luminar include Austin Russell, Luminars President and Chief Executive Officer, holders of Luminar Preferred Stock, including investors affiliated with the Company, G2VP I, LLC and GVA Auto, LLC, certain current and former employees of Luminar and other holders. |
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The following diagram illustrates the ownership percentages and structure of the Post-Combination Company:
(1) | For more information about the ownership interests of our Initial Stockholders, including our Sponsor, following the Business Combination, please see the section entitled Beneficial Ownership of Securities. |
(2) | The ownership interests of Luminar Equityholders includes the (i) ownership interests of the Series X Investors (excluding our Initial Stockholders) acquired as a result of the Series X Financing, (ii) the Rollover Options and (iii) the Assumed Warrants. |
(3) | For more information about the ownership interests of the Luminar Stockholders, following the Business Combination, please see the section entitled Beneficial Ownership of Securities. |
(4) | The foregoing ownership percentages are calculated inclusive of the Rollover Options and Assumed Warrants and assume (i) no exercise of redemption rights by our Public Stockholders (ii) no inclusion of any Public Shares issuable upon the exercise of the Company Warrants and (iii) no shares of Class A Stock or Class B Stock are issued as Earn-Out Shares. |
Consideration in the Business Combination
Pursuant to the Merger Agreement, the Luminar Stockholders will receive stock consideration. At the closing of the Business Combination, each Luminar Stockholder will receive for each share of Luminar Stock it holds a number of shares of Class A Stock or Class B Stock equal to the Per Share Company Stock Consideration. Following the closing of the Business Combination, each Luminar Stockholder may receive Earn-Out Shares in the form of Class A Stock or Class B Stock, as applicable, payable pursuant to the earn-out.
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No fractional shares of Class A Stock or Class B Stock will be issued. In lieu of the issuance of any such fractional shares, the Company has agreed to pay to each Luminar Stockholder who otherwise would be entitled to receive such fractional share an amount in cash, without interest, rounded down to the nearest cent, equal to the product of (i) the amount of the fractional share interest in a share of Class A Stock or Class B Stock to which such Luminar Stockholder otherwise would have been entitled multiplied by (ii) $10.00.
Conditions to Closing of the Business Combination
Conditions to Each Partys Obligations
The respective obligations of each of Luminar and the Company to complete the Business Combination are subject to the satisfaction of the following conditions:
| the applicable waiting period(s) under the HSR Act in respect of the transactions contemplated by the Merger Agreement shall have expired or been terminated; |
| there shall not have been enacted or promulgated any governmental order, statute, rule or regulation enjoining or prohibiting the consummation of the transactions contemplated by the Merger Agreement; |
| the Company shall have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) remaining after the completion of the redemption offer and prior to the closing of the First Merger; |
| the approval by the Company Stockholders of the Transaction Proposal, the Issuance Proposal and the Amendment Proposal shall have been obtained; |
| the adoption by the Luminar Stockholders of the Merger Agreement and each other agreement contemplated thereby shall have been obtained; |
| the Class A Stock to be issued in connection with the Business Combination (including the Class A Stock to be issued pursuant to the earn-out) shall have been approved for listing on Nasdaq, subject to the requirement to have a sufficient number of round lot holders and official notice of listing; and |
| this proxy statement/consent solicitation statement/prospectus shall have become effective under the Securities Act and no stop order suspending the effectiveness of this proxy statement/consent solicitation statement/prospectus shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC and not withdrawn. |
Conditions to Luminars Obligations
The obligation of Luminar to consummate and effect the Mergers and the other transactions contemplated by the Merger Agreement are subject to the satisfaction, at or prior to the closing of the Business Combination, of each of the following conditions, any of which may be waived, in writing, exclusively by Luminar:
| the accuracy of the representations and warranties of the Company, First Merger Sub and Second Merger Sub as of the date of the Merger Agreement and as of the closing date of the Business Combination, other than, in most cases, where the failure to be true and correct has not and would not reasonably be expected to have a material adverse effect on the Company, First Merger Sub and Second Merger Sub, taken as a whole, or a material adverse effect on the Companys, First Merger Subs and Second Merger Subs ability to consummate the transactions contemplated by the Merger Agreement, including the Mergers; |
| each of the covenants of the Company to be performed or complied with as of or prior to the closing shall have been performed or complied with in all material respects; |
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| the receipt of a certificate signed by an executive officer of the Company certifying that the two preceding conditions have been satisfied; and |
| the Current Company Certificate shall be amended and restated in the form of the Second Amended and Restated Certificate of Incorporation. |
Conditions to the Companys Obligations
The obligations of the Company, First Merger Sub and Second Merger Sub to consummate and effect the Mergers and the other transactions contemplated by the Merger Agreement are subject to the satisfaction, at or prior to the closing of the Business Combination, of each of the following conditions, any of which may be waived, in writing, exclusively by the Company:
| the accuracy of the representations and warranties of Luminar as of the date of the Merger Agreement and as of the closing date of the Business Combination, other than, in most cases, where the failure to be true and correct has not and would not reasonably be expected to have a material adverse effect on Luminar; |
| each of the covenants of Luminar to be performed or complied with as of or prior to the closing of the First Merger shall have been performed or complied with in all material respects; and |
| the receipt of a certificate signed by an officer of Luminar certifying that the two preceding conditions have been satisfied. |
Related Agreements
Support Agreement
In connection with the execution of the Merger Agreement, Austin Russell entered into the Support Agreement with the Company, First Merger Sub and Second Merger Sub substantially in the form attached as Annex E to this proxy statement/consent solicitation statement/prospectus. Under the Support Agreement, Mr. Russell agreed, on (or effective as of) the third business day following the mailing of the consent solicitation to the Luminar Stockholders, to execute and deliver a written consent with respect to the outstanding shares of Luminar Class A Stock and Luminar Founders Preferred Stock held by Mr. Russell, adopting the Merger Agreement and approving the Business Combination, unless the Merger Agreement is no longer recommended by the Luminar board of directors in accordance with the Merger Agreement, in which case, the number of shares with respect to which Mr. Russell is committed to execute such written consent will be reduced to 35% of the total number of outstanding shares of Luminar Stock (on an as-converted basis). The shares of Luminar Class A Stock and Luminar Founders Preferred Stock that are owned by Mr. Russell and subject to the Support Agreement represent approximately 38% of the outstanding voting power of Luminar Stock (on an as-converted basis). In addition, the Support Agreement prohibits Mr. Russell from engaging in activities that have the effect of soliciting a competing acquisition proposal.
The foregoing summary of the Support Agreement is not complete and is qualified in its entirety by reference to the complete text of the Support Agreement as set forth in Annex E.
Registration Rights Agreement
At the closing of the Business Combination, the Company will enter into the Registration Rights Agreement, substantially in the form attached as Annex F to this proxy statement/consent solicitation statement/prospectus, with the Registration Rights Holders. Pursuant to the terms of the Registration Rights Agreement, (a) any (i) outstanding share of Class A Stock or any Private Placement Warrants, (ii) shares of Class A Stock
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issued or issuable upon the exercise of any other equity security of the Company (including shares of Class A Stock issued or issuable upon the conversion of the Class F Stock or the Class B Stock and upon exercise of the Private Placement Warrants), and (iii) shares of Class A Stock issued as Earn-Out Shares or issuable upon the conversion of any Earn-Out Shares, in each case, held by the Luminar Holders, and (b) any other equity security of the Company issued or issuable with respect to any such share of Class A Stock by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise, will be entitled to registration rights.
The Registration Rights Agreement provides that the Company will, within 30 days after the consummation of the transactions contemplated by the Merger Agreement, file with the SEC a shelf registration statement registering the resale of the shares of Common Stock held by the Restricted Stockholders and will use its reasonable best efforts to have such registration statement declared effective as soon as practicable after the filing thereof, but in no event later than 60 days following the filing deadline. The Registration Rights Holders are each entitled to make up to six demands for registration, excluding short form demands, that the Company register shares of Common Stock held by these parties. In addition, the Restricted Stockholders have certain piggy-back registration rights. The Company will bear the expenses incurred in connection with the filing of any registration statements filed pursuant to the terms of the Registration Rights Agreement. The Company and the Registration Rights Holders agree in the Registration Rights Agreement to provide customary indemnification in connection with any offerings of Class A Stock effected pursuant to the terms of the Registration Rights Agreement.
Our Initial Stockholders entered into a letter agreement pursuant to which they agreed to restrictions on the transfer of their securities issued in the Companys IPO, which (i) in the case of the Class F Stock is 180 days after the completion of the Business Combination, and (ii) in the case of the Private Placement Warrants and the respective Class A Stock underlying the Private Placement Warrants is 30 days after the completion of the Business Combination.
The foregoing summary of the Registration Rights Agreement is not complete and is qualified in its entirety by reference to the complete text of the Registration Rights Agreement as set forth in Annex F.
Lock-Up Agreements
Certain Luminar Stockholders will enter into separate letters with the Company and Luminar (the Lock-Up Agreements), pursuant to which such Luminar Stockholders will agree to be bound by restrictions on the transfer of their Class A Stock acquired pursuant to the Merger Agreement for 180 days after the completion of the Business Combination.
For more information about the Lock-Up Agreements, see the section entitled The Merger Agreement and Related AgreementsRelated AgreementsLock-Up Agreements.
Voting Agreement
In connection with the execution of the Merger Agreement, Austin Russell entered into a voting agreement with the Company (the Voting Agreement), substantially in the form attached as Annex G to this proxy statement/consent solicitation statement/prospectus. Under the Voting Agreement, Mr. Russell agrees that, following the consummation of the Business Combination, solely if he is involuntarily terminated from his position as the Chief Executive Officer of the Post-Combination Company and as a result of his conviction of, or pleading guilty or nolo contendere to, a felony that has a material negative impact on the Post-Combination Company, at any meeting of the stockholders of the Post-Combination Company at which directors are to be elected following the consummation of the Business Combination, Mr. Russell, or any of his permitted
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successors or assigns, will not vote more than 10% of the Class B Stock he or they beneficially own in any director election.
The foregoing summary of the Voting Agreement is not complete and is qualified in its entirety by reference to the complete text of the Voting Agreement as set forth in Annex G.
Impact of the Business Combination on the Companys Public Float
It is anticipated that, upon completion of the Business Combination: (i) our Public Stockholders will retain an ownership interest of approximately 11.7% in the Post-Combination Company; (ii) our Initial Stockholders (including our Sponsor) will own approximately 4.2% of the Post-Combination Company (inclusive of their Series X investment); and (iii) the Luminar Equityholders (including the Series X Investors but excluding our Initial Stockholders) will own approximately 84.1% of the Post-Combination Company.
The foregoing percentages are calculated inclusive of the Rollover Options and Assumed Warrants and assume (i) no exercise of redemption rights by our Public Stockholders (ii) no inclusion of any Public Shares issuable upon the exercise of the Company Warrants and (iii) no shares of Class A Stock or Class B Stock are issued as Earn-Out Shares. For more information, please see the sections entitled SummaryImpact of the Business Combination on the Companys Public Float and Unaudited Pro Forma Condensed Combined Financial Information.
Our Boards Reasons for Approval of the Business Combination
We were formed for the purpose of effecting an initial business combination with one or more businesses. We sought to do this by utilizing the networks and industry experience of both our Sponsor and our Board to identify, acquire and operate one or more businesses within or outside of the United States, although we were not limited to a particular industry or sector.
In particular, our Board considered the following positive factors, although not weighted or in any order of significance:
| Industry Leadership of Luminar. Our Board noted that Luminar is a leading provider of Light Detection and Ranging (lidar) technology and has created the only lidar sensor that meets the stringent performance, safety and cost requirements for Level 3Level 5 autonomous vehicles. Our Board also noted that Luminars technology provides a robust scalable architecture that is designed for both passenger and commercial production vehicles. Our Board noted Luminars impressive leadership position and its technology solutions, which our Board believes position Luminar for future growth and profitability. |
| Commercial Viability. Our Board was aware that Luminar was awarded the automotive industrys first series production contract for autonomy by Volvo and, starting in 2022, Luminars hardware and software will be integrated into Volvos global vehicle platform. Our Board also took note that Luminar is currently partnered with 50 other OEM and commercial/strategic partners, including seven of the worlds top 10 automakers. Our Board noted Luminars impressive commercial partnerships and robust customer base, which our Board believes provides proof that Luminar is not only a market leader but also a commercially viable business. |
| Business and Financial Condition and Prospects. Our Board and our management had knowledge of, and were familiar with, Luminars business, financial condition, results of operations and future growth prospects. Our Board considered Luminars hardware and software revenue growth, improvements in gross margins, large and rapidly growing total addressable market, low capital expenditures and strong leadership position with its track record of innovation. Our Board also discussed Luminars current |
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prospects for growth in executing upon and achieving Luminars business plan, and noted its unique and innovative lidar technology, its unique market position, opportunities for sustained organic growth and the opportunity for mass commercialization of its technology. |
| Visionary Management Team. Our Board considered the fact that the Post-Combination Company will be led by Mr. Austin Russell, Founder, President and Chief Executive Officer of Luminar, and Mr. Thomas Fennimore, Chief Financial Officer of Luminar, who have displayed visionary leadership, a strong track record of innovation and who have deep experience in the auto industry. |
| Opinion of our Financial Advisor. Our Board took into account the opinion of Moelis, dated August 23, 2020, addressed to our Board as to the fairness, from a financial point of view and as of the date of such opinion, of the consideration to be paid by us in the Business Combination, which opinion was based on and subject to the assumptions made, procedures followed, matters considered and limitations and qualification set forth in such opinion as more fully described under the caption Opinion of the Companys Financial Advisor. |
| Other Alternatives. Our Board believes, after a thorough review of other business combination opportunities reasonably available to the Company, that the proposed Business Combination represents the best potential initial business combination for the Company based upon the process utilized to evaluate and assess other potential acquisition targets. Our Board and our management also believes that such processes had not presented a better alternative. |
| Terms of the Merger Agreement. Our Board considered the terms and conditions of the Merger Agreement and the transactions contemplated thereby, including the Business Combination. |
| Independent Director Role. Our Board is comprised of a majority of independent directors who are not affiliated with our Sponsor and its affiliates, including The Gores Group, Mr. Alec Gores, Metropoulos & Co. and Mr. Dean Metropoulos. In connection with the Business Combination, our independent directors, Messrs. Randall Bort, Joseph Gatto and Michael Cramer, took an active role in evaluating the proposed terms of the Business Combination, including the Merger Agreement, the Related Agreements and the amendments to the Current Company Certificate to take effect upon the completion of the Business Combination. Our independent directors evaluated and unanimously approved, as members of the Board, the Merger Agreement and the transactions contemplated therein, including the Business Combination. |
For more information about our Boards decision-making process concerning the Business Combination, please see the section entitled The Business CombinationRecommendation of our Board of Directors and Reasons for the Business Combination.
Luminars Board of Directors Reasons for Approval of the Business Combination
After consideration, Luminars board of directors adopted resolutions unanimously determining that the Merger Agreement, the Mergers contemplated by the Merger Agreement and the other transactions contemplated by the Merger Agreement were advisable, fair to and in the best interests of Luminar and Luminar Stockholders, approved the Merger Agreement and the transactions contemplated thereby, including the Mergers, and directed that the Merger Agreement be submitted to the Luminar Stockholders for their consideration. Luminars board of directors unanimously recommends that the Luminar Stockholders adopt the Merger Agreement and approve the transactions contemplated thereby, including the Mergers, by executing and delivering the written consent furnished with this proxy statement/consent solicitation statement/prospectus.
In reaching its decision to approve and declare advisable, the Merger Agreement, and in resolving to recommend that Luminar Stockholders adopt the Merger Agreement and thereby approve the Mergers and the other transactions contemplated by the Merger Agreement, Luminars board of directors consulted with Luminars management, as well
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as its financial and legal advisors, and considered a number of factors, including its knowledge of Luminars business, operations, financial condition, earnings and prospects, and its knowledge of the financial and capital markets. Among the various factors that Luminars board of directors considered in favor of its decision are:
| Other Alternatives. It is the belief of Luminars board of directors, after review of alternative strategic opportunities from time to time, including strategic transactions with other partners and the possibility of, and benefits and risks associated with, continuing to operate Luminar as an independent, stand-alone entity, that the proposed Business Combination represents the best potential transaction for Luminar to create greater value for Luminar Stockholders, while also providing greater liquidity for its stockholders by owning stock in a public company. |
| Terms of the Merger Agreement. Luminars board of directors considered the terms and conditions of the Merger Agreement, including but not limited to the nature and scope of the closing conditions and the likelihood of obtaining any necessary approvals, in addition to the transactions contemplated thereby, including the Mergers. |
| Consideration Received by Luminar Stockholders. Luminars board of directors considered the amount of consideration to be received by the Luminar Stockholders in the proposed Mergers under the terms and conditions of the Merger Agreement. |
| Size of Post-Combination Company. Luminars board of directors considered the implied enterprise value of approximately $2.9 billion for Luminar at the closing of the Business Combination, providing Luminar Stockholders with the opportunity to go forward with ownership in a public company with a larger market capitalization. |
| Access to Capital. Luminars board of directors considered the current industry trends and market conditions affecting Luminar and the cost of alternative means of raising capital and expects that the Business Combination would be a more time- and cost-effective means to access capital and potentially repay its existing indebtedness than other options considered. |
| Benefit from Being a Public Company. Luminars board of directors believes that under new public ownership it will have the flexibility and financial resources to pursue and execute a growth strategy to increase revenue and stockholder value and will benefit from being publicly traded, and can effectively utilize the broader access to capital and public profile that are associated with being a publicly traded company. |
| Opportunity to Increase Earnings and Expand Prospects. Luminars board of directors considered the financial condition, historical results of operations, and business and strategic objectives of the Company, as well as the risks involved in achieving those objectives, and believes that the Business Combination will create an opportunity for Luminar to increase future earnings and cultivate superior prospects compared to continuing to operate Luminar as an independent, stand-alone entity. |
| Insider Letters. Luminars board of directors considered that, pursuant to the Insider Letters, entered into with the Company, each of Messrs. Alec Gores, Dean Metropoulos, Randall Bort, Michael Cramer, Joseph Gatto, Andrew McBride (collectively, the Insiders) and the Sponsor, among other things, the Insiders and the Sponsor agreed to vote all of the shares of the capital stock of the Company they hold, representing approximately 20% of the aggregate voting power of the Company, to approve the Transaction Proposal at the Special Meeting and not to redeem such shares in connection with the transactions contemplated by the Merger Agreement. |
| Support Agreement. Luminars board of directors considered that Austin Russell was expected to enter into a Support Agreement with the Company. Under the Support Agreement, Mr. Russell would agree, within three business days of the registration statement on Form S-4 of which this proxy statement/consent solicitation statement/prospectus is a part being declared effective by the SEC, to execute and |
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deliver a written consent with respect to the outstanding shares of Luminar Class A Stock and Luminar Founders Preferred Stock held by him adopting the Merger Agreement and approving the other transactions contemplated thereby, including the Mergers, which, as of the close of business on the Luminar Record Date, represent approximately [62]% of the aggregate issued and outstanding shares of Luminar Class A Stock and [88]% of the shares of the aggregate issued and outstanding Luminar Founders Preferred Stock, or approximately [38]% of the total voting power of Luminar Stock. For a more detailed description of the Support Agreement, see the sections titled The Business CombinationSupport Agreement and The Merger Agreement and Related AgreementsSupport Agreement beginning on pages [●] and [●], respectively, of this proxy statement/consent solicitation statement/prospectus. |
| Lock-up Agreement. Luminars board of directors also considered that in connection with the consummation of the Mergers, the Company, Luminar and certain Luminar Stockholders who will receive Class A Stock will enter into Lock-Up Agreements. Under the Lock-Up Agreement, such stockholders will agree not to, without the prior written consent of the board of directors of the Company, (i) sell or otherwise dispose of, or agree to sell or dispose of, any shares of Class A Stock held by the stockholder immediately after the effective time of the Mergers or any shares of Class A issuable upon the exercise of options, warrants or other convertible securities to purchase shares of Class A Stock held by the stockholder immediately after the effective time of the Mergers (Lock-Up Shares), (ii) enter into any arrangement that transfers to another any of the economic consequences of ownership of any of such Lock-Up Shares, or (iii) publicly announce any intention to effect any transaction specified in clause (i) or (ii) above for 180 days after the closing date of the Mergers. |
| Registration Rights Agreement. Luminars board of directors also considered that in connection with the consummation of the Mergers, the Company, the Sponsor, Luminar, certain Company stockholders and certain Luminar Stockholders who will receive Class A Stock or Class B Stock will enter into the Registration Rights Agreement. Under the Registration Rights Agreement, the Post-Combination Company will agree to provide to such stockholders and their permitted transferees with certain registration rights, including, among other things, customary demand and piggyback registration rights, with respect to their shares of Class A Stock, including shares issued as Earn-Out Shares or issuable upon the conversion of certain Earn-Out Shares (as defined in the Merger Agreement), and Private Placement Warrants, subject to certain requirements and customary conditions. The Registration Rights Agreement will also provide that the Post-Combination Company will pay certain expenses relating to such registrations and indemnify the Registration Rights Holders against (or make contributions in respect of) certain liabilities which may arise under the Securities Act. For a more detailed description of the Registration Rights Agreement, see the section titled The Merger Agreement and Related AgreementsRegistration Rights Agreement beginning on page [●] of this proxy statement/consent solicitation statement/prospectus. |
Independent Director Oversight
Our Board is comprised of a majority of independent directors who are not affiliated with our Sponsor and its affiliates, including Mr. Dean Metropoulos and The Gores Group. In connection with the Business Combination, our independent directors, Messrs. Randall Bort, Michael Cramer and Joseph Gatto, took an active role in evaluating the proposed terms of the Business Combination, including the Merger Agreement, the Related Agreements and the amendments to the Current Company Certificate to take effect upon the completion of the Business Combination. As part of their evaluation of the Business Combination, our independent directors were aware of the potential conflicts of interest with our Sponsor and its affiliates, including Mr. Metropoulos and The Gores Group, that could arise with regard to the proposed terms of the Merger Agreement and the Related Agreements. Our Board did not deem it necessary to, and did not form, a special committee of the Board to exclusively evaluate and negotiate the proposed terms of the Business Combination, as our Board is comprised of
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a majority of independent and disinterested directors and did not deem the formation of a special committee necessary or appropriate. Our independent directors reviewed and considered these interests during the negotiation of the Business Combination and in evaluating and unanimously approving, as members of our Board, the Merger Agreement and the transactions contemplated therein, including the Business Combination. Please see the section entitled The Business CombinationIndependent Director Oversight.
Satisfaction of 80% Test
It is a requirement under our current certificate of incorporation and Nasdaq listing requirements that the business or assets acquired in our initial business combination have a fair market value equal to at least 80% of the balance of the funds in the Trust Account (excluding the Deferred Discount and taxes payable on the income earned on the Trust Account) at the time of the execution of a definitive agreement for our initial business combination. As of August 24, 2020, the date of the execution of the Merger Agreement, the balance of the Trust Account was approximately $406,414,536 (excluding the $14,000,000 Deferred Discount and taxes payable on the income earned on the Trust Account) and 80% thereof represents approximately $325,131,629. In reaching its conclusion that the Business Combination meets the 80% asset test, our Board used as a fair market value the enterprise value of approximately $2.9 billion, which was implied based on the terms of the transactions agreed to by the parties in negotiating the Merger Agreement. The enterprise value consists of an implied equity value of Luminar (prior to the Business Combination) of approximately $2.9 billion and an assumed $32 million of net debt. In determining whether the enterprise value described above represents the fair market value of Luminar, our Board considered all of the factors described above in this section and the fact that the purchase price for Luminar was the result of an arms length negotiation. As a result, our Board concluded that the fair market value of the business acquired was significantly in excess of 80% of the assets held in the Trust Account (excluding the Deferred Discount and taxes payable on the income earned on the Trust Account).
Special Meeting of the Stockholders of the Company in lieu of the 2020 Annual Meeting of the Company
Date, Time and Place of Special Meeting
In light of public health concerns regarding the coronavirus (COVID-19) pandemic, the Special Meeting will be held via live webcast at https://www.cstproxy.com/goresmetropoulos/sm2020, on [●], 2020, at [●]. The Special Meeting can be accessed by visiting https://www.cstproxy.com/goresmetropoulos/sm2020, where you will be able to listen to the meeting live and vote during the meeting. Additionally, you have the option to listen only to the Special Meeting by dialing +1 877-770-3647 (toll-free within the U.S. and Canada) or +1 312-780-0854 (outside of the U.S. and Canada, standard rates apply). The passcode for telephone access is 11499529#, but please note that you cannot vote or ask questions if you choose to participate telephonically. Please note that you will only be able to access the Special Meeting by means of remote communication.
Proposals
At the Special Meeting, Company stockholders will be asked to consider and vote on:
1. | Transaction ProposalTo consider and vote upon a proposal to approve the Merger Agreement, a copy of which is attached to this proxy statement/consent solicitation statement/prospectus as Annex A, and the transactions contemplated thereby, including, among other things, the Business Combination (Proposal No. 1); |
2. | Issuance ProposalTo consider and vote upon a proposal to approve, for purposes of complying with applicable Nasdaq listing rules, the issuance of more than 20% of the Companys issued and outstanding shares of Common Stock in connection with the Business Combination (Proposal No. 2); |
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3. | Amendment ProposalTo consider and act upon a proposal to adopt the proposed Second Amended and Restated Certificate of Incorporation in the form attached hereto as Annex B (Proposal No. 3); |
4. | Governance ProposalTo consider and act upon, on a non-binding advisory basis, a separate proposal with respect to certain governance provisions in the Second Amended and Restated Certificate of Incorporation in accordance with SEC requirements (Proposal No. 4); |
5. | Management Longer Term Equity Incentive Plan ProposalTo consider and vote upon a proposal to approve the Management Longer Term Equity Incentive Plan, including the authorization of the initial share reserve under the Management Longer Term Equity Incentive Plan (Proposal No. 5); |
6. | Omnibus Incentive Plan ProposalTo consider and vote upon a proposal to approve the Omnibus Incentive Plan, including the authorization of the initial share reserve under the Omnibus Incentive Plan (Proposal No. 6); |
7. | Employee Stock Purchase Plan ProposalTo consider and vote upon a proposal to approve the Employee Stock Purchase Plan, including the authorization of the initial share reserve under the Employee Stock Purchase Plan (Proposal No. 7); |
8. | Director Election ProposalTo consider and vote upon a proposal to elect seven directors to serve staggered terms on the Companys Board until the first, second and third annual meetings of stockholders following the date of the filing of the Second Amended and Restated Certificate of Incorporation, as applicable, and until their respective successors are duly elected and qualified (Proposal No. 8); and |
9. | Adjournment ProposalTo consider and vote upon a proposal to allow the chairman of the Special Meeting to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if there are insufficient votes for, or otherwise in connection with, the approval of the Transaction Proposal, the Issuance Proposal, the Amendment Proposal, the Management Longer Term Equity Incentive Plan Proposal or the Omnibus Incentive Plan Proposal but no other proposal if the Transaction Proposal, the Issuance Proposal, the Amendment Proposal, the Management Longer Term Equity Incentive Plan Proposal and the Omnibus Incentive Plan Proposal are approved (Proposal No. 9). |
Voting Power; Record Date
Only Company stockholders of record at the close of business on [●], 2020 the record date for the Special Meeting, will be entitled to vote at the Special Meeting. Each Company stockholder is entitled to one vote for each share of our Common Stock that such stockholder owned as of the close of business on the record date. If a Company stockholders shares are held in street name or are in a margin or similar account, such stockholder should contact its broker, bank or other nominee to ensure that votes related to the shares beneficially owned by such stockholder are properly counted. On the record date, there were [●] shares of our Common Stock outstanding, of which [●] are Public Shares and [●] are Founder Shares held by our Initial Stockholders.
Vote of our Initial Stockholders
Our Initial Stockholders have agreed to vote any shares of Common Stock owned by them in favor of the Transaction Proposal. As of the date hereof, our Initial Stockholders own shares equal to 20% of our issued and outstanding shares of Common Stock.
Quorum and Required Vote for Proposals at the Special Meeting
A majority of the issued and outstanding shares of our Common Stock entitled to vote as of the record date at the Special Meeting must be present, in person via the virtual meeting platform or represented by proxy, at the
46
Special Meeting to constitute a quorum and in order to conduct business at the Special Meeting. The approval of the Transaction Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote at the Special Meeting. The approval of the Issuance Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote at the Special Meeting. The approval of the Amendment Proposal requires (i) the affirmative vote of holders of a majority of our outstanding shares of Common Stock entitled to vote thereon at the Special Meeting and (ii) the affirmative vote of holders of a majority of our outstanding shares of Class F Stock, voting separately as a single class, entitled to vote thereon at the Special Meeting. The approval of the Governance Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting. Approval of the Management Longer Term Equity Incentive Plan Proposal, the Omnibus Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote at the Special Meeting. Directors are elected by a plurality of the votes cast in the Director Election Proposal; this means that the seven individuals nominated for election to our Board who receive the most FOR votes (among the shares of our Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote thereon at the Special Meeting) will be elected. Approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by holders of our outstanding shares of Common Stock represented in person via the virtual meeting platform or by proxy and entitled to vote at the Special Meeting.
Recommendation of our Board of Directors
Our Board believes that each of the Transaction Proposal, the Issuance Proposal, the Amendment Proposal, the Governance Proposals, the Management Longer Term Equity Incentive Plan Proposal, the Omnibus Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal, the Director Election Proposal and the Adjournment Proposal to be presented at the Special Meeting is in the best interests of the Company and its stockholders and unanimously recommends that its stockholders vote FOR each of the proposals.
Opinion of the Companys Financial Advisor
At the meeting of the Board on August 23, 2020 to evaluate and approve the Business Combination, Moelis delivered an oral opinion, which was confirmed by delivery of a written opinion, dated August 23, 2020, addressed to the Board to the effect that, as of the date of the opinion and based upon and subject to the assumptions, conditions and limitations set forth in the opinion, the consideration to be paid by the Company in the Business Combination was fair, from a financial point of view, to the Company.
The full text of Moelis written opinion, dated August 23, 2020, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion (which are also summarized herein), is attached as Annex H to this proxy statement/consent solicitation statement/prospectus and is incorporated herein by reference. Moelis opinion was provided for the use and benefit of the Board (in its capacity as such and not in any other capacity) in its evaluation of the Business Combination (and, in its engagement letter, Moelis provided its consent to the inclusion of the text of its opinion as part of this proxy statement/consent solicitation statement/prospectus). Moelis opinion is limited solely to the fairness, from a financial point of view, of the consideration to be paid by the Company in the Business Combination and does not address the Companys underlying business decision to effect the Business Combination or the relative merits of the Business Combination as compared to any alternative business strategies or initial business combinations
47
that might be available to the Company. Moelis opinion does not constitute a recommendation as to how any stockholder of the Company should vote or act with respect to the Business Combination or any other matter. Moelis opinion was approved by a Moelis fairness opinion committee.
For more information, see the section entitled Opinion of the Companys Financial Advisor in this proxy statement/consent solicitation/prospectus.
Luminar Solicitation of Written Consents
Luminar Stockholders are being asked to adopt the Merger Agreement and approve the transactions contemplated thereby, including the Mergers (the Luminar Proposal), by executing and delivering the written consent furnished with this proxy statement/consent solicitation statement/prospectus.
Record Date; Luminar Stockholders Entitled to Consent
Only Luminar Stockholders of record holding shares of Luminar Stock, Luminar Preferred Stock or Luminar Founders Preferred Stock at the close of business on the record date of [●], 2020 (the Luminar Record Date) will be notified of and be entitled to sign and deliver written consents with respect to the Luminar Proposal.
On the Luminar Record Date, the outstanding securities of Luminar eligible to consent with respect to the Luminar Proposal consisted of [●] shares of Luminar Class A Stock, no shares of Luminar Class B Stock, [●] shares of Luminar Preferred Stock and 1,922,600 shares of Luminar Founders Preferred Stock.
Consents; Required Consents
Written consents from the holders of a majority of the voting power of the outstanding shares of Luminar Stock, on an as-converted basis, voting together as a single class, are required to adopt the Luminar Proposal.
Concurrently with entry by the parties into the Merger Agreement, Mr. Austin Russell entered into the Support Agreement with the Company, First Merger Sub and Second Merger Sub substantially in the form attached as Annex E to this proxy statement/consent solicitation statement/prospectus. Under the Support Agreement, Mr. Russell agreed, on (or effective as of) the third business day following the mailing of the consent solicitation to the Luminar Stockholders, to execute and deliver a written consent with respect to the outstanding shares of Luminar Class A Stock and Luminar Founders Preferred Stock held by Mr. Russell, adopting the Merger Agreement and approving the Business Combination, unless the Merger Agreement is no longer recommended by the Luminar board of directors in accordance with the Merger Agreement, in which case, the number of shares with respect to which Mr. Russell is committed to execute such written consent will be reduced to 35% of the total number of outstanding shares of Luminar Stock (on an as-converted basis). The shares of Luminar Class A Stock and Luminar Founders Preferred Stock that are owned by Mr. Russell and subject to the Support Agreement represent approximately 38% of the outstanding voting power of Luminar Stock (on an as-converted basis). In addition, the Support Agreement prohibits Mr. Russell from engaging in activities that have the effect of soliciting a competing acquisition proposal.
Interests of Certain Persons in the Business Combination
In considering whether to adopt the Merger Agreement by executing and delivering the written consent, Luminar Stockholders should be aware that aside from their interests as stockholders, Luminars officers and members of Luminars board of directors have interests in the Business Combination that are different from, or in addition to, those of other Luminar Stockholders generally. Luminar Stockholders should take these interests into
48
account in deciding whether to approve the Business Combination. For additional information please see the section entitled The Business CombinationInterests of Certain Persons in the Business CombinationInterests of the Luminar Officers and Directors beginning on page [●] of this proxy statement/consent solicitation statement/prospectus.
Submission of Consents
If you hold shares of Luminar Stock, Luminar Preferred Stock or Luminar Founders Preferred Stock as of the Luminar Record Date and you wish to give your written consent, you must fill out the enclosed written consent, date and sign it, and promptly return it to Luminar. Once you have completed, dated and signed the written consent, you may deliver it to Luminar, by emailing a .pdf copy of your written consent to Luminars consent solicitor, Morrow Sodali LLC, at luminar.info@investor.morrowsodali.com or by mailing your written consent to Morrow Sodali LLC at 470 West Avenue, Suite 3000, Stamford, CT 06902.
Luminars board of directors has set 12:00 noon, New York time, on [●], 2020, as the target date for the receipt of written consents, which is the date on which Luminar expects to receive the written consent of Mr. Russell in accordance with the Support Agreement. Luminar reserves the right to extend the final date for receipt of written consents beyond such date. Any such extension may be made without notice to Luminar Stockholders. Once a sufficient number of consents to adopt the Merger Agreement has been received, the consent solicitation will conclude. As noted in the section entitled Appraisal Rights beginning on page [●], the delivery of a signed and dated consent adopting the Merger Agreement, or delivery of a signed and dated consent without indicating a decision on the Luminar Proposal, will result in a loss of appraisal rights under Section 262 of the DGCL.
Executing Consents; Revocation of Consents
You may execute a written consent to adopt the Merger Agreement, which is equivalent to a vote FOR the Luminar Proposal. If you do not execute and return your written consent, or otherwise withhold your written consent, it will have the same effect as voting against the Luminar Proposal.
If you are a record holder of shares of Luminar Stock, Luminar Preferred Stock or Luminar Founders Preferred Stock as of the close of business on the Luminar Record Date, you may change or revoke your written consent (subject to any contractual obligations you may otherwise have) at any time prior to 12:00 noon, New York time, on [●], 2020 (or, if earlier, before the consents of a sufficient number of shares to adopt the Merger Agreement have been delivered to the Secretary of Luminar). If you wish to change or revoke your consent before that time, you may do so by sending a notice of revocation by emailing a .pdf copy to Luminars consent solicitor, Morrow Sodali LLC, at luminar.info@investor.morrowsodali.com or by mailing it to Morrow Sodali LLC at 470 West Avenue, Suite 3000, Stamford, CT 06902.
Solicitation of Consents; Expenses
The expense of preparing, printing and mailing these consent solicitation materials is being borne by Luminar. Officers and directors of Luminar may solicit consents by telephone and personally, in addition to solicitation by mail. These persons will receive their regular salaries but no special compensation for soliciting consents.
Recommendation of Luminars Board of Directors
In the course of reaching its decision to approve the Mergers, Merger Agreement, and the transactions contemplated thereby, including the Business Combination, Luminars board of directors consulted with its
49
senior management and legal counsel, reviewed a significant amount of information and considered a number of reasons, uncertainties and risks concerning the Mergers and Merger Agreement. Luminars board of directors concluded that the potential uncertainties and risks associated with the proposed Mergers were outweighed by the potential benefits of completing the Mergers. Accordingly, on August 24, 2020, after careful consideration, Luminars board of directors unanimously approved the Merger Agreement and determined that the Mergers, Merger Agreement, and the transactions contemplated thereby, including the Business Combination, are advisable and fair to, and in the best interests of, Luminar and its stockholders. For the reasons why Luminars board of directors reached its decision to approve the Mergers, Merger Agreement, and the transactions contemplated thereby, and for additional information, see the section entitled The Business Combination Recommendation of Luminars Board of Directors and Reasons for the Business Combination beginning on page [●] of this proxy statement/consent solicitation statement/prospectus.
Interests of Certain Persons in the Business Combination
Interests of the Company Initial Stockholders and the Companys Other Current Officers and Directors
In considering the recommendation of our Board to vote in favor of the Business Combination, Company stockholders should be aware that aside from their interests as stockholders, our Sponsor and certain other members of our Board and officers have interests in the Business Combination that are different from, or in addition to, those of other stockholders generally. Our Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Business Combination, and in recommending to Company stockholders that they approve the Business Combination. Company stockholders should take these interests into account in deciding whether to approve the Business Combination.
These interests include, among other things:
| the fact that our Initial Stockholders have agreed not to redeem any of the Founder Shares in connection with a stockholder vote to approve a proposed initial business combination; |
| the fact that our Initial Stockholders have agreed to waive their rights to conversion price adjustments with respect to any shares of our Common Stock they may hold in connection with the consummation of the Business Combination; |
| the fact that our Sponsor paid an aggregate of $25,000 for 10,781,250 Founder Shares and (after giving effect to the cancellation of 781,250 Founder Shares on March 18, 2019, the remaining 10,000,000 Founder Shares will have a significantly higher value at the time of the Business Combination, which if unrestricted and freely tradable would be valued at approximately $100,000,000 but, given the restrictions on such shares, we believe such shares have less value; |
| the fact that our Initial Stockholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if we fail to complete an initial business combination by February 5, 2021; |
| the fact that our Sponsor paid an aggregate of approximately $10,000,000 for its 6,666,666 Private Placement Warrants to purchase shares of Class A Stock and that such Private Placement Warrants will expire worthless if a business combination is not consummated by February 5, 2021; |
| the continued right of our Sponsor to hold our Class A Stock and the shares of Class A Stock to be issued to our Sponsor upon exercise of its Private Placement Warrants following the Business Combination, subject to certain lock-up periods; |
| if the Trust Account is liquidated, including in the event we are unable to complete an initial business combination within the required time period, our Sponsor has agreed to indemnify us to ensure that the proceeds in the Trust Account are not reduced below $10.00 per public share, or such lesser per public |
50
share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which we have entered into an acquisition agreement or claims of any third party (other than our independent public accountants) for services rendered or products sold to us, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account; |
| the continued indemnification of our existing directors and officers and the continuation of our directors and officers liability insurance following the closing of the Business Combination; |
| the fact that our Sponsor, officers and directors will lose their entire investment in us and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by February 5, 2021; |
| that affiliates of our Sponsor, Mr. Alec E. Gores and Mr. Dean Metropoulos participated in the Series X Financing and, thereafter, will receive the Per Share Company Stock Consideration for each share of Luminar Series X Preferred Stock that they hold in connection with the closing of the Business Combination; and |
| that, at the closing of the Business Combination, we will enter into the Registration Rights Agreement with the Registration Rights Holders (in which certain members of our Board and affiliates are included), which provides for registration rights to Registration Rights Holders and their permitted transferees. |
Interests of the Luminar Officers and Directors
In considering whether to adopt the Merger Agreement by executing and delivering the written consent, Luminar Stockholders should be aware that aside from their interests as stockholders, Luminars officers and the members of the Luminars board of directors have interests in the Business Combination that are different from, or in addition to, those of other Luminar stockholders generally. Luminar stockholders should take these interests into account in deciding whether to approve the Business Combination.
These interests include, among other things, the fact that:
| Mr. Russell, Luminars President and Chief Executive Officer, will exchange certain Luminar Class A Stock owned by him for Luminar Class B Stock (prior to the consummation of the Business Combination); |
| Luminar directors may serve as directors of the Post-Combination Company; |
| Outstanding equity awards will convert into equity awards of the Post-Combination Company; and |
| Luminar officers may participate in the Management Longer Term Equity Incentive Plan. |
Redemption Rights
Pursuant to the Current Company Certificate, holders of Public Shares may elect to have their shares redeemed for cash at the applicable redemption price per share equal to the quotient obtained by dividing (i) the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest not previously released to us to fund Regulatory Withdrawals and/or to pay its franchise and income taxes, by (ii) the total number of then-outstanding Public Shares; provided that we will not redeem any shares of Class A Stock issued in the Company IPO to the extent that such redemption would result in our failure to have net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) in excess of $5,000,000. As of June 30, 2020, the estimated per share redemption price would have been approximately $10.16. Notwithstanding the foregoing, a holder of the Public Shares, together with any affiliate of his or her or any other person with whom he or she is acting in concert or as a group (as defined in Section 13(d)-(3) of the Exchange Act) will be restricted from exercising redemption rights with respect to more than an aggregate of 20% of the shares of Class A Stock included in the units sold in the Company IPO.
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If a holder exercises its redemption rights, then such holder will be exchanging its shares of our Class A Stock for cash and will no longer own shares of the Post-Combination Company. Such a holder will be entitled to receive cash for its Public Shares only if it properly demands redemption and delivers its shares (either physically or electronically) to our Transfer Agent in accordance with the procedures described herein. Please see the section entitled Special Meeting of the Stockholders of the Company in Lieu of 2020 Annual Meeting of Company StockholdersRedemption Rights for the procedures to be followed if you wish to redeem your shares for cash.
Treatment of Luminar Equity Awards
Effective as of the effective time of the First Merger, each outstanding unexercised Luminar Stock Option and each outstanding unvested award of Luminar Restricted Stock will automatically be converted into, respectively, an option to acquire a number of shares of our Class A Stock or a number of shares of our Class A Stock in each case determined by multiplying the number of shares of Luminar Stock subject to such award as of immediately prior thereto by the Per Share Company Stock Consideration (determined in accordance with the Merger Agreement), rounded down to the nearest whole number of shares, subject to the same terms as were applicable thereto immediately prior thereto (including applicable vesting conditions), except to the extent such terms are rendered inoperative by the transactions contemplated by the Merger Agreement. Each such converted stock option will be exercisable solely for shares of our Class A Stock, and the per share exercise price for the stock issuable upon exercise thereof will be determined by dividing the per share exercise price for the shares of Luminar Class A Stock subject to the Luminar Stock Option immediately prior thereto by the Per Share Company Stock Consideration, rounded up to the nearest whole cent.
Certain Information Relating to the Company and Luminar
Company Board and Executive Officers before the Business Combination
The following individuals currently serve as directors and executive officers of the Company:
Name |
Age |
Position | ||
Dean Metropoulos |
73 | Chairman and Director | ||
Alec Gores |
67 | Chief Executive Officer and Director | ||
Andrew McBride |
40 | Chief Financial Officer and Secretary | ||
Randall Bort |
55 | Director | ||
Michael Cramer |
67 | Director | ||
Joseph Gatto |
64 | Director |
Luminars Board of Directors and Executive Officers before the Business Combination
Name |
Age | Position | |||||
Executive Officers |
|||||||
Austin Russell |
25 | President and Chief Executive Officer, and Director | |||||
Thomas J. Fennimore |
44 | Chief Financial Officer | |||||
M. Scott Faris |
55 | Chief Business Officer | |||||
Jason Eichenholz |
48 | Chief Technology Officer | |||||
Non-Employee Directors |
|||||||
Matthew J. Simoncini |
59 | Director | |||||
Scott A. McGregor |
64 | Director | |||||
Benjamin J. Kortlang |
45 | Director |
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Post-Combination Company Board and Executive Officers
Assuming the approval of the Director Election Proposal, the following individuals are expected to serve as directors and executive officers of the Post-Combination Company upon consummation of the Business Combination:
Name |
Age |
Position | ||
Executive Officers |
||||
Austin Russell |
25 | Chairperson, President and Chief Executive Officer (Class III) | ||
Thomas J. Fennimore |
44 | Chief Financial Officer | ||
M. Scott Faris |
55 | Chief Business Officer | ||
Jason Eichenholz |
48 | Chief Technology Officer | ||
Non-Employee Directors |
||||
Alec Gores |
67 | Director (Class I) | ||
Matthew J. Simoncini |
59 | Director (Class II) | ||
Scott A. McGregor |
64 | Director (Class I) | ||
Benjamin J. Kortlang |
45 | Director (Class I) | ||
[●] |
[●] | Director (Class II) | ||
[●] |
[●] | Director (Class III) |
Listing of Securities
The Public Shares, Public Units and Public Warrants are traded on the Nasdaq Capital Market under the ticker symbols GMHI, GMHIU and GMHIW, respectively. The Company intends to apply to continue the listing of its Class A Stock and Public Warrants on the Nasdaq Capital Market under the symbols LAZR and LAZRW, respectively, upon the closing of the Business Combination.
Comparison of Stockholder Rights
There are certain differences in the rights of the Company stockholders and Luminar Stockholders prior to the Business Combination and following the closing of the Business Combination. Please see the section entitled Comparison of Stockholder Rights.
Regulatory Approvals
Under the HSR Act and the rules that have been promulgated thereunder by the FTC, certain transactions may not be consummated unless information has been furnished to the Antitrust Division and the FTC and certain waiting period requirements have been satisfied. The Business Combination is subject to these requirements and may not be completed until the expiration of a 30-day waiting period following the filing of the required Notification and Report Forms with the Antitrust Division and the FTC or until early termination is granted. If the FTC or the Antitrust Division makes a request for additional information or documentary material related to the Business Combination (a Second Request), the waiting period with respect to the Business Combination will be extended for an additional period of 30 calendar days, which will begin on the date on which the Company and Luminar each certify compliance with the Second Request. Complying with a Second Request can take a significant period of time. The Company and Luminar have filed the required forms under the HSR Act with the Antitrust Division and the FTC. The 30-day waiting period with respect to the Business Combination, which cannot expire on a Saturday, Sunday or a U.S. federal holiday, is expected to expire at 11:59 p.m. Eastern Time on October 5, 2020 unless the FTC and the Antitrust Division earlier terminate the waiting period or issue a Second Request.
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At any time before or after consummation of the Business Combination, notwithstanding termination of the waiting period under the HSR Act, the applicable competition authorities could take such action under applicable antitrust laws as each deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Business Combination. Private parties may also seek to take legal action under the antitrust laws under certain circumstances. We cannot assure you that the Antitrust Division, the FTC, any state attorney general, or any other government authority will not attempt to challenge the Business Combination on antitrust grounds, and, if such a challenge is made, we cannot assure you as to its result. Neither the Company nor Luminar is aware of any material regulatory approvals or actions that are required for completion of the Business Combination other than the expiration or early termination of the waiting period under the HSR Act. It is presently contemplated that if any such additional regulatory approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained.
Material U.S. Federal Income Tax Consequences for Holders of Class A Stock
As described more fully herein, a holder of Class A Stock that exercises its redemption rights to receive cash in exchange for such shares may be treated as selling its Class A Stock resulting in the recognition of gain or loss. There may be certain circumstances in which the redemption may be treated as a distribution as an amount equal to the redemption proceeds, for U.S. federal income tax purposes, depending on the amount of our stock that a holder owns or is deemed to own by attribution (including through the ownership of warrants).
Please see the section entitled Material Tax ConsiderationsMaterial U.S. Federal Income Tax Considerations for Holders of Class A Stock for additional information. You are urged to consult your tax advisors regarding the tax consequences of exercising your redemption rights.
Accounting Treatment of the Business Combination
The Business Combination is intended to be accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States (GAAP). Under this method of accounting, while the Company is the legal acquirer, it will be treated as the acquired company for financial reporting purposes. Accordingly, the Business Combination will be treated as the equivalent of Luminar issuing stock for the net assets of the Company, accompanied by a recapitalization. The net assets of the Company will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of Luminar.
Appraisal Rights
Appraisal rights or dissenters rights are not available to holders of our Common Stock in connection with the Business Combination.
Pursuant to Section 262 of the DGCL, Luminar Stockholders who comply with the applicable requirements of Section 262 of the DGCL and do not otherwise fail to perfect, waive, withdraw or lose the right to appraisal under Delaware law have the right to seek appraisal of the fair value of their shares of Luminar Stock, as determined by the Court of Chancery, if the Mergers are completed. The fair value of your shares of Luminar Stock as determined by the Court of Chancery may be more or less than, or the same as, the value of the consideration that you are otherwise entitled to receive under the Merger Agreement. Luminar Stockholders who do not consent to the adoption of the Merger Agreement and who wish to preserve their appraisal rights must so advise Luminar by submitting a demand for appraisal within the period prescribed by Section 262 of the DGCL after receiving a notice from Luminar or the Company that appraisal rights are available to them, and must otherwise precisely follow the procedures prescribed by Section 262 of the DGCL. Failure to follow any of the
54
statutory procedures set forth in Section 262 of the DGCL will result in the loss or waiver of appraisal rights under Delaware law. In view of the complexity of Section 262 of the DGCL, Luminar Stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors. For additional information on appraisal rights available to Luminar Stockholders, see the section entitled Appraisal Rights beginning on page [●] of this proxy statement/consent solicitation statement/prospectus.
Proxy Solicitation
We are soliciting proxies on behalf of our Board. Proxies may be solicited by mail, via telephone or via e-mail or other electronic correspondence. We have engaged Morrow to assist in the solicitation of proxies.
If a Company stockholder grants a proxy, such stockholder may still vote its shares in person via the virtual meeting platform if it revokes its proxy before the Special Meeting. A Company stockholder may also change its vote by submitting a later-dated proxy, as described in the section entitled Special Meeting of the Stockholders of the Company in Lieu of the 2020 Annual Meeting of the Company Revoking Your Proxy.
Risk Factors
In evaluating the Business Combination and the proposals to be considered and voted on at the Special Meeting, you should carefully review and consider the risk factors set forth under Risk Factors. The occurrence of one or more of the events or circumstances described in that section, alone or in combination with other events or circumstances, may have a material adverse effect on (i) our ability and Luminars ability to complete the Business Combination and (ii) the business, cash flows, financial condition and results of operations of the Post-Combination Company.
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Selected Historical Financial Data for the Company
Statement of Operations Data:
For the Six Months Ended June 30, 2020 (unaudited) |
For the Six Months Ended June 30, 2019 (unaudited) |
For the Year Ended December 31, 2019 (audited) |
For the Period from August 28, 2018 (inception) to December 31, 2018 (audited) |
|||||||||||||
Professional fees and other expenses |
(358,968 | ) | (309,984 | ) | (620,871 | ) | (20,554 | ) | ||||||||
State franchise taxes, other than income tax |
(100,000 | ) | (100,000 | ) | (200,000 | ) | (1,431 | ) | ||||||||
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|
|
|
|
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Loss from operations |
(458,968 | ) | (409,984 | ) | (820,871 | ) | (21,985 | ) | ||||||||
Other incomeinterest income |
1,325,278 | 3,892,361 | 7,707,654 | | ||||||||||||
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Net income/(loss) before income taxes |
$ | 866,310 | $ | 3,482,377 | $ | 6,886,783 | $ | (21,985 | ) | |||||||
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Provision for income tax |
(218,352 | ) | (727,551 | ) | (1,441,607 | ) | | |||||||||
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|
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Net income/(loss) attributable to common shares |
$ | 647,958 | $ | 2,754,826 | $ | 5,445,176 | $ | (21,985 | ) | |||||||
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Net income/(loss) per ordinary share: |
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Class A ordinary sharesbasic and diluted |
$ | 0.02 | $ | 0.09 | $ | 0.16 | $ | | ||||||||
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Class F ordinary sharesbasic and diluted |
$ | (0.01 | ) | $ | (0.03 | ) | $ | (0.05 | ) | $ | (0.00 | ) | ||||
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Balance Sheet Data:
As of June 30, 2020 (unaudited) |
As of December 31, 2019 (audited) |
As of December 31, 2018 (audited) |
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Assets |
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Current assets: |
||||||||||||
Cash and cash equivalents |
$ | 1,011,395 | $ | 1,365,240 | $ | 52,489 | ||||||
Deferred offering costs |
| | 437,375 | |||||||||
Prepaid assets |
107,501 | 136,399 | | |||||||||
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|
|
|
|
|
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Total current assets |
1,118,896 | 1,501,639 | 489,864 | |||||||||
Deferred income tax |
15,079 | 2,353 | | |||||||||
Investments and cash held in Trust Account |
406,397,612 | 406,434,959 | | |||||||||
|
|
|
|
|
|
|||||||
Total assets |
$ | 407,531,587 | $ | 407,938,951 | $ | 489,864 | ||||||
|
|
|
|
|
|
|||||||
Liabilities and Stockholders Equity |
||||||||||||
Current liabilities: |
||||||||||||
Accrued expenses, formation and offering costs |
$ | 85,889 | $ | 53,203 | $ | 335,418 | ||||||
State franchise tax accrual |
20,000 | 200,000 | 1,431 | |||||||||
Notes and advances payablerelated party |
| | 150,000 | |||||||||
Current income tax and interest payable |
194,654 | 1,102,662 | | |||||||||
|
|
|
|
|
|
|||||||
Total current liabilities |
300,543 | 1,355,865 | 486,849 | |||||||||
Deferred underwriting compensation |
14,000,000 | 14,000,000 | | |||||||||
|
|
|
|
|
|
|||||||
Total liabilities |
$ | 14,300,543 | $ | 15,355,865 | $ | 486,849 | ||||||
Commitments and contingencies: |
||||||||||||
Class A subject to possible redemption, 38,713,476, 38,713,476 and -0- shares at June 30, 2020, December 31, 2019 and December 31, 2018, respectively (at redemption value of $10 per share) |
387,134,760 | 387,134,760 | |
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As of June 30, 2020 (unaudited) |
As of December 31, 2019 (audited) |
As of December 31, 2018 (audited) |
||||||||||
Stockholders equity: |
||||||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized, none issued or outstanding |
| | | |||||||||
Common stock |
||||||||||||
Class A common stock, $0.0001 par value; 200,000,000 shares authorized, 1,286,524, 1,286,524 and -0- shares issued and outstanding (excluding 38,713,476, 38,713,476 and -0- shares subject to possible redemption) at June 30, 2020, December 31, 2019 and December 31, 2018, respectively |
129 | 129 | | |||||||||
Class F common stock, $0.0001 par value; 20,000,000 shares authorized, 10,000,000 shares issued and outstanding |
1,000 | 1,000 | 1,078 | |||||||||
Additional paid-in capital |
24,006 | 24,006 | 23,922 | |||||||||
Retained earnings/(accumulated deficit) |
6,071,149 | 5,423,191 | (21,985 | ) | ||||||||
|
|
|
|
|
|
|||||||
Total stockholders equity |
6,096,284 | 5,448,326 | 3,015 | |||||||||
|
|
|
|
|
|
|||||||
Total liabilities and stockholders equity |
$ | 407,531,587 | $ | 407,938,951 | $ | 489,864 | ||||||
|
|
|
|
|
|
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Selected Historical Financial Data for Luminar
The selected historical consolidated statements of operations data of Luminar for the years ended December 31, 2019 and 2018 and the historical consolidated balance sheet data as of December 31, 2019 and 2018 are derived from Luminars audited consolidated financial statements included elsewhere in this proxy statement/consent solicitation statement/prospectus. The selected historical condensed consolidated statements of operations data of Luminar for the six months ended June 30, 2020 and 2019 and the condensed consolidated balance sheet data as of June 30, 2020 are derived from Luminars unaudited interim condensed consolidated financial statements included elsewhere in this proxy statement/consent solicitation statement/prospectus.
Luminars historical results are not necessarily indicative of the results that may be expected in the future and Luminars results for the six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2020 or any other period. The information below is only a summary and should be read in conjunction with the sections entitled Luminar Managements Discussion and Analysis of Financial Condition and Results of Operations and the financial statements, and the notes and schedules related thereto, which are included elsewhere in this proxy statement/consent solicitation statement/prospectus.
(in thousands, except per share data) |
Six Months Ended June 30, 2020 |
Six Months Ended June 30, 2019 |
As of and for the year ended December 31, 2019 |
As of and for the year ended December 31, 2018 |
||||||||||||
Statement of Operations Data: |
||||||||||||||||
Net sales |
$ | 7,296 | $ | 3,719 | $ | 12,602 | $ | 11,692 | ||||||||
Total operating expenses |
30,696 | 28,630 | 58,562 | 64,982 | ||||||||||||
Net loss |
(41,016 | ) | (63,095 | ) | (94,718 | ) | (79,550 | ) | ||||||||
Net loss per share attributable to common stockholdersBasic and diluted |
(4.34 | ) | (8.43 | ) | (11.47 | ) | (12.00 | ) | ||||||||
Balance Sheet Data: |
||||||||||||||||
Total assets |
50,216 | N/A | 51,864 | 28,202 | ||||||||||||
Total liabilities |
54,778 | N/A | 18,851 | 152,869 | ||||||||||||
Total mezzanine equity |
244,743 | N/A | 244,743 | | ||||||||||||
Total shareholders deficit |
(249,305 | ) | N/A | (211,730 | ) | (124,667 | ) |
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Selected Historical Financial Data of the Post-Combination Company on a Pro Forma Basis
The following summary unaudited pro forma condensed combined financial information (the Summary Pro Forma Information) gives effect to the transaction contemplated by the Merger Agreement. The transaction will be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, the Company will be treated as the acquired company for financial reporting purposes. Accordingly, the transaction will be reflected as the equivalent of Luminar issuing stock for the net assets of the Company, accompanied by a recapitalization whereby no goodwill or other intangible assets are recorded. Operations prior to the Business Combination will be those of Luminar. The summary unaudited pro forma condensed combined balance sheet data as of June 30, 2020 gives effect to the Business Combination as if it had occurred on June 30, 2020. The summary unaudited pro forma condensed combined statements of operations data for the six months ended June 30, 2020 and for the year ended December 31, 2019 give effect to the Business Combination as if it had occurred on January 1, 2019.
The Summary Pro Forma Information has been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial information of the Post-Combination Company appearing elsewhere in this proxy statement/consent solicitation statement/prospectus and the accompanying notes to the unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined financial information is based upon, and should be read in conjunction with, the historical financial statements and related notes of the Company and Luminar for the applicable periods included in this proxy statement/consent solicitation statement/prospectus. The Summary Pro Forma Information has been presented for informational purposes only and is not necessarily indicative of what the Post-Combination Companys financial position or results of operations actually would have been had the Business Combination been completed as of the dates indicated. In addition, the Summary Pro Forma Information does not purport to project the future financial position or operating results of the Post-Combination Company.
The unaudited pro forma condensed combined financial information has been prepared using the assumptions below with respect to the potential redemption into cash of the Companys common stock:
| Assuming No Redemptions: This presentation assumes that no public stockholders of the Company exercise redemption rights with respect to their Public Shares for a pro rata share of the funds in the Trust Account. |
| Assuming Maximum Redemptions: This presentation assumes that stockholders holding 39,507,871 Public Shares will exercise their redemption rights for their pro rata share (approximately $10.16 per share) of the funds in the Trust Account. The Merger Agreement provides that consummating the Business Combination is conditioned on the Company having net tangible assets of at least $5,000,001. This scenario gives effect to Public Share redemptions of 39,507,871 Public Shares for aggregate redemption payments of $401.4 million using a per share redemption price that was calculated as $406.4 million in the Trust Account per the Companys historical balance sheet divided by 40,000,000 Public Shares as of June 30, 2020. |
Pro Forma Combined (Assuming No Redemptions) |
Pro Forma Combined (Assuming Maximum Redemptions) |
|||||||
Summary Unaudited Pro Forma Condensed Combined |
||||||||
Statement of Operations Data |
||||||||
Six Months Ended June 30, 2020 |
||||||||
Net sales |
$ | 7,296 | $ | 7,296 | ||||
Net loss per share of Class A Stockbasic and diluted |
$ | (0.11 | ) | $ | (0.13 | ) | ||
Weighted average shares outstanding of Class A Stockbasic and diluted |
216,948,840 | 177,440,969 | ||||||
Net loss per share of Class B Stockbasic and diluted |
$ | (0.11 | ) | $ | (0.13 | ) | ||
Weighted average shares outstanding of Class B Stockbasic and diluted |
104,715,233 | 104,715,233 |
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Pro Forma Combined (Assuming No Redemptions) |
Pro Forma Combined (Assuming Maximum Redemptions) |
|||||||
Summary Unaudited Pro Forma Condensed Combined |
||||||||
Statement of Operations Data |
||||||||
Year Ended December 31, 2019 |
||||||||
Net sales |
$ | 12,602 | $ | 12,602 | ||||
Net loss per share of Class A Stockbasic and diluted |
$ | (0.30 | ) | $ | (0.34 | ) | ||
Weighted average shares outstanding of Class A Stockbasic and diluted |
216,948,840 | 177,440,969 | ||||||
Net loss per share of Class B Stockbasic and diluted |
$ | (0.30 | ) | $ | (0.34 | ) | ||
Weighted average shares outstanding of Class B Stockbasic and diluted |
104,715,233 | 104,715,233 | ||||||
Summary Unaudited Pro Forma Condensed Combined |
||||||||
Balance Sheet Data as of June 30, 2020 |
||||||||
Total assets |
$ | 537,762 | $ | 168,403 | ||||
Total liabilities |
$ | 10,998 | $ | 39,707 | ||||
Total stockholders equity |
$ | 526,764 | $ | 128,696 |
Selected Comparative Per Share Information
Comparative Per Share Data of the Company
The following table sets forth the closing market prices per share of the Public Units, Public Shares and Public Warrants as reported by Nasdaq on August 21, 2020 the last trading day before the Business Combination was publicly announced, and on [●], 2020 the last practicable trading day before the date of this proxy statement/consent solicitation statement/prospectus.
Trading Date |
Public Units (GMHIU) |
Public Shares (GMHI) |
Public Warrants (GMHIW) |
|||||||||
August 21, 2020 |
$ | 11.75 | $ | 10.51 | $ | 1.59 | ||||||
[●] |
$[●] | $[●] | $[●] |
The market prices of our securities could change significantly. Because the consideration payable in the Business Combination pursuant to the Merger Agreement will not be adjusted for changes in the market price of the Public Shares, the value of the consideration that Luminar Equityholders will receive in the Business Combination may vary significantly from the value implied by the market prices of shares of Public Shares on the date of the Merger Agreement, the date of this proxy statement/consent solicitation statement/prospectus, and the date on which Company stockholders vote on approval of the Merger Agreement. Company stockholders are urged to obtain current market quotations for our securities before making their decision with respect to the approval of the Merger Agreement.
Comparative Per Share Data of Luminar
Historical market price information regarding Luminar is not provided because there is no public market for Luminar Stock.
Market Prices and Dividends
Company
The Public Units, Public Shares and Public Warrants trade on the Nasdaq Capital Market, under the symbols GMHIU, GMHI and GMHIW, respectively. Each Public Unit consists of one Public Share and one-third of a Public Warrant. The Public Units began trading on February 1, 2019, and the Public Shares and Public Warrants began trading on March 25, 2019.
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The following table sets forth, for the calendar quarter indicated, the high and low sales prices per Public Unit, Public Share and Public Warrant as reported on Nasdaq for the periods presented:
Public Units (GMHIU) |
Public Shares (GMHI) |
Public Warrants (GMHIW) |
||||||||||||||||||||||
High | Low | High | Low | High | Low | |||||||||||||||||||
Fiscal Year 2020: |
||||||||||||||||||||||||
Quarter ended March 31, 2020 |
$ | 12.00 | $ | 9.69 | $ | 11.00 | $ | 9.45 | $ | 1.82 | $ | 0.65 | ||||||||||||
Quarter ended June 30, 2020 |
$ | 12.50 | $ | 10.18 | $ | 10.82 | $ | 9.87 | $ | 2.25 | $ | 1.00 | ||||||||||||
Fiscal Year 2019: |
||||||||||||||||||||||||
Quarter ended March 31, 2019(1)(2) |
$ | 10.25 | $ | 10.12 | $ | 9.81 | $ | 9.75 | $ | 1.40 | $ | 1.30 | ||||||||||||
Quarter ended June 30, 2019 |
$ | 10.50 | $ | 10.19 | $ | 10.28 | $ | 9.79 | $ | 1.35 | $ | 1.15 | ||||||||||||
Quarter ended September 30, 2019 |
$ | 10.63 | $ | 10.47 | $ | 10.34 | $ | 10.02 | $ | 1.42 | $ | 1.28 | ||||||||||||
Quarter ended December 31, 2019 |
$ | 10.75 | $ | 10.58 | $ | 10.20 | $ | 10.05 | $ | 1.54 | $ | 1.25 |
(1) | Beginning on February 1, 2019 with respect to GMHIU. |
(2) | Beginning on March 25, 2019 with respect to GMHI and GMHIW. |
On August 21, 2020, the trading date before the public announcement of the Business Combination, the Public Units, Public Shares and Public Warrants closed at $11.75, $10.51 and $1.59, respectively.
The Company has not paid any cash dividends on its Public Shares to date and does not intend to pay cash dividends prior to the completion of the Business Combination.
Luminar
Historical market price information regarding shares of Luminar Stock is not provided because there is no public market for Luminar Stock. Luminar has not paid any dividends on shares of Luminar Stock and does not intend to pay dividends prior to the completion of the Business Combination.
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You should carefully review and consider the following risk factors and the other information contained in this proxy statement/consent solicitation statement/prospectus, including the financial statements and notes to the financial statements included herein, in evaluating the Business Combination and the proposals to be voted on at the Special Meeting. Certain of the following risk factors apply to the business and operations of Luminar and will also apply to the business and operations of Company following the completion of the Business Combination. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to complete or realize the anticipated benefits of the Business Combination, and may have a material adverse effect on the business, cash flows, financial condition and results of operations of Company following the Business Combination. The risks discussed below may not prove to be exhaustive and are based on certain assumptions made by Company and Luminar that later may prove to be incorrect or incomplete. The Company and Luminar may face additional risks and uncertainties that are not presently known to such entity, or that are currently deemed immaterial, which may also impair its business or financial condition. The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein.
Risks Related to the Post-Combination Companys Business
Unless the context requires otherwise, references to Luminar in this section are to the business and operations of Luminar prior to the Business Combination and the business and operations of the Post-Combination Company as directly or indirectly affected by Luminar by virtue of the Post-Combination Companys ownership of the business of Luminar through its ownership of the Surviving Entity following the Business Combination.
Risks Related to Luminars Business and Industry
Luminar is an early stage company with a history of losses, and expects to incur significant expenses and continuing losses for the foreseeable future.
Luminar has incurred net losses on an annual basis since its inception. Luminar incurred a net loss of $41.0 million for the six months ended June 30, 2020 and net losses of $94.7 million and $79.6 million for the years ended December 31, 2019 and 2018, respectively. Luminar believes that it will continue to incur operating and net losses each quarter until at least the time it begins commercial deliveries of its lidar-based products, which are not expected to begin until 2022 and may occur later or not at all. Even if Luminar is able to successfully develop and sell its lidar solutions, there can be no assurance that they will be commercially successful. Luminars potential profitability is dependent upon the successful development and successful commercial introduction and acceptance of its lidar solutions, which may not occur.
Luminar expects the rate at which it will incur losses to be significantly higher in future periods as Luminar:
| continues to utilize its third-party partners for design, testing and commercialization; |
| expands its production capabilities to produce its lidar solutions, including costs associated with outsourcing the production of its lidar solutions; |
| expands its design, development, installation and servicing capabilities; |
| builds up inventories of parts and components for its lidar solutions; |
| produces an inventory of its lidar solutions; and |
| increases its sales and marketing activities and develops its distribution infrastructure. |
Because Luminar will incur the costs and expenses from these efforts before it receives incremental revenues with respect thereto, Luminars losses in future periods will be significant. In addition, Luminar may find that these efforts are more expensive than it currently anticipates or that these efforts may not result in revenues, which would further increase Luminars losses.
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Luminars limited operating history makes it difficult to evaluate its future prospects and the risks and challenges it may encounter.
Luminar has been focused on developing lidar products for autonomous driving systems since 2012. This relatively limited operating history makes it difficult to evaluate Luminars future prospects and the risks and challenges it may encounter. Risks and challenges Luminar has faced or expects to face include its ability to:
| produce and deliver lidar and software products of acceptable performance; |
| forecast its revenue and budget for and manage its expenses; |
| attract new customers and retain existing customers; |
| comply with existing and new or modified laws and regulations applicable to its business; |
| plan for and manage capital expenditures for its current and future products, and manage its supply chain and supplier relationships related to its current and future products; |
| anticipate and respond to macroeconomic changes and changes in the markets in which it operates; |
| maintain and enhance the value of its reputation and brand; |
| effectively manage its growth and business operations, including the impacts of the COVID-19 pandemic on its business; |
| develop and protect intellectual property; |
| hire, integrate and retain talented people at all levels of its organization; and |
| successfully develop new solutions to enhance the experience of customers. |
If Luminar fails to address the risks and difficulties that it faces, including those associated with the challenges listed above as well as those described elsewhere in this Risk Factors section, its business, financial condition and results of operations could be adversely affected. Further, because Luminar has limited historical financial data and operates in a rapidly evolving market, any predictions about its future revenue and expenses may not be as accurate as they would be if it had a longer operating history or operated in a more predictable market. Luminar has encountered in the past, and will encounter in the future, risks and uncertainties frequently experienced by growing companies with limited operating histories in rapidly changing industries. If Luminars assumptions regarding these risks and uncertainties, which it uses to plan and operate its business, are incorrect or change, or if it does not address these risks successfully, its results of operations could differ materially from its expectations and its business, financial condition and results of operations could be adversely affected.
Luminar continues to implement strategic initiatives designed to grow its business. These initiatives may prove more costly than it currently anticipates and Luminar may not succeed in increasing its revenue in an amount sufficient to offset the costs of these initiatives and to achieve and maintain profitability.
Luminar continues to make investments and implement initiatives designed to grow its business, including:
| investing in research and development (R&D); |
| expanding its sales and marketing efforts to attract new customers; |
| investing in new applications and markets for its products; |
| further enhancing its manufacturing processes and partnerships; |
| pursuing litigation to protect its intellectual property; and |
| investing in legal, accounting, and other administrative functions necessary to support its operations as a public company. |
63
These initiatives may prove more expensive than Luminar currently anticipates, and Luminar may not succeed in increasing its revenue, if at all, in an amount sufficient to offset these higher expenses and to achieve and maintain profitability. The market opportunities Luminar is pursuing are at an early stage of development, and it may be many years before the end markets Luminar expects to serve generate demand for its products at scale, if at all. Luminars revenue may be adversely affected for a number of reasons, including the development and/or market acceptance of new technology that competes with its lidar products, if certain automotive original equipment manufacturers (OEMs) or other market participants change their autonomous vehicle technology, failure of Luminars customers to commercialize autonomous systems that include its solutions, Luminars inability to effectively manage its inventory or manufacture products at scale, Luminars inability to enter new markets or help its customers adapt its products for new applications or Luminars failure to attract new customers or expand orders from existing customers or increasing competition. Furthermore, it is difficult to predict the size and growth rate of Luminars target markets, customer demand for its products, commercialization timelines, developments in autonomous sensing and related technology, the entry of competitive products, or the success of existing competitive products and services. For these reasons, Luminar does not expect to achieve profitability over the near term. If Luminars revenue does not grow over the long term, its ability to achieve and maintain profitability may be adversely affected, and the value of its business may significantly decrease.
If Luminars lidar products are not selected for inclusion in autonomous driving systems or ADAS by automotive OEMs or their suppliers, its business will be materially and adversely affected.
Automotive OEMs and their suppliers design and develop autonomous driving and ADAS technology over several years. These automotive OEMs and suppliers undertake extensive testing or qualification processes prior to placing orders for large quantities of products such as Luminars lidar products, because such products will function as part of a larger system or platform and must meet certain other specifications. Luminar spends significant time and resources to have its products selected by automotive OEMs and their suppliers, which is known as a design win. In the case of autonomous driving and ADAS technology, a design win means Luminars lidar product has been selected for use in a particular vehicle model. However, because Luminar does not have existing relationships with Tier 1 suppliers, automotive OEMs may be less inclined to select Luminars products for use in their vehicle models. If Luminar does not achieve a design win with respect to a particular vehicle model, it may not have an opportunity to supply its products to the automotive OEM for that vehicle model for a period of many years. In many cases, this period can be as long as five to seven or more years. If Luminars products are not selected by an automotive OEM or its suppliers for one vehicle model or if Luminars products are not successful in that vehicle model, it is unlikely that its product will be deployed in other vehicle models of that OEM. If Luminar fails to win a significant number of vehicle models from one or more of automotive OEMs or their suppliers, its business, results of operations and financial condition will be materially and adversely affected. For more information about certain risks related to product selection, please see the Risk Factor on page [●] of this proxy statement/consent solicitation statement/prospectus captioned The period of time from a design win to implementation is long and Luminar is subject to the risks of cancellation or postponement of the contract or unsuccessful implementation.
Luminar is reliant on key inputs and its inability to reduce and control the cost of such inputs could negatively impact the adoption of its products and its profitability.
The production of Luminars sensors is dependent on producing or sourcing certain key components and raw materials at acceptable price levels. If Luminar is unable to adequately reduce and control the costs of such key components, it will be unable to realize manufacturing costs targets, which could reduce the market adoption of its products, damage its reputation with current or prospective customers, and harm its brand, business, prospects, financial condition and operating results.
64
Continued pricing pressures, automotive OEM cost reduction initiatives and the ability of automotive OEMs to re-source or cancel vehicle or technology programs may result in lower than anticipated margins, or losses, which may adversely affect Luminars business.
Cost-cutting initiatives adopted by Luminars customers often result in increased downward pressure on pricing. Luminar expects that its agreements with automotive OEMs may require step-downs in pricing over the term of the agreement or, if commercialized, over the period of production. In addition, Luminars automotive OEM customers often reserve the right to terminate their supply contracts for convenience, which enhances their ability to obtain price reductions. Automotive OEMs also possess significant leverage over their suppliers, including Luminar, because the automotive component supply industry is highly competitive, serves a limited number of customers and has a high fixed cost base.
Accordingly, Luminar expects to be subject to substantial continuing pressure from automotive OEMs and Tier 1 suppliers to reduce the price of its products. It is possible that pricing pressures beyond Luminars expectations could intensify as automotive OEMs pursue restructuring, consolidation and cost-cutting initiatives. If Luminar is unable to generate sufficient production cost savings in the future to offset price reductions, its gross margin and profitability would be adversely affected.
Luminar expects to incur substantial R&D costs and devote significant resources to identifying and commercializing new products, which could significantly reduce its profitability and may never result in revenue to Luminar.
Luminars future growth depends on penetrating new markets, adapting existing products to new applications and customer requirements, and introducing new products that achieve market acceptance. Luminar plans to incur substantial, and potentially increasing, R&D costs as part of its efforts to design, develop, manufacture and commercialize new products and enhance existing products. Luminars R&D expenses were $37.0 million and $40.1 million and $18.1 million during 2018 and 2019, and the six months ended June 30, 2020, respectively, and are likely to grow in the future. Because Luminar accounts for R&D as an operating expense, these expenditures will adversely affect its results of operations in the future. Further, Luminars R&D program may not produce successful results, and its new products may not achieve market acceptance, create additional revenue or become profitable.
Although Luminar believes that lidar is the industry standard for autonomous vehicles and other emerging markets, market adoption of lidar is uncertain. If market adoption of lidar does not continue to develop, or develops more slowly than Luminar expects, its business will be adversely affected.
While Luminars lidar-based smart vision solutions can be applied to different use cases across end markets, nearly all of its revenue is generated from automotive applications with a few customers in the aerospace, defense, construction, mining and aviation sectors. Despite the fact that the automotive industry has engaged in considerable effort to research and test lidar products for ADAS and autonomous driving applications, the automotive industry may not introduce lidar products in commercially available vehicles. Luminar continually studies emerging and competing sensing technologies and methodologies and it may add new sensing technologies. However, lidar products remain relatively new and it is possible that other sensing modalities, or a new disruptive modality based on new or existing technology, including a combination of technology, will achieve acceptance or leadership in the ADAS and autonomous driving industries. Even if lidar products are used in initial generations of autonomous driving technology and certain ADAS products, Luminar cannot guarantee that lidar products will be designed into or included in subsequent generations of such commercialized technology. In addition, Luminar expects that initial generations of autonomous vehicles will be focused on limited applications, such as robo-taxis, and that mass market adoption of autonomous technology may lag behind these initial applications significantly. The speed of market growth for ADAS or autonomous vehicles is difficult if not impossible to predict, and it is more difficult to predict this markets future growth in light of the economic consequences of the COVID-19 pandemic. Although Luminar currently believes it is a leader in lidar-
65
based systems for the autonomous vehicle market, by the time mass market adoption of autonomous vehicle technology is achieved, Luminar expects competition among providers of sensing technology based on lidar and other modalities to increase substantially. If commercialization of lidar products is not successful, or not as successful as Luminar or the market expects, or if other sensing modalities gain acceptance by developers of autonomous driving systems or ADAS, automotive OEMs, regulators and safety organizations or other market participants by the time autonomous vehicle technology achieves mass market adoption, its business, results of operations and financial condition will be materially and adversely affected.
Luminar is investing in and pursuing market opportunities outside of the automotive markets, including in the aerospace and defense, aviation, construction, mining, security and city infrastructure sectors. Luminar believes that its future revenue growth, if any, will depend in part on its ability to expand within new markets such as these and to enter new markets as they emerge. Each of these markets presents distinct risks and, in many cases, requires Luminar to address the particular requirements of that market.
Addressing these requirements can be time-consuming and costly. The market for lidar technology outside of automotive applications is relatively new, rapidly developing and unproven in many markets or industries. Many of Luminars customers outside of the automotive industry are still in the testing and development phases and it cannot be certain that they will commercialize products or systems with its lidar products or at all. Luminar cannot be certain that lidar will be sold into these markets, or any market outside of automotive market, at scale. Adoption of lidar products, including Luminars products, outside of the automotive industry will depend on numerous factors, including: whether the technological capabilities of lidar and lidar-based products meet users current or anticipated needs, whether the benefits of designing lidar into larger sensing systems outweigh the costs, complexity and time needed to deploy such technology or replace or modify existing systems that may have used other modalities such as cameras and radar, whether users in other applications can move beyond the testing and development phases and proceed to commercializing systems supported by lidar technology and whether lidar developers such as Luminar can keep pace with rapid technological change in certain developing markets and the global response to the COVID-19 pandemic and the length of any associated work stoppages. If lidar technology does not achieve commercial success outside of the automotive industry, or if the market develops at a pace slower than Luminar expects, its business, results of operation and financial condition will be materially and adversely affected.
Luminar may experience difficulties in managing its growth and expanding its operations.
Luminar expects to experience significant growth in the scope and nature of its operations. Luminars ability to manage its operations and future growth will require Luminar to continue to improve its operational, financial and management controls, compliance programs and reporting systems. Luminar is currently in the process of strengthening its compliance programs, including its compliance programs related to export controls, privacy and cybersecurity and anti-corruption. Luminar may not be able to implement improvements in an efficient or timely manner and may discover deficiencies in existing controls, programs, systems and procedures, which could have an adverse effect on its business, reputation and financial results.
Luminar relies on third-party suppliers and because some of the raw materials and key components in its products come from limited or single source suppliers, Luminar is susceptible to supply shortages, long lead times for components, and supply changes, any of which could disrupt its supply chain and could delay deliveries of its products to customers.
Some of the components that go into the manufacture of Luminars solutions are sourced from third-party suppliers. To date, Luminar has produced its products in relatively limited quantities for use in R&D programs. Although Luminar does not have any experience in managing its supply chain to manufacture and deliver its products at scale, its future success will depend on its ability to manage its supply chain to manufacture and deliver its products at scale. Some of the key components used to manufacture Luminars products come from limited or single source suppliers. Luminar is therefore subject to the risk of shortages and long lead times in the
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supply of these components and the risk that its suppliers discontinue or modify components used in its products. Luminar has a global supply chain and the COVID-19 pandemic and other health epidemics and outbreaks may adversely affect its ability to source components in a timely or cost effective manner from its third-party suppliers due to, among other things, work stoppages or interruptions. For example, Luminars products depend on lasers and Luminar currently consumes a substantial portion of the available market. Any shortage of these lasers could materially and adversely affect Luminars ability to manufacture its solutions. In addition, the lead times associated with certain components are lengthy and preclude rapid changes in quantities and delivery schedules. Luminar has in the past experienced and may in the future experience component shortages and price fluctuations of certain key components and materials, and the predictability of the availability and pricing of these components may be limited. Component shortages or pricing fluctuations could be material in the future. In the event of a component shortage, supply interruption or material pricing change from suppliers of these components, Luminar may not be able to develop alternate sources in a timely manner or at all in the case of sole or limited sources. Developing alternate sources of supply for these components may be time-consuming, difficult, and costly and Luminar may not be able to source these components on terms that are acceptable to it, or at all, which may undermine Luminars ability to meet its requirements or to fill customer orders in a timely manner. Any interruption or delay in the supply of any of these parts or components, or the inability to obtain these parts or components from alternate sources at acceptable prices and within a reasonable amount of time, would adversely affect Luminars ability to meet its scheduled product deliveries to its customers. This could adversely affect Luminars relationships with its customers and channel partners and could cause delays in shipment of its products and adversely affect its operating results. In addition, increased component costs could result in lower gross margins. Even where Luminar is able to pass increased component costs along to its customers, there may be a lapse of time before it is able to do so such that Luminar must absorb the increased cost. If Luminar is unable to buy these components in quantities sufficient to meet its requirements on a timely basis, it will not be able to deliver products to its customers, which may result in such customers using competitive products instead of Luminars.
Because Luminars sales have been primarily to customers making purchases for R&D projects and its orders are project-based, Luminar expects its results of operations to fluctuate on a quarterly and annual basis, which could cause the stock price of the Post-Combination Company to fluctuate or decline.
Luminars quarterly results of operations have fluctuated in the past and may vary significantly in the future, and its revenue has declined in the first two quarters of 2020. As such, historical comparisons of its operating results may not be meaningful. In particular, because Luminars sales to date have primarily been to customers making purchases for R&D, sales in any given quarter can fluctuate based on the timing and success of its customers development projects. Accordingly, the results of any one quarter should not be relied upon as an indication of future performance. Luminars quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of its control and may not fully reflect the underlying performance of Luminars business. These fluctuations could adversely affect Luminars ability to meet its expectations or those of securities analysts, ratings agencies or investors. If Luminar does not meet these expectations for any period, the value of its business and its securities, or those of the Post-Combination Company, could decline significantly. Factors that may cause these quarterly fluctuations include, without limitation, those listed below:
| the timing and magnitude of orders and shipments of Luminars products in any quarter; |
| pricing changes Luminar may adopt to drive market adoption or in response to competitive pressure; |
| Luminars ability to retain its existing customers and attract new customers; |
| Luminars ability to develop, introduce, manufacture and ship in a timely manner products that meet customer requirements; |
| disruptions in Luminars sales channels or termination of its relationship with important channel partners; |
| delays in customers purchasing cycles or deferments of customers purchases in anticipation of new products or updates from Luminar or its competitors; |
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| fluctuations in demand pressures for Luminars products; |
| the mix of products sold in any quarter; |
| the duration of the global COVID-19 pandemic and the time it takes for economic recovery; |
| the timing and rate of broader market adoption of autonomous systems utilizing Luminars solutions across the automotive and other market sectors; |
| market acceptance of lidar and further technological advancements by Luminars competitors and other market participants; |
| the ability of Luminars customers to commercialize systems that incorporate its products; |
| any change in the competitive dynamics of Luminars markets, including consolidation of competitors, regulatory developments and new market entrants; |
| Luminars ability to effectively manage its inventory; |
| changes in the source, cost, availability of and regulations pertaining to materials Luminar uses; |
| adverse litigation, judgments, settlements or other litigation-related costs, or claims that may give rise to such costs; and |
| general economic, industry and market conditions, including trade disputes. |
Luminars transition to an outsourced manufacturing business model may not be successful, which could harm its ability to deliver products and recognize revenue.
Luminar is in the initial stages of transitioning from a manufacturing model in which it primarily manufactured and assembled its products at its Orlando, Florida location, to one where it relies on third-party manufacturers in Mexico, California and potentially other foreign and domestic locations. Luminar currently has an agreement with one such manufacturer of a key component and is in negotiations with other third parties to provide contract manufacturing of certain of its products. Luminar believes the use of third-party manufacturers will have benefits, but in the near term, while it is beginning manufacturing with new partners, Luminar may lose revenue, incur increased costs and potentially harm its customer relationships.
Reliance on third-party manufacturers reduces Luminars control over the manufacturing process, including reduced control over quality, product costs and product supply and timing. Luminar may experience delays in shipments or issues concerning product quality from its third-party manufacturers. If any of Luminars third-party manufacturers experience interruptions, delays or disruptions in supplying its products, including by natural disasters, the global COVID-19 pandemic, other health epidemics and outbreaks, or work stoppages or capacity constraints, Luminars ability to ship products to distributors and customers would be delayed. In addition, unfavorable economic conditions could result in financial distress among third-party manufacturers upon which Luminar relies, thereby increasing the risk of disruption of supplies necessary to fulfill Luminars production requirements and meet customer demands. Additionally, if any of Luminars third-party manufacturers experience quality control problems in their manufacturing operations and Luminars products do not meet customer or regulatory requirements, it could be required to cover the cost of repair or replacement of any defective products. These delays or product quality issues could have an immediate and material adverse effect on Luminars ability to fulfill orders and could have a negative effect on its operating results. In addition, such delays or issues with product quality could adversely affect Luminars reputation and its relationship with its channel partners. If third-party manufacturers experience financial, operational, manufacturing capacity or other difficulties, or experience shortages in required components, or if they are otherwise unable or unwilling to continue to manufacture Luminars products in required volumes or at all, Luminars supply may be disrupted, it may be required to seek alternate manufacturers and it may be required to re-design its products. It would be time-consuming, and could be costly and impracticable, to begin to use new manufacturers and designs, and such changes could cause significant interruptions in supply and could have an adverse effect on Luminars ability to
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meet its scheduled product deliveries and may subsequently lead to the loss of sales. While Luminar takes measures to protect its trade secrets, the use of third-party manufacturers may also risk disclosure of its innovative and proprietary manufacturing methodologies, which could adversely affect Luminars business.
If Luminar commences international manufacturing operations, it may face risks associated with manufacturing operations outside the United States.
Manufacturing outside the United States is subject to several inherent risks, including:
| foreign currency fluctuations; |
| local economic conditions; |
| political instability; |
| import or export requirements; |
| foreign government regulatory requirements; |
| reduced protection for intellectual property rights in some countries; |
| tariffs and other trade barriers and restrictions; and |
| potentially adverse tax consequences. |
If Luminar commences manufacturing operations outside the United States, it may be subject to these risks. Such risks could increase Luminars costs and decrease its profit margins.
Luminar, its outsourcing partners and its suppliers may rely on complex machinery for Luminars production, which involves a significant degree of risk and uncertainty in terms of operational performance and costs.
Luminar, its outsourcing partners and its suppliers may rely on complex machinery for the production, assembly and installation of Luminars lidar solutions, which will involve a significant degree of uncertainty and risk in terms of operational performance and costs. Luminars production facilities and the facilities of its outsourcing partners and suppliers consist of large-scale machinery combining many components. These components may suffer unexpected malfunctions from time to time and will depend on repairs and spare parts to resume operations, which may not be available when needed. Unexpected malfunctions of these components may significantly affect the intended operational efficiency. Operational performance and costs can be difficult to predict and are often influenced by factors outside of Luminars control, such as, but not limited to, scarcity of natural resources, environmental hazards and remediation, costs associated with decommissioning of machines, labor disputes and strikes, difficulty or delays in obtaining governmental permits, damages or defects in electronic systems, industrial accidents, fire, seismic activity and natural disasters. Should operational risks materialize, it may result in the personal injury to or death of workers, the loss of production equipment, damage to production facilities, monetary losses, delays and unanticipated fluctuations in production, environmental damage, administrative fines, increased insurance costs and potential legal liabilities, all which could have a material adverse effect on Luminars business, prospects, financial condition or operating results.
As part of growing its business, Luminar may make acquisitions. If Luminar fails to successfully select, execute or integrate its acquisitions, then its business, results of operations and financial condition could be materially adversely affected, and the stock price of the Post-Combination Company could decline.
From time to time, Luminar may undertake acquisitions to add new products and technologies, acquire talent, gain new sales channels or enter into new markets or sales territories. In addition to possible stockholder approval, Luminar may need approvals and licenses from relevant government authorities for the acquisitions and to comply with any applicable laws and regulations, which could result in increased delay and costs, and may disrupt Luminars business strategy if it fails to do so. Furthermore, acquisitions and the subsequent integration
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of new assets, businesses, key personnel, customers, vendors and suppliers require significant attention from Luminars management and could result in a diversion of resources from Luminars existing business, which in turn could have an adverse effect on Luminars operations. Acquired assets or businesses may not generate the financial results Luminar expects. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, the occurrence of significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant.
To date, Luminar has limited experience with acquisitions and the integration of acquired technology and personnel. Failure to successfully identify, complete, manage and integrate acquisitions could materially and adversely affect its business, financial condition and results of operations and could cause the Post-Combination Companys stock price to decline.
Luminars sales and operations in international markets expose it to operational, financial and regulatory risks.
International sales comprise a significant amount of Luminars overall revenue. Sales to international customers accounted for 20%, 17% and 76% of Luminars revenue in 2018, 2019 and the six months ended June 30, 2020, respectively. Luminar is committed to growing its international sales, and while it has committed resources to expanding its international operations and sales channels, these efforts may not be successful. International operations are subject to a number of other risks, including:
| exchange rate fluctuations; |
| political and economic instability, international terrorism and anti-American sentiment, particularly in emerging markets; |
| global or regional health crises, such as the COVID-19 pandemic or other health epidemics and outbreaks; |
| potential for violations of anti-corruption laws and regulations, such as those related to bribery and fraud; |
| preference for locally branded products, and laws and business practices favoring local competition; |
| potential consequences of, and uncertainty related to, the Brexit process in the United Kingdom, which could lead to additional expense and complexity in doing business there; |
| increased difficulty in managing inventory; |
| delayed revenue recognition; |
| less effective protection of intellectual property; |
| stringent regulation of the autonomous or other systems or products using Luminars products and stringent consumer protection and product compliance regulations, including but not limited to General Data Protection Regulation in the European Union, European competition law, the Restriction of Hazardous Substances Directive, the Waste Electrical and Electronic Equipment Directive and the European Ecodesign Directive that are costly to comply with and may vary from country to country; |
| difficulties and costs of staffing and managing foreign operations; |
| import and export laws and the impact of tariffs; |
| changes in local tax and customs duty laws or changes in the enforcement, application or interpretation of such laws; and |
| U.S. governments restrictions on certain technology transfer to certain countries of concern. |
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The occurrence of any of these risks could negatively affect Luminars international business and consequently its business, operating results and financial condition.
The complexity of Luminars products could result in unforeseen delays or expenses from undetected defects, errors or reliability issues in hardware or software which could reduce the market adoption of its new products, damage its reputation with current or prospective customers, expose Luminar to product liability and other claims and adversely affect its operating costs.
Luminars products are highly technical and very complex and require high standards to manufacture and have in the past and will likely in the future experience defects, errors or reliability issues at various stages of development. Luminar may be unable to timely release new products, manufacture existing products, correct problems that have arisen or correct such problems to its customers satisfaction. Additionally, undetected errors, defects or security vulnerabilities, especially as new products are introduced or as new versions are released, could result in serious injury to the end users of technology incorporating Luminars products, or those in the surrounding area, its customers never being able to commercialize technology incorporating our products, litigation against Luminar, negative publicity and other consequences. These risks are particularly prevalent in the highly competitive autonomous driving and ADAS markets. Some errors or defects in Luminars products may only be discovered after they have been tested, commercialized and deployed by customers. If that is the case, Luminar may incur significant additional development costs and product recall, repair or replacement costs. These problems may also result in claims, including class actions, against Luminar by its customers or others. Luminars reputation or brand may be damaged as a result of these problems and customers may be reluctant to buy its products, which could adversely affect its ability to retain existing customers and attract new customers and could adversely affect its financial results.
In addition, Luminar could face material legal claims for breach of contract, product liability, fraud, tort or breach of warranty as a result of these problems. Defending a lawsuit, regardless of its merit, could be costly and may divert managements attention and adversely affect the markets perception of Luminar and its products. In addition, Luminars business liability insurance coverage could prove inadequate with respect to a claim and future coverage may be unavailable on acceptable terms or at all. These product-related issues could result in claims against Luminar and its business could be adversely affected.
Luminar may be subject to product liability or warranty claims that could result in significant direct or indirect costs, which could adversely affect its business and operating results.
Luminars customers use its solutions in autonomous driving and ADAS applications, which present the risk of significant injury, including fatalities. Luminar may be subject to claims if a product using its lidar technology is involved in an accident and persons are injured or purport to be injured. Any insurance that Luminar carries may not be sufficient or it may not apply to all situations. Similarly, Luminars customers could be subjected to claims as a result of such accidents and bring legal claims against Luminar to attempt to hold it liable. In addition, if lawmakers or governmental agencies were to determine that the use of Luminars products or autonomous driving or certain ADAS increased the risk of injury to all or a subset of its customers, they may pass laws or adopt regulations that limit the use of Luminars products or increase its liability associated with the use of its products or that regulate the use of or delay the deployment of autonomous driving and ADAS technology. Any of these events could adversely affect Luminars brand, relationships with customers, operating results or financial condition.
Luminar typically provides a limited-time warranty on its products. The occurrence of any material defects in its products could make Luminar liable for damages and warranty claims. In addition, Luminar could incur significant costs to correct any defects, warranty claims or other problems, including costs related to product recalls. Any negative publicity related to the perceived quality of Luminars products could affect its brand image, partner and customer demand, and adversely affect its operating results and financial condition. Also, warranty, recall and product liability claims may result in litigation, including class actions, the occurrence of which could be costly, lengthy and distracting and adversely affect Luminars business and operating results.
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If Luminar does not maintain sufficient inventory or if it does not adequately manage its inventory, it could lose sales or incur higher inventory-related expenses, which could negatively affect Luminars operating results.
To ensure adequate inventory supply, Luminar must forecast inventory needs and expenses, place orders sufficiently in advance with its suppliers and manufacturing partners and manufacture products based on its estimates of future demand for particular products. Fluctuations in the adoption of lidar products may affect Luminars ability to forecast its future operating results, including revenue, gross margins, cash flows and profitability. Luminars ability to accurately forecast demand for its products could be affected by many factors, including the rapidly changing nature of the autonomous driving and ADAS markets in which it operates, the uncertainty surrounding the market acceptance and commercialization of lidar technology, the emergence of new markets, an increase or decrease in customer demand for Luminars products or for products and services of its competitors, product introductions by competitors, the COVID-19 pandemic, other health epidemics and outbreaks, and any associated work stoppages or interruptions, unanticipated changes in general market conditions and the weakening of economic conditions or consumer confidence in future economic conditions. If its lidar products are commercialized in autonomous driving and ADAS applications, both of which are experiencing rapid growth in demand, Luminar may face challenges acquiring adequate supplies to manufacture its products and/or Luminar and its manufacturing partners may not be able to manufacture its products at a rate necessary to satisfy the levels of demand, which would negatively affect Luminars revenue. This risk may be exacerbated by the fact that Luminar may not carry or be able to obtain for its manufacturers a significant amount of inventory to satisfy short-term demand increases. If it fails to accurately forecast customer demand, Luminar may experience excess inventory levels or a shortage of products available for sale.
Inventory levels in excess of customer demand may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would adversely affect Luminars financial results, including its gross margin, and have a negative effect on its brand. Conversely, if Luminar underestimates customer demand for its products, Luminar, or its manufacturing partners, may not be able to deliver products to meet its requirements, and this could result in damage to Luminars brand and customer relationships and adversely affect its revenue and operating results.
The average selling prices of Luminars products could decrease rapidly over the life of the product, which may negatively affect Luminars revenue and gross margin.
Luminar may experience declines in the average selling prices of its products generally as its customers seek to commercialize autonomous systems at prices low enough to achieve market acceptance. In order to sell products that have a falling average unit selling price and maintain margins at the same time, Luminar will need to continually reduce product and manufacturing costs. To manage manufacturing costs, Luminar must engineer the most cost-effective design for its products. In addition, Luminar continuously drives initiatives to reduce labor cost, improve worker efficiency, reduce the cost of materials, use fewer materials and further lower overall product costs by carefully managing component prices, inventory and shipping cost. Luminar also needs to continually introduce new products with higher sales prices and gross margin in order to maintain its overall gross margin. If Luminar is unable to manage the cost of older products or successfully introduce new products with higher gross margin, its revenue and overall gross margin would likely decline.
Adverse conditions in the automotive industry or the global economy more generally could have adverse effects on Luminars results of operations.
While Luminar makes its strategic planning decisions based on the assumption that the markets it is targeting will grow, Luminars business is dependent, in large part on, and directly affected by, business cycles and other factors affecting the global automobile industry and global economy generally. Automotive production and sales are highly cyclical and depend on general economic conditions and other factors, including consumer spending and preferences, changes in interest rates and credit availability, consumer confidence, fuel costs, fuel
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availability, environmental impact, governmental incentives and regulatory requirements, and political volatility, especially in energy-producing countries and growth markets. In addition, automotive production and sales can be affected by Luminars automotive OEM customers ability to continue operating in response to challenging economic conditions and in response to labor relations issues, regulatory requirements, trade agreements and other factors. The volume of automotive production in North America, Europe and the rest of the world has fluctuated, sometimes significantly, from year to year, and Luminar expects such fluctuations to give rise to fluctuations in the demand for its products. Any significant adverse change in any of these factors may result in a reduction in automotive sales and production by Luminars automotive OEM customers and could have a material adverse effect on its business, results of operations and financial condition.
The discontinuation, lack of commercial success, or loss of business with respect to a particular vehicle model or technology package for which Luminar is a significant supplier could reduce Luminars sales and adversely affect its profitability.
If Luminar is able to secure design wins and its solutions are included in these autonomous driving and ADAS products, it expects to enter into supply agreements with the relevant customer. Market practice dictates that these supply agreements typically require Luminar to supply a customers requirements for a particular vehicle model or autonomous driving or ADAS product, rather than supply a set number of products. These contracts can have short terms and/or can be subject to renegotiation, sometimes as frequently as annually, all of which may affect product pricing, and may be terminated by Luminars customers at any time. Therefore, even if Luminar is successful in obtaining design wins and the systems into which its products are built are commercialized, the discontinuation of, the loss of business with respect to, or a lack of commercial success of a particular vehicle model or technology package for which Luminar is a significant supplier could mean that the expected sales of Luminars products will not materialize, materially and adversely affecting its business.
Since many of the markets in which Luminar competes are new and rapidly evolving, it is difficult to forecast long-term end-customer adoption rates and demand for Luminars products.
Luminar is pursuing opportunities in markets that are undergoing rapid changes, including technological and regulatory changes, and it is difficult to predict the timing and size of the opportunities. For example, autonomous driving and lidar-based ADAS applications require complex technology. Because these automotive systems depend on technology from many companies, commercialization of autonomous driving or ADAS products could be delayed or impaired on account of certain technological components of Luminar or others not being ready to be deployed in vehicles. Although Luminar currently has contracts with over 50 commercial partners, these companies may not be able to commercialize Luminars technology immediately, or at all. Regulatory, safety or reliability developments, many of which are outside of Luminars control, could also cause delays or otherwise impair commercial adoption of these new technologies, which will adversely affect Luminars growth. Luminars future financial performance will depend on its ability to make timely investments in the correct market opportunities. If one or more of these markets experience a shift in customer or prospective customer demand, Luminars products may not compete as effectively, if at all, and they may not be designed into commercialized products. Given the evolving nature of the markets in which Luminar operates, it is difficult to predict customer demand or adoption rates for its products or the future growth of the markets in which it operates. As a result, the financial projections in this proxy statement/consent solicitation statement/prospectus necessarily reflect various estimates and assumptions that may not prove accurate and these projections could differ materially from actual results due to the risks included in Risk Factors, among others. If demand does not develop or if Luminar cannot accurately forecast customer demand, the size of its markets, inventory requirements or its future financial results, its business, results of operations and financial condition will be adversely affected.
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Luminar currently has and targets many customers that are large corporations with substantial negotiating power, exacting product standards and potentially competitive internal solutions. If Luminar is unable to sell its products to these customers, its prospects and results of operations will be adversely affected.
Many of Luminars customers and potential customers are large, multinational corporations with substantial negotiating power relative to it and, in some instances, may have internal solutions that are competitive to Luminars products. These large, multinational corporations also have significant development resources, which may allow them to acquire or develop independently, or in partnership with others, competitive technologies. Meeting the technical requirements and securing design wins with any of these companies will require a substantial investment of Luminars time and resources. Luminar cannot assure you that its products will secure design wins from these or other companies or that it will generate meaningful revenue from the sales of its products to these key potential customers. If Luminars products are not selected by these large corporations or if these corporations develop or acquire competitive technology, it will have an adverse effect on Luminars business.
Luminars business could be materially and adversely affected if it lost any of its largest customers or if they were unable to pay their invoices.
Although Luminar has and continues to pursue a broad customer base, it is dependent on a collection of large customers with strong purchasing power. In 2018 and 2019, Luminars top 10 customers represented 91% and 79% of its revenue, respectively. In 2018 and 2019, Volvo, Toyota and Northrop Grumman accounted for more than 10% of Luminars annual revenue. The loss of business from any of Luminars major customers (whether by lower overall demand for its products, cancellation of existing contracts or product orders or the failure to design in its products or award Luminar new business) could have a material adverse effect on its business.
To the extent autonomous vehicle and ADAS systems become accepted by major automotive OEMs, Luminar expects that it will rely increasingly for its revenue on Tier 1 suppliers through which automotive OEMs procure components. Luminar expects that these Tier 1 suppliers will be responsible for certain hardpoint and software configuration activities specific to each OEM, and they may not exclusively carry its solutions.
There is also a risk that one or more of its major customers could be unable to pay Luminars invoices as they become due or that a customer will simply refuse to make such payments if it experiences financial difficulties. If a major customer were to enter into bankruptcy proceedings or similar proceedings whereby contractual commitments are subject to stay of execution and the possibility of legal or other modification, Luminar could be forced to record a substantial loss.
Luminar is substantially dependent on its partnership with Volvo, and its business could be materially and adversely affected if its partnership with Volvo were terminated.
Luminars business is substantially dependent on its partnership with Volvo. For the year ended December 31, 2019 and the six months ended June 30, 2020, Volvo accounted for $0.6 million, or 4.7% and $5.3 million, or 73%, respectively, of Luminars total revenue. There can be no assurance that Luminar will be able to maintain its relationship with Volvo and secure orders for Luminar products. If Luminar is unable to maintain its relationship with Volvo, or if its arrangement is modified so that the economic terms become less favorable to Luminar, then Luminars business would be materially adversely affected.
If Luminar is unable to establish and maintain confidence in its long-term business prospects among customers and analysts and within its industry or is subject to negative publicity, then Luminars financial condition, operating results, business prospects and access to capital may suffer materially.
Customers may be less likely to purchase Luminars lidar solutions if they are not convinced that Luminars business will succeed or that its service and support and other operations will continue in the long term.
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Similarly, suppliers and other third parties will be less likely to invest time and resources in developing business relationships with Luminar if they are not convinced that its business will succeed. Accordingly, in order to build and maintain its business, Luminar must maintain confidence among customers, suppliers, analysts, ratings agencies and other parties in its products, long-term financial viability and business prospects. Maintaining such confidence may be particularly complicated by certain factors including those that are largely outside of Luminars control, such as its limited operating history, customer unfamiliarity with its lidar solutions, any delays in scaling production, delivery and service operations to meet demand, competition and uncertainty regarding the future of autonomous vehicles or Luminars other services and its production and sales performance compared with market expectations.
Luminars investments in educating its customers and potential customers about the advantages of lidar and its applications may not result in sales of Luminars products.
Educating Luminars prospective customers, and to a lesser extent, its existing customers, about lidar, its advantages over other sensing technologies and lidars ability to convey value in different industries and deployments is an integral part of developing new business and the lidar market generally. If prospective customers have a negative perception of, or experience with, lidar or a competitors lidar products they may be reluctant to adopt lidar in general or specifically Luminars products. Adverse statements about lidar by influential market participants may also deter adoption. Some of Luminars competitors have significant financial or marketing resources that may allow them to engage in public marketing campaigns about their alternative technology, lidar or Luminars solutions. Luminars efforts to educate potential customers and the market generally and to counter any adverse statements made by competitors or other market participants will require significant financial and personnel resources. These educational efforts may not be successful and Luminar may not offset the costs of such efforts with revenue from the new customers. If Luminar is unable to acquire new customers to offset these expenses or if the market accepts such adverse statements, its financial condition will be adversely affected.
The period of time from a design win to implementation is long and Luminar is subject to the risks of cancellation or postponement of the contract or unsuccessful implementation.
Prospective customers, including those in the automotive industry, generally must make significant commitments of resources to test and validate Luminars products and confirm that they can integrate with other technologies before including them in any particular system, product or model. The development cycles of Luminars products with new customers varies widely depending on the application, market, customer and the complexity of the product. In the automotive market, for example, this development cycle can be five to seven or more years. The development cycle in certain other markets can be months to one or two years. These development cycles result in Luminar investing its resources prior to realizing any revenue from the commercialization. Further, Luminar is subject to the risk that customers cancel or postpone implementation of its technology, as well as that it will not be able to integrate its technology successfully into a larger system with other sensing modalities. Further, Luminars revenue could be less than forecasted if the system, product or vehicle model that includes its lidar products is unsuccessful, including for reasons unrelated to its technology. Long development cycles and product cancellations or postponements may adversely affect Luminars business, results of operations and financial condition.
Luminar operates in a highly competitive market and some market participants have substantially greater resources. Luminar competes against a large number of both established competitors and new market entrants.
The markets for sensing technology applicable to autonomous solutions in the automobile industry are highly competitive. Luminars future success will depend on its ability to remain a leader in its targeted markets by continuing to develop and protect from infringement advanced lidar technology in a timely manner and to stay ahead of existing and new competitors. Luminars competitors are numerous and they compete with it directly by
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offering lidar products and indirectly by attempting to solve some of the same challenges with different technology. Luminar faces competition from camera and radar companies, other developers of lidar products, Tier 1 suppliers and other technology and automotive supply companies, some of which have significantly greater resources than it does. In the automotive market, Luminars competitors have commercialized both lidar and non-lidar-based ADAS technology that has achieved market adoption, strong brand recognition and may continue to improve. Other competitors are working towards commercializing autonomous driving technology and either by themselves, or with a publicly announced partner, have substantial financial, marketing, R&D and other resources. Some of Luminars customers in the autonomous vehicle and ADAS markets have announced development efforts or made acquisitions directed at creating their own lidar-based or other sensing technologies, which would compete with Luminars solutions. Luminar does not know how close these competitors are to commercializing autonomous driving systems or novel ADAS applications. In markets outside of the automotive industry, its competitors, like Luminar, seek to develop new sensing applications across industries. Even in these emerging markets, Luminar faces substantial competition from numerous competitors seeking to prove the value of their technology.
Additionally, increased competition may result in pricing pressure and reduced margins and may impede Luminars ability to increase the sales of its products or cause it to lose market share, any of which will adversely affect its business, results of operations and financial condition.
The markets in which Luminar competes are characterized by rapid technological change, which requires it to continue to develop new products and product innovations and could adversely affect market adoption of its products.
While Luminar intends to invest substantial resources to remain on the forefront of technological development, continuing technological changes in sensing technology, lidar and the markets for these products, including the ADAS and autonomous driving industries, could adversely affect adoption of lidar and/or Luminars products, either generally or for particular applications. Luminars future success will depend upon its ability to develop and introduce a variety of new capabilities and innovations to its existing product offerings, as well as introduce a variety of new product offerings, to address the changing needs of the markets in which Luminar offers its products. For example, Luminar is currently working on developing perception software products. Luminar cannot guarantee that such software or other new products will be released in a timely manner, or at all, or achieve market acceptance. Delays in delivering new products that meet customer requirements could damage Luminars relationships with customers and lead them to seek alternative sources of supply. In addition, Luminars success to date has been based on the delivery of its solutions to R&D programs in which developers are investing substantial capital to develop new systems. Luminars continued success relies on the success of the R&D phase of these customers as they expand into commercialized projects. As autonomous technology reaches the stage of large-scale commercialization, Luminar will be required to develop and deliver solutions at price points that enable wider and ultimately mass-market adoption. Delays in introducing products and innovations, the failure to choose correctly among technical alternatives or the failure to offer innovative products or configurations at competitive prices may cause existing and potential customers to purchase Luminars competitors products or turn to alternative sensing technology.
If Luminar is unable to devote adequate resources to develop products or cannot otherwise successfully develop products or system configurations that meet customer requirements on a timely basis or that remain competitive with technological alternatives, its products could lose market share, its revenue will decline, it may experience operating losses and its business and prospects will be adversely affected.
Developments in alternative technology may adversely affect the demand for Luminars lidar technology.
Significant developments in alternative technologies, such as cameras and radar, may materially and adversely affect Luminars business, prospects, financial condition and operating results in ways Luminar does
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not currently anticipate. Existing and other camera and radar technologies may emerge as customers preferred alternative to Luminars solutions. Any failure by Luminar to develop new or enhanced technologies or processes, or to react to changes in existing technologies, could materially delay Luminars development and introduction of new and enhanced products in the autonomous vehicle industry, which could result in the loss of competitiveness of Luminars lidar solutions, decreased revenue and a loss of market share to competitors. Luminars R&D efforts may not be sufficient to adapt to changes in technology. As technologies change, Luminar plans to upgrade or adapt its lidar solutions with the latest technology. However, Luminars solutions may not compete effectively with alternative systems if Luminar is not able to source and integrate the latest technology into its existing lidar solutions.
Because lidar is new in most of the markets Luminar is seeking to enter, forecasts of market growth in this proxy statement/consent solicitation statement/prospectus may not be accurate.
Market opportunity estimates and growth forecasts included in this proxy statement/consent solicitation statement/prospectus are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The forecasts and estimates in this proxy statement/consent solicitation statement/prospectus relating to the expected size and growth of the markets for lidar-based technology may prove to be inaccurate. Even if these markets experience the forecasted growth described in this proxy statement/consent solicitation statement/prospectus, Luminar may not grow its business at similar rates, or at all. Luminars future growth is subject to many factors, including market adoption of its products, which is subject to many risks and uncertainties. Accordingly, the forecasts and estimates of market size and growth described in this proxy statement/consent solicitation statement/prospectus, including Luminars estimates that the size of its total addressable market is expected to grow from approximately $5 billion currently to $150 billion by 2030, should not be taken as indicative of Luminars future growth. In addition, these forecasts do not take into account the impact of the current global COVID-19 pandemic, and Luminar cannot assure you that these forecasts will not be materially and adversely affected as a result.
Luminar may need to raise additional capital in the future in order to execute its business plan, which may not be available on terms acceptable to Luminar, or at all.
In the future, Luminar may require additional capital to respond to technological advancements, competitive dynamics or technologies, customer demands, business opportunities, challenges, acquisitions or unforeseen circumstances and it may determine to engage in equity or debt financings or enter into credit facilities for other reasons. In order to further business relationships with current or potential customers or partners, Luminar may issue equity or equity-linked securities to such current or potential customers or partners. Luminar may not be able to timely secure additional debt or equity financing on favorable terms, or at all. If Luminar raises additional funds through the issuance of equity or convertible debt or other equity-linked securities or if it issues equity or equity-linked securities to current or potential customers to further business relationships, its existing stockholders could experience significant dilution. Any debt financing obtained by Luminar in the future could involve restrictive covenants relating to its capital raising activities and other financial and operational matters, which may make it more difficult for Luminar to obtain additional capital and to pursue business opportunities, including potential acquisitions. If Luminar is unable to obtain adequate financing or financing on terms satisfactory to Luminar, when Luminar requires it, Luminars ability to continue to grow or support its business and to respond to business challenges could be significantly limited. These same risks will apply to the Post-Combination Company following the closing of the Business Combination.
Luminar has identified material weaknesses in its internal control over financial reporting as of December 31, 2018 and 2019. If Luminar fails to develop and maintain an effective system of internal control over financial reporting, it may not be able to accurately report its financial results in a timely manner, which may adversely affect investor confidence in the Post-Combination Company.
In connection with Luminars financial statement close process for the years ended December 31, 2018 and 2019, Luminar identified a material weakness in the design and operating effectiveness of its internal control
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over financial reporting. The material weakness Luminar identified resulted from a lack of sufficient number of qualified personnel within its accounting function who possessed an appropriate level of expertise to effectively perform the following functions:
| identify, select and apply GAAP sufficiently to provide reasonable assurance that transactions were being appropriately recorded; and |
| assess risk and design appropriate control activities over information technology systems and financial and reporting processes necessary to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. |
A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of its financial statements would not be prevented or detected on a timely basis. These deficiencies could result in additional material misstatements to its consolidated financial statements that could not be prevented or detected on a timely basis.
Luminars management is in the process of developing a remediation plan which shall include, without limitation, the hiring of additional accounting and finance personnel with technical public company accounting and financial reporting experience. The material weaknesses will not be considered remediated until management designs and implements effective controls that operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. The Post-Combination Companys management will monitor the effectiveness of the Post-Combination Companys remediation plans and will make changes management determines to be appropriate.
If not remediated, these material weaknesses could result in material misstatements to the Post-Combination Companys annual or interim consolidated financial statements that might not be prevented or detected on a timely basis, or in delayed filing of required periodic reports. If the Post-Combination Company is unable to assert that its internal control over financial reporting is effective, or when required in the future, if the Post-Combination Companys independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of the internal control over financial reporting, investors may lose confidence in the accuracy and completeness of the Post-Combination Companys financial reports, the market price of the Common Stock could be adversely affected and the Post-Combination Company could become subject to litigation or investigations by Nasdaq, the SEC, or other regulatory authorities, which could require additional financial and management resources.
If Luminar fails to maintain an effective system of internal controls, its ability to produce timely and accurate financial statements or comply with applicable regulations could be adversely affected.
Following the closing of the Business Combination, the Post-Combination Company will carry out Luminars business and will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of Nasdaq. Luminar expects that the requirements of these rules and regulations will continue to increase its legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place significant strain on its personnel, systems and resources.
The Sarbanes-Oxley Act requires, among other things, that Luminar maintain effective disclosure controls and procedures and internal control over financial reporting. Luminar is continuing to develop and refine its disclosure controls, internal control over financial reporting and other procedures that are designed to ensure that information required to be disclosed by it in the reports that it will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to Luminars principal executive and financial officers.
Luminars current controls and any new controls that it develops may be inadequate because of changes in conditions in its business. Further, additional weaknesses in Luminars internal controls may be discovered in the
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future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could adversely affect Luminars operating results or cause it to fail to meet its reporting obligations and may result in a restatement of Luminars financial statements for prior periods. Any failure to implement and maintain effective internal controls also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of Luminars internal control over financial reporting that it is required to include in its periodic reports Luminar will file with the SEC under Section 404 of the Sarbanes-Oxley Act. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in Luminars reported financial and other information.
In order to maintain and improve the effectiveness of its disclosure controls and procedures and internal control over financial reporting, Luminar has expended and anticipates that it will continue to expend significant resources, including accounting-related costs, and provide significant management oversight. Any failure to maintain the adequacy of its internal controls, or consequent inability to produce accurate financial statements on a timely basis, could increase Luminars operating costs and could materially and adversely affect its ability to operate its business. If Luminars internal controls are perceived as inadequate or that it is unable to produce timely or accurate financial statements, investors may lose confidence in Luminars operating results and the stock price of the Post-Combination Company could decline.
The Post-Combination Companys independent registered public accounting firm is not required to formally attest to the effectiveness of its internal control over financial reporting until after the Post-Combination Company is no longer an emerging growth company. At such time, the Post-Combination Companys independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which Luminars controls are documented, designed or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on the Post-Combination Companys business and operating results.
Changes in tax laws or exposure to additional income tax liabilities could affect Luminars future profitability.
Factors that could materially affect Luminars future effective tax rates include but are not limited to:
| changes in tax laws or the regulatory environment; |
| changes in accounting and tax standards or practices; |
| changes in the composition of operating income by tax jurisdiction; and |
| Luminars operating results before taxes. |
Because Luminar does not have a long history of operating at its present scale and it has significant expansion plans, Luminars effective tax rate may fluctuate in the future. Future effective tax rates could be affected by operating losses in jurisdictions where no tax benefit can be recorded under GAAP, changes in the composition of earnings in countries with differing tax rates, changes in deferred tax assets and liabilities, or changes in tax laws.
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the Tax Act) was signed into law making significant changes to the U.S. Tax Code. In particular, sweeping changes were made to the U.S. taxation of foreign operations. Changes include, but are not limited to, a permanent reduction to the corporate income tax rate, limiting interest deductions, adopting elements of a territorial tax system, assessing a repatriation tax or toll-charge on undistributed earnings and profits of U.S.-owned foreign corporations, and introducing certain anti-base erosion provisions, including a new minimum tax on global intangible low-taxed income (GILTI) and base erosion and anti-abuse tax (BEAT). The new legislation had no effect on Luminars 2018 and 2019 and six months ended June 30, 2020 provision for income taxes because Luminar generated net tax losses and offset
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its deferred tax assets on the balance sheet with a full valuation allowance due to its current loss position and forecasted losses for the near future. The overall impact of this tax reform is uncertain, and Luminars business and financial condition, including with respect to its non-U.S. operations, could be adversely affected.
In addition to the impact of the Tax Act on Luminars federal taxes, the Tax Act may impact its taxation in other jurisdictions, including with respect to state income taxes. State legislatures have not had sufficient time to respond to the Tax Act. Accordingly, there is uncertainty as to how the laws will apply in the various state jurisdictions. Additionally, other foreign governing bodies may enact changes to their tax laws in reaction to the Tax Act that could result in changes to Luminars global tax position and materially adversely affect its business, results of operations and financial condition. Additionally, the IRS and several foreign tax authorities have increasingly focused attention on intercompany transfer pricing with respect to sales of products and services and the use of intangibles. Tax authorities could disagree with Luminars future intercompany charges, cross-jurisdictional transfer pricing or other matters and assess additional taxes. If Luminar does not prevail in any such disagreements, its profitability may be affected.
Luminars ability to use its net operating loss carryforwards and certain other tax attributes may be limited.
As of December 31, 2019, Luminar had $164.8 million of U.S. federal and $177.9 million of state net operating loss carryforwards available to reduce future taxable income. Of the $164.8 million in U.S. federal operating loss carryforwards, $122.3 million will be carried forward indefinitely for U.S. federal tax purposes and $42.5 million will expire between 2035 and 2036. $177.9 million of Luminars U.S. state net operating loss carryforwards will expire between 2035 and 2036. It is possible that Luminar will not generate taxable income in time to use these net operating loss carryforwards before their expiration or at all. Under legislative changes made in December 2017, U.S. federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such net operating losses is limited. It is uncertain if and to what extent various states will conform to the newly enacted federal tax law. In addition, the federal and state net operating loss carryforwards and certain tax credits may be subject to significant limitations under Section 382 and Section 383 of the U.S. Tax Code, respectively, and similar provisions of state law. Under those sections of the U.S. Tax Code, if a corporation undergoes an ownership change, the corporations ability to use its pre-change net operating loss carryforwards and other pre-change attributes, such as research tax credits, to offset its post-change income or tax may be limited. In general, an ownership change will occur if there is a cumulative change in our ownership by 5-percent shareholders that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. Luminar has not yet undertaken an analysis of whether the Business Combination constitutes an ownership change for purposes of Section 382 and Section 383 of the U.S. Tax Code.
Luminar is highly dependent on the services of Austin Russell, its founder and Chief Executive Officer.
Luminar is highly dependent on Austin Russell, its founder and chief executive officer. Mr. Russell created Luminars first lidar product and he remains deeply involved in all aspects of Luminars business, including product development. The loss of Mr. Russell would adversely affect Luminars business because his loss could make it more difficult to, among other things, compete with other market participants, manage Luminars R&D activities and retain existing customers or cultivate new ones. Negative public perception of, or negative news related to, Mr. Russell may adversely affect Luminars brand, relationship with customers or standing in the industry.
Luminars business depends substantially on the efforts of its executive officers and highly skilled personnel, and its operations may be severely disrupted if it lost their services.
Competition for highly-skilled personnel is often intense, especially in Orlando, Florida and the San Francisco Bay Area, where two of Luminars offices are located, and Luminar may incur significant costs to attract highly-skilled personnel. Luminar may not be successful in attracting, integrating, or retaining qualified personnel to fulfill its current or future needs. Luminar has, from time to time, experienced, and it expects to continue to experience, difficulty in hiring and retaining highly skilled employees with appropriate qualifications.
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In addition, job candidates and existing employees often consider the value of the equity awards they receive in connection with their employment. If the perceived value of Luminars equity or equity awards declines, including those of the Post-Combination Company after the closing of the Business Combination, it may adversely affect Luminars ability to retain highly skilled employees. If Luminar fails to attract new personnel or fails to retain and motivate its current personnel, its business and future growth prospects could be adversely affected.
Luminars business could be materially and adversely affected by the current global COVID-19 pandemic or other health epidemics and outbreaks.
The ongoing COVID-19 pandemic as well as other possible health epidemics and outbreaks could result in a material adverse impact on Luminars or its customers business operations including reduction or suspension of operations in the U.S. or certain parts of the world. Luminars engineering and manufacturing operations, among others, cannot all be conducted in a remote working structure and often require on-site access to materials and equipment. Luminar has customers with international operations in varying industries. It also depends on suppliers and manufacturers worldwide. Depending upon the duration of the ongoing COVID-19 pandemic and the associated business interruptions, its customers, suppliers, manufacturers and partners may suspend or delay their engagement with Luminar, which could result in a material adverse effect on its financial condition. Luminars response to the ongoing COVID-19 pandemic may prove to be inadequate and it may be unable to continue its operations in the manner it had prior to the outbreak, and may endure interruptions, reputational harm, delays in its product development and shipments, all of which could have an adverse effect on its business, operating results, and financial condition. In addition, when the pandemic subsides, Luminar cannot assure you as to the timing of any economic recovery, which could continue to have a material adverse effect on its target markets and its business.
Luminars business is subject to the risks of earthquakes, fire, floods and other natural catastrophic events, global pandemics, and interruptions by man-made problems, such as terrorism. Material disruptions of Luminars business or information systems resulting from these events could adversely affect its operating results.
A significant natural disaster, such as an earthquake, fire, flood, hurricane or significant power outage or other similar events, such as infectious disease outbreaks or pandemic events, including the ongoing COVID-19 pandemic, could have an adverse effect on Luminars business and operating results. The ongoing COVID-19 pandemic may have the effect of heightening many of the other risks described in this Risk Factors section, such as the demand for Luminars products, its ability to achieve or maintain profitability and its ability to raise additional capital in the future. Luminars corporate headquarters and R&D and manufacturing base are located in Florida, which currently has a high number of COVID-19 pandemic cases. One of Luminars offices is located in the San Francisco Bay Area, a region known for seismic activity. In addition, natural disasters, acts of terrorism or war could cause disruptions in Luminars remaining manufacturing operations, Luminars or its customers or channel partners businesses, Luminars suppliers or the economy as a whole. Luminar also relies on information technology systems to communicate among its workforce and with third parties. Any disruption to Luminars communications, whether caused by a natural disaster or by manmade problems, such as power disruptions, could adversely affect its business. Luminar does not have a formal disaster recovery plan or policy in place and does not currently require that its suppliers partners have such plans or policies in place. To the extent that any such disruptions result in delays or cancellations of orders or impede its suppliers ability to timely deliver product components, or the deployment of its products, Luminars business, operating results and financial condition would be adversely affected.
Interruption or failure of Luminars information technology and communications systems could impact Luminars ability to effectively provide its services.
Luminar plans to include in-vehicle services and functionality that utilize data connectivity to monitor performance and timely capture opportunities to enhance performance and functionality. The availability and effectiveness of Luminars services depend on the continued operation of information technology and
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communications systems. Luminars systems will be vulnerable to damage or interruption from, among others, physical theft, fire, terrorist attacks, natural disasters, power loss, war, telecommunications failures, viruses, denial or degradation of service attacks, ransomware, social engineering schemes, insider theft or misuse or other attempts to harm Luminars systems. Luminar utilizes reputable third-party service providers or vendors for all of its data other than its source code, and these providers could also be vulnerable to harms similar to those that could damage Luminars systems, including sabotage and intentional acts of vandalism causing potential disruptions. Some of Luminars systems will not be fully redundant, and Luminars disaster recovery planning cannot account for all eventualities. Any problems with Luminars third-party cloud hosting providers could result in lengthy interruptions in Luminars business. In addition, Luminars in-vehicle services and functionality are highly technical and complex technology which may contain errors or vulnerabilities that could result in interruptions in Luminars business or the failure of its systems.
Luminar is subject to cybersecurity risks to operational systems, security systems, infrastructure, integrated software in its lidar solutions and customer data processed by Luminar or third-party vendors or suppliers and any material failure, weakness, interruption, cyber event, incident or breach of security could prevent Luminar from effectively operating its business.
Luminar is at risk for interruptions, outages and breaches of: operational systems, including business, financial, accounting, product development, data processing or production processes, owned by Luminar or its third-party vendors or suppliers; facility security systems, owned by Luminar or its third-party vendors or suppliers; in-product technology owned by Luminar or its third-party vendors or suppliers; the integrated software in Luminars lidar solutions; or customer or driver data that Luminar processes or its third-party vendors or suppliers process on its behalf. Such cyber incidents could materially disrupt operational systems; result in loss of intellectual property, trade secrets or other proprietary or competitively sensitive information; compromise certain information of customers, employees, suppliers, drivers or others; jeopardize the security of Luminars facilities; or affect the performance of in-product technology and the integrated software in Luminars lidar solutions. A cyber incident could be caused by disasters, insiders (through inadvertence or with malicious intent) or malicious third parties (including nation-states or nation-state supported actors) using sophisticated, targeted methods to circumvent firewalls, encryption and other security defenses, including hacking, fraud, trickery or other forms of deception. The techniques used by cyber attackers change frequently and may be difficult to detect for long periods of time. Although Luminar maintains information technology measures designed to protect itself against intellectual property theft, data breaches and other cyber incidents, such measures will require updates and improvements, and Luminar cannot guarantee that such measures will be adequate to detect, prevent or mitigate cyber incidents. The implementation, maintenance, segregation and improvement of these systems requires significant management time, support and cost. Moreover, there are inherent risks associated with developing, improving, expanding and updating current systems, including the disruption of Luminars data management, procurement, production execution, finance, supply chain and sales and service processes. These risks may affect Luminars ability to manage its data and inventory, procure parts or supplies or produce, sell, deliver and service its solutions, adequately protect its intellectual property or achieve and maintain compliance with, or realize available benefits under, applicable laws, regulations and contracts. Luminar cannot be sure that the systems upon which it relies, including those of its third-party vendors or suppliers, will be effectively implemented, maintained or expanded as planned. If Luminar does not successfully implement, maintain or expand these systems as planned, its operations may be disrupted, its ability to accurately and timely report its financial results could be impaired, and deficiencies may arise in its internal control over financial reporting, which may impact Luminars ability to certify its financial results. Moreover, Luminars proprietary information or intellectual property could be compromised or misappropriated and its reputation may be adversely affected. If these systems do not operate as Luminar expects them to, Luminar may be required to expend significant resources to make corrections or find alternative sources for performing these functions.
A significant cyber incident could impact production capability, harm Luminars reputation, cause Luminar to breach its contracts with other parties or subject Luminar to regulatory actions or litigation, any of which could materially affect Luminars business, prospects, financial condition and operating results. In addition, Luminars
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insurance coverage for cyber-attacks may not be sufficient to cover all the losses it may experience as a result of a cyber incident.
Legal and Regulatory Risks Related to Luminars Business
Luminar is subject to governmental export and import control laws and regulations. Luminars failure to comply with these laws and regulations could have an adverse effect on its business, prospects, financial condition and results of operations.
Luminars products and solutions are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations and various economic and trade sanctions regulations administered by the U.S. Treasury Departments Office of Foreign Assets Controls. U.S. export control laws and regulations and economic sanctions prohibit the shipment of certain products and services to U.S. embargoed or sanctioned countries, governments and persons. In addition, complying with export control and sanctions regulations for a particular sale may be time-consuming and result in the delay or loss of sales opportunities. Exports of Luminars products and technology must be made in compliance with these laws and regulations. If Luminar fails to comply with these laws and regulations, Luminar and certain of its employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges, fines, which may be imposed on Luminar and responsible employees or managers and, in extreme cases, the incarceration of responsible employees or managers.
Changes to trade policy, tariffs and import/export regulations may have a material adverse effect on Luminars business, financial condition and results of operations.
Changes in global political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories or countries where Luminar currently purchases its components, sells its products or conducts its business could adversely affect Luminars business. The U.S. has recently instituted or proposed changes in trade policies that include the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the U.S., economic sanctions on individuals, corporations or countries, and other government regulations affecting trade between the U.S. and other countries where Luminar conducts its business. A number of other nations have proposed or instituted similar measures directed at trade with the United States in response. As a result of these developments, there may be greater restrictions and economic disincentives on international trade that could adversely affect Luminars business. For example, such changes could adversely affect the automotive market, Luminars ability to access key components or raw materials needed to manufacture its products (including, but not limited to, rare-earth metals), Luminars ability to sell its products to customers outside of the U.S. and the demand for its products. It may be time-consuming and expensive for Luminar to alter its business operations to adapt to or comply with any such changes, and any failure to do so could have a material adverse effect on its business, financial condition and results of operations.
Luminar has in the past and may become involved in legal and regulatory proceedings and commercial or contractual disputes, which could have an adverse effect on its profitability and consolidated financial position.
Luminar may be, from time to time, involved in litigation, regulatory proceedings and commercial or contractual disputes that may be significant. These matters may include, without limitation, disputes with Luminars suppliers and customers, intellectual property claims, stockholder litigation, government investigations, class action lawsuits, personal injury claims, environmental issues, customs and value-added tax disputes and employment and tax issues. In addition, Luminar has in the past and could face in the future a variety of labor and employment claims against it, which could include but is not limited to general discrimination, wage and hour, privacy, ERISA or disability claims. In such matters, government agencies or private parties may seek to recover from Luminar very large, indeterminate amounts in penalties or monetary
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damages (including, in some cases, treble or punitive damages) or seek to limit Luminars operations in some way. These types of lawsuits could require significant management time and attention or could involve substantial legal liability, adverse regulatory outcomes, and/or substantial expenses to defend. Often these cases raise complex factual and legal issues and create risks and uncertainties. No assurances can be given that any proceedings and claims will not have a material adverse impact on Luminars operating results and consolidated financial position or that its established reserves or its available insurance will mitigate this impact.
Luminar is subject to, and must remain in compliance with, numerous laws and governmental regulations concerning the manufacturing, use, distribution and sale of its products. Some of Luminars customers also require that it comply with their own unique requirements relating to these matters.
Luminar manufactures and sells products that contain electronic components, and such components may contain materials that are subject to government regulation in both the locations where Luminar manufactures and assembles its products, as well as the locations where Luminar sells its products. For example, certain regulations limit the use of lead in electronic components. Since Luminar operates on a global basis, this is a complex process which requires continual monitoring of regulations and an ongoing compliance process to ensure that Luminar and its suppliers are in compliance with existing regulations in each market where it operates. If there is an unanticipated new regulation that significantly impacts Luminars use and sourcing of various components or requires more expensive components, that regulation could materially adversely affect its business, results of operations and financial condition.
Luminars products are used for autonomous driving and ADAS applications, which are subject to complicated regulatory schemes that vary from jurisdiction to jurisdiction. These are rapidly evolving areas where new regulations could impose limitations on the use of lidar generally or Luminars products specifically. If Luminar fails to adhere to these new regulations or fails to continually monitor the updates, it may be subject to litigation, loss of customers or negative publicity and its business, results of operations and financial condition will be adversely affected.
Luminar is subject to various environmental laws and regulations that could impose substantial costs upon Luminar and cause delays in building its production facilities.
Concerns over environmental pollution and climate change have produced significant legislative and regulatory efforts on a global basis, and Luminar believes this will continue both in scope and in the number of countries participating. In addition, as climate change issues become more prevalent, foreign, federal, state and local governments and Luminars customers have been responding to these issues. The increased focus on environmental sustainability may result in new regulations and customer requirements, or changes in current regulations and customer requirements, which could materially adversely impact Luminars business, results of operations and financial condition. If Luminar is unable to effectively manage real or perceived issues, including concerns about environmental impacts or similar matters, sentiments toward Luminar or its products could be negatively impacted, and its business, results of operations or financial condition could suffer.
Luminars operations are and will be subject to international, federal, state and local environmental laws and regulations, and such laws and regulations could directly increase the cost of energy, which may have an effect on the way Luminar manufactures products or utilizes energy to produce its products. In addition, any new regulations or laws in the environmental area might increase the cost of raw materials or key components Luminar uses in its products. Environmental regulations require Luminar to reduce product energy usage, monitor and exclude an expanding list of restricted substances and to participate in required recovery and recycling of its products. Environmental and health and safety laws and regulations can be complex, and Luminar has limited experience complying with them. Capital and operating expenses needed to comply with environmental laws and regulations can be significant, and violations may result in substantial fines and penalties, third-party damages, suspension of production or a cessation of Luminars operations.
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Contamination at properties Luminar operates, Luminar formerly operated or to which hazardous substances were sent by Luminar, may result in liability for Luminar under environmental laws and regulations, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act, which can impose liability for the full amount of remediation-related costs without regard to fault, for the investigation and cleanup of contaminated soil and ground water, for building contamination and impacts to human health and for damages to natural resources. The costs of complying with environmental laws and regulations and any claims concerning noncompliance, or liability with respect to contamination in the future, could have a material adverse effect on Luminars financial condition or operating results. Luminar may face unexpected delays in obtaining the required permits and approvals in connection with its planned production facilities that could require significant time and financial resources and delay its ability to operate these facilities, which would adversely impact Luminars business, prospects, financial condition and operating results.
Luminar is subject to U.S. and foreign anti-corruption and anti-money laundering laws and regulations. Luminar can face criminal liability and other serious consequences for violations, which can harm its business.
Luminar is subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act and possibly other anti-bribery and anti-money laundering laws in countries in which Luminar conducts activities. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, contractors and other collaborators from authorizing, promising, offering or providing, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector. Luminar can be held liable for the corrupt or other illegal activities of its employees, agents, contractors and other collaborators, even if Luminar does not explicitly authorize or have actual knowledge of such activities. Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm and other consequences.
Luminars business may be adversely affected by changes in automotive and laser regulations or concerns that drive further regulation of the automobile and laser market.
Government product safety regulations are an important factor for Luminars business. Historically, these regulations have imposed ever-more stringent safety regulations for vehicles and laser products. These safety regulations often require, or customers demand that, vehicles have more safety features per vehicle and more advanced safety products.
While Luminar believes increasing automotive and laser safety standards will present a market opportunity for its products, government safety regulations are subject to change based on a number of factors that are not within its control, including new scientific or technological data, adverse publicity regarding the industry recalls and safety risks of autonomous driving and ADAS, accidents involving its products, domestic and foreign political developments or considerations, and litigation relating to its products and its competitors products. Changes in government regulations, especially in the autonomous driving and ADAS industries could adversely affect Luminars business. If government priorities shift and Luminar is unable to adapt to changing regulations, its business may be materially and adversely affected.
Federal and local regulators impose more stringent compliance and reporting requirements in response to product recalls and safety issues in the automotive and laser industry. As cars that carry Luminars sensors go into production, the obligations of complying with safety regulations and reporting requirements could increase and it could require increased resources and adversely affect Luminars business.
Autonomous and ADAS features may be delayed in adoption by OEMs, and Luminars business impacted, as additional emissions and safety requirements are imposed on vehicle manufacturers.
Vehicle regulators globally continue to consider new and enhanced emissions requirements, including electrification, to meet environmental and economic needs as well as pursue new safety standards to address
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emerging traffic risks. To control new vehicle prices, among other concerns, OEMs may need to dedicate technology and cost additions to new vehicle designs to meet these emissions and safety requirements and postpone the consumer cost pressures of new autonomous and ADAS features.
Luminars business may be adversely affected if it fails to comply with the regulatory requirements under the Federal Food, Drug, and Cosmetic or the Food and Drug Administration (the FDA).
As a lidar technology company, Luminar is subject to the Electronic Product Radiation Control Provisions of the Federal Food, Drug, and Cosmetic Act. These requirements are enforced by the FDA. Electronic product radiation includes laser technology. Regulations governing these products are intended to protect the public from hazardous or unnecessary exposure. Manufacturers are required to certify in product labeling and reports to the FDA that their products comply with applicable performance standards as well as maintain manufacturing, testing, and distribution records for their products. Failure to comply with these requirements could result in enforcement action by the FDA, which could require Luminar to cease distribution of its products, recall or remediate products already distributed to customers, or subject Luminar to FDA enforcement.
Failures, or perceived failures, to comply with privacy, data protection, and information security requirements in the variety of jurisdictions in which Luminar operates may adversely impact its business, and such legal requirements are evolving, uncertain and may require improvements in, or changes to, Luminars policies and operations.
Luminars current and potential future operations and sales subject it to laws and regulations addressing privacy and the collection, use, storage, disclosure, transfer and protection of a variety of types of data. For example, the European Commission has adopted the General Data Protection Regulation and California recently enacted the California Consumer Privacy Act of 2018, both of which provide for potentially material penalties for non-compliance. These regimes may, among other things, impose data security requirements, disclosure requirements, and restrictions on data collection, uses, and sharing that may impact Luminars operations and the development of its business. While, generally, Luminar does not have access to, collect, store, process, or share information collected by its solutions unless its customers choose to proactively provide such information to Luminar, Luminars products may evolve both to address potential customer requirements or to add new features and functionality. Therefore, the full impact of these privacy regimes on Luminars business is rapidly evolving across jurisdictions and remains uncertain at this time.
Luminar may also be affected by cyber-attacks and other means of gaining unauthorized access to its products, systems, and data. For instance, cyber criminals or insiders may target Luminar or third parties with which it has business relationships to obtain data, or in a manner that disrupts Luminars operations or compromises its products or the systems into which its products are integrated.
Luminar is assessing the continually evolving privacy and data security regimes and measures it believes are appropriate in response. Since these data security regimes are evolving, uncertain and complex, especially for a global business like Luminars, it may need to update or enhance its compliance measures as its products, markets and customer demands further develop, and these updates or enhancements may require implementation costs. In addition, Luminar may not be able to monitor and react to all developments in a timely manner. The compliance measures Luminar does adopt may prove ineffective. Any failure, or perceived failure, by Luminar to comply with current and future regulatory or customer-driven privacy, data protection, and information security requirements, or to prevent or mitigate security breaches, cyber-attacks, or improper access to, use of, or disclosure of data, or any security issues or cyber-attacks affecting Luminar, could result in significant liability, costs (including the costs of mitigation and recovery), and a material loss of revenue resulting from the adverse impact on its reputation and brand, loss of proprietary information and data, disruption to its business and relationships, and diminished ability to retain or attract customers and business partners. Such events may result in governmental enforcement actions and prosecutions, private litigation, fines and penalties or adverse publicity, and could cause customers and business partners to lose trust in Luminar, which could have an adverse effect on its reputation and business.
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Regulations related to conflict minerals may cause Luminar to incur additional expenses and could limit the supply and increase the costs of certain metals used in the manufacturing of its products.
Luminar is subject to the requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, that will require it to determine, disclose and report whether its products contain conflict minerals. The implementation of these requirements could adversely affect the sourcing, availability and pricing of the materials used in the manufacture of components used in Luminars products. In addition, Luminar will incur additional costs to comply with the disclosure requirements, including costs related to conducting diligence procedures to determine the sources of conflict minerals that may be used in or necessary to the production of its products and, if applicable, potential changes to products, processes or sources of supply as a consequence of such verification activities. It is also possible that its reputation may be adversely affected if Luminar determines that certain of its products contain minerals not determined to be conflict-free or if Luminar is unable to alter its products, processes or sources of supply to avoid use of such materials.
Risks Related to Luminars Intellectual Property
Despite the actions Luminar is taking to defend and protect its intellectual property, Luminar may not be able to adequately protect or enforce its intellectual property rights or prevent unauthorized parties from copying or reverse engineering its solutions. Luminars efforts to protect and enforce its intellectual property rights and prevent third parties from violating its rights may be costly.
The success of Luminars products and its business depends in part on Luminars ability to obtain patents and other intellectual property rights and maintain adequate legal protection for its products in the United States and other international jurisdictions. Luminar relies on a combination of patent, service mark, trademark and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect its proprietary rights, all of which provide only limited protection.
Luminar cannot assure you that any patents will be issued with respect to its currently pending patent applications or that any trademarks will be registered with respect to its currently pending applications in a manner that gives Luminar adequate defensive protection or competitive advantages, if at all, or that any patents issued to Luminar or any trademarks registered by it will not be challenged, invalidated or circumvented. Luminar has filed for patents and trademarks in the United States and in certain international jurisdictions, but such protections may not be available in all countries in which it operates or in which Luminar seeks to enforce its intellectual property rights, or may be difficult to enforce in practice. Luminars currently-issued patents and trademarks and any patents and trademarks that may be issued or registered, as applicable, in the future with respect to pending or future applications may not provide sufficiently broad protection or may not prove to be enforceable in actions against alleged infringers. Luminar cannot be certain that the steps it has taken will prevent unauthorized use of its technology or the reverse engineering of its technology. Moreover, others may independently develop technologies that are competitive to Luminar or infringe Luminars intellectual property.
Protecting against the unauthorized use of Luminars intellectual property, products and other proprietary rights is expensive and difficult, particularly internationally. Luminar believes that its patents are foundational in the area of lidar products and intends to enforce the intellectual property portfolio it has built over the years. Unauthorized parties may attempt to copy or reverse engineer Luminars lidar technology or certain aspects of Luminars solutions that it considers proprietary. Litigation may be necessary in the future to enforce or defend Luminars intellectual property rights, to prevent unauthorized parties from copying or reverse engineering its solutions, to determine the validity and scope of the proprietary rights of others or to block the importation of infringing products into the United States.
Any such litigation, whether initiated by Luminar or a third party, could result in substantial costs and diversion of management resources, either of which could adversely affect Luminars business, operating results and financial condition. Even if it obtains favorable outcomes in litigation, Luminar may not be able to obtain adequate remedies, especially in the context of unauthorized parties copying or reverse engineering its solutions.
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Further, many of Luminars current and potential competitors have the ability to dedicate substantially greater resources to defending intellectual property infringement claims and to enforcing their intellectual property rights than Luminar has. Attempts to enforce its rights against third parties could also provoke these third parties to assert their own intellectual property or other rights against Luminar or result in a holding that invalidates or narrows the scope of Luminars rights, in whole or in part. Effective patent, trademark, service mark, copyright and trade secret protection may not be available in every country in which Luminars products are available and competitors based in other countries may sell infringing products in one or more markets. Failure to adequately protect Luminars intellectual property rights could result in Luminars competitors offering similar products, potentially resulting in the loss of some of Luminars competitive advantage and a decrease in its revenue, which would adversely affect Luminars business, operating results, financial condition and prospects.
Third-party claims that Luminar is infringing intellectual property, whether successful or not, could subject it to costly and time-consuming litigation or expensive licenses, and its business could be adversely affected.
Although Luminar holds key patents related to its products, a number of companies, both within and outside of the lidar industry, hold other patents covering aspects of lidar products. In addition to these patents, participants in this industry typically also protect their technology, especially embedded software, through copyrights and trade secrets. As a result, there is frequent litigation based on allegations of infringement, misappropriation or other violations of intellectual property rights. Luminar has received, and in the future may receive, inquiries from other intellectual property holders and may become subject to claims that it infringes their intellectual property rights, particularly as Luminar expands its presence in the market, expands to new use cases and faces increasing competition. In addition, parties may claim that the names and branding of Luminars products infringe their trademark rights in certain countries or territories. If such a claim were to prevail, Luminar may have to change the names and branding of its products in the affected territories and it could incur other costs.
Luminar currently has a number of agreements in effect pursuant to which it has agreed to defend, indemnify and hold harmless its customers, suppliers, and channel partners and other partners from damages and costs which may arise from the infringement by Luminars products of third-party patents or other intellectual property rights. The scope of these indemnity obligations varies, but may, in some instances, include indemnification for damages and expenses, including attorneys fees. Luminars insurance may not cover all intellectual property infringement claims. A claim that its products infringe a third partys intellectual property rights, even if untrue, could adversely affect Luminars relationships with its customers, may deter future customers from purchasing its products and could expose Luminar to costly litigation and settlement expenses. Even if Luminar is not a party to any litigation between a customer and a third party relating to infringement by its products, an adverse outcome in any such litigation could make it more difficult for Luminar to defend its products against intellectual property infringement claims in any subsequent litigation in which it is a named party. Any of these results could adversely affect Luminars brand and operating results.
Luminars defense of intellectual property rights claims brought against it or its customers, suppliers and channel partners, with or without merit, could be time-consuming, expensive to litigate or settle, divert management resources and attention and force Luminar to acquire intellectual property rights and licenses, which may involve substantial royalty or other payments and may not be available on acceptable terms or at all. Further, a party making such a claim, if successful, could secure a judgment that requires Luminar to pay substantial damages or obtain an injunction. An adverse determination also could invalidate Luminars intellectual property rights and adversely affect its ability to offer its products to its customers and may require that Luminar procure or develop substitute products that do not infringe, which could require significant effort and expense. Any of these events could adversely affect Luminars business, operating results, financial condition and prospects.
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Luminars intellectual property applications for registration may not issue or be registered, which may have a material adverse effect on Luminars ability to prevent others from commercially exploiting products similar to Luminars.
Luminar cannot be certain that it is the first inventor of the subject matter to which it has filed a particular patent application, or if it is the first party to file such a patent application. If another party has filed a patent application to the same subject matter as Luminar has, Luminar may not be entitled to the protection sought by the patent application. Luminar also cannot be certain whether the claims included in a patent application will ultimately be allowed in the applicable issued patent. Further, the scope of protection of issued patent claims is often difficult to determine. As a result, Luminar cannot be certain that the patent applications that it files will issue, or that its issued patents will afford protection against competitors with similar technology. In addition, Luminars competitors may design around Luminars issued patents, which may adversely affect Luminars business, prospects, financial condition and operating results.
In addition to patented technology, Luminar relies on its unpatented proprietary technology, trade secrets, processes and know-how.
Luminar relies on proprietary information (such as trade secrets, know-how and confidential information) to protect intellectual property that may not be patentable or subject to copyright, trademark, trade dress or service mark protection, or that Luminar believes is best protected by means that do not require public disclosure. Luminar generally seeks to protect this proprietary information by entering into confidentiality agreements, or consulting, services or employment agreements that contain non-disclosure and non-use provisions with its employees, consultants, contractors and third parties. However, Luminar may fail to enter into the necessary agreements, and even if entered into, these agreements may be breached or may otherwise fail to prevent disclosure, third-party infringement or misappropriation of its proprietary information, may be limited as to their term and may not provide an adequate remedy in the event of unauthorized disclosure or use of proprietary information. Luminar has limited control over the protection of trade secrets used by its current or future manufacturing partners and suppliers and could lose future trade secret protection if any unauthorized disclosure of such information occurs. In addition, Luminars proprietary information may otherwise become known or be independently developed by its competitors or other third parties. To the extent that its employees, consultants, contractors, advisors and other third parties use intellectual property owned by others in their work for Luminar, disputes may arise as to the rights in related or resulting know-how and inventions. Costly and time-consuming litigation could be necessary to enforce and determine the scope of Luminars proprietary rights, and failure to obtain or maintain protection for its proprietary information could adversely affect its competitive business position. Furthermore, laws regarding trade secret rights in certain markets where Luminar operates may afford little or no protection to its trade secrets.
Luminar also relies on physical and electronic security measures to protect its proprietary information, but it cannot provide assurance that these security measures will not be breached or provide adequate protection for its property. There is a risk that third parties may obtain and improperly utilize Luminars proprietary information to its competitive disadvantage. Luminar may not be able to detect or prevent the unauthorized use of such information or take appropriate and timely steps to enforce its intellectual property rights.
Luminar may be subject to damages resulting from claims that it or its employees have wrongfully used or disclosed alleged trade secrets of its employees former employers.
Luminar may be subject to claims that it or its employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of an employees former employers. Litigation may be necessary to defend against these claims. If Luminar fails in defending such claims, in addition to paying monetary damages, it may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent Luminars ability to commercialize its products, which could severely harm its business. Even if Luminar is successful in defending against these claims, litigation could result in substantial costs and demand on management resources.
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Risks Related to Being a Public Company
Luminar will incur increased costs as a result of operating as a public company, and its management will devote substantial time to new compliance initiatives.
If Luminar completes the business combination and becomes a public company, it will incur significant legal, accounting and other expenses that it did not incur as a private company, and these expenses may increase even more after Luminar is no longer an emerging growth company, as defined in Section 2(a) of the Securities Act. As a public company, Luminar will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the Dodd-Frank Act, as well as rules adopted, and to be adopted, by the SEC and Nasdaq. Luminars management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, Luminar expects these rules and regulations to substantially increase its legal and financial compliance costs and to make some activities more time-consuming and costly. The increased costs will increase Luminars net loss. For example, Luminar expects these rules and regulations to make it more difficult and more expensive for it to obtain director and officer liability insurance and it may be forced to accept reduced policy limits or incur substantially higher costs to maintain the same or similar coverage. Luminar cannot predict or estimate the amount or timing of additional costs it may incur to respond to these requirements. The impact of these requirements could also make it more difficult for Luminar to attract and retain qualified persons to serve on its board of directors, its board committees or as executive officers.
Luminars management team has limited experience managing a public company.
Most of the members of Luminars management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. Additionally, many members of Luminars management team were recently hired, including its chief financial officer, Thomas Fennimore, who began serving as chief financial officer in July 2020. Luminars management team may not successfully or efficiently manage their new roles and responsibilities. Luminars transition to being a public company subjects it to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from Luminars senior management and could divert their attention away from the day-to-day management of Luminars business, which could adversely affect Luminars business, financial condition, and operating results.
Risks Related to the Company and the Business Combination
Our Initial Stockholders have agreed to vote in favor of the Business Combination described in this proxy statement/consent solicitation statement/prospectus, regardless of how our Public Stockholders vote.
Unlike many other blank check companies in which the founders agree to vote their founder shares in accordance with the majority of the votes cast by the holders of public stock in connection with an initial business combination, our Initial Stockholders have agreed to vote any shares of Common Stock owned by them in favor of the Transaction Proposal. As of the date hereof, our Initial Stockholders own shares equal to 20% of our issued and outstanding shares of Common Stock. Accordingly, it is more likely that the necessary stockholder approval will be received for the Business Combination than would be the case if our Initial Stockholders agreed to vote any shares of Common Stock owned by them in accordance with the majority of the votes cast by our Public Stockholders.
Our Sponsor, certain members of our Board and our officers have interests in the Business Combination that are different from or are in addition to other stockholders in recommending that stockholders vote in favor of approval of the Transaction Proposal and approval of the other proposals described in this proxy statement/consent solicitation statement/prospectus.
When considering our Boards recommendation that our stockholders vote in favor of the approval of the Transaction Proposal, our stockholders should be aware that our directors and officers have interests in the
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Business Combination that may be different from, or in addition to, the interests of our stockholders. These interests include:
| the fact that our Initial Stockholders have agreed not to redeem any of the Founder Shares in connection with a stockholder vote to approve a proposed initial business combination; |
| the fact that our Initial Stockholders have agreed to waive their rights to conversion price adjustments with respect to any shares of our Common Stock they may hold in connection with the consummation of the Business Combination; |
| the fact that our Sponsor paid an aggregate of $25,000 for 10,781,250 Founder Shares and (after giving effect to the cancellation of 781,250 Founder Shares on March 18, 2019, the remaining 10,000,000 Founder Shares will have a significantly higher value at the time of the Business Combination, which if unrestricted and freely tradable would be valued at approximately $100,000,000 but, given the restrictions on such shares, we believe such shares have less value; |
| the fact that our Initial Stockholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if we fail to complete an initial business combination by February 5, 2021; |
| the fact that our Sponsor paid an aggregate of approximately $10,000,000 for its 6,666,666 Private Placement Warrants to purchase shares of Class A Stock and that such Private Placement Warrants will expire worthless if a business combination is not consummated by February 5, 2021; |
| the continued right of our Sponsor to hold our Class A Stock and the shares of Class A Stock to be issued to our Sponsor upon exercise of its Private Placement Warrants following the Business Combination, subject to certain lock-up periods; |
| if the Trust Account is liquidated, including in the event we are unable to complete an initial business combination within the required time period, our Sponsor has agreed to indemnify us to ensure that the proceeds in the Trust Account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which we have entered into an acquisition agreement or claims of any third party (other than our independent public accountants) for services rendered or products sold to us, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account; |
| the continued indemnification of our existing directors and officers and the continuation of our directors and officers liability insurance following the closing of the Business Combination; |
| the fact that our Sponsor, officers and directors will lose their entire investment in us and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by February 5, 2021; |
| that affiliates of our Sponsor, Mr. Alec E. Gores and Mr. Dean Metropoulos participated in the Series X Financing and, thereafter, will receive the Per Share Company Stock Consideration for each share of Luminar Series X Preferred Stock that they hold in connection with the closing of the Business Combination; and |
| that, at the closing of the Business Combination, we will enter into the Registration Rights Agreement with the Registration Rights Holders (in which certain members of our Board and affiliates are included), which provides for registration rights to Registration Rights Holders and their permitted transferees. |
Our Sponsor, directors or officers or their affiliates may elect to purchase shares from Public Stockholders, which may influence a vote on a proposed Business Combination and the other proposals described in this proxy statement/consent solicitation statement/prospectus and reduce the public float of our Class A Stock.
Our Sponsor, directors or officers or their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of the Business Combination, although they are
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under no obligation to do so. 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 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 Business Combination and thereby increase the likelihood of obtaining stockholder approval of the Business Combination or to satisfy closing conditions in the Merger Agreement regarding required amounts in the Trust Account where it appears that such requirements would otherwise not be met. This may result in the completion of the Business Combination that may not otherwise have been possible.
In addition, if such purchases are made, the public float of our Class A Stock 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 the Nasdaq Capital Market or another national securities exchange or reducing the liquidity of the trading market for our Class A Stock.
Our Public Stockholders will experience dilution as a consequence of, among other transactions, the issuance of Class A Stock as consideration in the Business Combination. Having a minority share position may reduce the influence that our current stockholders have on the management of the Post-Combination Company.
The issuance of the Class A Stock in the Business Combination will dilute the equity interest of our existing stockholders and may adversely affect prevailing market prices for our Public Shares and/or Public Warrants.
It is anticipated that, upon completion of the Business Combination and based on the assumptions set forth in the below paragraph: (i) our Public Stockholders will retain an ownership interest of approximately 11.7% in the Post-Combination Company; (ii) our Initial Stockholders (including our Sponsor) will own approximately 4.2% of the Post-Combination Company (inclusive of their Series X investment); and (iii) the Luminar Equityholders (including the Series X Investors but excluding our Initial Stockholders) will own approximately 84.1% of the Post-Combination Company.
The foregoing percentages are calculated inclusive of the Rollover Options and Assumed Warrants and assume (i) no exercise of redemption rights by our Public Stockholders; (ii) no inclusion of any Public Shares issuable upon the exercise of the Company Warrants; and (iii) no shares of Class A Stock or Class B Stock are issued as Earn-Out Shares. If the actual facts are different than these assumptions, the percentage ownership retained by the Companys existing stockholders in the Post-Combination Company will be different. For more information, please see the sections entitled SummaryImpact of the Business Combination on the Companys Public Float and Unaudited Pro Forma Condensed Combined Financial Information.
We have no operating history and are subject to a mandatory liquidation and subsequent dissolution requirement. As such, there is a risk that we will be unable to continue as a going concern if we do not consummate an initial business combination by February 5, 2021. If we are unable to effect an initial business combination by February 5, 2021, we will be forced to liquidate and our warrants will expire worthless.
We are a blank check company, and as we have no operating history and are subject to a mandatory liquidation and subsequent dissolution requirement, there is a risk that we will be unable to continue as a going concern if we do not consummate an initial business combination by February 5, 2021. Unless we amend the Current Company Certificate to extend the life of the Company and certain other agreements into which we have entered, if we do not complete an initial business combination by February 5, 2021, 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 not previously released to us to fund Regulatory Withdrawals and/or its franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses)
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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, dissolve and liquidate, subject in each case to our obligations under the DGCL to provide for claims of creditors and the requirements of other applicable law. 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 Public Unit in the Company IPO. In addition, if we fail to complete an initial business combination by February 5, 2021, there will be no redemption rights or liquidating distributions with respect to our Public Warrants or the Private Placement Warrants, which will expire worthless. We expect to consummate the Business Combination and do not intend to take any action to extend the life of the Company beyond February 5, 2021 if we are unable to effect an initial business combination by that date.
Even if we consummate the Business Combination, there is no guarantee that the Public Warrants will ever be in the money, and they may expire worthless and the terms of the Public Warrants may be amended.
The exercise price for the Public Warrants is $11.50 per share of Class A Stock. There is no guarantee that the Public Warrants will ever be in the money prior to their expiration, and as such, the Public Warrants may expire worthless.
Our ability to successfully effect the Business Combination and to be successful thereafter will be dependent upon the efforts of our key personnel, including the key personnel of Luminar whom we expect to stay with the Post-Combination Company. The loss of key personnel could negatively impact the operations and profitability of the Post-Combination Company and its financial condition could suffer as a result.
Our ability to successfully effect the Business Combination is dependent upon the efforts of our key personnel, including the key personnel of Luminar. Although some of our key personnel may remain with the Post-Combination Company in senior management or advisory positions following the Business Combination, it is possible that we will lose some key personnel, the loss of which could negatively impact the operations and profitability of the business of the Post-Combination Company.
Luminars success depends to a significant degree upon the continued contributions of senior management, certain of whom would be difficult to replace. Departure by certain of Luminars officers could have a material adverse effect on Luminars business, financial condition, or operating results. The services of such personnel may not continue to be available to the Post-Combination Company.
We may waive one or more of the conditions to the Business Combination.
We may agree to waive, in whole or in part, one or more of the conditions to our obligations to complete the Business Combination, to the extent permitted by the Current Company Certificate and our current bylaws and applicable laws. However, if our Board determines that a failure to satisfy the condition is not material, then our Board may elect to waive that condition and close the Business Combination. We may not waive the condition that our stockholders approve the Business Combination. Please see the section entitled The Business CombinationConditions to Closing of the Business Combination for additional information.
The exercise of discretion by our directors and officers in agreeing to changes to the terms of or waivers of closing conditions in the Merger Agreement may result in a conflict of interest when determining whether such changes to the terms of the Merger Agreement or waivers of conditions are appropriate and in the best interests of our stockholders.
In the period leading up to the closing of the Business Combination, other events may occur that, pursuant to the Merger Agreement, would require us to agree to amend the Merger Agreement, to consent to certain
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actions or to waive rights that we are entitled to under those agreements. Such events could arise because of changes in the course of Luminars business, a request by Luminar to undertake actions that would otherwise be prohibited by the terms of the Merger Agreement or the occurrence of other events that would have a material adverse effect on Luminars business and would entitle us to terminate the Merger Agreement. In any of such circumstances, it would be in our discretion, acting through our Board, to grant our consent or waive our rights. The existence of the financial and personal interests of the directors described elsewhere in this proxy statement/consent solicitation statement/prospectus may result in a conflict of interest on the part of one or more of the directors between what he or she may believe is best for the Company and our stockholders and what he or she may believe is best for himself or herself or his or her affiliates in determining whether or not to take the requested action. As of the date of this proxy statement/consent solicitation statement/prospectus, we do not believe there will be any changes or waivers that our directors and officers would be likely to make after stockholder approval of the Business Combination has been obtained. While certain changes could be made without further stockholder approval, if there is a change to the terms of the Business Combination that would have a material impact on the stockholders, we will be required to circulate a new or amended proxy statement/consent solicitation statement/prospectus or supplement thereto and resolicit the vote of our stockholders with respect to the Transaction Proposal.
We and Luminar will incur significant transaction and transition costs in connection with the Business Combination.
We and Luminar have both incurred and expect to incur significant, non-recurring costs in connection with consummating the Business Combination and operating as a public company following the consummation of the Business Combination. We and Luminar may also incur additional costs to retain key employees. All expenses incurred in connection with the Merger Agreement and the transactions contemplated thereby (including the Business Combination), including all legal, accounting, consulting, investment banking and other fees, expenses and costs, will be for the account of the party incurring such fees, expenses and costs or paid by us following the closing of the Business Combination.
Our transaction expenses as a result of the Business Combination are currently estimated at approximately $25 million, including a $14,000,000 Deferred Discount. The amount of the Deferred Discount 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 Discount and after such redemptions, the per-share value of shares held by non-redeeming stockholders will reflect our obligation to pay the Deferred Discount.
If we are unable to complete an initial business combination, our Public Stockholders may receive only approximately $10.00 per share on the liquidation of the Trust Account (or less than $10.00 per share in certain circumstances where a third party brings a claim against us that our Sponsor is unable to indemnify), and our warrants will expire worthless.
If we are unable to complete an initial business combination by February 5, 2021, our Public Stockholders may receive only approximately $10.00 per share on the liquidation of the Trust Account (or less than $10.00 per share in certain circumstances where a third-party brings a claim against us that our Sponsor is unable to indemnify (as described herein)) and our warrants will expire worthless.
If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 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 (other than our independent auditors), 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 funds held in the Trust Account for the benefit of our Public
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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 funds 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 partys engagement would be significantly more beneficial to us than any alternative.
Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our Public Shares, if we are unable to complete our initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the ten years following redemption. Accordingly, the per-share redemption amount received by Public Stockholders could be less than the $10.00 per share initially held in the Trust Account, due to claims of such creditors.
Our Sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor (other than our independent public accountants) for services rendered or products sold to us, or a prospective target business with which we have entered into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under indemnity of the underwriter of the Company IPO against certain liabilities, including liabilities under the Securities Act. Moreover, 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. We have not independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations and believe that our Sponsors only assets are securities of the Company. We have not asked our Sponsor to reserve for such indemnification obligations. Therefore, we cannot assure you that our Sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available for the Business Combination and redemptions could be reduced to less than $10.00 per Public Share. In such event, we may not be able to complete the Business Combination, and you would receive such lesser amount per share in connection with any redemption of your Public Shares. None of our officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Our directors may decide not to enforce the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to our Public Stockholders.
In the event that the proceeds in the Trust Account are reduced below the lesser of (i) $10.00 per public share or (ii) other than due to the failure to obtain a waiver to seek access to the Trust Account, such lesser amount per share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to fund our Regulatory Withdrawals and/or to pay our franchise and income tax obligations, 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
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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 a favorable outcome is unlikely. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in our Trust Account available for distribution to our Public Stockholders may be reduced below $10.00 per share.
If, before distributing the proceeds in the Trust Account to our Public Stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the Trust Account to our Public Stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the Trust Account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
Subsequent to our completion of the 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.
Although we have conducted due diligence on Luminar, we cannot assure you that this diligence will surface all material issues that may be present in Luminars business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of Luminars business and outside of our and Luminars control will not later arise. As a result of these factors, we may be forced to later write down or write off assets, restructure operations, or incur impairment or other charges that could result in 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 the Post-Combination Company or its securities. Accordingly, any of our stockholders who choose to remain stockholders following the 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 have no operating or financial history and our results of operations and those of the Post-Combination Company may differ significantly from the unaudited pro forma financial data included in this proxy statement.
We are a blank check company and we have no operating history and no revenues. This proxy statement/consent solicitation statement/prospectus includes unaudited pro forma condensed combined financial statements for the Post-Combination Company. The unaudited pro forma condensed combined statement of operations of the Post-Combination Company combines our historical audited results of operations for the year ended December 31, 2019 and our unaudited results for the six months ended June 30, 2020, with the historical audited results of operations of Luminar for the year ended December 31, 2019 and the unaudited results of Luminar for the six months ended June 30, 2020, respectively, and gives pro forma effect to the Business Combination as if it had been consummated on January 1, 2019. The unaudited pro forma condensed combined balance sheet of the Post-Combination Company combines our historical balance sheets as of June 30, 2020 and of Luminar as of June 30, 2020 and gives pro forma effect to the Business Combination as if it had been consummated on June 30, 2020.
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The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only, are based on certain assumptions, address a hypothetical situation and reflect limited historical financial data. Therefore, the unaudited pro forma condensed combined financial statements are not necessarily indicative of the results of operations and financial position that would have been achieved had the Business Combination and the acquisitions by Luminar been consummated on the dates indicated above, or the future consolidated results of operations or financial position of the Post-Combination Company. Accordingly, the Post-Combination Companys business, assets, cash flows, results of operations and financial condition may differ significantly from those indicated by the unaudited pro forma condensed combined financial statements included in this document. For more information, please see the section entitled Unaudited Pro Forma Condensed Combined Financial Information.
Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our financial condition and results of operations.
We will be subject to income taxes in the United States and other jurisdictions, and our tax liabilities will be subject to the allocation of expenses in differing jurisdictions. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:
| changes in the valuation of our deferred tax assets and liabilities; |
| expected timing and amount of the release of any tax valuation allowances; |
| tax effects of stock-based compensation; |
| costs related to intercompany restructurings; |
| changes in tax laws, regulations or interpretations thereof; or |
| lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates. |
In addition, we may be subject to audits of our income, sales and other transaction taxes by taxing authorities. Outcomes from these audits could have an adverse effect on our financial condition and results of operations.
A market for our securities may not continue, which would adversely affect the liquidity and price of our securities.
Following the Business Combination, the price of our securities may fluctuate significantly due to the markets reaction to the Business Combination and general market and economic conditions. An active trading market for our securities following the Business Combination may never develop or, if developed, it may not be sustained. In addition, the price of our securities following the closing of the Business Combination can vary due to general economic conditions and forecasts, our general business condition and the release of our financial reports. Additionally, if our securities are not listed on, or become delisted from, Nasdaq for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.
If the Business Combinations benefits do not meet the expectations of investors, stockholders or financial analysts, the market price of our securities may decline.
If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of our securities prior to the closing of the Business Combination may decline. The market values of our securities at the time of the Business Combination may vary significantly from their prices on the date the Merger Agreement was executed, the date of this proxy statement/consent solicitation statement/prospectus, or the date on which our stockholders vote on the Business Combination.
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In addition, following the Business Combination, fluctuations in the price of our securities could contribute to the loss of all or part of your investment. Immediately prior to the Business Combination, there has not been a public market for Luminars stock and trading in the shares of our Class A Stock has not been active. Accordingly, the valuation ascribed to Luminar and our Class A Stock in the Business Combination may not be indicative of the price of the Post-Combination Company that will prevail in the trading market following the Business Combination. If an active market for our securities develops and continues, the trading price of our securities following the Business Combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our securities and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.
Factors affecting the trading price of the Post-Combination Companys securities following the Business Combination may include:
| actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; |
| changes in the markets expectations about our operating results; |
| the publics reaction to our press releases, our other public announcements and our filings with the SEC; |
| speculation in the press or investment community; |
| success of competitors; |
| our operating results failing to meet the expectation of securities analysts or investors in a particular period; |
| changes in financial estimates and recommendations by securities analysts concerning the Post-Combination Company or the market in general; |
| operating and stock price performance of other companies that investors deem comparable to the Post-Combination Company; |
| our ability to market new and enhanced products on a timely basis; |
| changes in laws and regulations affecting our business; |
| commencement of, or involvement in, litigation involving the Post-Combination Company; |
| changes in the Post-Combination Companys capital structure, such as future issuances of securities or the incurrence of additional debt; |
| the volume of shares of our Class A Stock available for public sale; |
| any major change in the Post-Combination Companys Board or management; |
| sales of substantial amounts of Common Stock by our directors, officers or significant stockholders or the perception that such sales could occur; |
| the realization of any of the risk factors presented in this proxy statement/consent solicitation statement/prospectus; |
| additions or departures of key personnel; |
| failure to comply with the requirements of Nasdaq; |
| failure to comply with the Sarbanes-Oxley Act or other laws or regulations; |
| actual, potential or perceived control, accounting or reporting problems; |
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| changes in accounting principles, policies and guidelines; and |
| general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and health epidemics and pandemics (including the ongoing COVID-19 public health emergency), acts of war or terrorism. |
Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general and Nasdaq have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for the stocks of other companies that investors perceive to be similar to the Post-Combination Company could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.
In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our managements attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.
Past performance by Mr. Dean Metropoulos or The Gores Group, including our management team, may not be indicative of future performance of an investment in the Company or the Post-Combination Company.
Past performance by Mr. Metropoulos or The Gores Group and by our management team, including with respect to Gores Holdings, Inc., a Delaware corporation (Gores Holdings I), Gores Holdings II, Inc., a Delaware corporation (Gores Holdings II), and Gores Holdings III, Inc., a Delaware corporation (Gores Holdings III), is not a guarantee of success with respect to the Business Combination. You should not rely on the historical record of Mr. Metropoulos, The Gores Group or our management teams, Gores Holdings Is, Gores Holdings IIs or Gores Holdings IIIs performance as indicative of the future performance of an investment in the Company or Post-Combination Company or the returns the Company or Post-Combination Company will, or is likely to, generate going forward.
A significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our Class A Stock to drop significantly, even if our business is doing well.
Sales of a substantial number of shares of Class A Stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our Class A Stock. Following the closing of the Business Combination, our Initial Stockholders, including our Sponsor, will hold approximately 6.1% of our Class A Stock. In addition, at the closing of the Business Combination, we will enter into the Registration Rights Agreement, substantially in the form attached as Annex F to this proxy statement/consent solicitation statement/prospectus, with the Registration Rights Holders. Pursuant to the terms of the Registration Rights Agreement, (a) any (i) outstanding share of Class A Stock or any Private Placement Warrants, (ii) shares of Class A Stock issued or issuable upon the exercise of any other equity security of the Company (including shares of Class A Stock issued or issuable upon the conversion of the Class F Stock or the Class B Stock and upon exercise of the Private Placement Warrants), and (iii) shares of Class A Stock issued as Earn-Out Shares or issuable upon the conversion of any Earn-Out Shares, in each case, held by the Luminar Holders, and (b) any other equity security of the Company issued or issuable with respect to any such share of Class A Stock by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise, will be entitled to registration rights. In addition, our Initial Stockholders entered into a letter agreement pursuant to which they agreed that, with certain limited exceptions, the Founder Shares (which will be
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converted into shares of Class A Stock at the closing of the Business Combination) may not be transferred until 180 days after the closing of the Business Combination. In addition, given that the lock-up period on the Founder Shares is potentially shorter than most other blank check companies, these shares may become registered and available for sale sooner than Founder Shares in such other companies. We may be unable to obtain additional financing to fund the operations and growth of the Post-Combination Company.
We may require additional financing to fund the operations or growth of the Post-Combination Company. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the Post-Combination Company. None of our officers, directors or stockholders is required to provide any financing to us in connection with or following the closing of the Business Combination.
Changes in laws, regulations or rules, or a failure to comply with any laws, regulations or rules, may adversely affect our business, investments and results of operations.
We are subject to laws, regulations and rules enacted by national, regional and local governments and Nasdaq. In particular, we are required to comply with certain SEC, Nasdaq and other legal or regulatory requirements. Compliance with, and monitoring of, applicable laws, regulations and rules may be difficult, time consuming and costly. Those laws, regulations or rules 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, regulations or rules, as interpreted and applied, could have a material adverse effect on our business and results of operations.
We have not registered the shares of Class A Stock issuable upon exercise of the Public Warrants under the Securities Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise Public Warrants, thus precluding such investor from being able to exercise its Public Warrants except on a cashless basis and potentially causing such Public Warrants to expire worthless.
We have not registered the shares of Class A Stock issuable upon exercise of the Public Warrants under the Securities Act or any state securities laws at this time. However, under the terms of the Continental Warrant Agreement, we have agreed to use our best efforts to file a registration statement under the Securities Act covering such shares and maintain a current prospectus relating to the Class A Stock issuable upon exercise of the Public Warrants, until the expiration of the Public Warrants in accordance with the provisions of the Continental Warrant Agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in such registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop order. If the shares issuable upon exercise of the Public Warrants are not registered under the Securities Act, we will be required to permit holders to exercise their Public Warrants on a cashless basis. However, no Public Warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their Public Warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder or an exemption from registration is available. Notwithstanding the above, if our Class A Stock is at the time of any exercise of a Public Warrant not listed on a national securities exchange such that it satisfies the definition of a covered security under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of Public Warrants who exercise their Public Warrants to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, but we will be required to use our best efforts to register the shares under applicable blue sky laws to the extent an exemption is not available. In no event will we be required to net cash settle any Public Warrant, or issue securities or other compensation in exchange for the Public Warrants in the event that we are unable to register or qualify the shares underlying the Public Warrants under applicable state securities laws and there is no exemption available. If the issuance of the shares upon exercise of the Public Warrants is not so registered or qualified or exempt from registration or qualification, the holder of such Public Warrant shall not be entitled to exercise such Public Warrant and such Public Warrant may have no value and expire worthless. In such event,
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holders who acquired their Public Warrants as part of a purchase of Public Units will have paid the full unit purchase price solely for the shares of Class A Stock included in the Public Units. If and when the Public Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying shares of Class A Stock for sale under all applicable state securities laws.
The exercise price for our Public Warrants is higher than in many similar blank check company offerings in the past, and, accordingly, the Public Warrants are more likely to expire worthless.
The exercise price of our Public Warrants is higher than is typical with many similar blank check companies in the past. Historically, with regard to units offered by blank check companies, the exercise price of a Public Warrant was generally a fraction of the purchase price of the units in the initial public offering. The exercise price for our Public Warrants is $11.50 per share, subject to adjustment as provided herein. As a result, the Public Warrants are less likely to ever be in the money and more likely to expire worthless.
We may amend the terms of the Public Warrants in a manner that may be adverse to holders with the approval by the holders of at least 50% of the then-outstanding Public Warrants. As a result, the exercise price of a holders Public Warrants could be increased, the exercise period could be shortened and the number of shares of our Common Stock purchasable upon exercise of a Public Warrant could be decreased, all without the approval of that warrant holder.
Our Public Warrants were issued in registered form under the Continental Warrant Agreement. The Continental Warrant Agreement provides that the terms of the Public Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then-outstanding Public Warrants to make any change that adversely affects the interests of the registered holders. Accordingly, we may amend the terms of the Public Warrants in a manner adverse to a holder if holders of at least 50% of the then-outstanding Public Warrants approve of such amendment. Although our ability to amend the terms of the Public Warrants with the consent of at least 50% of the then-outstanding Public Warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the Public Warrants, shorten the exercise period or decrease the number of shares of Class A Stock purchasable upon exercise of a Public Warrant.
We may redeem unexpired Public Warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making their Public Warrants worthless.
We have the ability to redeem outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per Public Warrant; provided that the last reported sales price of our Class A 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 we give proper notice of such redemption to the warrant holders and provided certain other conditions are met. If and when the Public Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding Public Warrants could force the warrant holders: (i) to exercise their Public Warrants and pay the exercise price therefor at a time when it may be disadvantageous for them to do so; (ii) to sell their Public Warrants at the then-current market price when they might otherwise wish to hold their Public Warrants; or (iii) to accept the nominal redemption price which, at the time the outstanding Public Warrants are called for redemption, is likely to be substantially less than the market value of their Public Warrants. None of the Private Placement Warrants will be redeemable by us so long as they are held by our Sponsor or its permitted transferees.
Because each Public Unit contains one-third of one Public Warrant and only a whole Public Warrant may be exercised, the Public Units may be worth less than Public Units of other blank check companies.
Each Public Unit contains one-third of one Public Warrant. Because, pursuant to the Continental Warrant Agreement, the Public Warrants may only be exercised for a whole number of shares, only a whole Public
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Warrant may be exercised at any given time. This is different from other offerings similar to ours whose public units include one share of common stock and one public warrant to purchase one whole share. We have established the components of the Public Units in this way in order to reduce the dilutive effect of the Public Warrants upon completion of an initial business combination since the Public Warrants will be exercisable in the aggregate for one-third of the number of shares compared to Public Units that each contain a Public Warrant to purchase one whole share, thus making us, we believe, a more attractive merger partner for target businesses. Nevertheless, this unit structure may cause our Public Units to be worth less than if they included a Public Warrant to purchase one whole share.
Warrants will become exercisable for our Class A Stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.
We issued Public Warrants to purchase 20,000,000 shares of Class A Stock as part of the Company IPO and, on the Company IPOs closing date, we issued Private Placement Warrants to our Sponsor to purchase 6,666,666 shares of our Class A Stock, in each case at $11.50 per share. In addition, prior to consummating an initial business combination, nothing prevents us from issuing additional securities in a private placement so long as they do not participate in any manner in the Trust Account or vote as a class with the Common Stock on an initial business combination. The shares of Class A Stock issued upon exercise of our warrants will result in dilution to our then existing holders of Class A Stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of our Class A Stock.
The Private Placement Warrants are identical to the Public Warrants sold as part of the Public Units issued in the Company IPO except that, so long as they are held by our Sponsor or its permitted transferees: (i) they will not be redeemable by us; (ii) they (including the Class A Stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by our Sponsor until 30 days after the completion of an initial business combination; (iii) they may be exercised by the holders on a cashless basis; and (iv) are subject to registration rights.
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 the Trust Account distributed to the Public Stockholders upon the redemption of our Public Shares in the event we do not complete an initial business combination by February 5, 2021 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 stockholders 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 February 5, 2021 in the event we do not complete an initial business combination and, therefore, we do not intend to comply with the foregoing procedures.
Because we will not be complying with Section 280 of the DGCL, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the ten years following our dissolution. However, because we are a blank check company, rather than an operating company, and our operations are 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
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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 stockholders 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 an initial business combination by February 5, 2021 is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
If, after we distribute the proceeds in the Trust Account to the 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 the 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 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.
Our internal controls over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation.
As a public company, we are required to comply with the SECs rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of internal control over financial reporting. To comply with the requirements of being a public company, the Post-Combination Company will be required to provide attestation on internal controls commencing with the annual report for fiscal year ended December 31, 2020, and we may need to undertake various actions, such as implementing additional internal controls and procedures and hiring additional accounting or internal audit staff. The standards required for a public company under Section 404 of the Sarbanes-Oxley Act are significantly more stringent than those required of Luminar as a privately-held company. Further, as an emerging growth company, our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404 until the date we are no longer an emerging growth company. At such time, our independent registered public accounting firm may issue a report that is adverse in the event that it is not satisfied with the level at which the controls of the Post-Combination Company are documented, designed or operating.
Testing and maintaining these controls can divert our managements attention from other matters that are important to the operation of our business. If we identify material weaknesses in the internal control over financial reporting of the Post-Combination Company or are unable to comply with the requirements of Section 404 or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting when we no longer qualify as an emerging growth company, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected, and we could become subject to investigations by the SEC or other regulatory authorities, which could require additional financial and management resources.
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Risks Related to Ownership of the Post-Combination Companys Shares
Luminars Certificate of Incorporation provides, and the Post-Combination Companys Second Amended and Restated Certificate of Incorporation will provide, subject to limited exceptions, that the Court of Chancery will be the sole and exclusive forum for certain stockholder litigation matters, which could limit its stockholders ability to obtain a chosen judicial forum for disputes with the Post-Combination Company or its directors, officers, employees or stockholders.
Luminars Certificate of Incorporation requires, and the Post-Combination Companys Second Amended and Restated Certificate of Incorporation will require, to the fullest extent permitted by law, that derivative actions brought in the Post-Combination Companys name, actions against directors, officers and employees for breach of fiduciary duty and other similar actions may be brought in the Court of Chancery or, if that court lacks subject matter jurisdiction, another federal or state court situated in the State of Delaware. Any person or entity purchasing or otherwise acquiring any interest in shares of the Post-Combination Companys capital stock shall be deemed to have notice of and consented to the forum provisions in the Post-Combination Companys Second Amended and Restated Certificate of Incorporation. In addition, the Post-Combination Companys Second Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws will provide that the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act and the Exchange Act.
In March 2020, the Delaware Supreme Court issued a decision in Salzburg et al. v. Sciabacucchi, which found that an exclusive forum provision providing for claims under the Securities Act to be brought in federal court is facially valid under Delaware law. It is unclear whether this decision will be appealed, or what the final outcome of this case will be. The Post-Combination Company intends to enforce this provision, but it does not know whether courts in other jurisdictions will agree with this decision or enforce it.
This choice of forum provision may limit a stockholders ability to bring a claim in a judicial forum of its choosing for disputes with the Post-Combination Company or any of its directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision contained in Luminars Certificate of Incorporation or the Post-Combination Companys Second Amended and Restated Certificate of Incorporation to be inapplicable or unenforceable in an action, the Post-Combination Company may incur additional costs associated with resolving such action in other jurisdictions, which could harm its business, operating results and financial condition.
The Post-Combination Companys charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of the Post-Combination Companys stock.
The Post-Combination Companys Second Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, to be in effect upon the closing of the Business Combination, will contain provisions that could delay or prevent a change in control of the Post-Combination Company. These provisions could also make it more difficult for stockholders to elect directors and take other corporate actions. These provisions include:
| providing for a classified board of directors with staggered, three-year terms; |
| authorizing its board of directors to issue Preferred Stock with voting or other rights or preferences that could discourage a takeover attempt or delay changes in control; |
| prohibiting cumulative voting in the election of directors; |
| providing that vacancies on its board of directors may be filled only by a majority of directors then in office, even though less than a quorum; |
| prohibiting the adoption, amendment or repeal of the Amended and Restated Bylaws or the repeal of the provisions of its Second Amended and Restated Certificate of Incorporation to be in effect upon the |
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closing of the Business Combination regarding the election and removal of directors without the required approval of at least two-thirds of the shares entitled to vote at an election of directors; |
| prohibiting stockholder action by written consent; |
| limiting the persons who may call special meetings of stockholders; and |
| requiring advance notification of stockholder nominations and proposals. |
These provisions may frustrate or prevent any attempts by the Post-Combination Company stockholders to replace or remove its current management by making it more difficult for stockholders to replace members of the Post-Combination Companys board of directors, which is responsible for appointing the members of its management. In addition, the provisions of Section 203 of the DGCL govern the Post-Combination Company. These provisions may prohibit large stockholders, in particular those owning 15% or more of the Post-Combination Companys outstanding voting stock, from merging or combining with the Post-Combination Company for a certain period of time without the consent of its board of directors.
These and other provisions in the Post-Combination Companys Second Amended and Restated Certificate of Incorporation and its Amended and Restated Bylaws to be in effect upon the closing of the Business Combination and under Delaware law could discourage potential takeover attempts, reduce the price investors might be willing to pay in the future for shares of Class A Stock and result in the market price of Class A Stock being lower than it would be without these provisions. For more information, see the section of this proxy statement/consent solicitation statement/prospectus captioned Description of SecuritiesAnti-Takeover Provisions.
Claims for indemnification by the Post-Combination Companys directors and officers may reduce the Post-Combination Companys available funds to satisfy successful third-party claims against the Post-Combination Company and may reduce the amount of money available to the Post-Combination Company.
The Post-Combination Companys Second Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws will provide that the Post-Combination Company will indemnify its directors and officers, in each case to the fullest extent permitted by Delaware law.
In addition, as permitted by Section 145 of the DGCL, the Amended and Restated Bylaws and its indemnification agreements that it will enter into with its directors and officers will provide that:
| the Post-Combination Company will indemnify its directors and officers for serving the Post-Combination Company in those capacities or for serving other business enterprises at its request, to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such persons conduct was unlawful; |
| the Post-Combination Company may, in its discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law; |
| the Post-Combination Company will be required to advance expenses, as incurred, to its directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification; |
| the Post-Combination Company will not be obligated pursuant to its Amended and Restated Bylaws to indemnify a person with respect to proceedings initiated by that person against the Post-Combination Company or its other indemnitees, except with respect to proceedings authorized by its board of directors or brought to enforce a right to indemnification; |
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| the rights conferred in the Amended and Restated Bylaws are not exclusive, and the Post-Combination Company is authorized to enter into indemnification agreements with its directors, officers, employees and agents and to obtain insurance to indemnify such persons; and |
| the Post-Combination Company may not retroactively amend its Amended and Restated Bylaw provisions to reduce its indemnification obligations to directors, officers, employees and agents. |
The dual class structure of the Post-Combination Companys Common Stock has the effect of concentrating voting control with Austin Russell, Luminars founder and Chief Executive Officer. This will limit or preclude your ability to influence corporate matters, including the outcome of important transactions, including a change in control.
Shares of the Class B Stock will have 10 votes per share, while shares of the Class A Stock will have one vote per share. As of the closing of the Business Combination, Austin Russell, Luminars founder and Chief Executive Officer, will hold all of the issued and outstanding shares of Class B Stock. Accordingly, Mr. Russell will hold approximately 83% of the voting power of the Post-Combination Companys outstanding capital stock as of the closing of the Business Combination (assuming no redemptions of the outstanding Public Shares held by the Public Stockholders) and will be able to control matters submitted to its stockholders for approval, including the election of directors, amendments of its organizational documents and any merger, consolidation, sale of all or substantially all of the Post-Combination Companys assets or other major corporate transactions. Mr. Russell may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentrated control may have the effect of delaying, preventing or deterring a change in control of the Post-Combination Company, could deprive its stockholders of an opportunity to receive a premium for their capital stock as part of a sale of the Post-Combination Company, and might ultimately affect the market price of shares of Class A Stock. For information about the Post-Combination Companys dual class structure, see the section titled Description of Securities.
In August 2020, in connection with entering into the Merger Agreement, Mr. Russell and the Company entered into a voting agreement (the Voting Agreement). Pursuant to the Voting Agreement, solely following a For Cause Termination (as defined in the section titled Certain Relationships and Related Transactions), Mr. Russell agreed not to vote in excess of 10% of the shares of Class B Stock beneficially owned by Mr. Russell in any director election (subject to the earlier termination of the Voting Agreement pursuant to the terms thereof and the occurrence of the consummation of the Business Combination). For more information about the Voting Agreement, see the section titled Certain Relationships and Related Transactions.
The Post-Combination Company will be a controlled company within the meaning of The Nasdaq Stock Market listing standards, and, as a result, will qualify for exemptions from certain corporate governance requirements that provide protection to stockholders of other companies. To the extent the Post-Combination Company utilizes any of these exemptions, you will not have the same protections afforded to stockholders of companies that are subject to such requirements. The Post-Combination Company does not currently intend to rely on the exemptions afforded to controlled companies at this time.
So long as more than 50% of the voting power for the election of directors of the Post-Combination Company is held by an individual, a group or another company, the Post-Combination Company will qualify as a controlled company under The Nasdaq Stock Market listing requirements. Following the completion of the Business Combination, Austin Russell will control a majority of the voting power of the Post-Combination Companys outstanding capital stock. As a result, the Post-Combination Company will be a controlled company under the Nasdaq Stock Market rules. As a controlled company, the Post-Combination Company will be exempt from certain Nasdaq corporate governance requirements, including those that would otherwise require the board of the Post-Combination Company to have a majority of independent directors and require that the Post-Combination Company establish a compensation committee comprised entirely of independent directors, or otherwise ensure that the compensation of the Post-Combination Companys executive officers and nominees for
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directors are determined or recommended to the board of directors by the independent members of the board of directors. While the Post-Combination Company does not currently intend to rely on any of these exemptions, it will be entitled to do so for as long as the Post-Combination Company will be considered a controlled company, and to the extent it relies on one or more of these exemptions, holders of the Post-Combination Companys capital stock will not have the same protections afforded to stockholders of companies that are subject to all of Nasdaqs corporate governance requirements.
The Post-Combination Companys dual class structure may depress the trading price of the Class A Stock.
The Post-Combination Company cannot predict whether its dual class structure will result in a lower or more volatile market price of the Class A Stock or in adverse publicity or other adverse consequences. For example, certain index providers have announced restrictions on including companies with multiple-class share structures in certain of their indexes. S&P Dow Jones and FTSE Russell have announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices, including the S&P 500, pursuant to which companies with multiple classes of shares of common stock are excluded. In addition, several stockholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the dual class structure of the Post-Combination Companys Common Stock may cause stockholder advisory firms to publish negative commentary about the Post-Combination Companys corporate governance practices or otherwise seek to cause the Post-Combination Company to change its capital structure. Any such exclusion from indices or any actions or publications by stockholder advisory firms critical of the Post-Combination Companys corporate governance practices or capital structure could adversely affect the value and trading market of the Class A Stock.
There will be approximately 216,948,840 shares of Class A Stock outstanding immediately following the Business Combination (assuming no redemptions of the Public Shares by Public Stockholders), and there may be a large number of shares of Class A Stock sold in the market following the completion of the Business Combination or shortly thereafter. The shares held by the Companys Public Stockholders are freely tradable.
Such sales of shares of Class A Stock in the public market or the perception that these sales or conversions might occur, may depress the market price of Class A Stock and could impair the Post Combination Companys ability to raise capital through the sale of additional equity securities. It is difficult to predict the effect that such sales or conversions may have on the prevailing market price of the Class A Stock.
Following the consummation of the Business Combination, our only significant asset will be our ownership interest in Luminar and such ownership may not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on our Common Stock or satisfy our other financial obligations.
Following the consummation of the Business Combination, we will have no direct operations and no significant assets other than our ownership of Luminar. We and certain investors, the Luminar Stockholders, and directors and officers of Luminar and its affiliates will become stockholders of the Post-Combination Company. We will depend on Luminar for distributions, loans and other payments to generate the funds necessary to meet our financial obligations, including our expenses as a publicly traded company and to pay any dividends with respect to our Common Stock. The financial condition and operating requirements of Luminar may limit our ability to obtain cash from Luminar. The earnings from, or other available assets of, Luminar may not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on our Common Stock or satisfy our other financial obligations.
Luminars operating activities may be restricted as a result of affirmative and negative covenants related to the indebtedness under Luminars Loan Documents (as defined below), and it may be required to repay the outstanding indebtedness in an event of default, which would have an adverse effect on its business.
In March 2020, Luminar issued a senior secured promissory note and entered into a security agreement and certain other loan documents (collectively, the Loan Documents). Pursuant to the Loan Documents, the
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Noteholders advanced to Luminar an aggregate principal amount of $30.0 million to be used for (i) the refinancing of certain prior indebtedness of Luminar owing to certain of the Noteholders or affiliates thereof and (ii) for general working capital of Luminar. The Loan Documents subject Luminar to various customary covenants, including requirements as to financial reporting, insurance, and the maintenance of certain liquidity thresholds, and restrictions and limitations on its ability to dispose of its assets or business, to change its line of business, to liquidate or dissolve, to enter into any change in control transaction, to merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, to incur additional indebtedness, to incur liens on its property, to pay any dividends or make other distributions on capital stock other than dividends payable solely in common stock, to redeem capital stock, to engage in transactions with affiliates, to encumber its intellectual property and certain other restrictions on Luminars activities. Luminars business may be adversely affected by these restrictions on its ability to operate its business.
Additionally, Luminar may be required to repay the outstanding indebtedness under the Loan Documents if an event of default occurs under the Loan Documents. Under the Loan Documents, an event of default will occur if, among other things, Luminar fails to make payments under the Loan Documents; breaches, in any material respect, any of its representations or warranties; breaches certain of its covenants under the Loan Documents, subject to specified cure periods with respect to certain breaches; Luminar or its assets become subject to certain legal proceedings, such as bankruptcy proceedings; a judgment in excess of $250,000 is entered against Luminar or its assets; Luminar is unable to pay its debts as they become due; Luminar defaults on contracts with third parties which would permit the Noteholders to accelerate the maturity of such indebtedness or that could have a material adverse change on Luminar; or the collateral agent determines that any Material Adverse Effect (as defined in the Loan Documents) has occurred. Luminar may not have enough available cash or be able to raise additional funds through equity or debt financings to repay such indebtedness at the time any such event of default occurs. The collateral agent could also exercise its rights to take possession of, and to dispose of, the collateral secured pursuant to the Loan Documents, which collateral includes substantially all of Luminars property (excluding intellectual property, which is subject to a negative pledge). Luminars business, financial condition, and results of operations could be materially adversely affected as a result of any of these events.
Pursuant to the Merger Agreement, if the amount of the Companys cash at the closing of the Business Combination exceeds $300 million, Luminar will be required to repay its indebtedness under the Loan Documents at the closing of the Business Combination. If the amount of the Companys cash at the closing of the Business Combination does not exceed $300 million, Luminar may, at its option, repay the indebtedness under the Loan Documents.
Luminar does not intend to pay dividends for the foreseeable future.
Luminar has never declared or paid any cash dividends on its capital stock and does not intend to pay any cash dividends in the foreseeable future. Luminar expects to retain future earnings, if any, to fund the development and growth of its business. Any future determination to pay dividends on Luminars capital stock will be at the discretion of its board of directors. In addition, Luminars Loan Documents contain restrictions on its ability to pay dividends. Accordingly, investors must rely on sales of their Luminar Class A Stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.
The market price and trading volume of Class A Stock may be volatile and could decline significantly following the Business Combination.
The stock markets, including Nasdaq on which we intend to list the shares of Class A Stock to be issued in the Business Combination under the symbol LAZR, have from time to time experienced significant price and volume fluctuations. Even if an active, liquid and orderly trading market develops and is sustained for the Class A Stock following the Business Combination, the market price of Class A Stock may be volatile and could decline significantly. In addition, the trading volume in Class A Stock may fluctuate and cause significant price variations to occur. If the market price of Class A Stock declines significantly, you may be unable to resell your
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shares at or above the market price of Class A Stock as of the date of the consummation of the Business Combination. We cannot assure you that the market price of Class A Stock will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following:
| the realization of any of the risk factors presented in this proxy statement/consent solicitation statement/prospectus; |
| actual or anticipated differences in our estimates, or in the estimates of analysts, for our revenues, Adjusted EBITDA, results of operations, level of indebtedness, liquidity or financial condition; |
| additions and departures of key personnel; |
| failure to comply with the requirements of Nasdaq; |
| failure to comply with the Sarbanes-Oxley Act or other laws or regulations; |
| future issuances, sales, resales or repurchases or anticipated issuances, sales, resales or repurchases, of our securities; |
| publication of research reports about the Company; |
| the performance and market valuations of other similar companies; |
| commencement of, or involvement in, litigation involving Luminar or us; |
| broad disruptions in the financial markets, including sudden disruptions in the credit markets; |
| speculation in the press or investment community; |
| actual, potential or perceived control, accounting or reporting problems; |
| changes in accounting principles, policies and guidelines; and |
| other events or factors, including those resulting from infectious diseases, health epidemics and pandemics (including the ongoing COVID-19 public health emergency), natural disasters, war, acts of terrorism or responses to these events. |
In the past, securities class-action litigation has often been instituted against companies following periods of volatility in the market price of their shares. This type of litigation could result in substantial costs and divert our managements attention and resources, which could have a material adverse effect on us.
Our quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to seasonality and other factors, some of which are beyond our control, resulting in a decline in our stock price.
Our quarterly operating results may fluctuate significantly because of several factors, including:
| labor availability and costs for hourly and management personnel; |
| profitability of our products, especially in new markets and due to seasonal fluctuations; |
| changes in interest rates; |
| impairment of long-lived assets; |
| macroeconomic conditions, both nationally and locally; |
| negative publicity relating to products we serve; |
| changes in consumer preferences and competitive conditions; |
| expansion to new markets; and |
| fluctuations in commodity prices. |
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If, following the Business Combination, securities or industry analysts do not publish or cease publishing research or reports about the Post-Combination Company, its business, or its market, or if they change their recommendations regarding our Class A Stock adversely, then the price and trading volume of our Class A Stock could decline.
The trading market for our Class A Stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market, or our competitors. Securities and industry analysts do not currently, and may never, publish research on the Company or the Post-Combination Company. If no securities or industry analysts commence coverage of the Post-Combination Company, our stock price and trading volume would likely be negatively impacted. If any of the analysts who may cover the Post-Combination Company change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, the price of our Class A Stock would likely decline. If any analyst who may cover the Company were to cease coverage of the Post-Combination Company or fail to regularly publish reports on it, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline.
Future issuances of debt securities and equity securities may adversely affect us, including the market price of the Class A Stock and may be dilutive to existing stockholders.
In the future, we may incur debt or issue equity-ranking senior to the Class A Stock. Those securities will generally have priority upon liquidation. Such securities also may be governed by an indenture or other instrument containing covenants restricting its operating flexibility. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of the Class A Stock. Because our decision to issue debt or equity in the future will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, nature or success of our future capital raising efforts. As a result, future capital raising efforts may reduce the market price of Class A Stock and be dilutive to existing stockholders.
There can be no assurance that our Class A Stock that will be issued in connection with the Business Combination will be approved for listing on Nasdaq or, if approved, will continue to be so listed following the closing of the Business Combination, or that we will be able to comply with the continued listing standards of Nasdaq.
Our Class A Stock, Public Units and Public Warrants are currently listed on Nasdaq. Our continued eligibility for listing may depend on, among other things, the number of our shares that are redeemed. We intend to apply to continue the listing of our publicly-traded common stock and warrants on Nasdaq. If, following the closing of the Business Combination, Nasdaq delists our Class A Stock from trading on its exchange for failure to meet the listing standards, we and our stockholders could face significant material adverse consequences including:
| a limited availability of market quotations for our securities; |
| reduced liquidity for our securities; |
| a determination that our Class A Stock is a penny stock which will require brokers trading in our Class A 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; or |
| a decreased ability to issue additional securities or obtain additional financing in the future. |
The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as covered securities. Because our Class A Stock, Public Units and Public Warrants are listed on Nasdaq, they are covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to
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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, other than the State of Idaho, having used these powers to prohibit or restrict the sale of securities issued by blank check companies, 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.
The Post-Combination Companys failure to meet the continued listing requirements of Nasdaq could result in a delisting of its Securities.
If, after listing, the Post-Combination Company fails to satisfy the continued listing requirements of Nasdaq such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may take steps to delist its securities. Such a delisting would likely have a negative effect on the price of the securities and would impair your ability to sell or purchase the securities when you wish to do so. In the event of a delisting, the Post-Combination Company can provide no assurance that any action taken by it to restore compliance with listing requirements would allow its securities to become listed again, stabilize the market price or improve the liquidity of its securities, prevent its securities from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaqs listing requirements. Additionally, if the Post-Combination Companys securities are not listed on, or become delisted from, Nasdaq for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.
The Post-Combination Company will qualify as an emerging growth company as well as a smaller reporting company within the meaning of the Securities Act, and if the Post-Combination Company takes advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this could make the Post-Combination Companys securities less attractive to investors and may make it more difficult to compare the Post-Combination Companys performance with other public companies.
Following the consummation of the Business Combination, the Post-Combination Company will qualify as an emerging growth company within the meaning of the Securities Act, as modified by the JOBS Act, and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies for as long as the Post-Combination Company continues to be an emerging growth company, 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 the Post-Combination Companys 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, the Post-Combination Companys stockholders may not have access to certain information they may deem important. The Post-Combination Company will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market value of Common Stock that is held by non-affiliates exceeds $700 million as of the end of that years second fiscal quarter, (ii) the last day of the fiscal year in which the Post-Combination Company has total annual gross revenue of $1.07 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which the Post-Combination Company has issued more than $1 billion in non-convertible debt in the prior three-year period or (iv) December 31, 2024. Investors may find the Post-Combination Companys securities less attractive because the Post-Combination Company will rely on these exemptions. If some investors find the Post-Combination Companys securities less attractive as a result of its reliance on these exemptions, the trading prices of the Post-Combination Companys securities may be lower than they otherwise would be, there may be a less active trading market for its securities and the trading prices of its securities may be more volatile.
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In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as the Post-Combination Company is an emerging growth company. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Post-Combination Company has elected not to opt out of such extended transition period and, therefore, the Post-Combination Company may not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. This may make comparison of its 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, the Post-Combination Company will qualify as a smaller reporting company as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. The Post-Combination Company will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of Common Stock held by non-affiliates exceeds $250 million as of the end of that years second fiscal quarter, or (ii) its annual revenues exceeded $100 million during such completed fiscal year and the market value of Common Stock held by non-affiliates exceeds $700 million as of the end of that years second fiscal quarter. To the extent the Post-Combination Company takes advantage of such reduced disclosure obligations, it may also make comparison of its financial statements with other public companies difficult or impossible.
Risks Related to the Redemption
We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete a Business Combination with which a substantial majority of our stockholders do not agree.
The Current Company Certificate does not provide a specified maximum redemption threshold, except that we will not redeem our Public Shares in an amount that would result in our failure to have net tangible assets in excess of $5,000,000 (such that we are not subject to the SECs penny stock rules). As a result, we may be able to complete the Business Combination even though a substantial portion of our Public Stockholders do not agree with the transaction and have redeemed their shares or have entered into privately negotiated agreements to sell their shares to our Sponsor, directors or officers or their affiliates. As of the date of this proxy statement/consent solicitation statement/prospectus, no agreements with respect to the private purchase of Public Shares by us or the persons described above have been entered into with any such investor or holder. We will file a Current Report on Form 8-K with the SEC to disclose private arrangements entered into or significant private purchases made by any of the aforementioned persons that would affect the vote on the Transaction Proposal or other proposals (as described in this proxy statement/consent solicitation statement/prospectus) at the Special Meeting.
In the event the aggregate cash consideration we would be required to pay for all shares of Class A Stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the Merger Agreement exceeds the aggregate amount of cash available to us, we may not complete the Business Combination or redeem any shares, all shares of Class A Stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate initial business combination.
If you or a group of stockholders of which you are a part are deemed to hold an aggregate of more than 20% of our Class A Stock issued in the Company IPO, you (or, if a member of such a group, all of the members of such group in the aggregate) will lose the ability to redeem all such shares in excess of 20% of our Class A Stock issued in the Company IPO.
A Public Stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a group (as defined under Section 13 of the Exchange Act), will be restricted from
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redeeming in the aggregate his, her or its shares or, if part of such a group, the groups shares, in excess of 20% of the shares of Class A Stock included in the Public Units sold in the Company IPO. In order to determine whether a stockholder is acting in concert or as a group with another stockholder, we will require each Public Stockholder seeking to exercise redemption rights to certify to us whether such stockholder is acting in concert or as a group with any other stockholder. Such certifications, together with other public information relating to stock ownership available to us at that time, such as Section 13D, Section 13G and Section 16 filings under the Exchange Act, will be the sole basis on which we make the above-referenced determination. Your inability to redeem any such excess shares will reduce your influence over our ability to consummate the Business Combination and you could suffer a material loss on your investment in us if you sell such excess shares in open market transactions. Additionally, you will not receive redemption distributions with respect to such excess shares if we consummate the Business Combination. As a result, you will continue to hold that number of shares aggregating to more than 20% of the shares sold in the Company IPO and, in order to dispose of such excess shares, would be required to sell your stock in open market transactions, potentially at a loss. We cannot assure you that the value of such excess shares will appreciate over time following the Business Combination or that the market price of our Class A Stock will exceed the per-share redemption price. Notwithstanding the foregoing, stockholders may challenge our determination as to whether a stockholder is acting in concert or as a group with another stockholder in a court of competent jurisdiction.
However, our stockholders ability to vote all of their shares (including such excess shares) for or against the Business Combination is not restricted by this limitation on redemption.
There is no guarantee that a stockholders decision whether to redeem its shares for a pro rata portion of the Trust Account will put the stockholder in a better future economic position.
We can give no assurance as to the price at which a stockholder may be able to sell its Public Shares in the future following the completion of the Business Combination or any alternative initial business combination. Certain events following the consummation of any initial business combination, including the Business Combination, may cause an increase in our share price, and may result in a lower value realized now than a stockholder of the Company might realize in the future had the stockholder not redeemed its shares. Similarly, if a stockholder does not redeem its shares, the stockholder will bear the risk of ownership of the Public Shares after the consummation of any initial business combination, and there can be no assurance that a stockholder can sell its shares in the future for a greater amount than the redemption price set forth in this proxy statement/consent solicitation statement/prospectus. A stockholder should consult the stockholders own tax and/or financial advisor for assistance on how this may affect his, her or its individual situation.
Our stockholders who wish to redeem their shares for a pro rata portion of the Trust Account must comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline. If stockholders fail to comply with the redemption requirements specified in this proxy statement/consent solicitation statement/prospectus, they will not be entitled to redeem their shares of our Class A Stock for a pro rata portion of the funds held in our Trust Account.
Public Stockholders who wish to redeem their shares for a pro rata portion of the Trust Account must, among other things (i) submit a request in writing and (ii) tender their certificates to our Transfer Agent or deliver their shares to the Transfer Agent electronically through the DWAC system at least two business days prior to the Special Meeting. In order to obtain a physical stock certificate, a stockholders broker and/or clearing broker, DTC and our Transfer Agent will need to act to facilitate this request. It is our understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the Transfer Agent. However, because we do not have any control over this process or over the brokers, which we refer to as DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. If it takes longer than anticipated to obtain a physical certificate, stockholders who wish to redeem their shares may be unable to obtain physical certificates by the deadline for exercising their redemption rights and thus will be unable to redeem their shares.
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Stockholders electing to redeem their shares will receive their pro rata portion of the Trust Account less Regulatory Withdrawals and franchise and income taxes payable, calculated as of two business days prior to the anticipated consummation of the Business Combination. Please see the section entitled Special Meeting of the Stockholders of the Company in Lieu of 2020 Annual Meeting of Company StockholdersRedemption Rights for additional information on how to exercise your redemption rights.
If a stockholder fails to receive notice of our offer to redeem our Public Shares in connection with the Business Combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
If, despite our compliance with the proxy rules, a stockholder fails to receive our proxy materials, such stockholder may not become aware of the opportunity to redeem its shares. In addition, the proxy materials that we are furnishing to holders of our Public Shares in connection with the Business Combination describes the various procedures that must be complied with in order to validly redeem Public Shares. In the event that a stockholder fails to comply with these procedures, its shares may not be redeemed.
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Presentation of Financial Information
This proxy statement/consent solicitation statement/prospectus contains:
| the audited financial statements of the Company as of and for the fiscal year ended December 31, 2019 and the period from August 28, 2018 (inception) to December 31, 2018, prepared in accordance with GAAP; |
| the unaudited financial statements of the Company as of and for the six months ended June 30, 2020 and for the six months ended June 30, 2019, prepared in accordance with GAAP; |
| the audited consolidated financial statements of Luminar as of and for the fiscal years ended December 31, 2019 and December 31, 2018, prepared in accordance with GAAP; |
| the unaudited condensed consolidated financial statements of Luminar as of and for the six months ended June 30, 2020 and June 30, 2019, prepared in accordance with GAAP; and |
| the unaudited pro forma condensed combined financial statements of the Post-Combination Company for the year ended December 31, 2019 and as of and for the six months ended June 30, 2020, prepared in accordance with GAAP. |
Unless indicated otherwise, financial data presented in this document has been taken from the audited and unaudited consolidated financial statements of the Company included in this document, and the audited and unaudited consolidated financial statements of Luminar included in this document. Where information is identified as unaudited, it has not been subject to an audit.
Cautionary Note Regarding Forward-Looking Statements
Some of the statements contained in this proxy statement/consent solicitation statement/prospectus constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. These forward-looking statements include statements about future financial and operating results of Luminar; benefits of the Business Combination; statements about the plans, strategies and objectives of management for future operations of Luminar; statements regarding future performance; and other statements regarding the Business Combination. In some cases, you can identify these forward-looking statements by the use of terminology such as outlook, believes, expects, potential, continues, may, will, should, could, seeks, approximately, predicts, intends, plans, estimates, anticipates or the negative version of these words or other comparable words or phrases.
The forward-looking statements contained in this proxy statement/consent solicitation statement/prospectus reflect the Companys and Luminars current views about the Business Combination and future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause its actual results to differ significantly from those expressed in any forward-looking statement. There are no guarantees that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:
| general economic uncertainty and the effect of general economic conditions on Luminars industry in particular, including the level of demand and financial performance of the autonomous vehicle industry and market adoption of lidar; |
| Luminars history of losses and whether it will continue to incur significant expenses and continuing losses for the foreseeable future; |
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| the effect of continued pricing pressures, automotive OEM cost reduction initiatives and the ability of automotive OEMs to re-source or cancel vehicle or technology programs which may result in lower than anticipated margins, or losses, which may adversely affect Luminars business; |
| the ability of Luminar to protect and enforce its intellectual property rights; |
| whether Luminars lidar products are selected for inclusion in autonomous driving or ADAS systems by automotive OEMs or their suppliers; |
| Luminar is reliant on key inputs and its inability to reduce and control the cost of such inputs could negatively impact the adoption of its products and its profitability; |
| changes in personnel and availability of qualified personnel; |
| the effects of the ongoing coronavirus (COVID-19) pandemic or other infectious diseases, health epidemics, pandemics and natural disasters on Luminars business; |
| Luminars ability to remediate the material weakness in its internal controls over financial reporting; |
| Luminars ability to transition to an outsourced manufacturing business model; |