Spac Backstop Agreement

One of the main considerations or restrictions applicable to psPC participants is the availability of capital. Not all PSPC IPOs are generally available to PSPC to pay deposits, separation fees, refunds, etc., as the proceeds are held in PSPC`s fiduciary account. In some circumstances, after its IPO, PSPC may have a small amount of cash or interest income to withdraw from the trust account, but this amount is often insufficient for PSPC to pay its own expenses, let alone the target company`s expenses or a deposit, commitment fee or separation fee. An important distinguishing feature of PSPC is whether PSPC has a subsidiary or third party willing to commit to backstop withdrawals and purchase additional equity to the extent necessary to finance the cash purchase price of the PSPC transaction. These parties may also be prepared to enter into alternative sales contracts with the target company, to commit to purchase PSPC common shares on the market (and to undertake not to exchange such shares), to fund transaction fees and expenses, and to provide capital for termination fees if the PSPC transaction does not obtain the necessary approvals or is not otherwise entered into. In some recent transactions, the seller, PIPE investors, backstop investors or debt financing sources have received a portion of the founding shares or founding option securities. If the dilution effect of the founding shares is too great, PSPC`s sponsor may lose part of the founding shares or dispose of them subject to certain earn-in rights. As described above, each PSPC has an external date on which it is required (under its Articles) to either enter into or liquidate a PSPC transaction. The external date for each PSPC is different and is generally based on the PSPC IPO date.

However, some SPCAs provide for potential renewal clauses that may extend the life of PSPC upon the occurrence of certain triggering events, which are most often the signing of a final sales contract or memorandum of understanding or the provision of additional funds into the trust account by the PSPC sponsor. The characteristics of a PSPC`s capital structure and contractual arrangements under PSPC are important to the sponsor, management, funding sources (including public shareholders) and, if sellers obtain an interest in PSPC, to the shareholders of the target company. The dilutive effect of the founding shares, in particular with regard to investment in backstop or pipe, should be understood and possibly modified. Among PSPC`s recent transactions, the average time between the signing of definitive agreements for the PSPC transaction and the closing of the transaction was approximately 4.5 months. Accordingly, a PSPC that has a short term until its external date must amend its articles (which must be accompanied by an offer of withdrawal to its common shareholders) in order to extend its external date in order to provide the time necessary to complete the PSPC transaction. If the subscription organization takes possession of shares In accordance with the agreement, the shares belong to the organization that manages it as it pleases. Shares are treated in the same way as any other investment acquired through normal market activity. The issuing company may not impose restrictions on the trading of shares.

The underwriting organisation may hold or sell the associated securities in accordance with the rules governing the business as a whole. . . .

Jason Thane Jeffers

Jason Thane Jeffers

Jason Thane Jeffers - Metal sculptor and Web Developer.