Document:

CPI AEROSTRUCTURES, INC. 10-K

 

 

EXHIBIT 10.2 

 

CPI AEROSTRUCTURES, INC.

 

2016 Long Term Incentive Plan

Adopted: June 28, 2016

Amended: October 6, 2020

Section 1. Purpose; Definitions.

1.1. Purpose.  The purpose of
the Plan is to enable the Company to offer to its employees, officers, directors and consultants whose past, present and/or potential
future contributions to the Company and its Subsidiaries have been, are or will be important to the success of the Company, an opportunity
to share monetarily in the success of, and/or acquire a proprietary interest in, the Company. The various types of long-term incentive
awards that may be provided under the Plan will enable the Company to respond to changes in compensation practices, tax laws, accounting
regulations and the size and diversity of its business.

1.2. Definitions.  For purposes
of the Plan, the following terms shall be defined as set forth below:

(a) “Agreement” means the agreement between
the Company and the Holder, or such other document as may be determined by the Committee, setting forth the terms and conditions of an
award under the Plan.

(b) “Board” means the Board of Directors
of the Company.

(c) “Code” means the Internal Revenue Code
of 1986, as amended from time to time.

(d) “Committee” means the committee of the
Board designated to administer the Plan as provided in Section 2.1. If no Committee is so designated, then all references in this Plan
to “Committee” shall mean the Board.

(e) “Common Stock” means the Common Stock
of the Company, par value $0.001 per share.

(f) “Company” means CPI Aerostructures,
Inc., a corporation organized under the laws of the State of New York.

(g) “Disability” means physical or mental
impairment as determined under procedures established by the Committee for purposes of the Plan.

(h) “Effective Date” means the date determined
pursuant to Section 12.1.

(i) “Excluded Items” has the meaning set
forth in Section 13.2.

(j) “Fair Market Value,” unless otherwise
required by any applicable provision of the Code or any regulations issued thereunder, means, as of any given date: (i) if the Common
Stock is listed on a national securities exchange or is traded over-the-counter and last sale information is available, the last sale
price of the Common Stock in the principal trading market for the Common Stock on such date, as reported by the exchange or by such source
that the Committee deems reliable, as the case may be; or (ii) if the fair market value of the Common Stock cannot be determined pursuant
to clause (i), such price as the Committee shall determine, in good faith.

(k) “Holder” means a person who has received
an award under the Plan.

(l) “Incentive Bonus” means a bonus opportunity
awarded under Section 9 pursuant to which a recipient may become entitled to receive an amount based on satisfaction of such Performance
Goals as are specified in the Agreement.

(m) “Incentive Stock Option” means any Stock
Option intended to be and designated as an “incentive stock option” within the meaning of Section 422 of the Code.

(n) “Non-qualified Stock Option” means any
Stock Option that is not an Incentive Stock Option.

(o) “Normal Retirement” means retirement
from active employment with the Company or any Subsidiary on or after such age which may be designated by the Committee as “retirement
age” for any particular Holder. If no age is designated, it shall be 65.

(p) “Other Stock-Based Award” means an award
under Section 8 that is valued in whole or in part by reference to, or is otherwise based upon, Common Stock.

(q) “Parent” means any present or future
“parent corporation” of the Company, as such term is defined in Section 424(e) of the Code.

(r) “Performance Goals” means the one or
more goals established by the Committee in accordance with Sections 13.2.

(s) “Plan” means the Company’s 2016
Long Term Incentive Plan, as hereinafter amended from time to time.

(t) “Repurchase Value” shall mean the Fair
Market Value if the award to be settled under Section 2.2(d) or repurchased under Section 5.2(l) is comprised of shares of Common Stock
and the difference between Fair Market Value and the exercise price (if lower than Fair Market Value) if the award is a Stock Option or
Stock Appreciation Right; in each case, multiplied by the number of shares subject to the award. “Repurchase Value” if the
award to be repurchased under Section 10.2 is comprised of shares of Common Stock shall mean the greater of the Fair Market Value or the
based upon the price per share of Common Stock received or to be received by other shareholders of the Company in the event. “Repurchase
Value” if the award to be repurchased under Section 10.2 is comprised of Stock Options or Stock Appreciation Rights shall mean the difference between
the greater of Fair Market Value or the price per share of Common Stock received or to be received by other shareholders of the Company
in the event and the exercise price (if lower) multiplied by the number of shares subject to the award.

 

     

    	 

    

(u) “Restricted Stock” means Common Stock
received under an award made pursuant to Section 7 that is subject to restrictions under Section 7.

(v) “Restricted Stock Unit” means an unfunded,
unsecured right to receive, on the applicable settlement date, one share or an amount in cash or other consideration determined by the
Committee to be of equal value as of such settlement date, subject to certain vesting conditions and other restrictions.

(w) “SAR Value” means the excess of the
Fair Market Value (on the exercise date) over (a) the exercise price that the participant would have otherwise had to pay to exercise
the related Stock Option or (b) if a Stock Appreciation Right is granted unrelated to a Stock Option, the Fair Market Value of a share
of Common Stock on the date of grant of the Stock Appreciation Right, in either case, multiplied by the number of shares for which the
Stock Appreciation Right is exercised.

(x) “Stock Appreciation Right” means the
right to receive from the Company, without a cash payment to the Company, a number of shares of Common Stock equal to the SAR Value divided
by the Fair Market Value (on the exercise date).

(y) “Stock Option” or “Option”
means any option to purchase shares of Common Stock which is granted pursuant to the Plan.

(z) “Subsidiary” means any present or future
“subsidiary corporation” of the Company, as such term is defined in Section 424(f) of the Code.

(aa) “Vest” means to become exercisable
or to otherwise obtain ownership rights in an award.

Section 2. Administration.

2.1. Committee Membership.  The
Plan shall be administered by the Board or a Committee. If administered by a Committee, such Committee shall be composed of at least two
directors, all of whom are “outside directors” within the meaning of the regulations issued under Section 162(m) of the Code
and “non-employee” directors within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended. Committee
members shall serve for such term as the Board may in each case determine and shall be subject to removal at any time by the Board.

2.2. Powers of Committee.  The
Committee shall have full authority to award, pursuant to the terms of the Plan: (i) Stock Options, (ii) Stock Appreciation Rights, (iii)
Restricted Stock, (iv) Restricted Stock Units, (v) Other Stock-Based Awards, and/or (vi) Incentive Bonuses. For purposes of illustration
and not of limitation, the Committee shall have the authority (subject to the express provisions of this Plan):

(a) to select the officers, employees, directors and
consultants of the Company or any Subsidiary to whom Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,
Other Stock-Based Awards and/or Incentive Bonuses may from time to time be awarded hereunder;

(b) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder (including, but not limited to, number of shares, share exercise price or types
of consideration paid upon exercise of such options, such as other securities of the Company or other property, any restrictions or limitations,
and any vesting, exchange, surrender, cancellation, acceleration, termination, exercise or forfeiture provisions, or any Performance Goals,
as the Committee shall determine);

(c) to determine the terms and conditions under which
awards granted hereunder are to operate on a tandem basis and/or in conjunction with or apart from other awards under this Plan and cash
and non-cash awards made by the Company or any Subsidiary outside of this Plan; and

(d) to make payments and distributions with respect
to awards (i.e., to “settle” awards) through cash payments in an amount equal to the Repurchase Value.

The Committee may not modify or amend any outstanding
Option or Stock Appreciation Right to reduce the exercise price of such Option or Stock Appreciation Right, as applicable, below the exercise
price as of the date of grant of such Option or Stock Appreciation Right. In addition, no payment of cash or other property having a value
greater than the Repurchase Value may be made, and no Option or Stock Appreciation Right with a lower exercise price may be granted, in
exchange for, or in connection with, the cancellation or surrender of an Option or Stock Appreciation Right.

Notwithstanding anything to the contrary, the Committee
shall not grant to any one Holder in any one calendar year Options and/or Stock Appreciation Rights with respect to more than 100,000
shares in the aggregate or any other awards for more than 50,000 shares in the aggregate or Incentive Bonuses for more than $500,000 in
the aggregate. In all cases, determinations of these limits should be made in a manner that is consistent with the exemption for performance-based
compensation that Section 162(m) of the Code provides.

     

    	 

    

2.3. Interpretation of Plan.  Subject
to Section 11, the Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing
the Plan as it shall from time to time deem advisable, to interpret the terms and provisions of the Plan and any award issued under the
Plan (and to determine the form and substance of all agreements relating thereto), and to otherwise supervise the administration of the
Plan. Subject to Section 11, all decisions made by the Committee pursuant to the provisions of the Plan shall be made in the Committee’s
sole discretion and shall be final and binding upon all persons, including the Company, its Subsidiaries and Holders.

Section 3. Stock Subject to Plan.

3.1. Number of Shares.  The total
number of shares of Common Stock reserved and available for issuance under the Plan shall be up to 1,400,000 shares; provided
that, no more than 200,000 shares of Common Stock may be granted as Incentive Stock Options. Any shares of Common Stock granted in
connection with Stock Options and Stock Appreciation Rights shall be counted against this limit as one share for every one Stock Option
or Stock Appreciation Right awarded. Any shares of Common Stock granted in connection with awards other than Stock Options and Stock Appreciation
Rights shall be counted against this limit as one and one-half shares of Common Stock for every one share of Common Stock granted in connection
with such award. Additionally, a non-employee Director may not be granted awards covering more than 50,000 shares of Common Stock in any
year. Shares of Common Stock under the Plan (“Shares”) may consist, in whole or in part, of authorized and unissued shares
or treasury shares. If any shares of Common Stock that have been granted pursuant to a Stock Option cease to be subject to a Stock Option,
or if any shares of Common Stock that are subject to any Stock Appreciation Right, Restricted Stock award, Restricted Stock Units or Other
Stock-Based award granted hereunder are forfeited, or any such award otherwise terminates without a payment being made to the Holder in
the form of Common Stock, such shares shall again be available for distribution in connection with future grants and awards under the
Plan. Shares of Common Stock that are surrendered by a Holder or withheld by the Company as full or partial payment in connection with
any award under the Plan, as well as any shares of Common Stock surrendered by a Holder or withheld by the Company or one of its Subsidiaries
to satisfy the tax withholding obligations related to any award under the Plan, shall not be available for subsequent awards under the
Plan.

3.2. Adjustment Upon Changes in Capitalization,
Etc.  In the event of any common stock dividend payable on shares of Common Stock, Common Stock split or reverse split,
combination or exchange of shares of Common Stock, or other extraordinary or unusual event which results in a change in the shares of
Common Stock of the Company as a whole, the Committee shall determine, in its sole discretion, whether such change equitably requires
an adjustment in the terms of any award in order to prevent dilution or enlargement of the benefits available under the Plan (including
number of shares subject to the award and the exercise price) or the aggregate number of shares reserved for issuance under the Plan.
Any such adjustments will be made by the Committee, whose determination will be final, binding and conclusive.

3.3. Administrative Stand Still.  In
the event of any changes in capitalization described above in Section 3.2, or any other extraordinary transaction or change affecting
the shares or the share price of Common Stock, including any equity restructuring or any securities offering or other similar transaction,
for administrative convenience, the Committee may refuse to permit the exercise of any award for up to sixty days before and/or after
such transaction; provided, however, that the Committee may not refuse to permit the exercise of any award during the last five trading
days prior to the expiration of such award.

3.4. Substitute Awards.  In connection
with an entity’s merger or consolidation with the Company or any Subsidiary or the Company’s or any Subsidiary’s acquisition
of an entity’s property or stock, the Committee may grant awards in substitution for any options or other stock or stock-based awards
granted before such merger or consolidation by such entity or its affiliate. Substitute awards may be granted on such terms as the Committee
deems appropriate, notwithstanding limitations on awards in the Plan. Substitute awards will not count against the Plan limit, except
that shares acquired by exercise of substitute Incentive Stock Options will count against the maximum number of shares that may be issued
pursuant to the exercise of Incentive Stock Options under the Plan.

Section 4. Eligibility.

Awards may be made or granted to employees, officers,
directors and consultants who are deemed to have rendered or to be able to render significant services to the Company or its Subsidiaries
and who are deemed to have contributed or to have the potential to contribute to the success of the Company and which recipients are qualified
to receive options under the regulations governing Form S-8 registration statements under the Securities Act of 1933, as amended (“Securities
Act”). No Incentive Stock Option shall be granted to any person who is not an employee of the Company or an employee of a Subsidiary
at the time of grant or so qualified as set forth in the immediately preceding sentence. Notwithstanding the foregoing, an award may also
be made or granted to a person in connection with his hiring or retention, or at any time on or after the date he reaches an agreement
(oral or written) with the Company with respect to such hiring or retention, even though it may be
prior to the date the person first performs services for the Company or its Subsidiaries; provided, however, that no portion of any such
award shall vest prior to the date the person first performs such services and the date of grant shall be deemed to be the date hiring
or retention commences.

 

     

    	 

    

Section 5. Stock Options.

5.1. Grant and Exercise.  Stock
Options granted under the Plan may be of two types: (i) Incentive Stock Options and (ii) Non-qualified Stock Options. Any Stock Option
granted under the Plan shall contain such terms, not inconsistent with this Plan, or with respect to Incentive Stock Options, not inconsistent
with the Plan and the Code, as the Committee may from time to time approve. The Committee shall have the authority to grant Incentive
Stock Options or Non-qualified Stock Options, or both types of Stock Options which may be granted alone or in addition to other awards
granted under the Plan.

5.2. Terms and Conditions.  Stock
Options granted under the Plan shall be subject to the following terms and conditions:

(a) Option Term.  The term of
each Stock Option shall be fixed by the Committee; provided, however, that no Stock Option may be exercisable after the expiration of
ten years from the date of grant; provided, further, that no Incentive Stock Option granted to a person who, at the time of grant, owns
stock possessing more than 10% of the total combined voting power of all classes of voting stock of the Company (“10% Shareholder”)
may be exercisable after the expiration of five years from the date of grant.

(b) Exercise Price.  The exercise
price per share of Common Stock purchasable under a Stock Option shall be determined by the Committee at the time of grant; provided,
however, that the exercise price of a Stock Option may not be less than 100% of the Fair Market Value on the date of grant or, if greater,
the par value of a share of Common Stock; provided, further, that the exercise price of an Incentive Stock Option granted to a 10% Shareholder
may not be less than 110% of the Fair Market Value on the date of grant.

(c) Exercisability.  Stock Options
shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee. The Committee
intends generally to provide that Stock Options be exercisable only in installments, i.e., that they vest over time, typically over a
three to five year period. The Committee may waive such installment exercise provisions at any time at or after the time of grant in whole
or in part, based upon such factors as the Committee determines.

(d) Method of Exercise.  Subject
to whatever installment, exercise and waiting period provisions are applicable in a particular case, Stock Options may be exercised in
whole or in part at any time during the term of the Option by giving written notice of exercise to the Company specifying the number of
shares of Common Stock to be purchased. Such notice shall be accompanied by payment in full of the purchase price, which shall be in cash
or, if provided in the Agreement, either in shares of Common Stock (including Restricted Stock and other contingent awards under this
Plan) or partly in cash and partly in such Common Stock, or such other means which the Committee determines are consistent with the Plan’s
purpose and applicable law. Cash payments shall be made by wire transfer, certified or bank check or personal check, in each case payable
to the order of the Company; provided, however, that the Company shall not be required to deliver certificates for shares of Common Stock
with respect to which an Option is exercised until the Company has confirmed the receipt of good and available funds in payment of the
purchase price thereof (except that, in the case of an exercise arrangement approved by the Committee and described in the last sentence
of this paragraph, payment may be made as soon as practicable after the exercise). The Committee may permit a Holder to elect to pay the
exercise price upon the exercise of a Stock Option by irrevocably authorizing a third party to sell shares of Common Stock (or a sufficient
portion of the shares) acquired upon exercise of the Stock Option and remit to the Company a sufficient portion of the sale proceeds to
pay the entire exercise price and any tax withholding resulting from such exercise.

(e) Stock Payments.  Payments
in the form of Common Stock shall be valued at the Fair Market Value on the date of exercise. Such payments shall be made by delivery
of stock certificates in negotiable form that are effective to transfer good and valid title thereto to the Company, free of any liens
or encumbrances.

(f) Transferability.  Except as
may be set forth in the next sentence of this Section or in the Agreement, no Stock Option shall be transferable by the Holder other than
by will or by the laws of descent and distribution, and all Stock Options shall be exercisable, during the Holder’s lifetime, only
by the Holder (or, to the extent of legal incapacity or incompetency, the Holder’s guardian or legal representative). Notwithstanding
the foregoing, a Holder, with the approval of the Committee, may transfer a Non-Qualified Stock Option (i) (A) by gift, for no consideration,
or (B) pursuant to a domestic relations order, in either case, to or for the benefit of the Holder’s “Immediate Family”
(as defined below), or (ii) to an entity in which the Holder and/or members of Holder’s Immediate Family own more than fifty percent
of the voting interest, subject to such limits as the Committee may establish and the execution of such documents as the Committee may
require, and the transferee shall remain subject to all the terms and conditions applicable to the Non-Qualified Stock Option prior to such transfer.
The term “Immediate Family” shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationships, any person sharing the Holder’s household (other than a tenant or employee), a trust in which these persons have
more than fifty percent beneficial interest, and a foundation in which these persons (or the Holder) control the management of the assets.
The Committee may, in its sole discretion, permit transfer of an Incentive Stock Option in a manner consistent with the Code and applicable
securities law upon the Holder’s request.

 

     

    	 

    

(g) Termination by Reason of Death.  If
a Holder’s employment by, or association with, the Company or a Subsidiary terminates by reason of death, any Stock Option held
by such Holder, unless otherwise determined by the Committee and set forth in the Agreement, shall thereupon automatically terminate,
except that the portion of such Stock Option that has vested on the date of death may thereafter be exercised by the legal representative
of the estate or by the legatee of the Holder under the will of the Holder, for a period of one year (or such other greater or lesser
period as the Committee may specify in the Agreement) from the date of such death or until the expiration of the stated term of such Stock
Option, whichever period is shorter.

(h) Termination by Reason of Disability.  If
a Holder’s employment by, or association with, the Company or any Subsidiary terminates by reason of Disability, any Stock Option
held by such Holder, unless otherwise determined by the Committee and set forth in the Agreement, shall thereupon automatically terminate,
except that the portion of such Stock Option that has vested on the date of termination may thereafter be exercised by the Holder for
a period of one year (or such other greater or lesser period as the Committee may specify in the Agreement) from the date of such termination
or until the expiration of the stated term of such Stock Option, whichever period is shorter.

(i) Termination by Reason of Normal Retirement.  Subject
to the provisions of Section 13.4, if such Holder’s employment by, or association with, the Company or any Subsidiary terminates
due to Normal Retirement, any Stock Option held by such Holder, unless otherwise determined by the Committee and set forth in the Agreement,
shall thereupon automatically terminate, except that the portion of such Stock Option that has vested on the date of termination may thereafter
be exercised by the Holder for a period of one year in the case of a Non-Qualified Stock Option or three months in the case of an Incentive
Stock Option (or such other greater or lesser period as the Committee may specify in the Agreement) from the date of such termination
or until the expiration of the stated term of such Stock Option, whichever period is shorter.

(j) Other Termination.  Subject
to the provisions of Section 13.4, if such Holder’s employment by, or association with, the Company or any Subsidiary terminates
for any reason other than death, Disability or Normal Retirement, any Stock Option held by such Holder, unless otherwise determined by
the Committee and set forth in the Agreement, shall thereupon automatically terminate, except that, if the Holder’s employment is
terminated by the Company or a Subsidiary without cause, the portion of such Stock Option that has vested on the date of termination may
thereafter be exercised by the Holder for a period of three months (or such other greater or lesser period as the Committee may specify
in the Agreement) from the date of such termination or until the expiration of the stated term of such Stock Option, whichever period
is shorter.

(k) Incentive Stock Options.  The
aggregate Fair Market Value (on the date of grant of the Stock Option) with respect to which Incentive Stock Options become exercisable
for the first time by a Holder during any calendar year (under all such plans of the Company and its Parent and Subsidiaries) shall not
exceed $100,000. To the extent that any Stock Option intended to qualify as an Incentive Stock Option does not so qualify, including by
reason of the immediately preceding sentence, it shall constitute a separate Non-qualified Stock Option. The Company shall have no liability
to any Holder or any other person if a Stock Option designated as an Incentive Stock Option fails to qualify as such at any time or if
a Stock Option is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the
Code and the terms of such Stock Option do not satisfy the requirements of Section 409A of the Code.

(l) Buyout and Settlement Provisions.  The
Committee may at any time, in its sole discretion, offer to repurchase a Stock Option previously granted, at a purchase price not to exceed
the Repurchase Value, based upon such terms and conditions as the Committee shall establish and communicate to the Holder at the time
that such offer is made.

(m) Rights as Shareholder.  A
Holder shall have none of the rights of a shareholder of the Company with respect to the shares subject to the Option until such shares
shall be transferred to the Holder upon the exercise of the Option.

Section 6. Stock Appreciation Rights.

6.1. Grant and Exercise.  Subject
to the terms and conditions of the Plan, the Committee may grant Stock Appreciation Rights in tandem with an Option or alone and unrelated
to an Option. The Committee may grant Stock Appreciation Rights to participants who have been or are being granted Stock Options under
the Plan as a means of allowing such participants to exercise their Stock Options without the
need to pay the exercise price in cash. In the case of a Non-qualified Stock Option, a Stock Appreciation Right may be granted either
at or after the time of the grant of such Non-qualified Stock Option. In the case of an Incentive Stock Option, a Stock Appreciation Right
may be granted only at the time of the grant of such Incentive Stock Option.

 

     

    	 

    

6.2. Terms and Conditions.  Stock
Appreciation Rights shall be subject to the following terms and conditions:

(a) Exercisability.  Stock Appreciation
Rights shall be exercisable as shall be determined by the Committee and set forth in the Agreement, subject, for Stock Appreciation Rights
granted in tandem with an Incentive Stock Option, to the limitations, if any, imposed by the Code with respect to related Incentive Stock
Options.

(b) Termination.  All or a portion
of a Stock Appreciation Right granted in tandem with a Stock Option shall terminate and shall no longer be exercisable upon the termination
or after the exercise of the applicable portion of the related Stock Option.

(c) Method of Exercise.  Stock
Appreciation Rights shall be exercisable upon such terms and conditions as shall be determined by the Committee and set forth in the Agreement
and, for Stock Appreciation Rights granted in tandem with a Stock Option, by surrendering the applicable portion of the related Stock
Option. Upon exercise of all or a portion of a Stock Appreciation Right and, if applicable, surrender of the applicable portion of the
related Stock Option, the Holder shall be entitled to receive a number of shares of Common Stock equal to the SAR Value divided by the
Fair Market Value on the date the Stock Appreciation Right is exercised.

(d) Shares Available Under Plan.  The
granting of a Stock Appreciation Right in tandem with a Stock Option shall not affect the number of shares of Common Stock available for
awards under the Plan. The number of shares available for awards under the Plan will, however, be reduced by the number of shares of Common
Stock acquirable upon exercise of the Stock Option to which such Stock Appreciation Right relates.

Section 7. Restricted Stock; Restricted Stock Units.

7.1. Grant.  Shares of Restricted
Stock may be awarded either alone or in addition to other awards granted under the Plan. The Committee shall determine the eligible persons
to whom, and the time or times at which, grants of Restricted Stock will be awarded, the number of shares to be awarded, the price (if
any) to be paid by the Holder, the time or times within which such awards may be subject to forfeiture, including upon termination of
employment or failure of performance conditions (“Restriction Period”), the vesting schedule and rights to acceleration thereof,
the Performance Goal(s), if any, and level of achievement versus the Performance Goal(s) that shall determine the number of shares of
Restricted Stock granted, issued and/or vested, the term of the performance period, if any, as to which performance will be measured for
determining the number of such shares of Restricted Stock and all other terms and conditions of the awards. In addition, the Committee
may award Restricted Stock Units, which may be subject to vesting and forfeiture conditions during the applicable restriction period or
periods, as set forth in an Agreement.

7.2. Restricted Stock Terms and Conditions.  Each
Restricted Stock award shall be subject to the following terms and conditions:

(a) Certificates.  Restricted
Stock, when issued, will be represented by a stock certificate or certificates registered in the name of the Holder to whom such Restricted
Stock shall have been awarded. During the Restriction Period, certificates representing the Restricted Stock and any securities constituting
Retained Distributions (as defined below) shall bear a legend to the effect that ownership of the Restricted Stock (and such Retained
Distributions) and the enjoyment of all rights appurtenant thereto are subject to the restrictions, terms and conditions provided in the
Plan and the Agreement. Such certificates shall be deposited by the Holder with the Company, together with stock powers or other instruments
of assignment, each endorsed in blank, which will permit transfer to the Company of all or any portion of the Restricted Stock and any
securities constituting Retained Distributions that shall be forfeited or that shall not become vested in accordance with the Plan and
the Agreement.

(b) Rights of Holder.  Restricted
Stock shall constitute issued and outstanding shares of Common Stock for all corporate purposes. The Holder will have the right to vote
such Restricted Stock and to exercise all other rights, powers and privileges of a holder of Common Stock with respect to such Restricted
Stock, with the exceptions that (i) the Holder will not be entitled to delivery of the stock certificate or certificates representing
such Restricted Stock until the Restriction Period shall have expired and unless all other vesting requirements with respect thereto shall
have been fulfilled; (ii) the Company will retain custody of the stock certificate or certificates representing the Restricted Stock during
the Restriction Period; (iii) the Company will retain custody of all dividends and distributions (“Retained Distributions”)
made, paid or declared with respect to the Restricted Stock (and such Retained Distributions will be subject to the same restrictions,
terms and conditions as are applicable to the Restricted Stock) until such time, if ever, as the Restricted Stock with respect to which
such Retained Distributions shall have been made, paid or declared shall have become vested and with respect to which the Restriction
Period shall have expired; and (iv) a breach of any of the restrictions, terms or conditions contained in this Plan or the Agreement or otherwise established by the Committee with respect to any
Restricted Stock or Retained Distributions will cause a forfeiture of such Restricted Stock and any Retained Distributions with respect
thereto.

 

     

    	 

    

(c) Vesting; Forfeiture.  Upon
the expiration of the Restriction Period with respect to each award of Restricted Stock and the satisfaction of any other applicable restrictions,
terms and conditions, which may include Performance Goals, (i) all or part of such Restricted Stock shall become vested in accordance
with the terms of the Agreement, and (ii) any Retained Distributions with respect to such Restricted Stock shall become vested to the
extent that the Restricted Stock related thereto shall have become vested. Any such Restricted Stock and Retained Distributions that do
not vest shall be forfeited to the Company and the Holder shall not thereafter have any rights with respect to such Restricted Stock and
Retained Distributions that shall have been so forfeited.

(d) Discretionary Adjustments and Limits.  Notwithstanding
the satisfaction of any Performance Goals, the number of shares of Restricted Stock granted, issued and/or vested under an award of Restricted
Stock on account of either financial performance or personal performance evaluations may, to the extent specified in the Agreement, be
reduced, but not increased, by the Committee on the basis of such further considerations as the Committee shall determine.

7.3. Restricted Stock Units Terms and Conditions.  Each
Restricted Stock Units award shall be subject to the following terms and conditions:

(a) Settlement.  The Committee
may provide that settlement of Restricted Stock Units will occur upon or as soon as reasonably practicable after the Restricted Stock
Units vest or will instead be deferred, on a mandatory basis or at the Holder’s election, in a manner intended to comply with Section
409A.

(b) Shareholder Rights.  A Holder
will have no rights of a holder of Common Stock with respect to shares subject to any Restricted Stock Unit unless and until the shares
are delivered in settlement of the Restricted Stock Unit.

(c) Dividend Equivalents.  If
the Committee provides, a grant of Restricted Stock Units may provide a Holder with the right to receive dividend equivalents. Dividend
equivalents may be paid currently or credited to an account for the Holder, settled in cash or shares and subject to the same restrictions
on transferability and forfeitability as the Restricted Stock Units with respect to which the dividend equivalents are granted and subject
to other terms and conditions as set forth in the Agreement.

Section 8. Other Stock-Based Awards.

Other Stock-Based Awards may be awarded, subject to
limitations under applicable law, that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on
or related to, shares of Common Stock, as deemed by the Committee to be consistent with the purposes of the Plan, including, without limitation,
purchase rights, shares of Common Stock awarded which are not subject to any restrictions or conditions, rights convertible into shares
of Common Stock and awards valued by reference to the value of securities of or the performance of specified Subsidiaries. These other
stock-based awards may include performance shares or options, whose award is tied to specific Performance Goals. Other Stock-Based Awards
may be awarded either alone or in addition to or in tandem with any other awards under this Plan or any other plan of the Company. Each
other Stock-Based Award shall be subject to such terms and conditions as may be determined by the Committee.

Section 9. Incentive Bonuses

9.1. General.  Each Incentive
Bonus award will confer upon the Holder the opportunity to earn a future payment tied to the level of achievement with respect to one
or more Performance Goals established for a performance period established by the Committee.

9.2. Incentive Bonus Document.  The
terms of any Incentive Bonus will be set forth in an Agreement. Each Agreement evidencing an Incentive Bonus shall contain provisions
regarding (i) the target and maximum amount payable to the Holder as an Incentive Bonus, (ii) the Performance Goals and level of achievement
versus the Performance Goals that shall determine the amount of such payment, (iii) the term of the performance period as to which performance
shall be measured for determining the amount of any payment, (iv) the timing of any payment earned by virtue of performance, (v) restrictions
on the alienation or transfer of the Incentive Bonus prior to actual payment, (vi) forfeiture provisions and (vii) such further terms
and conditions, in each case not inconsistent with this Plan as may be determined from time to time by the Committee.

9.3. Performance Goals.  The Committee
shall establish the Performance Goals and level of achievement versus the Performance Goals that shall determine the target and maximum
amount payable under an Incentive Bonus.

9.4. Timing and Form of Payment.  The
Committee shall determine the timing of payment of any Incentive Bonus. Payment of the amount due under an Incentive Bonus shall be made
in cash. The Committee may provide for or, subject to such terms and conditions as the Committee may specify, may permit a Holder to elect
for the payment of, any Incentive Bonus to be deferred to a specified date or event.

     

    	 

    

9.5. Discretionary Adjustments.  Notwithstanding
satisfaction of any Performance Goals, the amount paid under an Incentive Bonus on account of either financial performance or personal
performance evaluations may, to the extent specified in the Agreement, be reduced, but not increased, by the Committee on the basis of
such further considerations as the Committee shall determine.

9.6. Termination.  If a Holder’s
employment by, or association with, the Company or any Subsidiary terminates for any reason (including by reason of death or Disability),
the Holder shall receive payment in respect of any Incentive Bonuses only to the extent specified by the Committee, unless otherwise expressly
provided in the Agreement or another contract, including an employment agreement. Payments in respect of any such Incentive Bonuses shall
be made at the time specified by the Committee and set forth in the Agreement.

Section 10. Accelerated Vesting and Exercisability.

10.1. Non-Approved Transactions.  If
any one person, or more than one person acting as a group, acquires the ownership of stock of the Company that, together with the stock
held by such person or group, constitutes more than 50% of the total fair market value or combined voting power of the stock of the Company,
and the Board does not authorize or otherwise approve such acquisition, then the vesting periods of any and all Stock Options and other
awards granted and outstanding under the Plan shall be accelerated and all such Stock Options and awards will immediately and entirely
vest, and the respective holders thereof will have the immediate right to purchase and/or receive any and all Common Stock subject to
such Stock Options and awards on the terms set forth in this Plan and the respective Agreements respecting such Stock Options and awards,
and all Performance Goals will be deemed achieved at 100% of target levels and all other terms and conditions will be deemed met. An increase
in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the Company acquires
its stock in exchange for property is not treated as an acquisition of stock for purposes of this Section 10.1.

10.2. Approved Transactions.  The
Committee may, in the event of an acquisition by any one person, or more than one person acting as a group, together with acquisitions
during the 12-month period ending on the date of the most recent acquisition by such person or persons, of assets from the Company that
have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of the assets of the Company
immediately before such acquisition or acquisitions, or if any one person, or more than one person acting as a group, acquires the ownership
of stock of the Company that, together with the stock held by such person or group, constitutes more than 50% of the total fair market
value or combined voting power of the stock of the Company, which has been approved by the Company’s Board of Directors, (i) accelerate
the vesting of any and all Stock Options and other awards granted and outstanding under the Plan; (ii) require a Holder of any Stock Option,
Stock Appreciation Right, Restricted Stock award or Other Stock-Based Award granted under this Plan to relinquish such award to the Company
upon the tender by the Company to Holder of cash, stock or other property, or any combination thereof, in an amount equal to the Repurchase
Value of such award; provided, however, that the obligation to tender the Repurchase Value to such Holders may be subject to any terms
and conditions to which the tender of consideration to the Company’s shareholders in connection with the acquisition is subject,
including any terms and conditions of the acquisition providing for an adjustment to or escrow of such consideration; and provided, further,
that in the case of any Stock Option or Stock Appreciation Right with an exercise price that equals or exceeds the price paid for a share
of Common Stock in connection with the acquisition, the Committee may cancel the Stock Option or Stock Appreciation Right without the
payment of consideration therefor; and/or (iii) terminate all incomplete performance periods in respect of awards in effect on the date
the acquisition occurs, determine the extent to which Performance Goals have been met based upon such information then available as it
deems relevant and cause to be paid to the Holder the all or the applicable portion of the award based upon the Committee’s determination
of the degree of attainment of Performance Goals, or on such other basis determined by the Committee. For this purpose, gross fair market
value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities
associated with such assets.

10.3. Code Section 409A.  Notwithstanding
any provisions of this Plan or any award granted hereunder to the contrary, no acceleration shall occur with respect to any award to the
extent such acceleration would cause the Plan or an award granted hereunder to fail to comply with Code Section 409A.

Section 11. Amendment and Termination.

The Board may at any time, and from time to time, amend
alter, suspend or discontinue any of the provisions of the Plan or any Agreement, but no amendment, alteration, suspension or discontinuance
shall be made that would impair the rights of a Holder under any Agreement theretofore entered into hereunder, without the Holder’s
consent, except as set forth in this Plan or the Agreement. Notwithstanding anything to the contrary herein, no amendment to the provisions
of the Plan shall be effective unless approved by the shareholders of the Company to the extent shareholder approval is necessary to satisfy any provision of the Code
or other applicable law or the listing requirements of any national securities exchange on which the Company’s securities are listed.

 

     

    	 

    

Section 12. Term of Plan.

12.1. Effective Date.  The Effective
Date of the Plan shall be May 9, 2016, subject to the approval of the Plan by the Company’s shareholders within one year after the
Effective Date. Only Stock Options may be granted under the Plan prior to such approval of the Plan by the Company’s shareholders.
Any Stock Options granted under the Plan prior to such approval shall be effective when made (unless otherwise specified by the Committee
at the time of grant), but shall be conditioned upon, and subject to, such approval of the Plan by the Company’s shareholders and
no Stock Options shall vest or otherwise become free of restrictions prior to such approval.

12.2. Termination Date.  Unless
terminated by the Board, this Plan shall continue to remain effective until such time as no further awards may be granted and all awards
granted under the Plan are no longer outstanding. Notwithstanding the foregoing, grants of Incentive Stock Options may be made only during
the ten-year period beginning on the Effective Date.

Section 13. General Provisions.

13.1. Written Agreements.  Each
award granted under the Plan shall be confirmed by, and shall be subject to the terms of, the Agreement executed by the Company and the
Holder, or such other document as may be determined by the Committee. The Committee may terminate any award made under the Plan if the
Agreement relating thereto is not executed and returned to the Company within 10 days after the Agreement has been delivered to the Holder
for his or her execution.

13.2. Establishing Performance Goals.  Performance
Goals shall be established by the Committee based upon performance criteria that relate to one or more of the following with respect to
the Company or any one or more of its Subsidiaries or its or their respective business units, in all cases before Excluded Items, except
as otherwise determined by the Committee upon the grant of an award: sales or other revenues; cost of goods sold; gross profit; expenses
or expense or cost reductions; income or earnings, including net income or income from operations; earnings before one or more items such
as interest, taxes, depreciation and amortization; margins; working capital or any of its components, including accounts receivable, inventories
or accounts payable; assets or productivity of assets; return on shareholders’ equity, capital, assets or other financial measure
that appears on the Company’s financial statements or is derived from one or more amounts that appear on the Company’s financial
statements; stock price; dividend payments; economic value added, or other measure of profitability that considers the cost of capital
employed; cash flow; debt or ratio of debt to equity or other financial measure that appears on the Company’s financial statements
or is derived from one or more amounts that appear on the Company’s financial statements; net increase (decrease) in cash and cash
equivalents; customer satisfaction; market share; product quality; new product introductions or launches; sustainability, including energy
or materials utilization; business efficiency measures; safety; or any combination of the foregoing. Performance Goals also may include
earnings per share on a consolidated basis and total shareholder return. Unless otherwise determined by the Committee at the time of grant,
as to each Performance Goal, the relevant measurement of performance shall be computed in accordance with U.S. generally accepted accounting
principles to the extent applicable, but will exclude the effects of the following: (i) charges for reorganizing and restructuring; (ii)
discontinued operations; (iii) asset write-downs; (iv) gains or losses on the disposition of a business or business segment or arising
from the sale of assets outside the ordinary course of business; (v) changes in tax or accounting principles, regulations or laws; (vi)
extraordinary, unusual, transition, one-time and/or non-recurring expenses, revenues or other items of gain or loss; (vii) changes in
interest expenses as a result of modified debt structures; and (viii) mergers and acquisitions, that, in case of each of the foregoing,
the Company identifies in its publicly filed periodic or current reports, its audited financial statements, including notes to the financial
statements, or the Management’s Discussion and Analysis section of the Company’s annual report, to the extent applicable (collectively,
the “Excluded Items”). With respect to any award intended to qualify as performance-based compensation under Section 162(m)
of the Code, such exclusions shall be made only to the extent consistent with Section 162(m) of the Code. To the extent consistent with
Section 162(m) of the Code, the Committee may also provide for other adjustments to Performance Goals in the Agreement evidencing any
award. In addition, the Committee may appropriately adjust any evaluation of performance under a Performance Goal to exclude any of the
following events that occurs during a performance period: (i) litigation, claims, judgments or settlements; (ii) the effects of changes
in other laws or regulations affecting reported results; and (iii) accruals of any amounts for payment under this Plan or any other compensation
arrangements maintained by the Company; provided that, with respect to any award intended to qualify as performance-based compensation
under Section 162(m) of the Code, such adjustment may be made only to the extent consistent with Code Section 162(m) of the Code. Where
applicable, the Performance Goals may be expressed, without limitation, in terms of attaining a specified level of the particular criterion
or the attainment of an increase or decrease (expressed as absolute numbers, averages and/or percentages) in the particular criterion or achievement
in relation to a peer group or other index. The Performance Goals may include a threshold level of performance below which no payment
will be made (or no vesting will occur), levels of performance at which specified payments will be paid (or specified vesting will occur),
and a maximum level of performance above which no additional payment will be made (or at which full vesting will occur).

     

    	 

    

13.3. Performance Awards.  The
Committee, in its sole discretion, may determine at the time an award is granted or at any time thereafter whether such award is intended
to qualify as “performance based compensation” within the meaning of Section 162(m) of the Code. For the avoidance of doubt,
nothing herein shall require the Committee to structure any awards in a manner intended to constitute performance based compensation and
the Committee shall be free, in its sole discretion, to grant awards that are not intended to be performance based compensation. Notwithstanding
any other provision of the Plan and except as otherwise determined by the Committee, any award which is granted under the Plan and is
intended to qualify as performance based compensation” shall be subject to any additional limitations set forth in Section 162(m)
of the Code or any regulations or rulings issued thereunder that are requirements for qualification as performance based compensation,
and the Plan and the applicable Agreement shall be deemed amended to the extent necessary to conform to such requirements. In addition,
Restricted Stock awards, Other Stock-Based Awards and Incentive Bonus awards that are intended to qualify as performance based compensation
under Section 162(m) of the Code shall be subject to the following provisions, which shall control over any conflicting provision in the
Plan or any Agreement:

(a) To the extent necessary to comply with the requirements
of Section 162(m)(4)(C) of the Code, no later than 90 days following the commencement of any performance period or any designated fiscal
period or period of service (or such earlier time as may be required under Section 162(m) of the Code), the Committee shall, in writing,
(a) designate the recipient to receive such award, (b) select the performance criteria applicable to the performance period, (c) establish
the Performance Goals, and amounts of such awards, as applicable, which may be earned for such performance period based on the performance
criteria, and (d) specify the relationship between performance criteria and the Performance Goals and the amounts of such awards, as applicable,
to be earned by each covered employee for such performance period.

(b) Following the completion of each performance period,
the Committee shall certify in writing whether and the extent to which the applicable Performance Goals have been achieved for such performance
period. In determining the amount earned under such awards, the Committee shall have the right to reduce or eliminate (but not to increase)
the amount payable at a given level of performance to take into account additional factors that the Committee may deem relevant, including
the assessment of individual or corporate performance for the performance period.

(c) No adjustment or action described in any provision
of the Plan shall be authorized to the extent that such adjustment or action would cause such award to fail to so qualify as performance
based compensation, unless the Committee determines that the award should not so qualify.

13.4. Unfunded Status of Plan.  The
Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not
yet made to a Holder by the Company, nothing contained herein shall give any such Holder any rights that are greater than those of a general
creditor of the Company.

13.5. Employees.

(a) Engaging in Competition With the Company;
Solicitation of Customers and Employees; Disclosure of Confidential Information.  If a Holder’s employment with the
Company or a Subsidiary is terminated for any reason whatsoever, and within 12 months after the date thereof such Holder either (i) accepts
employment with any competitor of, or otherwise engages in competition with, the Company or any of its Subsidiaries, (ii) solicits any
customers or employees of the Company or any of its Subsidiaries to do business with or render services to the Holder or any business
with which the Holder becomes affiliated or to which the Holder renders services or (iii) uses or discloses to anyone outside the Company
any confidential information or material of the Company or any of its Subsidiaries in violation of the Company’s policies or any
agreement between the Holder and the Company or any of its Subsidiaries, the Committee, in its sole discretion, may require such Holder
to return to the Company the economic value of any award that was realized or obtained by such Holder at any time during the period beginning
on the date that is six months prior to the date such Holder’s employment with the Company is terminated; provided, however, that
if the Holder is a resident of the State of California, such right must be exercised by the Company for cash within six months after the
date of termination of the Holder’s service to the Company or within six months after exercise of the applicable Stock Option, whichever
is later. In such event, Holder agrees to remit to the Company, in cash, an amount equal to the difference between the Fair Market Value
of the Shares on the date of termination (or the sales price of such Shares if the Shares were sold during such six month period) and
the price the Holder paid the Company for such Shares.

 

     

    	 

    

(b) Termination for Cause.  If
a Holder’s employment with the Company or a Subsidiary is terminated for cause, the Committee may, in its sole discretion, require
such Holder to return to the Company the economic value of any award that was realized or obtained by such Holder at any time during the
period beginning on that date that is six months prior to the date such Holder’s employment with the Company is terminated. In such
event, Holder agrees to remit to the Company, in cash, an amount equal to the difference between the Fair Market Value of the Shares on
the date of termination (or the sales price of such Shares if the Shares were sold during such six month period) and the price the Holder
paid the Company for such Shares.

(c) No Right of Employment.  Nothing
contained in the Plan or in any award hereunder shall be deemed to confer upon any Holder who is an employee of the Company or any Subsidiary
any right to continued employment with the Company or any Subsidiary, nor shall it interfere in any way with the right of the Company
or any Subsidiary to terminate the employment of any Holder who is an employee at any time.

13.6. No Fractional Shares.  No
fractional shares of Common Stock shall be issued or delivered pursuant to the Plan. The Committee shall determine whether cash, additional
awards or other securities or property shall be issued or paid in lieu of fractional shares of Common Stock or whether any fractional
shares should be rounded, forfeited or otherwise eliminated.

13.7. Provisions for Foreign Participants.  The
Committee may modify awards granted to Holders who are foreign nationals or employed outside the United States or establish subplans or
procedures under the Plan to address differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to
tax, securities, currency, employee benefit or other matters.

13.8. Limitations on Liability.

(a) Notwithstanding any other provisions of the Plan,
no individual acting as a director, officer, other employee or agent of the Company or any Subsidiary will be liable to any Holder, former
Holder, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan or any
award, and such individual will not be personally liable with respect to the Plan because of any contract or other instrument executed
in his or her capacity as member of the Committee, director, officer, other employee or agent of the Company or any Subsidiary. The Company
will indemnify and hold harmless each director, officer, other employee and agent of the Company or any Subsidiary that has been or will
be granted or delegated any duty or power relating to the Plan’s administration or interpretation, against any cost or expense (including
attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Committee’s approval) arising from
any act or omission concerning this Plan unless arising from such person’s own fraud or bad faith.

(b) Neither the Company nor any Subsidiary shall be
liable to a Holder or any other person as to: (i) the non-issuance or sale of shares as to which the Company has been unable to obtain
from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance
and sale of any shares hereunder; and (ii) any tax consequence expected, but not realized, by any Holder or other person due to the receipt,
exercise or settlement of any award granted hereunder.

13.9. Lock-Up Period.  The Company
may, at the request of any underwriter representative, placement agent or otherwise, in connection with an offering of any Company securities
under the Securities Act or pursuant to an exemption therefrom, prohibit any Holder from, directly or indirectly, selling or otherwise
transferring any shares of Common Stock or other Company securities during a period of up to one hundred eighty days following either
the effective date of a Company registration statement filed under the Securities Act, in the case of a registered offering, or the closing
date of the sale of the Company securities, in the case of an offering exempt from registration, or for such longer period as determined
by the underwriter, representative or placement agent.

13.10. Data Privacy.  As a condition
for receiving any award, each Holder explicitly and unambiguously consents to the collection, use and transfer, in electronic or other
form, of personal data as described in this Section 13.10 by and among the Company and its Subsidiaries and affiliates exclusively for
implementing, administering and managing the Holder’s participation in the Plan. The Company and its Subsidiaries and affiliates
may hold certain personal information about a Holder, including the Holder’s name, address and telephone number; birthdate; social
security, insurance number or other identification number; salary; nationality; job title(s); any shares held in the Company or its Subsidiaries
and affiliates; and award details, to implement, manage and administer the Plan and awards (the “Data”). The Company and its
Subsidiaries and affiliates may transfer the Data amongst themselves as necessary to implement, administer and manage a Holder’s
participation in the Plan, and the Company and its Subsidiaries and affiliates may transfer the Data to third parties assisting the Company
with Plan implementation, administration and management. These recipients may be located in the Holder’s country, or elsewhere,
and the Holder’s country may have different data privacy laws and protections than the recipients’ country. By accepting an
award, each Holder authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, to
implement, administer and manage the Holder’s participation in the Plan, including any required Data transfer to a broker or other third party with whom the Company or the
Holder may elect to deposit any shares. The Data related to a Holder will be held only as long as necessary to implement, administer,
and manage the Holder’s participation in the Plan. A Holder may, at any time, view the Data that the Company holds regarding such
Holder, request additional information about the storage and processing of the Data regarding such Holder, recommend any necessary corrections
to the Data regarding the Holder or refuse or withdraw the consents in this Section 13.10 in writing, without cost, by contacting the
local human resources representative. The Company may cancel Holder’s ability to participate in the Plan and, in the Committee’s
discretion, the Holder may forfeit any outstanding awards if the Holder refuses or withdraws the consents in this Section 13.10. For more
information on the consequences of refusing or withdrawing consent, Holders may contact their local human resources representative.

 

     

    	 

    

13.11. Successor.  The obligations
of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation
or other reorganization of the Company, or upon any successor corporation or organization succeeding to all or substantially all of the
assets and business of the Company and its affiliates, taken as a whole.

13.12. Investment Representations; Company Policy.  The
Committee may require each person acquiring shares of Common Stock pursuant to a Stock Option or other award under the Plan to represent
to and agree with the Company in writing that the Holder is acquiring the shares for investment without a view to distribution thereof.
Each person acquiring shares of Common Stock pursuant to a Stock Option or other award under the Plan shall be required to abide by all
policies of the Company in effect at the time of such acquisition and thereafter with respect to the ownership and trading of the Company’s
securities.

13.13. Additional Incentive Arrangements.  Nothing
contained in the Plan shall prevent the Board from adopting such other or additional incentive arrangements as it may deem desirable,
including, but not limited to, the granting of Stock Options and the awarding of Common Stock and cash otherwise than under the Plan;
and such arrangements may be either generally applicable or applicable only in specific cases.

13.14. Withholding Taxes.  Not
later than the date as of which an amount must first be included in the gross income of the Holder for Federal income tax purposes with
respect to any Stock Option or other award under the Plan, the Holder shall pay to the Company, or make arrangements satisfactory to the
Committee regarding the payment of, any Federal, state and local taxes of any kind required by law to be withheld or paid with respect
to such amount. If permitted by the Committee, tax withholding or payment obligations may be settled with Common Stock, including Common
Stock that is part of the award that gives rise to the withholding requirement. The obligations of the Company under the Plan shall be
conditioned upon such payment or arrangements and the Company or the Holder’s employer (if not the Company) shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Holder from the Company or
any Subsidiary.

13.15. Clawback.  Notwithstanding
any other provisions of the Plan, any award which is subject to recovery under any law, government regulation or listing requirement of
any national securities exchange on which the Company’s securities are listed, will be subject to such deductions and clawback as
may be required to be made pursuant to such law, government regulation or listing requirement (or any policy adopted by the Company pursuant
to any such law, government regulation or listing requirement).

13.16. Governing Law.  The Plan
and all awards made and actions taken thereunder shall be governed by and construed in accordance with the law of the State of New York
(without regard to choice of law provisions).

13.17. Other Benefit Plans.  Any
award granted under the Plan shall not be deemed compensation for purposes of computing benefits under any retirement plan of the Company
or any Subsidiary and shall not affect any benefits under any other benefit plan now or subsequently in effect under which the availability
or amount of benefits is related to the level of compensation (unless required by specific reference in any such other plan to awards
under this Plan).

13.18. Non-Transferability.  Except
as otherwise expressly provided in the Plan or the Agreement, no right or benefit under the Plan may be alienated, sold, assigned, hypothecated,
pledged, exchanged, transferred, encumbranced or charged, and any attempt to alienate, sell, assign, hypothecate, pledge, exchange, transfer,
encumber or charge the same shall be void.

13.19. Applicable Laws.  The obligations
of the Company with respect to all Stock Options and awards under the Plan shall be subject to (i) all applicable laws, rules and regulations
and such approvals by any governmental agencies as may be required, including, without limitation, the Securities Act, and (ii) the rules
and regulations of any securities exchange on which the Common Stock may be listed. Notwithstanding anything herein to the contrary, the
Plan and all awards will be administered only in conformance with such applicable laws. To the extent such applicable laws permit, the
Plan and all Agreements will be deemed amended as necessary to conform to such applicable laws.

     

    	 

    

13.20. Conflicts.  If any of the
terms or provisions of the Plan or an Agreement conflict with the requirements of Section 422 of the Code, then such terms or provisions
shall be deemed inoperative to the extent they so conflict with such requirements. Additionally, if this Plan or any Agreement does not
contain any provision required to be included herein under Section 422 of the Code, such provision shall be deemed to be incorporated
herein and therein with the same force and effect as if such provision had been set out at length herein and therein. If any of the terms
or provisions of any Agreement conflict with any terms or provisions of the Plan, then such terms or provisions shall be deemed inoperative
to the extent they so conflict with the requirements of the Plan. Additionally, if any Agreement does not contain any provision required
to be included therein under the Plan, such provision shall be deemed to be incorporated therein with the same force and effect as if
such provision had been set out at length therein.

13.21. Compliance with Section 409A of the Code.  The
Company intends that any awards be structured in compliance with, or to satisfy an exemption from, Section 409A of the Code, such that
there are no adverse tax consequences, interest, or penalties pursuant to Section 409A of the Code as a result of the awards. Notwithstanding
the Company’s intention, in the event any award is subject to Section 409A of the Code, the Committee may, in its sole discretion
and without a participant’s prior consent, amend this Plan and/or outstanding Agreements, adopt policies and procedures, or take
any other actions (including amendments, policies, procedures and actions with retroactive effect) as are necessary or appropriate to
(i) exempt this Plan and/or any award from the application of Section 409A of the Code, (ii) preserve the intended tax treatment of any
such award, or (iii) comply with the requirements of Section 409A of the Code, including without limitation any such regulations guidance,
compliance programs and other interpretive authority that may be issued after the date of grant of an award. This Plan shall be interpreted
at all times in such a manner that the terms and provisions of the Plan and the awards are exempt from or comply with Section 409A of
the Code.

13.22. Non-Registered Stock.  The
shares of Common Stock to be distributed under this Plan have not been, as of the Effective Date, registered under the Securities Act
or any applicable state or foreign securities laws and the Company has no obligation to any Holder to register the Common Stock or to
assist the Holder in obtaining an exemption from the various registration requirements, or to list the Common Stock on a national securities
exchange or any other trading or quotation system.Exhibit 4.1

 

Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, As Amended

 

The following description sets forth certain material terms and provisions of the securities of Provident Acquisition Corp. (“we,” “us” or “our”) that are registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The following description of our securities is not complete and may not contain all the information you should consider before investing in our securities. This description is summarized from, and qualified in its entirety by reference to, our amended and restated memorandum and articles of association, which are incorporated herein by reference. The summary below is also qualified by reference to the Companies Law and common law of the Cayman Islands.

 

As of December 31, 2020, we had three classes of securities registered under the Exchange Act: our Class A ordinary shares, $0.0001 par value per share; warrants to purchase shares of our Class A ordinary shares; and units consisting of one Class A ordinary share and one-half of one redeemable warrant to purchase one Class A ordinary share. In addition, this Description of Securities also contains a description of our Class B ordinary shares, par value $0.0001 per share (“founder shares”), which are not registered pursuant to Section 12 of the Exchange Act but are convertible into shares of the Class A ordinary shares. The description of the founder shares is necessary to understand the material terms of the Class A ordinary shares. Further, this Description of Securities also contains a description of our Forward Purchase Warrants to be issued under the forward purchase agreements entered in connection with the IPO, which are not registered pursuant to Section 12 of the Exchange Act but will have the same terms as Public Shareholders’ Warrants.

 

Units

 

Public Units

 

Each unit has an offering price of $10.00 and consists of one Class A ordinary share and one-half of one warrant. Each whole warrant entitles the holder thereof to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment as described in this prospectus. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of the Company’s Class A ordinary shares. This means only a whole warrant may be exercised at any given time by a warrant holder. For example, if a warrant holder holds one-half of one warrant to purchase a Class A ordinary share, such warrant will not be exercisable. If a warrant holder holds two-halves of one warrant, such whole warrant will be exercisable for one Class A ordinary share at a price of $11.50 per share. The Class A ordinary shares and warrants comprising the units had commenced separate trading on March 1, 2021. Holders have the option to continue to hold units or separate their units into the component securities. Holders need to have their brokers contact our transfer agent in order to separate the units into Class A ordinary shares and warrants. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least two units, you will not be able to receive or trade a whole warrant.

 

Ordinary Shares

 

On October 28, 2020, our sponsor purchased an aggregate of 5,750,000 Class B ordinary shares (our “founder shares”) for an aggregate purchase price of $25,000, or approximately $0.004 per share. In November 30, 2020 our sponsor surrounded for no consideration 656,250 founder share, resulted in 4,375,000 outstanding founder shares. Funds affiliated with our Sponsor purchased 4,000,000 in the IPO. As of the date hereof, 28,750,000 of our ordinary shares are outstanding including:

 

·                  23,000,000 Class A ordinary shares underlying units issued as part of the IPO; and

 

·                  5,750,000 Class B ordinary shares held by our initial shareholders.

 

 

Ordinary shareholders of record are entitled to one vote for each share held on all matters to be voted on by shareholders. Holders of Class A ordinary shares and holders of Class B ordinary shares will vote together as a single class on all matters submitted to a vote of our shareholders except as required by law. Unless specified in our amended and restated memorandum and articles of association, or as required by applicable provisions of the Companies Act or applicable stock exchange rules, the affirmative vote of a majority of our ordinary shares that are voted is required to approve any such matter voted on by our shareholders. Approval of certain actions will require a special resolution under Cayman Islands law, which requires the affirmative vote of a majority of at least two-thirds of the shareholders who attend and vote at a general meeting of the company, and pursuant to our amended and restated memorandum and articles of association; such actions include amending our amended and restated memorandum and articles of association and approving a statutory merger or consolidation with another company. Our board of directors is divided into three classes, each of which will generally serve for a term of three years with only one class of directors being appointed in each year. There is no cumulative voting with respect to the appointment of directors, with the result that the holders of more than 50% of the shares voted for the appointment of directors can appoint all of the directors. However, only holders of Class B ordinary shares will have the right to appoint directors in any general meeting held prior to or in connection with the completion of our initial business combination, meaning that holders of Class A ordinary shares will not have the right to appoint any directors until after the completion of our initial business combination. Our shareholders are entitled to receive ratable dividends when, as and if declared by the board of directors out of funds legally available therefor.

 

Because our amended and restated memorandum and articles of association authorize the issuance of up to 200,000,000 Class A ordinary shares, if we were to enter into a business combination, we may (depending on the terms of such a business combination) be required to increase the number of Class A ordinary shares which we are authorized to issue at the same time as our shareholders vote on the business combination to the extent we seek shareholder approval in connection with our initial business combination. Our board of directors is divided into three classes with only one class of directors being appointed in each year and each class (except for those directors appointed prior to our first annual meeting of shareholders) serving a three-year term.

 

In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual general meeting until one year after our first fiscal year end following our listing on Nasdaq. There is no requirement under the Companies Act for us to hold annual or extraordinary general meetings or appoint directors. We may not hold an annual general meeting to appoint new directors prior to the consummation of our initial business combination.

 

We will provide our public shareholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, subject to the limitations and on the conditions described herein. The amount in the trust account is initially anticipated to be $10.00 per public share. The per share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and public shares in connection with the completion of our initial business combination. Unlike many special purpose acquisition companies that hold shareholder votes and conduct proxy solicitations in conjunction with their initial business combinations and provide for related redemptions of public shares for cash upon completion of such initial business combinations even when a vote is not required by law, if a shareholder vote is not required by law and we do not decide to hold a shareholder vote for business or other legal reasons, we will, pursuant to our amended and restated memorandum and articles of association, conduct the redemptions pursuant to the tender offer rules of the SEC, and file tender offer documents with the SEC prior to completing our initial business combination. Our amended and restated memorandum and articles of association require these tender offer documents to contain substantially the same financial and other information about our initial business combination and the redemption rights as is required under the

 

2

 

SEC’s proxy rules. If, however, a shareholder approval of the transaction is required by law, or we decide to obtain shareholder approval for business or other reasons, we will, like many special purpose acquisition companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If we seek shareholder approval, we will complete our initial business combination only if we obtain an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the shareholders represented in person or by proxy and entitled to vote thereon who attend and vote at a general meeting of the company. However, the participation of our sponsor, officers, directors, advisors or their affiliates in privately-negotiated transactions (as described in this prospectus), if any, could result in the approval of our initial business combination even if a majority of our public shareholders vote, or indicate their intention to vote, against such initial business combination. For purposes of seeking approval of an ordinary resolution, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained. Our amended and restated memorandum and articles of association require that at least five days’ notice will be given of any general meeting.

 

If we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated memorandum and articles of association provide that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to Excess Shares without our prior consent. However, we would not be restricting our shareholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination. Our shareholders’ inability to redeem the Excess Shares will reduce their influence over our ability to complete our initial business combination, and such shareholders could suffer a material loss in their investment if they sell such Excess Shares on the open market. Additionally, such shareholders will not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. And, as a result, such shareholders will continue to hold that number of shares exceeding 15% and, in order to dispose such shares would be required to sell their shares in open market transactions, potentially at a loss.

 

If we seek shareholder approval in connection with our initial business combination, our sponsor, officers and directors have agreed to vote their founder shares and any public shares purchased during or after this offering (including in open market and privately-negotiated transactions) in favor of our initial business combination. As a result, in addition to our initial shareholders’ founder shares, we would need 7,500,001, or 37.5%, of the 20,000,000 public shares sold in this offering to be voted in favor of an initial business combination in order to have our initial business combination approved (assuming all outstanding shares are voted and the over-allotment option is not exercised). Additionally, each public shareholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction or whether they were a public shareholder on the record date for the general meeting held to approve the proposed transaction.

 

Pursuant to our amended and restated memorandum and articles of association, if we do not complete our initial business combination within 24 months from the closing of this offering, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account (less taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii) to our obligations under Cayman Islands law to provide for claims of creditors and in all cases subject to the other requirements of applicable law. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 24 months from the closing of this offering. However, if our sponsor or management team acquire public shares in or after this offering, they will be entitled to

 

3

 

liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the prescribed time period.

 

In the event of a liquidation, dissolution or winding up of the company after a business combination, our shareholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of shares, if any, having preference over the ordinary shares. Our shareholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the ordinary shares, except that we will provide our public shareholders with the opportunity to redeem their public shares for cash at a per share price equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, upon the completion of our initial business combination, subject to the limitations and on the conditions described herein.

 

Founder Shares

 

The founder shares are designated as Class B ordinary shares and, except as described below, are identical to the Class A ordinary shares included in the units being sold in this offering, and holders of founder shares have the same shareholder rights as public shareholders, except that (i) the founder shares are subject to certain transfer restrictions, as described in more detail below, (ii) the founder shares are entitled to registration rights; (iii) Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to (A) waive their redemption rights with respect to their founder shares and public shares in connection with the completion of our initial business combination, (B) waive their redemption rights with respect to their founder shares and public shares in connection with a shareholder vote to approve an amendment to our amended and restated memorandum and articles of association (1) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we have not consummated an initial business combination within 24 months from the closing of this offering or (2) with respect to any other material provisions relating to shareholders’ rights or pre-initial business combination activity, (C) waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination within 24 months from the closing of this offering, although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our initial business combination within such time period and (D) vote any founder shares held by them and any public shares purchased during or after this offering (including in open market and privately-negotiated transactions) in favor of our initial business combination, (iv) the founder shares are automatically convertible into Class A ordinary shares concurrently with or immediately following the consummation of our initial business combination on a one-for-one basis, subject to adjustment as described herein and in our amended and restated memorandum and articles of association, and (v) only holders of Class B ordinary shares will have the right to appoint directors in any general meeting held prior to or in connection with the completion of our initial business combination.

 

The founder shares will automatically convert into Class A ordinary shares concurrently with or immediately following the consummation of our initial business combination on a one-for-one basis, subject to adjustment for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional Class A ordinary shares or equity-linked securities are issued or deemed issued in connection with our initial business combination, the number of Class A ordinary shares issuable upon conversion of the Class B ordinary shares issued and outstanding upon completion of this offering will equal, in the aggregate, 20% of the sum of (i) the total number of Class A ordinary shares issued and outstanding upon completion of this offering, plus (ii) the total number of Class A ordinary shares issuable upon conversion of the Class B ordinary shares issued and outstanding upon completion of this offering, plus (iii) the total number of Class A ordinary shares issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial business combination (including the forward purchase shares but not the forward purchase warrants), excluding any Class A ordinary shares or equity-linked securities exercisable

 

4

 

for or convertible into Class A ordinary shares issued, or to be issued, to any seller in the initial business combination and any private placement warrants issued to our sponsor, officers or directors upon conversion of working capital loans, minus (iv) the number of Class A ordinary shares redeemed by public shareholders; provided that such conversion of founder shares will never occur on a less than one-for-one basis.

 

In connection with entering into the forward purchase agreement with Ward Ferry, our sponsor will transfer an aggregate of 312,500 Class B ordinary shares to Ward Ferry concurrently with the closing of this offering for no cash consideration. The founder shares transferred to Ward Ferry are subject to similar contractual conditions and restrictions as the founder shares issued to our sponsor. The anchor investors will have redemption rights with respect to any public shares they own.

 

With certain limited exceptions, the founder shares are not transferable, assignable or salable (except to our officers and directors and other persons or entities affiliated with our sponsor, each of whom will be subject to the same transfer restrictions) until the earlier of (A) one year after the completion of our initial business combination or earlier if, subsequent to our initial business combination, the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, and (B) the date following the completion of our initial business combination on which we complete a liquidation, merger, share exchange or other similar transaction that results in all of our shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.

 

Register of Members

 

Under Cayman Islands law, we must keep a register of members (shareholders) and there will be entered therein:

 

·                  the names and addresses of the members, a statement of the shares held by each member, and of the amount paid or agreed to be considered as paid, of the number and category of shares of each member, and the voting rights of the shares of each member and whether such rights are conditional;

 

·                  the date on which the name of any person was entered on the register as a member; and

 

·                  the date on which any person ceased to be a member.

 

Under Cayman Islands law, the register of members of our company is prima facie evidence of the matters set out therein (i.e. the register of members will raise a presumption of fact on the matters referred to above unless rebutted) and a member registered in the register of members will be deemed as a matter of Cayman Islands law to have legal title to the shares as set against its name in the register of members. Upon the closing of this public offering, the register of members will be immediately updated to reflect the issue of shares by us. Once our register of members has been updated, the shareholders recorded in the register of members will be deemed to have legal title to the shares set against their name. However, there are certain limited circumstances where an application may be made to a Cayman Islands court for a determination on whether the register of members reflects the correct legal position. Further, the Cayman Islands court has the power to order that the register of members maintained by a company should be rectified where it considers that the register of members does not reflect the correct legal position. If an application for an order for rectification of the register of members were made in respect of our ordinary shares, then the validity of such shares may be subject to re-examination by a Cayman Islands court.

 

Preferred Shares

 

Our amended and restated memorandum and articles of association authorize 1,000,000 preferred shares and provide that preferred shares may be issued from time to time in one or more series. Our board of directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions

 

5

 

thereof, applicable to the shares of each series. Our board of directors will be able to, without shareholder approval, issue preferred shares with voting and other rights that could adversely affect the voting power and other rights of the holders of the ordinary shares and could have anti-takeover effects. The ability of our board of directors to issue preferred shares without shareholder approval could have the effect of delaying, deferring or preventing a change of control of us or the removal of existing management. We have no preferred shares outstanding at the date hereof. Although we do not currently intend to issue any preferred shares, we cannot assure you that we will not do so in the future. No preferred shares are being issued or registered in the IPO.

 

Warrants

 

Public Shareholders’ Warrants and Forward Purchase Warrants

 

Each whole warrant entitles the registered holder to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing on the later of one year from the closing of this offering or 30 days after the completion of our initial business combination, provided in each case that we have an effective registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the warrants and a current prospectus relating to them is available (or we permit holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement) and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder.  Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of Class A ordinary shares.  This means only a whole warrant may be exercised at a given time by a warrant holder.  No fractional warrants will be issued upon separation of the units and only whole warrants will trade.  Accordingly, unless you purchase at least two units, you will not be able to receive or trade a whole warrant.  The warrants will expire five years after the completion of our initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

 

We will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the Class A ordinary shares underlying the warrants is then effective and a prospectus relating thereto is current, subject to our satisfying our obligations described below with respect to registration.  No warrant will be exercisable and we will not be obligated to issue a Class A ordinary share upon exercise of a warrant unless the Class A ordinary share issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.  In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless.  In no event will we be required to net cash settle any warrant.  In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the Class A ordinary share underlying such unit.

 

We have agreed that as soon as practicable, but in no event later than thirty (30) business days, after the closing of our initial business combination, we will use our reasonable best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A ordinary shares issuable upon exercise of the warrants.  We will use our reasonable best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration or redemption of the warrants in accordance with the provisions of the warrant agreement.  If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the sixtieth (60th) business day after the closing of our initial business combination, warrant holders may, until such time as there is an effective registration statement and during any period when we will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if our Class A ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy 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 warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities

 

6

 

Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, and in the event we do not so elect, we will use our reasonable best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In such event, each holder would pay the exercise price by surrendering each such warrant for that number of Class A ordinary shares equal to the lesser of (A) the quotient obtained by dividing (x) the product of the number of Class A ordinary shares underlying the warrants, multiplied the excess of the “fair market value” less the exercise price of the warrants by (y) the fair market value and (B) 0.361.  The “fair market value” shall mean the volume weighted average price of the Class A ordinary shares for the 10 trading days ending on the trading day prior to the date on which the notice of exercise is received by the warrant agent.

 

Redemptions of warrants when the price per Class A ordinary share equals or exceeds $18.00

 

Once the warrants become exercisable, we may redeem the outstanding warrants (except as described herein with respect to the private placement warrants):

 

·                  in whole and not in part;

 

·                  at a price of $0.01 per warrant;

 

·                  upon not less than 30 days’ prior written notice of redemption to each warrant holder; and

 

·                  if, and only if, the last reported sale price of the Class A ordinary shares for any 20 trading days within a 30-trading day period ending three business days before we send to the notice of redemption to the warrant holders (which we refer to as the “Reference Value”) equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share dividends, reorganizations, recapitalizations and the like).

 

If and when the 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. However, we will not redeem the warrants unless an effective registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the warrants is effective and a current prospectus relating to those Class A ordinary shares is available throughout the 30-day redemption period.

 

We have established the last of the redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price.  If the foregoing conditions are satisfied and we issue a notice of redemption of the warrants, each warrant holder will be entitled to exercise his, her or its warrant prior to the scheduled redemption date.  Any such exercise would not be done on a “cashless” basis and would require the exercising warrant holder to pay the exercise price for each warrant being exercised.  However, the price of the Class A ordinary shares may fall below the $18.00 redemption trigger price (as adjusted for share sub-divisions, share dividends, reorganizations, recapitalizations and the like) as well as the $11.50 (for whole shares) warrant exercise price after the redemption notice is issued.

 

Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00

 

Once the warrants become exercisable, we may redeem the outstanding warrants:

 

·                  in whole and not in part;

 

·                  at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption; provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to the table below, based on the redemption date and the “fair market value” of our Class A ordinary shares (as defined below);

 

7

 

·                  if, and only if, the Reference Value (as defined above under “Redemptions for warrants when the price per Class A ordinary share equals or exceeds $18.00”) equals or exceeds $10.00 per share (as adjusted for share sub-divisions, share dividends, reorganizations, recapitalizations and the like); and

 

·                  if the Reference Value is less than $18.00 per share (as adjusted for share sub-divisions, share dividends, reorganizations, recapitalizations and the like), the private placement warrants must also be concurrently called for redemption on the same terms as the outstanding public warrants, as described above.

 

The numbers in the table below represent the number of Class A ordinary shares that a warrant holder will receive upon exercise in connection with a redemption by us pursuant to this redemption feature, based on the “fair market value” of our Class A ordinary shares on the corresponding redemption date (assuming holders elect to exercise their warrants and such warrants are not redeemed for $0.10 per warrant), determined based on volume-weighted average price of our Class A ordinary shares as reported during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of warrants, and the number of months that the corresponding redemption date precedes the expiration date of the warrants, each as set forth in the table below. We will provide our warrant holders with the final fair market value no later than one business day after the 10-trading day period described above ends.

 

Pursuant to the warrant agreement, references above to Class A ordinary shares shall include a security other than Class A ordinary shares into which the Class A ordinary shares have been converted or exchanged for in the event we are not the surviving company in our initial business combination. The numbers in the table below will not be adjusted when determining the number of Class A ordinary shares to be issued upon exercise of the warrants if we are not the surviving entity following our initial business combination.

 

The share prices set forth in the column headings of the table below will be adjusted as of any date on which the number of shares issuable upon exercise of a warrant is adjusted as set forth in the first three paragraphs under the heading “—Anti-dilution Adjustments” below.  The adjusted share prices in the column headings will equal the share prices immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the number of shares deliverable upon exercise of a warrant immediately prior to such adjustment and the denominator of which is the number of shares deliverable upon exercise of a warrant as so adjusted.  The number of shares in the table below shall be adjusted in the same manner and at the same time as the number of shares issuable upon exercise of a warrant.

 

	
Redemption Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(period to
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
expiration of
    	
 
    	
Fair Market Value of Class A Ordinary Shares
    	
 
    
	
warrants)
    	
 
    	
<$10.00
    	
 
    	
$11.00
    	
 
    	
$12.00
    	
 
    	
$13.00
    	
 
    	
$14.00
    	
 
    	
$15.00
    	
 
    	
$16.00
    	
 
    	
$17.00
    	
 
    	
>$18.00
    	
 
    
	
60 months
    	
 
    	
0.261
    	
 
    	
0.281
    	
 
    	
0.297
    	
 
    	
0.311
    	
 
    	
0.324
    	
 
    	
0.337
    	
 
    	
0.348
    	
 
    	
0.358
    	
 
    	
0.361
    	
 
    
	
57 months
    	
 
    	
0.257
    	
 
    	
0.277
    	
 
    	
0.294
    	
 
    	
0.310
    	
 
    	
0.324
    	
 
    	
0.337
    	
 
    	
0.348
    	
 
    	
0.358
    	
 
    	
0.361
    	
 
    
	
54 months
    	
 
    	
0.252
    	
 
    	
0.272
    	
 
    	
0.291
    	
 
    	
0.307
    	
 
    	
0.322
    	
 
    	
0.335
    	
 
    	
0.347
    	
 
    	
0.357
    	
 
    	
0.361
    	
 
    
	
51 months
    	
 
    	
0.246
    	
 
    	
0.268
    	
 
    	
0.287
    	
 
    	
0.304
    	
 
    	
0.320
    	
 
    	
0.333
    	
 
    	
0.346
    	
 
    	
0.357
    	
 
    	
0.361
    	
 
    
	
48 months
    	
 
    	
0.241
    	
 
    	
0.263
    	
 
    	
0.283
    	
 
    	
0.301
    	
 
    	
0.317
    	
 
    	
0.332
    	
 
    	
0.344
    	
 
    	
0.356
    	
 
    	
0.361
    	
 
    
	
45 months
    	
 
    	
0.235
    	
 
    	
0.258
    	
 
    	
0.279
    	
 
    	
0.298
    	
 
    	
0.315
    	
 
    	
0.330
    	
 
    	
0.343
    	
 
    	
0.356
    	
 
    	
0.361
    	
 
    
	
42 months
    	
 
    	
0.228
    	
 
    	
0.252
    	
 
    	
0.274
    	
 
    	
0.294
    	
 
    	
0.312
    	
 
    	
0.328
    	
 
    	
0.342
    	
 
    	
0.355
    	
 
    	
0.361
    	
 
    
	
39 months
    	
 
    	
0.221
    	
 
    	
0.246
    	
 
    	
0.269
    	
 
    	
0.290
    	
 
    	
0.309
    	
 
    	
0.325
    	
 
    	
0.340
    	
 
    	
0.354
    	
 
    	
0.361
    	
 
    
	
36 months
    	
 
    	
0.213
    	
 
    	
0.239
    	
 
    	
0.263
    	
 
    	
0.285
    	
 
    	
0.305
    	
 
    	
0.323
    	
 
    	
0.339
    	
 
    	
0.353
    	
 
    	
0.361
    	
 
    
	
33 months
    	
 
    	
0.205
    	
 
    	
0.232
    	
 
    	
0.257
    	
 
    	
0.280
    	
 
    	
0.301
    	
 
    	
0.320
    	
 
    	
0.337
    	
 
    	
0.352
    	
 
    	
0.361
    	
 
    
	
30 months
    	
 
    	
0.196
    	
 
    	
0.224
    	
 
    	
0.250
    	
 
    	
0.274
    	
 
    	
0.297
    	
 
    	
0.316
    	
 
    	
0.335
    	
 
    	
0.351
    	
 
    	
0.361
    	
 
    

 

8

 

	
Redemption Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
(period to
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
expiration of
    	
 
    	
Fair Market Value of Class A Ordinary Shares
    	
 
    
	
warrants)
    	
 
    	
<$10.00
    	
 
    	
$11.00
    	
 
    	
$12.00
    	
 
    	
$13.00
    	
 
    	
$14.00
    	
 
    	
$15.00
    	
 
    	
$16.00
    	
 
    	
$17.00
    	
 
    	
>$18.00
    	
 
    
	
27 months
    	
 
    	
0.185
    	
 
    	
0.214
    	
 
    	
0.242
    	
 
    	
0.268
    	
 
    	
0.291
    	
 
    	
0.313
    	
 
    	
0.332
    	
 
    	
0.350
    	
 
    	
0.361
    	
 
    
	
24 months
    	
 
    	
0.173
    	
 
    	
0.204
    	
 
    	
0.233
    	
 
    	
0.260
    	
 
    	
0.285
    	
 
    	
0.308
    	
 
    	
0.329
    	
 
    	
0.348
    	
 
    	
0.361
    	
 
    
	
21 months
    	
 
    	
0.161
    	
 
    	
0.193
    	
 
    	
0.223
    	
 
    	
0.252
    	
 
    	
0.279
    	
 
    	
0.304
    	
 
    	
0.326
    	
 
    	
0.347
    	
 
    	
0.361
    	
 
    
	
18 months
    	
 
    	
0.146
    	
 
    	
0.179
    	
 
    	
0.211
    	
 
    	
0.242
    	
 
    	
0.271
    	
 
    	
0.298
    	
 
    	
0.322
    	
 
    	
0.345
    	
 
    	
0.361
    	
 
    
	
15 months
    	
 
    	
0.130
    	
 
    	
0.164
    	
 
    	
0.197
    	
 
    	
0.230
    	
 
    	
0.262
    	
 
    	
0.291
    	
 
    	
0.317
    	
 
    	
0.342
    	
 
    	
0.361
    	
 
    
	
12 months
    	
 
    	
0.111
    	
 
    	
0.146
    	
 
    	
0.181
    	
 
    	
0.216
    	
 
    	
0.250
    	
 
    	
0.282
    	
 
    	
0.312
    	
 
    	
0.339
    	
 
    	
0.361
    	
 
    
	
9 months
    	
 
    	
0.090
    	
 
    	
0.125
    	
 
    	
0.162
    	
 
    	
0.199
    	
 
    	
0.237
    	
 
    	
0.272
    	
 
    	
0.305
    	
 
    	
0.336
    	
 
    	
0.361
    	
 
    
	
6 months
    	
 
    	
0.065
    	
 
    	
0.099
    	
 
    	
0.137
    	
 
    	
0.178
    	
 
    	
0.219
    	
 
    	
0.259
    	
 
    	
0.296
    	
 
    	
0.331
    	
 
    	
0.361
    	
 
    
	
3 months
    	
 
    	
0.034
    	
 
    	
0.065
    	
 
    	
0.104
    	
 
    	
0.150
    	
 
    	
0.197
    	
 
    	
0.243
    	
 
    	
0.286
    	
 
    	
0.326
    	
 
    	
0.361
    	
 
    
	
0 months
    	
 
    	
—
    	
 
    	
—
    	
 
    	
0.042
    	
 
    	
0.115
    	
 
    	
0.179
    	
 
    	
0.233
    	
 
    	
0.281
    	
 
    	
0.323
    	
 
    	
0.361
    	
 
    

 

The exact fair market value and redemption date may not be set forth in the table above, in which case, if the fair market value is between two values in the table or the redemption date is between two redemption dates in the table, the number of Class A ordinary shares to be issued for each warrant exercised will be determined by a straight-line interpolation between the number of shares set forth for the higher and lower fair market values and the earlier and later redemption dates, as applicable, based on a 365 or 366-day year, as applicable.  For example, if the volume-weighted average price of our Class A ordinary shares as reported during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of the warrants is $11.00 per share, and at such time there are 57 months until the expiration of the warrants, holders may choose to, in connection with this redemption feature, exercise their warrants for 0.277 Class A ordinary shares for each whole warrant.  For an example where the exact fair market value and redemption date are not as set forth in the table above, if the volume-weighted average price of our Class A ordinary shares as reported during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of the warrants is $13.50 per share, and at such time there are 38 months until the expiration of the warrants, holders may choose to, in connection with this redemption feature, exercise their warrants for 0.298 Class A ordinary shares for each whole warrant.  In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 Class A ordinary shares per warrant (subject to adjustment).

 

This redemption feature is structured to allow for all of the outstanding warrants to be redeemed when the Class A ordinary shares are trading at or above $10.00 per share, which may be at a time when the trading price of our Class A ordinary shares is below the exercise price of the warrants.  We have established this redemption feature to provide us with the flexibility to redeem the warrants without the warrants having to reach the $18.00 per share threshold set forth above under “—Redemptions of warrants when the price per Class A ordinary share equals or exceeds $18.00.”  Holders choosing to exercise their warrants in connection with a redemption pursuant to this feature will, in effect, receive a number of shares for their warrants based on an option pricing model with a fixed volatility input as of the date of this prospectus.  This redemption right provides us with an additional mechanism by which to redeem all of the outstanding warrants, and therefore have certainty as to our capital structure as the warrants would no longer be outstanding and would have been exercised or redeemed.  We will be required to pay the applicable redemption price to warrant holders if we choose to exercise this redemption right and it will allow us to quickly proceed with a redemption of the warrants if we determine it is in our best interest to do so.  As such, we would redeem the warrants in this manner when we believe it is in our best interest to update our capital structure to remove the warrants and pay the redemption price to the warrant holders.

 

As stated above, we can redeem the warrants when the Class A ordinary shares are trading at a price starting at $10.00, which is below the exercise price of $11.50, because it will provide certainty with respect to our capital structure and cash position while providing warrant holders with the opportunity to

 

9

 

exercise their warrants on a cashless basis for the applicable number of shares.  If we choose to redeem the warrants when the Class A ordinary shares are trading at a price below the exercise price of the warrants, this could result in the warrant holders receiving fewer Class A ordinary shares than they would have received if they had chosen to wait to exercise their warrants for Class A ordinary shares if and when such Class A ordinary shares were trading at a price higher than the exercise price of $11.50.

 

No fractional Class A ordinary shares will be issued upon exercise.  If, upon exercise, a holder would be entitled to receive a fractional interest in a share, we will round down to the nearest whole number of the number of Class A ordinary shares to be issued to the holder.  If, at the time of redemption, the warrants are exercisable for a security other than the Class A ordinary shares pursuant to the warrant agreement (for instance, if we are not the surviving company in our initial business combination), the warrants may be exercised for such security.  At such time as the warrants become exercisable for a security other than the Class A ordinary shares, the Company (or surviving company) will use its commercially reasonable efforts to register under the Securities Act the security issuable upon the exercise of the warrants.

 

Redemption Procedures. A holder of a warrant may notify us in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such warrant, to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the warrant agent’s actual knowledge, would beneficially own in excess of 4.9% or 9.8% (as specified by the holder) of the Class A ordinary shares issued and outstanding immediately after giving effect to such exercise.

 

Anti-dilution Adjustments.  If the number of outstanding Class A ordinary shares is increased by a capitalization or share dividend payable in Class A ordinary shares, or by a split-up of ordinary shares or other similar event, then, on the effective date of such capitalization or share dividend, split-up or similar event, the number of Class A ordinary shares issuable on exercise of each warrant will be increased in proportion to such increase in the outstanding ordinary shares.  A rights offering to holders of ordinary shares entitling holders to purchase Class A ordinary shares at a price less than the “historical fair market value” (as defined below) will be deemed a share dividend of a number of Class A ordinary shares equal to the product of (i) the number of Class A ordinary shares actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for Class A ordinary shares) and (ii) one minus the quotient of (x) the price per Class A ordinary share paid in such rights offering and (y) the historical fair market value.  For these purposes, (i) if the rights offering is for securities convertible into or exercisable for Class A ordinary shares, in determining the price payable for Class A ordinary shares, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) “historical fair market value” means the volume-weighted average price of Class A ordinary shares as reported during the 10 trading day period ending on the trading day prior to the first date on which the Class A ordinary shares trade on the applicable exchange or in the applicable market, regular way, without the right to receive such rights.

 

In addition, if we, at any time while the warrants are outstanding and unexpired, pay a dividend or make a distribution in cash, securities or other assets to the holders of Class A ordinary shares on account of such Class A ordinary shares (or other securities into which the warrants are convertible), other than (a) as described above, (b) any cash dividends or cash distributions which, when combined on a per share basis with all other cash dividends and cash distributions paid on the Class A ordinary shares during the 365-day period ending on the date of declaration of such dividend or distribution does not exceed $0.50 (as adjusted to appropriately reflect any other adjustments and excluding cash dividends or cash distributions that resulted in an adjustment to the exercise price or to the number of Class A ordinary shares issuable on exercise of each warrant) but only with respect to the amount of the aggregate cash dividends or cash distributions equal to or less than $0.50 per share, (c) to satisfy the redemption rights of the holders of Class A ordinary shares in connection with a proposed initial business combination, (d) to satisfy the redemption rights of the holders of Class A ordinary shares in connection with a shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering or (B) with respect to any other material provisions relating to shareholders’ rights or pre-initial business combination activity, or (e) in connection with the redemption of our public shares upon our

 

10

 

failure to complete our initial business combination, then the warrant exercise price will be decreased, effective immediately after the effective date of such event, by the amount of cash and/or the fair market value of any securities or other assets paid on each Class A ordinary share in respect of such event.

 

If the number of outstanding Class A ordinary shares is decreased by a consolidation, combination, reverse share sub-division or reclassification of Class A ordinary shares or other similar event, then, on the effective date of such consolidation, combination, reverse share sub-division, reclassification or similar event, the number of Class A ordinary shares issuable on exercise of each warrant will be decreased in proportion to such decrease in outstanding Class A ordinary shares.

 

Whenever the number of Class A ordinary shares purchasable upon the exercise of the warrants is adjusted, as described above, the warrant exercise price will be adjusted by multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number of Class A ordinary shares purchasable upon the exercise of the warrants immediately prior to such adjustment and (y) the denominator of which will be the number of Class A ordinary shares so purchasable immediately thereafter.

 

In addition, if (x) we issue additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at an issue price or effective issue price of less than $9.20 per ordinary share (with such issue price or effective issue price to be determined in good faith by our board of directors and, in the case of any such issuance to our sponsors or their affiliates, without taking into account any founder shares held by our sponsors or such affiliates, as applicable, prior to such issuance (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date of the completion of our initial business combination (net of redemptions), and (z) the volume-weighted average trading price of our Class A ordinary shares during the 20 trading day period starting on the trading day prior to the day on which we complete our initial business combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $10.00 and $18.00 per share redemption trigger prices described adjacent to “Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00” and “Redemption of warrants when the price per Class A ordinary share equals or exceeds $18.00” will be adjusted (to the nearest cent) to be equal to 100% and 180% of the higher of the Market Value and the Newly Issued Price, respectively.

 

In case of any reclassification or reorganization of the outstanding Class A ordinary shares (other than those described above or that solely affects the par value of such Class A ordinary shares), or in the case of any merger or consolidation of us with or into another corporation (other than a consolidation or merger in which we are the continuing corporation and that does not result in any reclassification or reorganization of our issued and outstanding Class A ordinary shares), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of us as an entirety or substantially as an entirety in connection with which we are dissolved, the holders of the warrants will thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the warrants and in lieu of the Class A ordinary shares immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of Class A ordinary shares or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the warrants would have received if such holder had exercised their warrants immediately prior to such event.  If less than 70% of the consideration receivable by the holders of Class A ordinary shares in such a transaction is payable in the form of Class A ordinary shares in the successor entity that is listed for trading on a national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately following such event, and if the registered holder of the warrant properly exercises the warrant within thirty days following public disclosure of such transaction, the warrant exercise price will be reduced as specified in the warrant agreement based on the Black-Scholes value (as defined in the warrant agreement) of the warrant.  The purpose of such exercise price reduction is to provide additional value to holders of the

 

11

 

warrants when an extraordinary transaction occurs during the exercise period of the warrants pursuant to which the holders of the warrants otherwise do not receive the full potential value of the warrants.

 

The warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the 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 and forward purchase warrants to make any change that adversely affects the interests of the registered holders. You should review a copy of the warrant agreement, which will be filed as an exhibit to the registration statement of which this prospectus is a part, for a complete description of the terms and conditions applicable to the warrants.

 

The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price (or on a cashless basis, if applicable), by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of ordinary shares and any voting rights until they exercise their warrants and receive Class A ordinary shares. After the issuance of Class A ordinary shares upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by shareholders.

 

Private Placement Warrants

 

The private placement warrants (including the Class A ordinary shares issuable upon exercise of such warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination (except, among other limited exceptions as described under “Principal Shareholders — Transfers of Founder Shares and Private Placement Warrants,” to our officers and directors and other persons or entities affiliated with our sponsor) and they will not be redeemable by us so long as they are held by our sponsor, members of our sponsor or their permitted transferees. The sponsor or its permitted transferees, have the option to exercise the private placement warrants on a cashless basis. Except as described below, the private placement warrants have terms and provisions that are identical to those of the warrants being sold as part of the units in the IPO. If the private placement warrants are held by holders other than the sponsor or its permitted transferees, the private placement warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in the IPO.

 

Except as described under “—Warrants—Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00,” if holders of the private placement warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering his, her or its warrants for that number of Class A ordinary shares equal to the quotient obtained by dividing (x) the product of the number of Class A ordinary shares underlying the warrants, multiplied by the excess of the “fair market value” of our Class A ordinary shares (defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” will mean the volume weighted average price of the Class A ordinary shares for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent. The reason that we have agreed that these warrants will be exercisable on a cashless basis so long as they are held by the sponsor or its permitted transferees is because it is not known at this time whether they will be affiliated with us following a business combination. If they remain affiliated with us, their ability to sell our securities in the open market will be significantly limited. We expect to have policies in place that prohibit insiders from selling our securities except during specific periods of time. Even during such periods of time when insiders will be permitted to sell our securities, an insider cannot trade in our securities if he or she is in possession of material non-public information. Accordingly, unlike public shareholders who could exercise their warrants and sell the Class A ordinary shares received upon such exercise freely in the open market in order to recoup the cost of such exercise, the insiders could be significantly restricted from selling such securities. As a result, we believe that allowing the holders to exercise such warrants on a cashless basis is appropriate.

 

12

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