As filed with the Securities and Exchange Commission on December 6, 2021
Registration
No. 333-259375
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No.
2
toFORM
S-4/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ENVIRONMENTAL IMPACT ACQUISITION CORP.
(Exact name of registrant as specified in its charter)
Delaware | 6770 | 85-1914700 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
535 Madison Avenue
New York, New York 10022
Telephone: (212)
389-8109
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Daniel Coyne
Environmental Impact Acquisition Corp.
535 Madison Avenue
New York, New York 10022
Telephone: (212)
389-8109
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies of all communications, including communications sent to agent for service, should be sent to:
Steven B. Stokdyk Brian Duff Brent T. Epstein Latham & Watkins LLP 355 South Grand Avenue, Suite 100 Los Angeles, California 90071-1560 Tel: (213) 485-1234 | David A. Broadwin Adrienne Ellman John D. Hancock Foley Hoag LLP 155 Seaport Boulevard Boston, Massachusetts 02210 Tel: (617) 832-1000 |
Approximate date of commencement of proposed sale of the securities to the public:
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a
post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2
of the Exchange Act. ☐| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
| Emerging growth company | ☒ | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act
Rule 13e-4(i)
(Cross-Border Issuer Tender Offer) ☐Exchange Act
Rule 14d-1(d)
(Cross-Border Third-Party Tender Offer) ☐The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the SEC, acting pursuant to Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
PRELIMINARY—SUBJECT TO COMPLETION, DATED DECEMBER 6, 2021
PROXY STATEMENT FOR
SPECIAL MEETING OF
ENVIRONMENTAL IMPACT ACQUISITION CORP.
PROSPECTUS FOR
SHARES OF CLASS A COMMON STOCK, PAR VALUE $0.0001 PER SHARE, OF
ENVIRONMENTAL IMPACT ACQUISITION CORP.
The board of directors of Environmental Impact Acquisition Corp., a Delaware corporation (“
ENVI
”), has unanimously approved the transactions (collectively, the “Business Combination
”) contemplated by the Business Combination Agreement, dated August 9, 2021 (as may be amended, supplemented or otherwise modified from time to time, the “Business Combination Agreement
”), by and among ENVI, Honey Bee Merger Sub, Inc., a Delaware corporation (“Merger Sub
”), and GreenLight Biosciences, Inc., a Delaware corporation (“GreenLight
”), a copy of which is attached to this proxy statement/prospectus as Annex A. As described in this proxy statement/prospectus, ENVI’s stockholders are being asked to consider and vote upon the Business Combination and other items. As used in this proxy statement/prospectus, “New GreenLight
” refers to ENVI after giving effect to the consummation of the Business Combination.On the date of the closing of the Business Combination (the “
Closing
”), Merger Sub will merge with and into GreenLight (the “Merger
”), with GreenLight as the surviving company in the Merger and, after giving effect to the Merger, GreenLight will be a wholly owned subsidiary of ENVI (the time that the Merger becomes effective being referred to as the “Effective Time
”).In accordance with the terms and subject to the conditions of the Business Combination Agreement, at the Effective Time, each outstanding share of capital stock of GreenLight (other than treasury shares and shares with respect to which appraisal rights under the Delaware General Corporation Law are properly exercised and not withdrawn) will be exchanged for shares of Class A common stock, par value $0.0001 per share, of ENVI (“
ENVI Class
A Common Stock
”) and outstanding GreenLight options and warrants to purchase shares of capital stock of GreenLight (whether vested or unvested) will be converted into comparable options and warrants to purchase ENVI Class A Common Stock, in each case, based on an implied GreenLight equity value of $1.2 billion. In connection with the consummation of the Business Combination, all of the issued and outstanding shares of ENVI Class A Common Stock, and all of the issued and outstanding shares of ENVI Class B common stock, par value $0.0001 per share, of ENVI (“ENVI Class
B Common Stock
”), will become shares of common stock, par value $0.0001 per share, of New GreenLight (“New GreenLight Common Stock
”).This proxy statement/prospectus covers 120,000,000 shares of ENVI Class A Common Stock. The number of shares of ENVI Class A Common Stock that this proxy statement/prospectus covers represents the maximum number of shares that may be issued to holders of shares of capital stock, options and warrants of GreenLight in connection with the Business Combination (as more fully described in this proxy statement/prospectus).
The ENVI Class A Common Stock is currently listed on the Nasdaq Capital Market (“
Nasdaq
”) under the symbol “ENVI.” ENVI will apply for listing, to be effective at the Effective Time, of New GreenLight Common Stock on Nasdaq under the proposed symbol “ ”. It is a condition of the Closing that New GreenLight’s initial listing application with Nasdaq be conditionally approved, that New GreenLight, following the consummation of the Business Combination, satisfy any initial and continuing Nasdaq listing requirements and that New GreenLight not fail to immediately cure any notice of noncompliance, but there can be no assurance that such conditions will be met or that ENVI will obtain such conditional approval from Nasdaq. If these conditions are not met or if such conditional approval is not obtained, the Business Combination will not be consummated unless these Nasdaq conditions set forth in the Business Combination Agreement are waived by the applicable parties.This proxy statement/prospectus provides stockholders of ENVI with detailed information about the Business Combination and other matters to be considered at the special meeting of ENVI. We encourage you to read this entire proxy statement/prospectus, including the Annexes and other documents referred to herein, carefully and in their entirety. You should also carefully consider the risk factors described in “
” beginning on page 24 of this proxy statement/prospectus.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.
This proxy statement/prospectus is dated , 2021, and
is first being mailed to ENVI’s stockholders on or about , 2021.
ENVIRONMENTAL IMPACT ACQUISITION CORP.
535 Madison Avenue
New York, New York 10022
NOTICE OF SPECIAL MEETING
TO BE HELD ON , 2021
TO THE STOCKHOLDERS OF ENVIRONMENTAL IMPACT ACQUISITION CORP.:
NOTICE IS HEREBY GIVEN that a special meeting of the stockholders (the “
special meeting
”) of Environmental Impact Acquisition Corp., a Delaware corporation, will be held virtually at 9:00 a.m., Eastern Time, on , 2021, at the following address: , or at such other time, on such other date and at such other place to which the meeting may be adjourned. In light of ongoing developments related to the novel coronavirus, after careful consideration, ENVI has determined that the special meeting will be a virtual meeting conducted exclusively via live webcast in order to facilitate stockholder attendance while safeguarding the health and safety of our stockholders, directors and management team. You or your proxyholder will be able to attend and vote at the special meeting by visiting the website address above and using a control number assigned by Continental Stock Transfer & Trust Company (“Continental
”). To register and receive access to the virtual meeting, registered stockholders and beneficial stockholders (those holding shares through a stock brokerage account or by a bank or other holder of record) will need to follow the instructions applicable to them provided in this proxy statement/prospectus.You are cordially invited to attend the special meeting, which will be held for the following purposes:
| • | Proposal No. 1: The Business Combination Proposal Business Combination Proposal ”). |
| • | Proposal No. 2: The Public Benefit Corporation Proposal Public Benefit Corporation Proposal ”). |
| • | Proposal No. 3: The Charter Amendment Proposal Proposed Charter ”) to be in effect following the Business Combination, which, if approved, would take effect at the effective time of the Merger, as further described in this proxy statement/prospectus (the “Charter Amendment Proposal ”). |
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| • | Proposal No. 4(A)-(C): Advisory Charter Amendment Proposals non-binding advisory basis, each of the following governance proposals regarding the Proposed Charter (such proposals, collectively, the “Advisory Charter Amendment Proposals ”) and the following material differences between the Amended and Restated Certificate of Incorporation of ENVI currently in effect (the “Existing Charter ”) and the Proposed Charter (the “Advisory Charter Amendment Proposals ”): |
| • | Proposal No. 4(A): Advisory Charter Amendment Proposal A |
| • | Proposal No. 4(B): Advisory Charter Amendment Proposal B — to provide that, in addition to any vote required by applicable law or the certificate of incorporation or bylaws of New GreenLight, the affirmative vote of the holders of at least seventy-five percent (75%) of the voting power of the then-outstanding shares of capital stock of New GreenLight entitled to vote generally in the election of directors, voting together as a single class, will be required for the stockholders to reduce the total number of shares of New GreenLight Preferred Stock authorized to be issued by New GreenLight or to amend, alter, change or repeal, or adopt any provision of the Proposed Charter inconsistent with, specified provisions of the Proposed Charter; and |
| • | Proposal No. 4(C): Advisory Charter Amendment Proposal C |
| • | Proposal No. 5: The Nasdaq Proposal Nasdaq Proposal ”). |
| • | Proposal No. 6: The Incentive Award Plan Proposal— New GreenLight 2021 Plan ”), a copy of which is attached to this proxy statement/prospectus as Annex H (the “Incentive Award Plan Proposal ”). |
| • | Proposal No. 7: The Employee Stock Purchase Plan Proposal— New GreenLight ESPP ”), a copy of which is attached to this proxy statement/prospectus as Annex J (the “Employee Stock Purchase Plan Proposal ”). |
| • | Proposal No. 8: The Director Election Proposal— Director Election Proposal ”). |
| • | Proposal No. 9: The Adjournment Proposal— |
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Business Combination that the aggregate cash proceeds to be received by ENVI from the trust account in connection with the Business Combination, together with the aggregate gross proceeds from the PIPE Financing, equal no less than $105.0 million (after deducting ENVI’s unpaid expenses, liabilities, and any amounts paid to ENVI stockholders that exercise their redemption rights in connection with the Business Combination) would not be satisfied (the “ Adjournment Proposal ”). |
The Business Combination will be consummated only if the Business Combination Proposal, the Charter Amendment Proposal, the Nasdaq Proposal, the Incentive Award Plan Proposal, the Employee Stock Purchase Plan Proposal and the Director Election Proposal (collectively, the “
Condition Precedent Proposals
”) are approved at the special meeting. The Public Benefit Corporation Proposal and the Advisory Charter Amendment Proposals are conditioned on the approval of the Condition Precedent Proposals. The Adjournment Proposal is not conditioned on any other proposal.These items of business are described in more detail in this proxy statement/prospectus, which we encourage you to read carefully and in its entirety before voting.
Only ENVI’s stockholders of record at the close of business on December 10, 2021 are entitled to notice of and to vote and have their votes counted at the special meeting and any adjournment of the special meeting.
This notice of special meeting and this proxy statement/prospectus and accompanying proxy card are being provided to ENVI’s stockholders in connection with the solicitation of proxies to be voted at the special meeting and at any adjournment of the special meeting.
Whether or not you plan to attend the special meeting, all of ENVI’s stockholders are urged to read this proxy statement/prospectus, including the Annexes and the documents referred to herein, carefully and in their entirety. You should also carefully consider the risk factors described in “
Risk Factors
” beginning on page 24 of this proxy statement/prospectus.
After careful consideration, the board of directors of ENVI has unanimously approved the Business Combination Agreement and the transactions contemplated thereby, including the Merger, and unanimously recommends that stockholders vote “FOR” the adoption of the Business Combination Agreement and approval of the transactions contemplated thereby, including the Merger, and “FOR” all other proposals presented to ENVI’s stockholders pursuant to this notice of special meeting. When you consider the recommendation of these proposals by the board of directors of ENVI, you should keep in mind that ENVI’s directors and officers have interests in the Business Combination that may conflict with your interests as a stockholder. See the section titled “
Business Combination Proposal—Interests of ENVI’s Directors and Officers in the Business Combination
” in this proxy statement/prospectus for a further discussion of these considerations.
Pursuant to the Existing Organizational Documents, a public stockholder may request of ENVI that New GreenLight redeem all or a portion of its shares of public common stock for cash if the Business Combination is consummated. As a holder of shares of public common stock, you will be entitled to receive cash for any shares of public common stock to be redeemed only if you:
(i) hold shares of public common stock;
(ii) submit a written request to Continental, ENVI’s transfer agent, in which you (i) request that New GreenLight redeem all or a specified portion of your shares of public common stock for cash, and (ii) identify yourself as the beneficial holder of the shares of public common stock and provide your legal name, phone number and address; and
(iii) deliver your shares of public common stock to be redeemed to Continental, ENVI’s transfer agent, physically or electronically through The Depository Trust Company.
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Holders must complete the procedures for electing to redeem their shares of public common stock in the manner described above prior to 5:00 p.m., Eastern Time, on , 2021 (two business days before the special meeting) in order for their shares to be redeemed.
The redemption rights include the requirement that a holder must identify itself in writing as a beneficial holder and provide its legal name, phone number and address to Continental in order to validly redeem its shares. Public stockholders may elect to redeem shares of public common stock regardless of whether or how they vote in respect of the Business Combination Proposal. If the Business Combination is not consummated, the shares of public common stock will be returned to the respective holder, broker or bank. If the Business Combination is consummated, and if a public stockholder properly exercises its right to redeem all or a portion of the shares of public common stock that it holds and timely delivers its shares to Continental, New GreenLight will redeem such shares of public common stock for a” in this proxy statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your shares of public common stock for cash.
per-share
price, payable in cash, equal to the pro rata portion of the trust account established at the consummation of ENVI’s initial public offering (the “trust account
”), calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as of , 2021, this would have amounted to approximately $10.00 per issued and outstanding public share. If a public stockholder exercises its redemption rights in full, then it will be electing to exchange its shares of public common stock for cash and will no longer own public common stock. See “Special Meeting of ENVI—Redemption Rights
Notwithstanding the foregoing, a public stockholder, together with any affiliate of such public stockholder or any other person with whom such public stockholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (“
Exchange Act
”)), will be restricted from redeeming its shares of public common stock with respect to more than an aggregate of 20% of the outstanding shares of public common stock. Accordingly, if a public stockholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the outstanding public common stock, then any such shares in excess of that 20% limit would not be redeemed for cash.Our sponsor, CG Investments Inc. VI (our “” in this proxy statement/prospectus for more information related to the Sponsor Letter Agreement.
Sponsor
”), HB Strategies, LLC (“HB Strategies
”) and certain of our directors (collectively, the “initial stockholders
”), pursuant to the Sponsor Letter Agreement (as defined in this proxy statement / prospectus), have agreed to, among other things, vote all of their founder shares (as defined in this proxy statement / prospectus) in favor of the proposals being presented at the special meeting and waive theiranti-dilution
rights with respect to their shares of ENVI Class B Common Stock in connection with the consummation of the Business Combination. As of the date of this proxy statement/prospectus, the founder shares owned by the initial stockholders represent approximately 20% of the issued and outstanding ENVI common stock. See “Business Combination Proposal—Related Agreements
—
Sponsor Letter Agreement
The Business Combination Agreement is subject to the satisfaction or waiver of certain other closing conditions as described in this proxy statement/prospectus. There can be no assurance that the parties to the Business Combination Agreement would waive any such provision of the Business Combination Agreement. In addition, in no event will ENVI redeem shares of public common stock in an amount that would cause New GreenLight’s net tangible assets (as determined in accordance with Rule
3a51-1(g)(1)
of the Exchange Act) to be less than $5,000,001 after giving effect to the transactions contemplated by the Business Combination Agreement and the PIPE Financing (as defined in this proxy statement / prospectus).Your vote is very important
. Whether or not you plan to attend the special meeting, please vote as soon as possible by following the instructions in this proxy statement/prospectus to make sure that your shares are represented at the special meeting. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the special meeting. The Business Combination will be consummated only if the Condition Precedent Proposals are approved at the special meeting. Each of the Condition Precedent Proposals is
cross-conditioned
on the approval of each other.4
The Public Benefit Corporation Proposal and the Advisory Charter Amendment Proposals are conditioned on the approval of the Condition Precedent Proposals. The Adjournment Proposal is not conditioned on the approval of any other proposal.
If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted FOR each of the proposals presented at the special meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not attend the special meeting in person, the effect will be, among other things, that your shares will not be counted for purposes of determining whether a quorum is present at the special meeting. If you are a stockholder of record and you attend the special meeting and wish to vote in person, you may withdraw your proxy and vote in person.
Your attention is directed to this proxy statement/prospectus following this notice of special meeting (including the Annexes and other documents referred to herein) for a more complete description of the proposed Business Combination and related transactions and each of the proposals. You are encouraged to read this proxy statement/prospectus carefully and in its entirety, including the Annexes and other documents referred to herein. If you have any questions or need assistance voting your shares, please contact D.F. King, our proxy solicitor, by calling (866) 620-2535, or for banks and brokers call collect (212) 269-5550, or by emailing ENVI@dfking.com.
Thank you for your participation. We look forward to your continued support.
By Order of the Board of Directors of Environmental Impact Acquisition Corp.,
Daniel Coyne
Chief Executive Officer and President
TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT YOUR SHARES OF ENVI PUBLIC COMMON STOCK BE REDEEMED FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO ENVI’S TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING. IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS, YOU NEED TO IDENTIFY YOURSELF AS A BENEFICIAL HOLDER AND PROVIDE YOUR LEGAL NAME, PHONE NUMBER AND ADDRESS IN YOUR WRITTEN DEMAND. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL BE RETURNED TO YOU OR YOUR ACCOUNT. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.
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ADDITIONAL INFORMATION
You may request copies of this proxy statement/prospectus and any other publicly available information concerning ENVI, without charge, by written request to Environmental Impact Acquisition Corp., 535 Madison Avenue, New York, New York 10022, or by telephone request at (212)
389-8109;
or D.F. King, our proxy solicitor, by calling (866) 620-2535, or for banks and brokers call collect(212) 269-5550,
or by emailing ENVI@dfking.com or from the SEC through the SEC website at http://www.sec.gov.In order for ENVI’s stockholders to receive timely delivery of the documents in advance of the special meeting of ENVI to be held on , 2021, you must request the information no later than five business days prior to the date of the special meeting, by , 2021.
TRADEMARKS
This document contains references to trademarks, trade names and service marks belonging to other entities. Solely for convenience, trademarks, trade names and service marks referred to in this proxy statement/prospectus may appear without the
®
or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks, trade names and service marks. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.ii
SELECTED DEFINITIONS
Unless otherwise stated in this proxy statement/prospectus or the context otherwise requires, references to:
| • | “50% Redemption Scenario” are to a scenario in which it is assumed that 10,187,589 shares of ENVI Class A Common Stock are redeemed by public stockholders for an aggregate payment of approximately $101.9 million (based on the estimated per share redemption price of approximately $10.00 per share) from the Trust Account; |
| • | “Aggregate Transaction Proceeds” are to the amount equal to (a) the sum of (i) the aggregate cash proceeds available to ENVI from the Trust Account in connection with the Business Combination (calculated after giving effect to any redemption of shares of ENVI Class A Common Stock) and (ii) the aggregate proceeds from the PIPE Financing, less (b) unpaid expenses and liabilities of ENVI; |
| • | “Aggregate Transaction Proceeds Condition” are to an amount of Aggregate Transaction Proceeds no less than $105.0 million; |
| • | “Business Combination” are to the Merger and the other transactions contemplated by the Business Combination Agreement, collectively, including the PIPE Financing; |
| • | “Business Combination Agreement” are to that certain Business Combination Agreement, dated August 9, 2021, by and among ENVI, Merger Sub and GreenLight; |
| • | “Canaccord” are to Canaccord Genuity LLC, our financial advisor and an affiliate of the Sponsor; |
| • | “Closing” are to the closing of the Business Combination; |
| • | “Closing Date” are to that date that is in no event later than the third (3rd) business day following the satisfaction (or, to the extent permitted by applicable law, waiver) of the conditions described under the sections titled “ Business Combination Proposal — Business Combination Agreement Business Combination Proposal — Conditions to Closing of the Business Combination |
| • | “Condition Precedent Proposals” are to the Business Combination Proposal, the Charter Amendment Proposal, the Nasdaq Proposal, the Incentive Award Plan Proposal, the Employee Stock Purchase Plan Proposal and the Director Election Proposal, collectively; |
| • | “Continental” are to Continental Stock Transfer & Trust Company; |
| • | “DGCL” are to the Delaware General Corporation Law; |
| • | “Effective Time” are to the time at which the Merger becomes effective; |
| • | “ENVI,” “we,” “us” or “our” are to Environmental Impact Acquisition Corp., a Delaware corporation, prior to the consummation of the Business Combination; |
| • | “ENVI Acquisition Proposal” are to (a) any direct or indirect acquisition (or other business combination), in one or a series of related transactions under which ENVI or any of its controlled affiliates, directly or indirectly, (i) acquires or otherwise purchases any other person(s), (ii) engages in a business combination with any other person(s) or (iii) acquires or otherwise purchases all or a material portion of the assets, equity securities or businesses of any other Persons(s) (in the case of each of clause (i), (ii) and (iii), whether by merger, consolidation, recapitalization, purchase or issuance of equity securities, tender offer or otherwise), (b) any equity, debt or similar investment in ENVI or any of its controlled affiliates or (c) any other Business Combination; |
| • | “ENVI Board” are to ENVI’s board of directors; |
| • | “ENVI Class A Common Stock” are to the Class A common stock, par value $0.0001 per share, of ENVI, which will automatically convert, on a one-for-one |
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| • | “ENVI Class B Common Stock” or “founder shares” are to the Class B common stock, par value $0.0001 per share, of ENVI outstanding as of the date of this proxy statement/prospectus that were initially issued to the Sponsor, HB Strategies, and certain directors of ENVI in private placement transactions prior to and in connection with our initial public offering; |
| • | “ENVI common stock” are to the ENVI Class A Common Stock and the ENVI Class B Common Stock; |
| • | “ENVI Parties” are to, collectively, ENVI and Merger Sub; |
| • | “ENVI Units” are to the units offered at ENVI’s initial public offering at a price of $10.00 per unit, with each unit consisting of one share of ENVI Class A Common Stock and one-half of one redeemable warrant entitling the holder of such warrant to purchase one share of ENVI Class A Common Stock at a price of $11.50 per share; |
| • | “Exchange Act” are to the Securities Exchange Act of 1934, as amended; |
| • | “Existing Bylaws” are to ENVI’s Bylaws currently in effect as of the date of this proxy statement/prospectus; |
| • | “Existing Charter” are to ENVI’s Amended and Restated Certificate of Incorporation currently in effect as of the date of this proxy statement/prospectus; |
| • | “Existing Organizational Documents” are to the Existing Charter and the Existing Bylaws; |
| • | “GreenLight” are to GreenLight Biosciences, Inc., a Delaware corporation, prior to the consummation of the Business Combination and, following the consummation of the Business Combination, are to the surviving company in the Merger; |
| • | “GreenLight 2012 Equity Plan” are to the GreenLight Biosciences, Inc. 2012 Stock Incentive Plan; |
| • | “GreenLight Acquisition Proposal” are to (a) any direct or indirect acquisition (or other business combination), in one or a series of related transactions, (i) of the equity securities of GreenLight, in each case, that, if consummated, would result in a person acquiring beneficial ownership of 15% or more of any class of outstanding voting equity securities of GreenLight or 15% or more of the outstanding voting equity securities of GreenLight (regardless of class) or (ii) of all or a portion of assets or businesses of GreenLight which constitute 15% or more of the fair market value of GreenLight, taken as a whole (in the case of each of clause (i) and (ii), whether by merger, consolidation, recapitalization, purchase or issuance of equity securities, tender offer or otherwise), or (b) any direct or indirect acquisition, in one or a series of related transactions, of 15% or more of any class of outstanding voting equity securities of GreenLight or 15% or more of the outstanding voting equity securities of the GreenLight (regardless of class) (in each case of clauses (a) and (b) other than pursuant to the exercise or conversion of any GreenLight options or warrants in accordance with the terms of the GreenLight 2012 Equity Plan, the underlying grant, award or similar agreement or GreenLight’s warrant agreement (as applicable)); |
| • | “GreenLight Common Stock” are to shares of common stock, par value $0.001 per share, of GreenLight; |
| • | “GreenLight Preferred Stock” are to the GreenLight Series A Preferred Stock, GreenLight Series B Preferred Stock, GreenLight Series C Preferred Stock and GreenLight Series D Preferred Stock; |
| • | “GreenLight Series A Preferred Stock” are to shares of Series A-1 Preferred Stock, Series A-2 Preferred Stock and Series A-3 Preferred Stock, in each case with a par value $0.001 per share, of GreenLight; |
| • | “GreenLight Series B Preferred Stock” are to shares of Series B Preferred Stock, par value $0.001 per share, of GreenLight; |
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| • | “GreenLight Series C Preferred Stock” are to shares of Series C Preferred Stock, par value $0.001 per share, of GreenLight; |
| • | “GreenLight Series D Preferred Stock” are to shares of Series D Preferred Stock, par value $0.001 per share, of GreenLight; |
| • | “GreenLight Shares” are, as the context requires, to the GreenLight Common Stock, GreenLight Series A Preferred Stock, GreenLight Series B Preferred Stock, GreenLight Series C Preferred Stock and GreenLight Series D Preferred Stock; |
| • | “GreenLight stockholders” are to holders of GreenLight capital stock prior to the consummation of the Business Combination; |
| • | “HB Strategies” are to HB Strategies, LLC, a Delaware limited liability company and an affiliate of Hudson Bay Capital Management, LP; |
| • | “initial public offering” are to ENVI’s initial public offering that was consummated on January 19, 2021; |
| • | “initial stockholders” are to the Sponsor, HB Strategies and any other holders of ENVI Class B Common Stock prior to the consummation of ENVI’s initial public offering; |
| • | “Insider Warrants” are to the 750,000 private placement warrants issued simultaneously with the closing of ENVI’s initial public offering, of which 600,000 warrants were issued to the Sponsor and 50,000 warrants were issued to each of Gov. Patrick and Messrs. Brewster and Seavers, entitling such warrant holder the right to purchase one share of ENVI Class A Common Stock on terms identical to the warrants included in the ENVI Units; |
| • | “Merger” are to the merger of Merger Sub with and into GreenLight pursuant to the Business Combination Agreement, with GreenLight as the surviving company in the Merger and, after giving effect to such Merger, GreenLight becoming a wholly owned subsidiary of ENVI, which itself will be renamed “GreenLight Biosciences, Inc.”; |
| • | “Merger Sub” are to Honey Bee Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of ENVI prior to the consummation of the Business Combination; |
| • | “Nasdaq” are to the Nasdaq Capital Market; |
| • | “New GreenLight” are to Environmental Impact Acquisition Corp. following the filing of the Proposed Charter or the PBC Proposed Charter, as applicable, the consummation of the Business Combination and the change of ENVI’s name to “GreenLight Biosciences, Inc.” or “GreenLight Biosciences, PBC”, as applicable; |
| • | “New GreenLight Board” are to the board of directors of New GreenLight; |
| • | “New GreenLight Common Stock” are to the common stock, par value $0.0001 per share, of New GreenLight upon the effectiveness of the Proposed Charter; |
| • | “New GreenLight Equity Plan” are to the New GreenLight Biosciences, Inc. 2021 Equity and Incentive Plan to be considered for adoption and approval by the stockholders pursuant to the Incentive Award Plan Proposal, a form of which is attached to this proxy statement / prospectus as Annex H; |
| • | “New GreenLight ESPP” are to the New GreenLight 2021 Employee Stock Purchase Plan, a form of which is attached to this proxy statement/prospectus as Annex I, to be considered for adoption and approval by the stockholders pursuant to the Employee Stock Purchase Plan Proposal; |
| • | “PBC” are to a public benefit corporation; |
| • | “PBC Purpose” are to the public benefit corporation purpose of ENVI, as provided in the PBC Proposed Charter; |
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| • | “PBC Proposed Charter” are to the proposed second amended and restated certificate of incorporation, to be approved and adopted by the ENVI stockholders pursuant to the Public Benefit Corporation Proposal, and attached as Annex J hereto; |
| • | “PIPE Financing” are to the transactions contemplated by the Subscription Agreements, pursuant to which the PIPE Investors have collectively committed to subscribe for an aggregate of 12,425,000 shares of ENVI Class A Common Stock for an aggregate purchase price of $124,250,000 to be consummated in connection with the Closing; |
| • | “PIPE Investors” are to the investors party to the Subscription Agreements who have agreed to subscribe for and purchase on the date of the Closing a number of shares of ENVI Class A Common Stock set forth in the applicable Subscription Agreement; |
| • | “private placement warrants” are to the warrants entitling such warrant holder the right to purchase one share of ENVI Class A Common Stock on terms identical to the warrants included in the ENVI Units offered in ENVI’s initial public offering; |
| • | “pro forma” are to giving pro forma effect to the Business Combination, including the Merger and the PIPE Financing; |
| • | “Proposed Bylaws” are to the proposed bylaws of New GreenLight attached to this proxy statement/prospectus as Annex C; |
| • | “Proposed Charter” are to the proposed second amended and restated certificate of incorporation of New GreenLight to be effective upon the Closing, a copy of which is attached to this proxy statement/prospectus as Annex B and, except where the context otherwise requires, the PBC Proposed Charter; |
| • | “Proposed Organizational Documents” are to the Proposed Charter and the Proposed Bylaws; |
| • | “public common stock” are to the 20,700,000 shares of ENVI Class A Common Stock outstanding as of the date of this proxy statement/prospectus, whether acquired in ENVI’s initial public offering or acquired in the secondary market; |
| • | “public stockholders” are to holders of public common stock, whether acquired in ENVI’s initial public offering or acquired in the secondary market; |
| • | “public warrants” are to the currently outstanding warrants to purchase 10,350,000 shares of ENVI Class A Common Shares for an exercise price of $11.50 per share; |
| • | “redemption” are to each redemption of public common stock for cash pursuant to the Existing Organizational Documents; |
| • | “SEC” are to the Securities and Exchange Commission; |
| • | “Securities Act” are to the Securities Act of 1933, as amended; |
| • | “special meeting” are to the special meeting of ENVI at 9:00 a.m., Eastern Time, held virtually at 9:00 a.m., Eastern Time, on , 2021, at the following address: , or at such other time, on such other date and at such other place to which the meeting may be adjourned; |
| • | “Sponsor” are to CG Investments Inc. VI, a Canadian corporation; |
| • | “Subscription Agreements” are to the subscription agreements, entered into by ENVI and each of the PIPE Investors in connection with the PIPE Financing; |
| • | “transfer agent” are to Continental, ENVI’s transfer agent; and |
| • | “trust account” are to the trust account established at the consummation of ENVI’s initial public offering that holds the proceeds of the initial public offering and is maintained by Continental, acting as trustee. |
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QUESTIONS AND ANSWERS FOR STOCKHOLDERS OF ENVI
The questions and answers below highlight only selected information from this document and only briefly address some commonly asked questions about the proposals to be presented at the special meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that is important to ENVI’s stockholders. We urge stockholders to read this proxy statement/prospectus, including the Annexes and the other documents referred to herein, carefully and in their entirety to fully understand the proposed Business Combination and the voting procedures for the special meeting, which will be held virtually at 9:00 a.m., Eastern Time, on , 2021, at the following address: , or at such other time, on such other date and at such other place to which the meeting may be adjourned.
Q. | Why am I receiving this proxy statement/prospectus? |
| A. | ENVI stockholders are being asked to consider and vote upon, among other proposals, a proposal to approve and adopt the Business Combination Agreement and approve the transactions contemplated thereby, including the Business Combination. In accordance with the terms and subject to the conditions of the Business Combination Agreement, among other things, (i) ENVI will be renamed “GreenLight Biosciences, Inc.” if the Charter Amendment Proposal is approved (or “GreenLight Biosciences, PBC” if the Public Benefit Corporation Proposal is also approved), and (ii) each outstanding share of capital stock of GreenLight (other than treasury shares and shares with respect to which appraisal rights under the DGCL are properly exercised and not withdrawn) will be exchanged for shares of New GreenLight Common Stock and outstanding GreenLight options and warrants to purchase shares of GreenLight (whether vested or unvested) will be exchanged for comparable options or warrants, as applicable, to purchase New GreenLight Common Stock, in each case, based on an implied GreenLight equity value of $1.2 billion. See “ Business Combination Proposal |
A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A and you are encouraged to read the Business Combination Agreement in its entirety.
The provisions of the Proposed Organizational Documents will differ in certain material respects from the Existing Organizational Documents.
THE VOTE OF STOCKHOLDERS IS IMPORTANT. STOCKHOLDERS ARE ENCOURAGED TO VOTE AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT/PROSPECTUS.
Q. | What proposals are stockholders of ENVI being asked to vote upon? |
| A. | At the special meeting, ENVI is asking its stockholders to consider and vote upon the following separate proposals: |
| • | a proposal to approve and adopt the Business Combination Agreement, including the Merger, and the transactions contemplated thereby; |
| • | a proposal to adopt and approve the PBC Proposed Charter; |
| • | a proposal to adopt and approve the Proposed Charter; |
| • | the following governance proposals to approve, on a non-binding advisory basis, the following material differences between the Existing Charter and the Proposed Charter: |
| • | to change the authorized capital stock of ENVI from (a) 121,000,000 shares, par value $0.0001 per share, consisting of 100,000,000 shares of ENVI Class A Common Stock, 20,000,000 shares of ENVI Class B Common Stock, and 1,000,000 shares of undesignated |
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preferred stock, to (b) 510,000,000 shares, par value $0.0001 per share, consisting of 500,000,000 shares of common stock of New GreenLight and 10,000,000 shares of undesignated preferred stock of New GreenLight; |
| • | to provide that, in addition to any vote required by applicable law or the certificate of incorporation or bylaws of New GreenLight, the affirmative vote of the holders of at least seventy-five percent (75%) of the voting power of all then-outstanding shares of capital stock of New GreenLight entitled to vote generally in the election of directors, voting together as a single class, will be required for the stockholders to reduce the total number of shares of New GreenLight Preferred Stock authorized to be issued by New GreenLight or to amend, alter, change or repeal, or adopt any provision of the charter of New GreenLight inconsistent with, specified provisions of the charter of New GreenLight; and |
| • | to provide that the bylaws of New GreenLight may be adopted, amended, altered or repealed with the approval of a majority of the New GreenLight Board or by the affirmative vote of the holders of at least 75% of the voting power of all then-outstanding shares of capital stock of New GreenLight entitled to vote generally in the election of directors, voting together as a single class, provided that the voting requirement is reduced to a majority if the New GreenLight Board recommends that stockholders approve the adoption, amendment, alteration or repeal; |
| • | a proposal to approve the issuance of shares of New GreenLight Common Stock in connection with the Business Combination in compliance with the Nasdaq listing rules; |
| • | a proposal to approve and adopt the New GreenLight Equity Plan; |
| • | a proposal to approve and adopt the New GreenLight ESPP; |
| • | to elect seven directors to serve on the New GreenLight Board, effective upon the closing of the Business Combination; and |
| • | a proposal to approve the adjournment of the special meeting to a later date or dates, if necessary, to, among other things, permit further solicitation and voting of proxies in the event that there are insufficient votes for the approval of one or more proposals at the special meeting. |
If our stockholders do not approve each of the Condition Precedent Proposals, then unless certain conditions in the Business Combination Agreement are waived by the applicable parties to the Business Combination Agreement, the Business Combination Agreement could terminate and the Business Combination may not be consummated.
For more information, please see “,” “The Public Benefit Corporation Proposal,” “The Charter Amendment Proposal,” “The Advisory Charter Amendment Proposals,” “The Nasdaq Proposal,” “The Incentive Award Plan Proposal,” “The Employee Stock Purchase Plan Proposal,” “The Director Election Proposal” and “The Adjournment Proposal.”
The Business Combination Proposal
ENVI will hold the special meeting to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the Business Combination and the other matters to be acted upon at the special meeting. Stockholders of ENVI should read it carefully.
After careful consideration, the ENVI Board has determined that the Business Combination Proposal, the Public Benefit Corporation Proposal, the Charter Amendment Proposal, each of the Advisory Charter Amendment Proposals, the Nasdaq Proposal, the Incentive Award Plan Proposal, the Employee Stock Purchase Plan Proposal, the Director Election Proposal and the Adjournment Proposal are in the best interests of ENVI and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” each of those proposals.
The existence of financial and personal interests of one or more of ENVI’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of
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ENVI and its stockholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that stockholders vote for the proposals. In addition, ENVI’s officers have interests in the Business Combination that may conflict with your interests as a stockholder. See the section titled “—” for a further discussion of these considerations.
Business Combination Proposal
Interests of ENVI’s Directors and Officers in the Business Combination
Q. | Why is ENVI proposing the Business Combination? |
| A. | ENVI is a blank check company incorporated in Delaware on July 2, 2020 for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. ENVI is authorized to pursue an acquisition opportunity in any business, industry, sector or geographical location for purposes of consummating an initial business combination. ENVI is not permitted under its Existing Organizational Documents to effect a business combination with a blank check company or a similar type of company with nominal operations. |
Before entering into the Business Combination Agreement, ENVI identified several criteria and guidelines it believed were important for evaluating acquisition opportunities. ENVI sought to acquire one or more companies that: have an enterprise value between $750 million and $2 billion; offer innovative and unique products, services and technology solutions that promote and profit from sustainability, including energy efficiency, decarbonization, resource efficiency and productivity improvement, and/or help their customers achieve their sustainability objectives; have a defensible position with its target market(s) as a result of differentiated technology, distribution capabilities, customer service or other capabilities; have a history of, or potential for, strong and stable cash flow generation with predictable and recurring revenue streams; have strong long-term growth prospects and will benefit from access to additional capital to accelerate organic growth and/or inorganic growth through future add-on acquisitions; have strong management teams with a proven track record of driving revenue growth, enhancing profitability and generating strong free cash flow; could leverage from our management, board and sponsor to tangibly improve operations and market position; will benefit from being publicly traded and can effectively utilize the broader access to capital and public profile that are associated with being a publicly traded company; and can offer attractive risk-adjusted return on investments for ENVI stockholders.
Based on its due diligence investigations of GreenLight and the industry in which it operates, including the financial and other information provided by GreenLight in the course of negotiations, the ENVI Board believes that GreenLight meets the criteria and guidelines listed above. However, there is no assurance of this. See “.”
Business Combination Proposal—The ENVI Board’s Reasons for the Business Combination
Although the ENVI Board believes that the Business Combination with GreenLight presents a unique business combination opportunity and is in the best interests of ENVI and its stockholders, the board of directors did consider certain potentially material negative factors in arriving at that conclusion. These factors are discussed in greater detail in the sections entitled “” and “”
Business Combination Proposal—The ENVI Board’s Reasons for the Business Combination
Risk Factors—Risks Related to the Business Combination and ENVI.
Q. | Did the ENVI Board obtain a fairness opinion in determining whether or not to proceed with the Business Combination? |
| A. | Yes. The ENVI Board obtained a fairness opinion from Duff & Phelps in connection with its determination to approve the Business Combination. See the section titled “ The Business Combination Proposal—Opinion of Duff & Phelps , Financial Adviser to the ENVI Board |
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Q. | What will GreenLight’s equityholders receive in return for the Business Combination with ENVI? |
| A. | On the date of Closing, Merger Sub will merge with and into GreenLight, with GreenLight as the surviving company in the Merger and, after giving effect to such Merger, GreenLight will be a wholly owned subsidiary of ENVI. In accordance with the terms and subject to the conditions of the Business Combination Agreement, at the Effective Time, outstanding shares of GreenLight (other than treasury shares and shares with respect to which appraisal rights under the DGCL are properly exercised and not withdrawn) will be exchanged for shares of New GreenLight Common Stock and outstanding GreenLight options and warrants to purchase shares of GreenLight (whether vested or unvested) will be exchanged for comparable options or warrants, as applicable, to purchase New GreenLight Common Stock, in each case, based on an implied GreenLight equity value of $1.2 billion. |
Q. | How will the combined company be managed following the Business Combination? |
| A. | Following the Closing, it is expected that the current management of GreenLight will become the management of New GreenLight, and the New GreenLight Board will consist of seven (7) directors, which will be divided into three classes (Class I, II and III) with each class initially consisting of two (2) or three (3) directors. Pursuant to the Business Combination Agreement, the New GreenLight Board will consist of four (4) individuals designated by GreenLight, GreenLight’s chief executive officer and, prior to the effectiveness of the Registration Statement of which this proxy statement/prospectus forms a part, one (1) individual determined by ENVI and one (1) individual determined by GreenLight. Please see the section titled “ Management Following the Business Combination |
Q. | What equity stake will current ENVI stockholders and current equityholders of GreenLight hold in New GreenLight immediately after the consummation of the Business Combination? |
| A. | As of September 30, 2021, there were outstanding 25,875,000 shares of ENVI common stock, consisting of 20,700,000 shares of ENVI Class A Common Stock, all of which were issued in ENVI’s initial public offering, and 5,175,000 shares of ENVI Class B Common Stock, all of which were issued to ENVI’s initial stockholders. These amounts do not include 10,350,000 public warrants or 2,750,000 private placement warrants (including the Insider Warrants). |
It is anticipated that, following the Business Combination (assuming consummation of the transactions contemplated by the Business Combination Agreement), (1) ENVI’s public stockholders will own approximately 14% of the outstanding New GreenLight Common Stock, (2) GreenLight stockholders will own approximately 73% of the outstanding New GreenLight Common Stock and (3) the initial stockholders of ENVI will own approximately 4% of the outstanding New GreenLight Common Stock. These percentages assume (i) that no public stockholders exercise their redemption rights in connection with the Business Combination, (ii) 103,470,217 shares of New GreenLight Common Stock will be issued to the holders of outstanding shares of capital stock of GreenLight at Closing (including shares issuable upon the conversion of certain notes and the exercise of certain warrants), (iii) 12,425,000 shares of ENVI Class A Common Stock will be issued in the PIPE Financing, and (iv) that no options to purchase New GreenLight Common Stock are exercised. If the actual facts are different from these assumptions, the percentage ownership retained by ENVI’s existing shareholders in New GreenLight will be different.
The following table illustrates different ownership levels in New GreenLight Common Stock immediately following the consummation of the Business Combination based on the capitalization of ENVI and GreenLight as of September 30, 2021 and either no redemptions, 50% redemptions or maximum redemptions by the public stockholders, assuming: (i) 103,470,217 shares of New GreenLight Common Stock will be issued to the holders of outstanding shares of capital stock of GreenLight at Closing (including shares issuable upon the conversion of certain notes and the exercise of certain warrants); (ii) 12,425,000 shares of ENVI Class A Common Stock will be issued in the PIPE Financing; and (iii) no outstanding |
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| options to purchase New GreenLight Common Stock are exercised. If the actual facts differ from these assumptions, the ownership percentages in New GreenLight will be different. |
Assuming No Redemption | Assuming 50% Redemption | Assuming Maximum Redemption | ||||||||||||||||||||||
Shares | % | Shares | % | Shares | % | |||||||||||||||||||
(percentages represent percentages of pro forma outstanding shares) | ||||||||||||||||||||||||
Public shares (a) | 20,700,000 | 14 | % | 10,512,411 | 8 | % | 324,821 | * | ||||||||||||||||
Founder shares | 5,175,000 | 4 | % | 5,175,000 | 4 | % | 5,175,000 | 4 | % | |||||||||||||||
GreenLight stockholders (b)(c) | 103,470,217 | 73 | % | 103,470,217 | 79 | % | 103,470,217 | 85 | % | |||||||||||||||
PIPE shares | 12,425,000 | 9 | % | 12,425,000 | 9 | % | 12,425,000 | 10 | % | |||||||||||||||
Pro forma common stock outstanding as of September 30, 2021 (d) | 141,770,217 | 100 | % | 131,582,628 | 100 | % | 121,395,038 | 100 | % | |||||||||||||||
Potential sources of dilution | ||||||||||||||||||||||||
Public Warrants | 10,350,000 | 7 | % | 10,350,000 | 8 | % | 10,350,000 | 9 | % | |||||||||||||||
Private Placement Warrants | 2,000,000 | 1 | % | 1,500,000 | 1 | % | 1,500,000 | 1 | % | |||||||||||||||
Insider Warrants | 750,000 | * | 600,000 | * | 600,000 | * | ||||||||||||||||||
Rollover Options | 17,555,928 | 12 | % | 17,555,928 | 13 | % | 17,555,928 | 14 | % | |||||||||||||||
| * | Less than 1% |
| (a) | Amount includes 1,000,000 shares of ENVI Class A Common Stock held by HB Strategies, a founder, all of which shares carry the same redemption rights as other shares of ENVI Class A Common Stock. The 50% Redemption Scenario and the Maximum Redemption Scenario assume that HB Strategies will redeem 50% and 100%, respectively, of its shares of ENVI Class A Common Stock. Amount excludes 13,100,000 warrants to purchase ENVI Class A Common Stock, which is made up of 10,350,000 public warrants, 2,000,000 private placement warrants and 750,000 Insider Warrants. Additionally, under each of the 50% Redemption Scenario and the Maximum Redemption Scenario, an aggregate of 650,000 Warrants comprised of 500,000 Private Placement Warrants owned by HB Strategies and 150,000 Insider Warrants owned by the Sponsor will be forfeited pursuant to the Sponsor Letter Agreement. |
| (b) | In accordance with the terms and subject to the conditions of the Business Combination Agreement, each outstanding share of capital stock of GreenLight will be exchanged for shares of New GreenLight Common Stock and outstanding GreenLight Options (whether vested or unvested) will be exchanged for comparable options to purchase New GreenLight Common Stock, in each case, based on an implied GreenLight equity value of $1.2 billion. The number of shares of New GreenLight Common Stock issued to the holders of shares of capital stock of GreenLight at Closing will fluctuate based on the number of shares underlying GreenLight Options and GreenLight Warrants, whether vested or unvested (and the exercise prices of such options and warrants), outstanding at Closing. |
| (c) | Amount includes 6,583,549 shares issuable upon conversion of the GreenLight Convertible Notes and 872,667 shares underlying GreenLight Warrants that are assumed to be exercised immediately prior to the consummation of the Business Combination and excludes 17,555,928 shares underlying Rollover Options to be issued to holders of GreenLight Options, assuming such GreenLight Options remain unexercised as of the Closing. |
| (d) | Amount excludes 31,750,000 shares (which amount includes shares underlying Rollover Options) and 2,000,000 shares of New GreenLight Common Stock that are expected to be available for issuance under the New GreenLight Equity Plan and the New GreenLight ESPP, respectively, after the consummation of the Business Combination, assuming approval of the Condition Precedent Proposals. |
For further details, see the section titled “.”
Business Combination Proposal—Consideration to GreenLight Equityholders in the Business Combination
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Q. | Do I have redemption rights? |
| A. | If you are a holder of shares public common stock, you have the right to request that we redeem all or a portion of your shares of public common stock for cash provided that you follow the procedures and deadlines described elsewhere in this proxy statement/prospectus. Public stockholders may elect to redeem all or a portion of the shares of public common stock held by them regardless of whether or how they vote in respect of the Business Combination Proposal. How do I exercise my redemption rights? |
Notwithstanding the foregoing, a public stockholder, together with any affiliate of such public stockholder or any other person with whom such public stockholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its shares of public common stock with respect to more than an aggregate of 20% of the outstanding shares of public common stock. Accordingly, if a public stockholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the outstanding shares of public common stock, then any such shares in excess of that 20% limit would not be redeemed for cash.
The initial stockholders have agreed to waive their redemption rights with respect to certain of their common stock in connection with the consummation of the Business Combination. |
Q. | How do I exercise my redemption rights? |
| A. | If you are a public stockholder and wish to exercise your right to redeem your shares of public common stock, you must: |
| (i) | hold shares of public common stock; |
| (ii) | submit a written request to Continental, ENVI’s transfer agent, in which you (i) request that we redeem all or a specified portion of your shares of public common stock for cash, and (ii) identify yourself as the beneficial holder of the shares of public common stock and provide your legal name, phone number and address; and |
| (iii) | deliver your shares of public common stock to be redeemed to Continental, our transfer agent, physically or electronically through The Depository Trust Company (“ DTC ”). |
Holders must complete the procedures for electing to redeem their shares of public common stock in the manner described above prior to 5:00 p.m., Eastern Time, on , 2021 (two business days before the special meeting) in order for their shares to be redeemed.
The address of Continental, ENVI’s transfer agent, is listed under the question “” below.
Who can help answer my questions?
Public stockholders will be entitled to request that their shares of public common stock be redeemed for a pro rata portion of the amount on deposit in the trust account as of two business days prior to the consummation of the Business Combination including interest earned on the funds held in the trust account and not previously released to us (net of taxes payable). For illustrative purposes, as of September 30, 2021, this would have amounted to approximately $10.00 per issued and outstanding public share. However, the proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public stockholders, regardless of whether such public stockholders vote or, if they do vote, irrespective of whether they vote for or against the Business Combination Proposal. Therefore, the per share distribution from the trust account in such a situation may be less than originally expected due to such claims. Whether you vote, and if you do vote how you vote, on any proposal, including the Business Combination Proposal, will have no impact on the amount you will receive upon exercise of your redemption rights.
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Any request for redemption, once made by a holder of shares of public common stock, may be withdrawn at any time up to the time the vote is taken with respect to the Business Combination Proposal at the special meeting. If you deliver your shares for redemption to Continental, our transfer agent, and later decide prior to the special meeting not to elect redemption, you may request that our transfer agent return the shares (physically or electronically) to you. You may make such request by contacting Continental, our transfer agent, at the phone number or address listed at the end of this section.
Any corrected or changed written exercise of redemption rights must be received by Continental, our transfer agent, prior to the vote taken on the Business Combination Proposal at the special meeting.
No request for redemption will be honored unless the holder’s shares of public common stock have been delivered (either physically or electronically) to Continental, our transfer agent, at least two business days prior to the vote at the special meeting.
If a holder of shares of public common stock properly makes a request for redemption and the shares of public common stock are delivered as described above, then, if the Business Combination is consummated, we will redeem the shares of public common stock for a pro rata portion of funds deposited in the trust account, calculated as of two business days prior to the consummation of the Business Combination. It is expected that the funds to be distributed to public stockholders electing to redeem their shares of public common stock will be distributed promptly after the consummation of the Business Combination.
Q. | What are the U.S. federal income tax consequences of exercising my redemption rights? |
| A. | The receipt of cash by a holder of public common stock in redemption of such stock will generally be a taxable event for U.S. federal income tax purposes that could result in the recognition of income or gain in the case of a U.S. holder (as defined below), and could be a taxable event for U.S. federal income tax purposes in the case of a Non-U.S. holder (as defined below). Please see the discussion below under the caption “Material U.S. Federal Income Tax Consequences |
All holders of our public common stock considering exercising their redemption rights are urged to consult their tax advisor on the tax consequences to them of an exercise of redemption rights, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws.
Q. | What happens to the funds deposited in the trust account after consummation of the Business Combination? |
| A. | Following the closing of our initial public offering, an amount equal to $207,000,000 of the net proceeds from our initial public offering was placed in the trust account. As of September 30, 2021, funds in the trust account totaled approximately $207.0 million and were held in money market funds. These funds will remain in the trust account, except for the withdrawal of interest to pay taxes, if any, until the earliest of (i) the completion of a business combination (including the closing of the Business Combination) or (ii) the redemption of all of the public common stock if we are unable to complete a business combination by July 19, 2022 (or by January 19, 2023 if we, by resolution of our board, extend the period of time by an additional six months), subject to applicable law. |
If our initial business combination is paid for using equity or debt securities or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination or used for redemptions or purchases of the public common stock, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of New GreenLight, the payment of principal or interest due on indebtedness incurred in completing our Business Combination, to fund the purchase of other companies or for working capital. See “.”
Summary of the Proxy Statement/Prospectus
—
Sources and Uses of Funds for the Business Combination
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Q. | What happens if a substantial number of the public stockholders vote in favor of the Business Combination Proposal and exercise their redemption rights? |
| A. | Our public stockholders are not required to vote “FOR” the Business Combination in order to exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the trust account and the number of public stockholders are reduced as a result of redemptions by public stockholders. |
In no event will New GreenLight redeem public common stock in an amount that would cause our net tangible assets (as determined in accordance with Rule
3a51-1(g)(1)
of the Exchange Act) to be less than $5,000,001 after giving effect to the transactions contemplated by the Business Combination Agreement and the PIPE Financing or if we would not have funds legally available therefor.Additionally, as a result of redemptions, the trading market for New GreenLight Common Stock may be less liquid than the market for the public common stock prior to consummation of the Business Combination and we may not be able to meet the listing standards for Nasdaq or another national securities exchange.
Q. | What conditions must be satisfied to complete the Business Combination? |
| A. | The consummation of the Business Combination is conditioned upon, among other things, (i) the approval by our stockholders of the Condition Precedent Proposals being obtained; (ii) approval of the Business Combination Agreement and the Merger by the GreenLight stockholders; (iii) each applicable waiting period under the HSR Act relating to the Business Combination Agreement having expired or been terminated; (iv) ENVI having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) after giving effect to the transactions contemplated by the Business Combination Agreement and the PIPE Financing; (v) the Aggregate Transaction Proceeds Condition; (vi) the approval by Nasdaq of our initial listing application in connection with the Business Combination (also see “Risk Factors—Nasdaq may not list New GreenLight’s securities on its exchange, which could limit investors’ ability to make transactions in New GreenLight’s securities and subject New GreenLight to additional trading restrictions |
For more information about conditions to the consummation of the Business Combination, see “”
Business Combination Proposal—Conditions to Closing of the Business Combination.
Q. | When do you expect the Business Combination to be completed? |
| A. | It is currently expected that the Business Combination will be consummated in the fourth quarter of 2021. This date depends, among other things, on the approval of the proposals to be put to ENVI stockholders at the special meeting. However, such special meeting could be adjourned if the Adjournment Proposal is adopted by our stockholders at the special meeting and we elect to adjourn the special meeting to a later date or dates to consider and vote upon a proposal to approve the adjournment of the special meeting to a later date or dates (A) to the extent necessary to ensure that any required supplement or amendment to this proxy statement/prospectus is provided to ENVI stockholders, (B) if as of the time for which the special meeting is scheduled, there are insufficient shares of ENVI Class A Common Stock and ENVI Class B Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the special meeting, (C) in order to solicit additional proxies from ENVI stockholders in favor of one or more of the proposals at the special meeting or (D) if ENVI stockholders redeem an amount of public common stock such that the Aggregate Transaction Proceeds Condition would not be satisfied. For a description of the conditions for the completion of the Business Combination, see “ Business Combination Proposal—Conditions to Closing of the Business Combination. |
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Q. | What happens if the Business Combination is not consummated? |
| A. | If ENVI is not able to consummate the Business Combination with GreenLight nor able to complete another business combination by July 19, 2022 (or by January 19, 2023 if the Company, by resolution of its board, extends the period of time by an additional six months), we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public common stock, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding shares of public common stock, which redemption will completely extinguish the public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of ENVI’s remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. |
Q. | Do I have appraisal rights in connection with the proposed Business Combination? |
| A. | Our stockholders have no appraisal rights in connection with the Business Combination under the DGCL. |
Q. | What do I need to do now? |
| A. | We urge you to read this proxy statement/prospectus, including the Annexes and the documents referred to herein, carefully and in their entirety and to consider how the Business Combination will affect you as a stockholder. Our stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card. |
Q. | How do I vote? |
| A. | If you are a holder of record of common stock on the record date for the special meeting, you may vote in person at the special meeting or by submitting a proxy for the special meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope.If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the special meeting and vote in person, obtain a proxy from your broker, bank or nominee. |
Q. | If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me? |
| A. | No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” If this is the case, this proxy statement/prospectus may have been forwarded to you by your brokerage firm, bank or other nominee, or its agent. As the beneficial holder, you have the right to direct your broker, bank or other nominee as to how to vote your shares. If you do not provide voting instructions to your broker, bank or nominee on a particular proposal on which your broker, bank or nominee does not have discretionary authority to vote, your shares will not be voted on that proposal. This is called a “broker non-vote.” Abstentions and brokernon-votes will be counted as present for the purpose of determining the presence of a quorum on all matters. Abstentions and broker non-votes will not count as votes cast at the special meeting and will have no effect on the outcome of a proposal, other than the Charter Amendment Proposal and the Public Benefit Corporation Proposal. For the Charter Amendment Proposal and the Public Benefit |
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| Corporation Proposal, abstentions and broker non-votes will have the same effect as votes “AGAINST” such proposal. If you hold shares in street name and decide to vote, you should provide instructions to your broker, bank or other nominee on how to vote in accordance with the information and procedures provided to you by your broker, bank or other nominee. |
Q. | When and where will the special meeting be held? |
| A. | The special meeting will be held virtually at 9:00 a.m., Eastern Time, on , 2021, at the following address: , or at such other time, on such other date and at such other place to which the meeting may be adjourned. |
Q. | Will stockholders of ENVI be able to ask questions during the general meeting? |
| A. | Stockholders of ENVI will be able to ask questions about the Business Combination during the special meeting, as time permits. |
Q. | What impact will the COVID-19 pandemic have on the Business Combination? |
| A. | Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the coronavirus pandemic on the business of ENVI and GreenLight, and there is no guarantee that efforts by ENVI and GreenLight to address the adverse impacts of the coronavirus pandemic will be effective. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and actions taken to contain the coronavirus or its impact, among others. If ENVI or GreenLight is unable to recover from a business disruption on a timely basis, the Business Combination and New GreenLight’s business, financial condition and results of operations following the completion of the Business Combination would be adversely affected. The Business Combination may also be delayed and adversely affected by the coronavirus pandemic and become more costly. Each of ENVI and GreenLight may also incur additional costs to remedy damages caused by any such disruptions, which could adversely affect its financial condition and results of operations. |
Q. | Who is entitled to vote at the special meeting? |
| A. | We have fixed December 10, 2021 as the record date for the special meeting. If you were a stockholder of ENVI at the close of business on the record date, you are entitled to vote on matters that come before the special meeting. However, a stockholder may only vote his, her or their shares if he, she or they are present in person or is represented by proxy at the special meeting. |
Q. | How many votes do I have? |
| A. | ENVI stockholders are entitled to one vote at the special meeting for each share of ENVI Class A Common Stock or ENVI Class B Common Stock held of record as of the record date. As of the close of business on the record date for the special meeting, there were 20,700,000 shares of ENVI Class A Common Stock issued and outstanding and 5,175,000 shares of ENVI Class B Common Stock issued and outstanding. Under the Existing Charter, prior to the consummation of the Business Combination, only holders of ENVI Class B Common Stock will have the right vote on the election or removal of a director of ENVI. |
Q. | What constitutes a quorum? |
| A. | A quorum of ENVI stockholders is necessary to hold a valid meeting. For each proposal, a quorum will be present at the special meeting if one or more stockholders who together hold a majority of the voting power of the outstanding shares of each class (or group of classes voting as a single class) of ENVI common stock entitled to vote on such proposal at the special meeting are represented in person or by proxy at the special meeting. |
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Q. | What vote is required to approve each proposal at the special meeting? |
| A. | The proposals at the special meeting each involve a vote by holders of ENVI Class A Common Stock and holders of ENVI Class B Common Stock. As of the date of this proxy statement/prospectus, there are 20,700,000 shares of ENVI Class A Common Stock outstanding, all of which were issued in ENVI’s initial public offering, and 5,175,000 shares of ENVI Class B Common Stock outstanding, all of which were issued to ENVI’s initial stockholders. In connection with the Business Combination, ENVI’s initial stockholders have agreed to vote all shares of ENVI Class B Common Stock owned by them in favor of the proposals at the special special meeting. Thus, any approval requiring the affirmative vote of the holders of at least a majority of the shares of ENVI Class A Common Stock and ENVI Class B Common Stock issued and outstanding on the record date for the special meeting, voting as a single class, would require only 7,762,501 more shares of ENVI Class A Common Stock, or approximately 37.5% of the total outstanding shares of ENVI Class A Common Stock, voting in favor of the proposal. The following votes are required for each proposal at the special meeting: |
| (i) | The Business Combination Proposal |
| (ii) | The Public Benefit Corporation Proposal |
| (iii) | The Charter Amendment Proposal |
| (iv) | The Advisory Charter Amendment Proposals non-binding advisory basis, of each of the Advisory Charter Amendment Proposals the affirmative vote (in person or by proxy) of the holders of at least a majority of the shares of ENVI Class A Common Stock and ENVI Class B Common Stock entitled to vote on such matter and actually cast thereon at the special meeting, voting as a single class. |
| (v) | The Nasdaq Proposal |
| (vi) | The Incentive Award Plan Proposal |
| (vii) | The Employee Stock Purchase Plan Proposal |
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| the shares of ENVI Class A Common Stock and ENVI Class B Common Stock entitled to vote and actually cast thereon at the special meeting, voting as a single class. |
| (viii) | The Director Election Proposal The Director Election Proposal |
| (ix) | The Adjournment Proposal |
Q. | What are the recommendations of the ENVI Board? |
| A. | The ENVI Board believes that the Business Combination Proposal and the other proposals to be presented at the special meeting are in the best interest of ENVI and its stockholders and unanimously recommends that its stockholders vote “FOR” the Business Combination Proposal, “FOR” the Public Benefit Corporation Proposal, “FOR” the Charter Amendment Proposal, “FOR” each of the separate Advisory Charter Amendment Proposals, “FOR” the Nasdaq Proposal, “FOR” the Incentive Award Plan Proposal, “FOR” the Employee Stock Purchase Plan Proposal, “FOR” the Director Election Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the special meeting. |
The existence of financial and personal interests of one or more of ENVI’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of ENVI and its stockholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that stockholders vote for the proposals. In addition, ENVI’s officers have interests in the Business Combination that may conflict with your interests as a stockholder. See the section titled “” for a further discussion of these considerations.
Business Combination Proposal—Interests of ENVI’s Directors and Officers in the Business Combination
Q. | How do the Sponsor and the other initial stockholders intend to vote their shares? |
| A. | Our initial stockholders have agreed to vote all their founders shares in favor of all the proposals being presented at the special meeting. As of the date of this proxy statement/prospectus, our initial stockholders own approximately 5% of the outstanding shares of ENVI Class A Common Stock and 100% of the shares of ENVI Class B Common Stock. As the holder of a majority of the outstanding shares of ENVI Class B Common Stock, our initial stockholders control the outcome of the Director Election Proposal. See the section titled “ The Director Election Proposal |
At any time at or prior to the Business Combination, during a period when they are not then aware of any material nonpublic information regarding us or our securities, our initial stockholders, GreenLight and/or their directors, officers, advisors or respective affiliates may purchase public common stock from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent Proposals, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire public common stock or vote their public common stock in favor of the Condition Precedent Proposals. Such a purchase may include a contractual acknowledgement that such stockholder, although still the record or beneficial holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights.
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In the event that our initial stockholders, GreenLight and/or their directors, officers, advisors or respective affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholder would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to (i) increase the likelihood of satisfaction of the requirements that each of the Business Combination Proposal, the Charter Amendment Proposal, the Advisory Charter Amendment Proposals, the Nasdaq Proposal, the Incentive Award Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal are approved by the requisite vote at the special meeting, (ii) otherwise limit the number of shares of public common stock to be redeemed and (iii) ensure that New GreenLight’s net tangible assets (as determined in accordance with Rule
3a51-1(g)(1)
of the Exchange Act) are at least $5,000,001 after giving effect to the transactions contemplated by the Business Combination Agreement and the PIPE Financing.Entering into any such arrangements may have a depressive effect on the common stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he, she or they own, either at or prior to the Business Combination.
If such transactions are effected, the consequence could be to cause the Business Combination to be consummated in circumstances where such consummation could not otherwise occur. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the special meeting and would likely increase the chances that such proposals would be approved. We will file or submit a Current Report on Form
8-K
to disclose any material arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be put to the special meeting.Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.
Q. | What do I need to know about the conflicts of interest that the directors and officers of ENVI may have? |
| A. | When you consider the recommendation of the ENVI Board in favor of approval of the Business Combination and the other proposals to be presented at the special meeting, you should keep in mind that the initial stockholders, which include the Sponsor, HB Strategies and ENVI’s directors and officers, have interests in such proposals that are different from, or in addition to, those of ENVI stockholders generally. These interests include, among other things, the fact that the initial stockholders paid an aggregate of $25,000 for the 5,175,000 shares of ENVI Class B Common Stock currently owned by them and such securities will have a significantly higher value as a result of the Business Combination and the fact that the private placement warrants purchased by HB Strategies, as well as the Insider Warrants, in connection with our initial public offering would be worthless if a business combination is not consummated by July 19, 2022 (or by January 19, 2023 if we, by resolution of the ENVI Board, elects to extend the period of time by an additional six months). As a result of the lower price paid by our initial stockholders for their shares of ENVI Class B Common Stock, the initial stockholders may generate a profit on those shares even at prices that would generate a significant loss for the public stockholders on their shares of public common stock. Additionally, at the election of the Sponsor, any amounts outstanding under any loan made by the Sponsor, any of its affiliates or HB Strategies to ENVI in an aggregate amount of up to $1,500,000 may be converted into ENVI Units in connection with the consummation of the Business Combination. For more information regarding certain conflicts of interests of ENVI and its affiliates relating to the Business Combination and the other proposals to be presented at the special meeting, see “ Summary of the Proxy Statement/Prospectus—Interests of ENVI Directors and Officers in the Business Combination |
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Q. | What happens if I sell my ENVI common stock before the special meeting? |
| A. | The record date for the special meeting is earlier than the date of the special meeting and earlier than the date that the Business Combination is expected to be completed. If you transfer your public common stock after the applicable record date, but before the special meeting, unless you grant a proxy to the transferee, you will retain your right to vote at such general meeting. |
Q. | May I change my vote after I have mailed my signed proxy card? |
| A. | Yes. ENVI stockholders may send a later-dated, signed proxy card to our Secretary at our address set forth below so that it is received by our Secretary prior to the vote at the special meeting or attend the special meeting and vote. ENVI stockholders also may revoke their proxy by sending a notice of revocation to our Secretary, which must be received by our Secretary prior to the vote at the special meeting. However, if your shares are held in “street name” by your broker, bank or another nominee, you must contact your broker, bank or other nominee to change your vote. |
Q. | What happens if I fail to take any action with respect to the special meeting? |
| A. | If you fail to vote with respect to the special meeting and the Business Combination is approved by stockholders and the Business Combination is consummated, you will become a stockholder of New GreenLight. If you fail to vote with respect to the special meeting and the Business Combination is not approved, you will remain a stockholder of ENVI. However, if you fail to vote with respect to the special meeting, you will nonetheless be able to elect to redeem your public common stock in connection with the Business Combination in accordance with the procedures described in this proxy statement/prospectus. |
Q. | What should I do if I receive more than one set of voting materials? |
| A. | Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your common stock. |
Q. | Who will solicit and pay the cost of soliciting proxies for the special meeting? |
| A. | ENVI will pay the cost of soliciting proxies for the special meeting. ENVI has engaged D.F. King to assist in the solicitation of proxies for the special meeting. ENVI has agreed to pay the proxy solicitor a fee of , plus disbursements, and will reimburse the proxy solicitor for its reasonable out-of-pocket |
Q. | Where can I find the voting results of the special meeting? |
| A. | The preliminary voting results will be announced at the special meeting. ENVI will also publish the voting results of the special meeting in a Current Report on Form 8-K within four business days after the special meeting. |
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Q. | Who can help answer my questions? |
| A. | If you have questions about the Business Combination or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card you should contact: |
You also may obtain additional information about ENVI from documents filed with the SEC by following the instructions in the section titled “” If you are a holder of public common stock and you intend to seek redemption of your public common stock, you will need to deliver your public common stock (either physically or electronically) to Continental, ENVI’s transfer agent, at the address below prior to the special meeting. If you have questions regarding the certification of your position or delivery of your stock, please contact:
Where You Can Find More Information; Incorporation by Reference.
Holders must complete the procedures for electing to redeem their public common stock in the manner described above prior to 5:00 p.m., Eastern Time, on
, 2021 (two business days before the
special meeting) in order for their shares to be redeemed.
Continental Stock Transfer & Trust Company
1 State Street 30th Floor
New York, New York 10004
Attention:
E-mail:
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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS
This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the special meeting, including the Business Combination, you should read this proxy statement/prospectus, including the Annexes and other documents referred to herein, carefully and in their entirety. The Business Combination Agreement is the legal document that governs the Business Combination and the other transactions that will be undertaken in connection with the Business Combination. The Business Combination Agreement is also described in detail in this proxy statement/prospectus in the section titled “Business Combination Proposal—The Business Combination Agreement.”
Business Summary
Unless otherwise indicated or the context otherwise requires, references in this Business Summary to “we,” “us,” “our” and other similar terms refer to GreenLight and its subsidiaries prior to the Business Combination and to New GreenLight and its consolidated subsidiaries after giving effect to the Business Combination.
Company Overview
GreenLight has a clear mission: To create products addressing some of humanity’s greatest challenges through the rigorous application of science.
We aim to achieve this goal through our cell-free biomanufacturing platform. This platform enables us to make complex biological molecules—nucleic acids, peptides, carbohydrates, and many others—in a manner that we believe will allow us to manufacture high-quality products at a lower cost (below $1.00 per gram) than traditional methods using fermentation. We are using this platform to develop and commercialize products that, if they receive appropriate regulatory approvals, address a variety of agricultural, human health, and animal health issues. For more information on our manufacturing platform, see “—.”
Information about Greenlight
Our
Manufacturing Platform
Humanity faces numerous challenges. There are more than seven and a half billion people sharing the diminishing resources of Earth. This growing population needs to produce more food with the same amount of land and, at the same time, honor the global desire—and increasing technical need—to replace chemical pesticides. Not only are these pesticides facing increased consumer opposition and threat of outright bans due to environmental damage, many are losing their effectiveness.
More than half the world’s population now lives in cities, breathing the same air that carries pathogens and causes infections. Humanity needs to adapt and tackle pandemics both for those who have and for those who do not have access to good health care around the planet.
To address these issues, we need to develop high-quality, cost-effective products that can be widely deployed, including to developing countries. We believe RNA can be the critical aspect to these products.
Ribonucleic acid, or RNA, recently gained broad global prominence as the
COVID-19
pandemic swept through the world’s population, prompting messenger RNA, or mRNA, vaccines to move from a scientific theory to a medical reality. Vaccines made using mRNA proved among the fastest to develop and the easiest to update for newer strains ofCOVID-19.
While the fast rollout of mRNA vaccines helped change the course of the pandemic, this is just one part of the story. The full potential for RNA in human health has not yet been realized. Beyond human health,
RNA-based
technology can also be deployed to address other global issues, including agricultural needs for crop protection.1
Our technology platform, which was initially developed to produce agricultural crop protection products and is protected by patents and know-how, is capable of synthesizing building blocks (nucleotides), building tools (enzymes), and instructions (DNA templates) to make dsRNA within an integrated process. The manufacturing process know-how that we gained from our experience making dsRNA allows us to understand some of the key aspects of producing mRNAs. For more information on our manufacturing platform and technology, see “—.”
Information
about Greenlight
Our Manufacturing Platform
We have several dsRNA-based products in our agricultural pipeline that, if commercialized, we believe can change the way in which farmers protect crops, allowing them to better utilize the land dedicated to agriculture and produce foods with less or no pesticide residue. One of these products, which is designed to manage Colorado potato beetles, has been submitted to the EPA for approval. Our other dsRNA-based agricultural products are in various earlier stages of development as compared to our Colorado potato beetle product, ranging from proof of concept in the lab to proof of technology in the greenhouse and proof of scale in the field. See “” for additional information on the development process. In order to commercialize a product for the U.S. agricultural market, we must complete specified toxicology studies, submit a registration dossier to the EPA demonstrating that the product does not pose unreasonable risks to human health or the environment, respond adequately to any deficiencies identified by the EPA through its risk assessment process and obtain the EPA’s approval of our labeling. The EPA must also establish a tolerance level for the product or issue a tolerance exemption. We must separately obtain any applicable state or foreign regulatory approvals. For more information regarding the regulatory process, see “” and “”.
Information About GreenLight — Plant Health Product Pipeline — Process for developing new
products
Information About GreenLight – Government Regulation –
Agricultural Products
Risk Factors – Risks Related to Our Plant Health Program
We are also in pre-clinical development of RNA-based vaccines directed at arresting the damage of the current viral pandemic and addressing emerging pathogens. The first candidate in this product pipeline that we hope to bring to market is a COVID-19 vaccine, which is currently being tested on animals in toxicity studies in anticipation of filing an Investigational New Drug, or IND, application with the FDA, which, if approved, will allow clinical testing on human subjects. Other product candidates in the human health pipeline have yet to reach the Pre-IND phase. To get to the Pre-IND phase for our other product candidates in our human health pipeline, we must successfully design and test the product candidates in animal models, achieve positive results, select the product candidates to progress to IND-enabling toxicology studies, develop chemistry, manufacturing, and controls protocols and create a development plan to discuss with the FDA as part of pre-IND consultations.
The Parties to the Business Combination
ENVI
ENVI is a blank check company incorporated on July 2, 2020 as a Delaware corporation and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. ENVI has neither engaged in any operations nor generated any revenue to date. Based on ENVI’s business activities, it is a “shell company” as defined under the Exchange Act because it has no operations and nominal assets other than cash and cash equivalents.
On January 19, 2021, ENVI consummated an initial public offering of 20,700,000 ENVI Units at an offering price of $10.00 per share, and a private placement with Sponsor of 2,000,000 private placement warrants at a price of $1.00 per share. Additionally, ENVI issued the 750,000 Insider Warrants in connection with the initial public offering.
Following the closing of ENVI’s initial public offering, an amount equal to $207,000,000 of the net proceeds from our initial public offering was placed in the trust account. The trust account may be invested only
2
in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “
Investment Company Act
”) with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by ENVI meeting certain conditions of Rule2a-7
of the Investment Company Act, as determined ENVI. As of September 30, 2021, funds in the trust account totaled approximately $207.0 million and were held in money market funds. These funds will remain in the trust account, except for the withdrawal of interest to pay taxes, if any, until the earliest of (i) the completion of ENVI’s initial business combination, (ii) the redemption of any public common stock properly tendered in connection with a stockholder vote to amend the Existing Organizational Documents to modify the substance and timing of our obligation to redeem 100% of the public common stock if ENVI does not complete a business combination by July 19, 2022 (or by January 19, 2023 if we, by resolution of our board, extend the period of time by an additional six months), or (iii) the redemption of all of the public common stock if ENVI is unable to complete a business combination by July 19, 2022 (or by January 19, 2023 if we elect to extend), subject to applicable law.ENVI’s public common stock is currently listed on Nasdaq under the symbol “ENVI”.
ENVI’s principal executive office is located at 535 Madison Avenue, New York, NY 10022, and its telephone number is (212)
389-8109.
ENVI’s corporate website address is https://www.eiacorp.com. ENVI’s website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this proxy statement/prospectus.GreenLight
GreenLight was incorporated in 2008 as GreenLight Biosciences, Inc., a Delaware corporation, and has its principal place of business at 200 Boston Avenue, Medford, Massachusetts 02155. GreenLight’s telephone number is (888)
262-0893.
GreenLight’s website address iswww.greenlightbio.com
. GreenLight’s website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this proxy statement/prospectus.Merger Sub
Merger Sub is a Delaware corporation and wholly owned subsidiary of ENVI formed for the purpose of effecting the Business Combination. Merger Sub owns no material assets and does not operate any business.
Merger Sub’s principal executive office is located at 535 Madison Avenue, New York, NY 10022, and its telephone number is (212)
389-8109.
Proposals to be put to the Stockholders of ENVI at the Special Meeting
The following is a summary of the proposals to be put to the special meeting of ENVI and certain transactions contemplated by the Business Combination Agreement. Each of the Condition Precedent Proposals is conditioned on the approval and adoption of each of the other Condition Precedent Proposals. The Public Benefit Corporation Proposal and the Advisory Charter Amendment Proposals are conditioned on the approval of the Condition Precedent Proposals. The Adjournment Proposal is not conditioned on any other proposal set forth in this proxy statement/prospectus. The transactions contemplated by the Business Combination Agreement will be consummated only if the Condition Precedent Proposals are approved at the special meeting.
The Business Combination Proposal
As discussed in this proxy statement/prospectus, ENVI is asking its stockholders to approve the Business Combination Agreement, pursuant to which, among other things, on the date of Closing, Merger Sub will merge
3
with and into GreenLight, with GreenLight as the surviving company in the Merger and, after giving effect to such Merger, GreenLight will be a wholly owned subsidiary of ENVI. In accordance with the terms and subject to the conditions of the Business Combination Agreement, at the Effective Time, (i) each outstanding share of GreenLight (other than treasury shares and shares with respect to which appraisal rights under the DGCL are properly exercised and not withdrawn) will be automatically cancelled and extinguished and converted into New GreenLight Common Stock and (ii) each outstanding GreenLight option and warrant to purchase shares of GreenLight capital stock (whether vested or unvested) will be converted into an option or warrant to purchase New GreenLight Common Stock, in each case, based on an implied GreenLight equity value of $1.2 billion.
After consideration of the factors identified and discussed in the section titled “,” the ENVI Board concluded that the Business Combination met all of the requirements disclosed in the prospectus for ENVI’s initial public offering, including that the business of GreenLight had a fair market value of at least 80% of the balance of the funds in the trust account at the time of execution of the Business Combination Agreement. For more information about the transactions contemplated by the Business Combination Agreement, see “.”
Business Combination Proposal
—
The ENVI Board’s Reasons for the Business Combination
Business Combination Proposal
Conditions to Closing of the Business Combination
The consummation of the Business Combination is conditioned upon, among other things, (i) the approval by our stockholders of the Condition Precedent Proposals being obtained; (ii) approval of the Business Combination Agreement and the Merger by the GreenLight stockholders; (iii) each applicable waiting period under the HSR Act relating to the Business Combination Agreement having expired or been terminated; (iv) ENVI having at least $5,000,001 of net tangible assets (as determined in accordance with Rule.”); and (vii) the effectiveness of the registration statement of which this proxy statement/prospectus forms a part. Therefore, unless these conditions are satisfied or waived by both ENVI and GreenLight in the case of (i), (ii), (iii), (iv), (vi), (vii) and by GreenLight in the case of (v) and (vii), the Business Combination Agreement could terminate and the Business Combination may not be consummated. For further details, see “.”
3a51-1(g)(1)
of the Exchange Act) after giving effect to the transactions contemplated by the Business Combination Agreement and the PIPE Financing; (v) the Aggregate Transaction Proceeds Condition; (vi) the approval by Nasdaq of our initial listing application in connection with the Business Combination and the PIPE Financing (also see “Risk Factors
-Nasdaq
may not list New GreenLight’s securities on its exchange, which could limit investors’ ability to make transactions in New GreenLight’s securities and subject New GreenLight to additional trading restrictionsBusiness Combination Proposal
-Conditions
to Closing of the Business CombinationThe Public Benefit Corporation Proposal
ENVI is asking its stockholders to approve the conversion of ENVI into a Delaware public benefit corporation, effective at the Effective Time, by adopting the Public Benefit Corporation Charter, which is identical to the Proposed Charter, except that it also contains the provisions necessary or desirable for the conversion of ENVI to a public benefit corporation. We encourage stockholders to carefully consider the information set out below in the section titled “.”
The Public Benefit Corporation Proposal
The Charter Amendment Proposal
ENVI is asking its stockholders to approve the amendment and restatement of the Amended and Restated Certificate of Incorporation of ENVI currently in effect to be in the form of the proposed second amended and restated certificate of incorporation of New GreenLight, to be in effect following the Business Combination, including the authorization of the change in authorized capital stock as indicated therein and the change of the name of ENVI to “GreenLight Biosciences, Inc.” if the Charter Amendment Proposal is approved (or “GreenLight Biosciences, PBC” if the Public Benefit Corporation Proposal is also approved). We encourage
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stockholders to carefully consult the information set out below under “The Charter Amendment Proposal” of this proxy statement/prospectus and a complete copy of the Proposed Charter that is attached hereto as Annex C.
Advisory Charter Amendment Proposals
ENVI is asking its stockholders to approve, on a
non-binding
advisory basis, the following governance proposals in connection with the replacement of the Existing Charter with the Proposed Charter. The ENVI Board has unanimously approved each of the Advisory Charter Amendment Proposals and believes such proposals are necessary to adequately address the needs of New GreenLight after the Business Combination. A brief summary of each of the Advisory Charter Amendment Proposals is set forth below. These summaries are qualified in their entirety by reference to the complete text of the Proposed Charter included in this proxy statement/prospectus.| • | Advisory Charter Amendment Proposal A |
| • | Advisory Charter Amendment Proposal B . |
| • | Advisory Charter Amendment Proposal C |
The Proposed Charter differs in certain material respects from the Existing Charter, and we encourage stockholders to carefully consult the information set out in the section titled “” and the full text of the Proposed Charter of New GreenLight, attached hereto as Annex B.
Advisory
Charter Amendment Proposals
The Nasdaq Proposal
ENVI is asking its stockholders to approve, for the purposes of complying with the applicable provisions of Nasdaq Stock Market Listing Rule 5635, the issuance of shares of New GreenLight Common Stock in connection with the Business Combination Agreement in connection with the Merger. For additional information, see “.”
The
Nasdaq Proposal
Incentive Award Plan Proposal
ENVI is asking its stockholders to approve and adopt the Incentive Award Plan Proposal. Pursuant to the New GreenLight Equity Plan, 31,750,000 shares of New GreenLight Common Stock will be reserved for issuance, including upon exercise of the Rollover Options. The New GreenLight Equity Plan provides that the
5
number of shares reserved and available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2022, by 4% of the outstanding number of shares of New GreenLight Common Stock on the immediately preceding December 31, or such lesser amount as determined by the New GreenLight Board. For additional information, see “.” The full text of the New GreenLight Equity Plan is attached hereto as Annex H.
Incentive Award Plan Proposal
Employee Stock Purchase Plan Proposal
ENVI is asking its stockholders to approve and adopt the Employee Stock Purchase Plan Proposal. A total of 2,000,000 shares of New GreenLight Common Stock will be reserved for issuance under the New GreenLight ESPP. The New GreenLight ESPP provides that the number of shares reserved and available for issuance under the New GreenLight ESPP will automatically increase each January 1, beginning on January 1, 2022, by 4% of the outstanding number of shares of New GreenLight Common Stock on the immediately preceding December 31, or such lesser amount as determined by the New GreenLight Board. For additional information, see “.” The full text of the New GreenLight ESPP is attached hereto as Annex I.
Employee Stock Purchase Plan Proposal
Director Election Proposal
ENVI is asking its Class B stockholders to elect seven directors, effective upon the Closing, divided into three classes designated Class I, Class II and Class III, to serve terms on the New GreenLight Board until the annual meeting for the year in which such director’s term expires, or until such directors’ successors have been duly elected and qualified, or until such directors’ earlier death, resignation, retirement or removal. For additional information, see “.”
Director Election Proposal
Adjournment Proposal
ENVI is asking its stockholders to adjourn the special meeting to a later date or dates, if necessary, (A) to the extent necessary to ensure that any required supplement or amendment to this proxy statement/prospectus is provided to ENVI stockholders, (B) if as of the time for which the special meeting is scheduled, there are insufficient shares of ENVI Class A Common Stock and ENVI Class B Common Stock represented to constitute a quorum necessary to conduct business at the special meeting, (C) in order to solicit additional proxies from ENVI stockholders in favor of one or more of the proposals at the special meeting or (D) if ENVI stockholders redeem an amount of public common stock such that the Aggregate Transaction Proceeds Condition would not be satisfied. For additional information, see “.”
Adjournment Proposal
Each of the Business Combination Proposal, the Charter Amendment Proposal, the Nasdaq Proposal, the Incentive Award Plan Proposal, the Employee Stock Purchase Plan Proposal and the Director Election Proposal is conditioned on the approval and adoption of each of the other Condition Precedent Proposals. The Public Benefit Corporation Proposal and the Advisory Charter Amendment Proposals are conditioned on the approval of the Condition Precedent Proposals. The Adjournment Proposal is not conditioned on any other proposal.
The ENVI Board’s Reasons for the Business Combination
ENVI was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. The ENVI Board sought to do this by utilizing the networks and industry experience of both the Sponsor and the ENVI Board and management to identify, acquire and operate one or more businesses. The members of the ENVI Board and management have extensive transactional experience.
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In particular, the ENVI Board considered the following attributes of GreenLight as positive factors, although not weighted or in any order of significance, in deciding to approve the Business Combination Proposal:
| • | synthetic biology and biomanufacturing platform with flexible technology; |
| • | leadership in RNA-based product development; |
| • | near-term adoption of GreenLight’s products; |
| • | experienced, diverse, mission-driven and multidisciplinary management team; |
| • | development of products through a strong commitment to research and development and new partnerships and collaborations; |
| • | efficient and scalable biomanufacturing processes; |
| • | results of due diligence and attractive valuation; |
| • | strong alignment with sustainability and ESG focus; |
| • | continued participation by leading private investors and a strong balance sheet; and |
| • | the fairness opinion of Duff & Phelps. |
The ENVI Board also considered a variety of uncertainties and risks and other potentially negative factors concerning the Business Combination, including, but not limited to, the following:
| • | the risk that the potential benefits of the Business Combination may not be fully achieved; |
| • | the risks and costs to ENVI if the Business Combination is not completed; |
| • | the fact that the Business Combination Agreement includes an exclusivity provision that prohibits ENVI from soliciting other business combination proposals; |
| • | the risk that ENVI’s stockholders may fail to provide the respective votes necessary to effect the Business Combination; |
| • | the post-business combination corporate governance and the terms of the Investor Rights Agreement; |
| • | the fact that the completion of the Business Combination is conditioned on the satisfaction of certain closing conditions that are not within ENVI’s control; |
| • | potential litigation challenging the Business Combination; |
| • | the fees and expenses associated with completing the Business Combination; and |
| • | various other risks associated with the Business Combination, the business of ENVI and the business of GreenLight described under the section titled “ Risk Factors |
In addition to considering the factors described above, the ENVI Board also considered that certain of the officers and directors of ENVI may have interests in the Business Combination as individuals that are in addition to, and that may be different from, the interests of ENVI’s stockholders. You should be aware that the interests described above and presented in more detail in the section titled “—” present a risk that the Sponsor, HB Strategies and each of their affiliates will benefit from the completion of a business combination, including in a manner that may not be aligned with public stockholders—as such, the Sponsor and HB Strategies may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to public stockholders rather than liquidate. ENVI’s independent directors reviewed and considered these interests during the negotiation of the Business Combination and in evaluating and approving, as members of the ENVI Board, the Business Combination Agreement and the transactions contemplated therein, including the Business Combination.
Interests of ENVI Directors and Officers in the Business Combination
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The ENVI Board concluded that the potential benefits that it expected ENVI and its stockholders to achieve as a result of the Business Combination outweighed the potentially negative factors associated with the Business Combination. Accordingly, the ENVI Board determined that the Business Combination Agreement, the Business Combination and the Merger, were advisable, fair to, and in the best interests of, ENVI and its stockholders.
For more information about the ENVI Board’s.”
decision-making
process concerning the Business Combination, please see the section titled “The
Business Combination Proposal
—
the ENVI Board’s Reasons for the Business Combination
Opinion of the Financial Advisor to ENVI
On June 25, 2021, ENVI retained Duff & Phelps to serve as an independent financial advisor to the ENVI Board, specifically to provide to the ENVI Board a fairness opinion in connection with the Business Combination. On August 9, 2021, Duff & Phelps delivered its opinion, dated August 9, 2021 (the “
Opinion
”), to the ENVI Board (solely in their capacity as members of the ENVI Board) that, as of the date of the Opinion and subject to and based on the procedures followed, assumptions made, matters considered, limitations of the review undertaken and qualifications contained in such Opinion, the consideration to be paid by ENVI pursuant to the Business Combination Agreement was fair, from a financial point of view, to ENVI.The full text of the Opinion is attached hereto as an exhibit and is incorporated into this proxy statement/prospectus by reference. The summary of the Opinion set forth here and elsewhere in this proxy statement/prospectus is qualified in its entirety by reference to the full text of the Opinion. ENVI’s stockholders are urged to read the Opinion carefully and in its entirety for a discussion of the procedures followed, assumptions made, matters considered, limitations of the review undertaken by Duff & Phelps in connection with such Opinion as well as other qualifications contained in such Opinion.
Related Agreements
This section describes certain additional agreements entered into or to be entered into in connection with the Business Combination Agreement. For additional information, see “.”
The Business Combination Proposal
—
Related Agreements
PIPE Financing
Concurrently with the execution of the Business Combination Agreement and subsequently in November 2021, ENVI entered into the Subscription Agreements with each of the PIPE Investors, pursuant to which the PIPE Investors have agreed to subscribe for and purchase, and ENVI has agreed to issue and sell to the PIPE Investors, immediately prior to the Closing, an aggregate of 12,425,000 shares of ENVI Class A Common Stock at a price of $10.00 per share, for aggregate gross proceeds of $124,525,000 on terms identical in all material respects to the Class A Common Stock issued in the initial public offering. The shares of ENVI Class A Common Stock to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act and will be issued in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act. The PIPE Financing is contingent upon, among other things, the substantially concurrent closing of the Business Combination.
The Subscription Agreements grant the PIPE Investors certain resale registration rights in connection with the PIPE Financing. ENVI agreed to file a registration statement with the SEC within 30 days after the Closing to register the resale of the shares acquired in the PIPE Financing. ENVI agreed to use its commercially reasonable efforts to have the registration statement declared effective as soon as practicable after filing but no later than the earlier of (i) the 60th day (or 90th day if the SEC notifies ENVI that it will “review” the registration statement)
8
following the Closing and (ii) the 10th business day after the date ENVI is notified by the SEC that the registration statement will not be “reviewed” or will not be subject to further review. For additional information, see “.”
Business Combination Proposal
—
Related Agreements
—
PIPE Financing
Investor Rights Agreement
Concurrently with the execution of the Business Combination Agreement, ENVI, the initial stockholders and certain stockholders of GreenLight entered into the Investor Rights Agreement, dated August 9, 2021 (the “.”
Investor Rights Agreement
”), pursuant to which, among other things, the initial stockholders and such stockholders of GreenLight agreed not to effect any sale or distribution of any equity securities of ENVI during thelock-up
period described therein and will be granted certain registration rights, in each case subject to, and conditioned upon and effective as of, the effective time of the Merger. For additional information, see “The
Business Combination Proposal
—
Related Agreements
—
Investor Rights Agreement
Transaction Support Agreement
Concurrently with the execution of the Business Combination Agreement, ENVI and certain stockholders of GreenLight entered into the Transaction Support Agreement, dated August 9, 2021 (the “.”
Transaction Support
Agreement
”), pursuant to which each such holder agreed, subject to the terms and conditions of the Transaction Support Agreement, to (i) vote in favor of and consent to the Business Combination Agreement and the transactions contemplated thereby (including the Merger), (ii) waive his, her or its appraisal rights with respect to the Merger, (iii) effective immediately prior to, and contingent upon, the Effective Time, to terminate (a) the Fifth Amended and Restated Investors’ Rights Agreement, dated as of June 15, 2020, by and among GreenLight and the investor parties thereto, as amended, (b) the Fifth Amended and Restated Right of First Refusal andCo-Sale
Agreement, dated as of June 15, 2020, by and among the Company, the investor and key holder parties thereto, as amended, (c) the Fifth Amended and Restated Voting Agreement, dated as of June 15, 2020, by and among the Company, the investor and key holder parties thereto, as amended, and (d) any management rights letter, investor side letter or other investor agreement providing for board observer rights, information rights, inspection rights or other rights of investors, in each case between or among the Company and such holder (and/or other persons), and all rights and obligations contained therein and (iv) be bound by certain other covenants and agreements related to the Business Combination, including an agreement to be bound by the exclusive dealing provisions of the Business Combination Agreement and restrictions on transfers with respect to his, her or its securities of GreenLight capital stock prior to the closing of the Business Combination. For additional information, see “The
Business Combination Proposal
—
Related Agreements
—
Transaction Support Agreement
The approval of the Business Combination Agreement and the transactions contemplated thereby (including the Merger) by the GreenLight stockholders will require the approval of the holders of (a) a majority of the voting power of the outstanding GreenLight Shares, voting together on an as-converted basis, (b) a majority of the outstanding shares of GreenLight Common Stock, (c) a majority of the outstanding shares of GreenLight Preferred Stock, voting together on an as-converted basis, (d) a majority of the outstanding shares of GreenLight Series C Preferred Stock, voting as a separate class, and (e) a majority of the outstanding shares of GreenLight Series D Preferred Stock, voting as a separate class. The parties to the Transaction Support Agreement hold in the aggregate (a) 92,514,094 GreenLight Shares, or 64% of the total GreenLight Shares, (b) 1,846,446 shares of GreenLight Common Stock, or 54% of the total outstanding shares of GreenLight Common Stock, (c) 90,667,648 shares of GreenLight Preferred Stock on an as-converted basis, representing 64% of the total outstanding shares of GreenLight Preferred Stock on an as-converted basis, (d) 19,362,221 shares of GreenLight Series C Preferred Stock, representing 55% of the total outstanding shares of GreenLight Series C Preferred Stock and (e) 37,021,189 shares of GreenLight Series D Preferred Stock, representing 62% of the total outstanding shares of GreenLight Series D Preferred Stock. Accordingly, it is expected that, as of the relevant
9
record date for the vote, the parties to the Transaction Support Agreement will hold in the aggregate a sufficient number of GreenLight Shares to provide the requisite approval from the GreenLight stockholders of the Business Combination Agreement and the transactions contemplated thereby (including the Merger).
Sponsor Letter Agreement
Concurrently with the execution of the Business Combination Agreement, the initial stockholders and GreenLight entered into the Sponsor Letter Agreement, dated August 9, 2021 (the “.”
Sponsor Letter Agreement
”), pursuant to which the initial stockholders have agreed to, among other things, (i) vote all of their founder shares in favor of, and consent to, the Business Combination Agreement and the transactions contemplated thereby (including the Merger), (ii) waive any adjustment to the conversion ratio set forth in the Existing Organizational Documents or any other anti-dilution or similar protection with respect to the Class B Shares, whether resulting from the transactions contemplated by the Business Combination Agreement or otherwise, and (iii) be bound by certain other covenants and agreements related to the Business Combination, including an agreement to deal exclusively with GreenLight and restrictions on transfers with respect to his, her or its founder shares and private placement warrants prior to the Closing. However, shares of ENVI Class A Common Stock owned by HB Strategies are not subject to certain of the transfer restrictions under the Sponsor Letter Agreement. In addition, HB Strategies and the Sponsor agreed that, if more than 25% of the shares of ENVI Class A Common Stock are redeemed pursuant to the Existing Charter, then they will forfeit 25% of their respective private placement warrants immediately and Insider Warrants before the closing of the Business Combination. For additional information, see “Business Combination Proposal
—
Related Agreements
—
Sponsor Letter Agreement
Lock-up
BylawThe Proposed Bylaws will contain a provision (the “”) that will prevent the transfer of
Lock-up
Lock-up
Securities until the end of theLock-up
Period. The“Lock-up
Securities” are (i) the shares of New GreenLight Common Stock issuable as consideration pursuant to the terms of the Business Combination Agreement, (ii) the options issuable by New GreenLight pursuant to the Business Combination Agreement in respect of the Rollover Options and (iii) the shares of New GreenLight Common Stock issuable upon the exercise, conversion, exchange or other settlement of such options. The“Lock-up
Period” means the period beginning on the Closing and ending on the date that is the earlier of (a) 180 days after the Closing and (b) the date that the last sale price of New GreenLight Common Stock equals or exceeds $15.00 per share for any 20 trading days within any30-trading
day period commencing at least 120 days after the Effective Time or the date on which New GreenLight completes a merger, reorganization or other similar transaction that results in all of New GreenLight’s stockholders having the right to exchange their shares of New GreenLight Common Stock for cash, securities or other property.Ownership of New GreenLight
As of September 30, 2021, there were outstanding 25,875,000 shares of ENVI common stock, consisting of 20,700,000 shares of ENVI Class A Common Stock, all of which were issued in ENVI’s initial public offering, and 5,175,000 shares of ENVI Class B Common Stock, all of which were issued to ENVI’s initial stockholders. These amounts do not include 10,350,000 public warrants or 2,750,000 private placement warrants (including the Insider Warrants).
The following table illustrates different ownership levels in New GreenLight Common Stock immediately following the consummation of the Business Combination based on the capitalization of ENVI and GreenLight as of September 30, 2021 and either no redemptions, 50% redemptions or maximum redemptions by the public stockholders, assuming: (i) 103,470,217 shares of New GreenLight Common Stock will be issued to the holders of outstanding shares of capital stock of GreenLight at Closing (including shares issuable upon the conversion of certain notes and the exercise of certain warrants); (ii) 12,425,000 shares of ENVI Class A Common Stock will
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be issued in the PIPE Financing; and (iii) no outstanding options to purchase New GreenLight Common Stock are exercised. If the actual facts differ from these assumptions, the ownership percentages in New GreenLight will be different.
Assuming No Redemption | Assuming 50% Redemption | Assuming Maximum Redemption | ||||||||||||||||||||||
Shares | % | Shares | % | Shares | % | |||||||||||||||||||
(percentages represent percentages of pro forma outstanding shares) | ||||||||||||||||||||||||
Public shares (a) | 20,700,000 | 14 | % | 10,512,411 | 8 | % | 324,821 | * | ||||||||||||||||
Founder shares | 5,175,000 | 4 | % | 5,175,000 | 4 | % | 5,175,000 | 4 | % | |||||||||||||||
GreenLight stockholders (b)(c) | 103,470,217 | 73 | % | 103,470,217 | 79 | % | 103,470,217 | 85 | % | |||||||||||||||
PIPE shares | 12,425,000 | 9 | % | 12,425,000 | 9 | % | 12,425,000 | 10 | % | |||||||||||||||
Pro forma common stock outstanding as of September 30, 2021 (d) | 141,770,217 | 100 | % | 131,582,628 | 100 | % | 121,395,038 | 100 | % | |||||||||||||||
Potential sources of dilution | ||||||||||||||||||||||||
Public Warrants | 10,350,000 | 7 | % | 10,350,000 | 8 | % | 10,350,000 | 9 | % | |||||||||||||||
Private Placement Warrants | 2,000,000 | 1 | % | 1,500,000 | 1 | % | 1,500,000 | 1 | % | |||||||||||||||
Insider Warrants | 750,000 | * | 600,000 | * | 600,000 | * | ||||||||||||||||||
Rollover Options | 17,555,928 | 12 | % | 17,555,928 | 13 | % | 17,555,928 | 14 | % | |||||||||||||||
| * | Less than 1% |
| (a) | Amount includes 1,000,000 shares of ENVI Class A Common Stock held by HB Strategies, a founder, all of which shares carry the same redemption rights as other shares of ENVI Class A Common Stock. The 50% Redemption Scenario and the Maximum Redemption Scenario assume that HB Strategies will redeem 50% and 100%, respectively, of its shares of ENVI Class A Common Stock. Amount excludes 13,100,000 warrants to purchase ENVI Class A Common Stock, which is made up of 10,350,000 public warrants, 2,000,000 private placement warrants and 750,000 Insider Warrants. Additionally, under each of the 50% Redemption Scenario and the Maximum Redemption Scenario, an aggregate of 650,000 Warrants comprised of 500,000 private placement warrants owned by HB Strategies and 150,000 Insider Warrants owned by the Sponsor will be forfeited pursuant to the Sponsor Letter Agreement. |
| (b) | In accordance with the terms and subject to the conditions of the Business Combination Agreement, each outstanding share of capital stock of GreenLight will be exchanged for shares of New GreenLight Common Stock and outstanding GreenLight Options (whether vested or unvested) will be exchanged for comparable options to purchase New GreenLight Common Stock, in each case, based on an implied GreenLight equity value of $1.2 billion. The number of shares of New GreenLight Common Stock issued to the holders of shares of capital stock of GreenLight at Closing will fluctuate based on the number of shares underlying GreenLight Options and GreenLight Warrants, whether vested or unvested (and the exercise prices of such options and warrants), outstanding at Closing. |
| (c) | Amount includes 6,583,549 shares issuable upon conversion of the GreenLight Convertible Notes and 872,667 shares underlying GreenLight Warrants that are assumed to be exercised immediately prior to the consummation of the Business Combination and excludes 17,555,928 shares underlying Rollover Options to be issued to holders of GreenLight Options, assuming such GreenLight Options remain unexercised as of the Closing. |
| (d) | Amount excludes 31,750,000 shares (which amount includes shares underlying Rollover Options) and 2,000,000 shares of New GreenLight Common Stock that are expected to be available for issuance under the New GreenLight Equity Plan and the New GreenLight ESPP, respectively, after the consummation of the Business Combination, assuming approval of the Condition Precedent Proposals. |
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The following table presents as an underwriting fee certain marketing fees payable by ENVI to Canaccord in an amount equal to 3.76% of the gross proceeds received by ENVI in its initial public offering, or a total of $7.8 million, for advisory services in connection with the Business Combination. The fee will not be adjusted on the basis of the number of redemptions by public stockholders in connection with the closing of the Business Combination. The fee is presented as a percentage of ENVI’s total stockholders’ equity and on a per share basis attributable to common stockholders.
Assuming No Redemption | Assuming 50% of Maximum Redemption | Assuming Maximum Redemption | ||||||||||
Underwriting fee as % of total stockholders’ equity | 2.5 | % | 3.6 | % | 6.8 | % | ||||||
Underwriting fee per share attributable to common stockholders | $ | (0.05 | ) | $ | (0.06 | ) | $ | (0.06 | ) | |||
For further details, see “.”
Business Combination Proposal
—
Consideration to GreenLight Equityholders in the Business Combination
Date, Time and Place of Special Meeting of ENVI’s stockholders
The special meeting of ENVI will be held virtually at 9:00 a.m., Eastern Time, on , 2021, at the following address: , or at such other time, on such other date and at such other place to which the meeting may be adjourned.
Voting Power; Record Date
ENVI stockholders will be entitled to vote or direct votes to be cast at the special meeting if they owned ENVI common stock at the close of business on December 10, 2021, which is the “record date” for the special meeting. ENVI stockholders will have one vote for each share of ENVI Class A Common Stock or ENVI Class B Common Stock owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker, bank or other nominee to ensure that votes related to the shares you beneficially own are properly counted. As of the close of business on the record date, there were 20,700,000 shares of ENVI Class A Common Stock and 5,175,000 shares of ENVI Class B Common Stock issued and outstanding.
Quorum and Vote of ENVI Stockholders
A quorum of ENVI stockholders is necessary to hold a valid meeting. For each proposal, a quorum will be present at the special meeting if one or more stockholders who together hold not less than a majority of the voting power of the outstanding shares of each class (or group of classes voting as a single class) of ENVI common stock entitled to vote on such proposal at the special meeting are represented in person or by proxy at the special meeting.
The initial stockholders have, pursuant to the Sponsor Letter Agreement, agreed to, among other things, vote all of their founder shares in favor of the proposals being presented at the special meeting. As of the date of this proxy statement/prospectus, the founder shares owned by the initial stockholders represent approximately 20% of the issued and outstanding common stock. Thus, any approval requiring the affirmative vote of the holders of at least a majority of the shares of ENVI Class A Common Stock and ENVI Class B Common Stock issued and outstanding on the record date for the special meeting, voting as a single class, would require only 7,762,501 more shares of ENVI Class A Common Stock, or approximately 37.5% of the total outstanding shares of ENVI Class A Common Stock, voting in favor of the proposal. See “” in this proxy statement/prospectus for more information related to the Sponsor Letter Agreement.
The Business Combination Proposal
—
Related Agreements
—
Sponsor Letter Agreement
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The proposals presented at the special meeting require the following votes:
| (i) | Business Combination Proposal |
| (ii) | Public Benefit Corporation Proposal |
| (iii) | Charter Amendment Proposal |
| (iv) | Advisory Charter Amendment Proposals non-binding advisory basis, of each of the Advisory Charter Amendment Proposals the affirmative vote (in person or by proxy) of the holders of at least a majority of the shares of ENVI Class A Common Stock and ENVI Class B Common Stock entitled to vote on such matter and actually cast thereon at the special meeting, voting as a single class. |
| (v) | Nasdaq Proposal |
| (vi) | Incentive Award Plan Proposal |
| (vii) | Employee Stock Purchase Plan Proposal |
| (viii) | Director Election Proposal The Director Election Proposal |
| (ix) | Adjournment Proposal |
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Redemption Rights
Pursuant to the Existing Organizational Documents, a public stockholder may request of ENVI that New GreenLight redeem all or a portion of its shares of public common stock for cash, out of funds legally available therefor, if the Business Combination is consummated. As a holder of shares of public common stock, you will be entitled to receive cash for any shares of public common stock to be redeemed only if you:
| (i) | hold shares of public common stock; |
| (ii) | submit a written request to Continental, ENVI’s transfer agent, in which you (i) request that New GreenLight redeem all or a specified portion of your shares of public common stock for cash, and (ii) identify yourself as the beneficial holder of the shares of public common stock and provide your legal name, phone number and address; and |
| (iii) | deliver your shares of public common stock to be redeemed to Continental, ENVI’s transfer agent, physically or electronically through DTC. |
Holders must complete the procedures for electing to redeem their shares of public common stock in the manner described above prior to 5:00 p.m. Eastern Time on , 2021 (two business days before the special meeting) in order for their shares to be redeemed.
The redemption rights include the requirement that a holder must identify itself in writing as a beneficial holder and provide its legal name, phone number and address to Continental in order to validly redeem its shares. Public stockholders may elect to redeem all or a portion of the shares of public common stock held by them regardless of whether or how they vote in respect of the Business Combination Proposal.
per-share
price, payable in cash, equal to the pro rata portion of the trust account, calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as ofSeptember 30, 2021, this would have amounted to approximately $10.00
per issued and outstanding public share. If a public stockholder exercises its redemption rights in full, then it will be electing to exchange its shares of public common stock for cash and will no longer own public common stock. See “
Special Meeting of ENVI
—
Redemption Rights
Notwithstanding the foregoing, a public stockholder, together with any affiliate of such public stockholder or any other person with whom such public stockholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its shares of public common stock with respect to more than an aggregate of 20% of the outstanding shares of public common stock. Accordingly, if a public stockholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the outstanding shares of public common stock, then any such shares in excess of that 20% limit would not be redeemed for cash.
Appraisal Rights
ENVI stockholders have no appraisal rights in connection with the Business Combination under the DGCL.
Proxy Solicitation
Proxies may be solicited by mail, by telephone or in person. ENVI has engaged D.F. King to assist in the solicitation of proxies.
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If a stockholder grants a proxy, it may still vote its shares in person if it revokes its proxy before the special meeting. A stockholder also may change its vote by submitting a.”
later-dated
proxy as described in the section titled “Special Meeting of ENVI
-Revoking
Your ProxyInterests of ENVI Directors and Officers in the Business Combination
When you consider the recommendation of the ENVI Board in favor of approval of the Business Combination Proposal and the other proposals to be presented at the special meeting, you should keep in mind that the initial stockholders, including ENVI’s directors and executive officers, have interests in such proposal that are different from, or in addition to, those of ENVI stockholders generally. You should be aware that the interests set forth in more detail below present a risk that the Sponsor, HB Strategies and each of their affiliates will benefit from the completion of a business combination, including in a manner that may not be aligned with public stockholders—as such, the Sponsor and HB Strategies may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to public stockholders rather than liquidate. These interests include, among other things, the interests listed below:
| • | the fact that our initial stockholders, and in the case of HB Strategies solely with respect to their founder shares, have agreed not to redeem any founders shares or any shares of ENVI Class A Common Stock held by them in connection with a stockholder vote to approve a proposed initial business combination, including all 5,175,000 shares of ENVI Class B Common Stock held by them as of the date of this proxy statement/prospectus; |
| • | the fact that our initial stockholders and their affiliates would receive approximately $8.3 million in aggregate proceeds comprised of (i) fees to Canaccord, an affiliate of the Sponsor, who will receive a fee of $7.8 million in connection with the closing of the proposed business combination and (ii) the repayment of a promissory note issued to HB Strategies in an aggregate principal amount of $500,000, the entire amount of which remains outstanding as of the date of this prospectus; |
| • | the fact that the initial stockholders paid an aggregate of $25,000 for the 5,175,000 shares of ENVI Class B Common Stock currently owned by them, or approximately $0.005 per share, and such securities will have a significantly higher value at the time of the Business Combination; |
| • | As a result of the lower price paid by our initial stockholders for their shares as compared to, for example, the price per share of our public shares of $10.00 at our initial public offering (which price is $9.995 above the price per share paid by our initial stockholders), the initial stockholders may generate a profit on their shares even at prices that would generate a significant loss for the public stockholders on their shares of public common stock; |
| • | the fact that HB Strategies paid $2,000,000 for its private placement warrants, and that ENVI issued the 750,000 Insider Warrants, and that these private placement warrants would be worthless if a business combination is not consummated by July 19, 2022 (or by January 19, 2023 if we, by resolution of our board, extend the period of time by an additional six months); |
| • | the fact that the initial stockholders and ENVI’s other current officers and directors have agreed to waive their rights to liquidating distributions from the trust account with respect to any common stock (other than public common stock) held by them if ENVI fails to complete an initial business combination by July 19, 2022 (or by January 19, 2023 if we elect to extend); |
| • | the fact that the Investor Rights Agreement has been entered into by the initial stockholders; |
| • | the fact that, at the option of the Sponsor, any amounts outstanding under any loan made by the Sponsor or any of its affiliates to ENVI in an aggregate amount of up to $1,500,000 may be converted into ENVI Units in connection with the consummation of the Business Combination; |
| • | the fact that HB Strategies has made a $500,000 working capital loan to ENVI; |
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| • | the continued indemnification of ENVI’s directors and officers and the continuation of ENVI’s directors’ and officers’ liability insurance after the Business Combination ( i.e. |
| • | the fact that the Sponsor and ENVI’s officers and directors will lose their entire investment in ENVI and will not be reimbursed for any out-of-pocket |
| • | the fact that if the trust account is liquidated, including in the event ENVI is unable to complete an initial business combination by July 19, 2022 (or by January 19, 2023 if we elect to extend), the Sponsor has agreed to indemnify ENVI to ensure that the proceeds in the trust account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the trust account on the liquidation date, by the claims of prospective target businesses with which ENVI has entered into an acquisition agreement or claims of any third party for services rendered or products sold to ENVI, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the trust account; and |
| • | the fact that ENVI may be entitled to distribute or pay over funds held by ENVI outside the Trust Account to the Sponsor or any of its Affiliates prior to the Closing. |
The initial stockholders have, pursuant to the Sponsor Letter Agreement, agreed to, among other things, vote all of their founder shares in favor of the proposals being presented at the special meeting. As of the date of this proxy statement/prospectus, the founder shares owned by the initial stockholders represent approximately 20% of the issued and outstanding shares of common stock. See “” in this proxy statement/prospectus for more information related to the Sponsor Letter Agreement.
Business Combination Proposal
—
Related Agreements
—
Sponsor Letter Agreement
At any time at or prior to the Business Combination, during a period when they are not then aware of any material nonpublic information regarding us or our securities, our initial stockholders, GreenLight and/or their directors, officers, advisors or respective affiliates may purchase public common stock from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent Proposals, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire public common stock or vote their public common stock in favor of the Condition Precedent Proposals. Such a purchase may include a contractual acknowledgement that such stockholder, although still the record or beneficial holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our initial stockholders, GreenLight and/or their directors, officers, advisors or respective affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholder would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to (i) increase the likelihood of satisfaction of the requirements that each of the Business Combination Proposal, the Charter Amendment Proposal, the Advisory Charter Amendment Proposals, the Nasdaq Proposal, the Incentive Award Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal are approved by the requisite vote at the special meeting, (ii) otherwise limit the number of shares of public common stock to be redeemed and (iii) ensure that New GreenLight’s net tangible assets (as determined in accordance with Rule
3a51-1(g)(1)
of the Exchange Act) are at least $5,000,001 after giving effect to the transactions contemplated by the Business Combination Agreement and the PIPE Financing.16
Entering into any such arrangements may have a depressive effect on the common stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he, she or they own, either at or prior to the Business Combination.
If such transactions are effected, the consequence could be to cause the Business Combination to be consummated in circumstances where such consummation could not otherwise occur. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the special meeting and would likely increase the chances that such proposals would be approved. We will file or submit a Current Report on Form
8-K
to disclose any material arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be put to the special meeting. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.Recommendation to Stockholders of ENVI
The ENVI Board believes that the Business Combination Proposal and the other proposals to be presented at the special meeting are in the best interest of ENVI and its stockholders and unanimously recommends that its stockholders vote “FOR” the Business Combination Proposal, “FOR” the Public Benefit Corporation Proposal, “FOR” the Charter Amendment Proposal, “FOR” each of the Advisory Charter Amendment Proposals, “FOR” the Nasdaq Proposal, “FOR” the Incentive Award Plan Proposal, “FOR” the Employee Stock Purchase Plan Proposal, “FOR” the Director Election Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the special meeting.
The existence of financial and personal interests of one or more of ENVI’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of ENVI and its stockholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that stockholders vote for the proposals. In addition, ENVI’s officers have interests in the Business Combination that may conflict with your interests as a stockholder. See the section titled “” for a further discussion of these considerations.
The Business Combination Proposal
—
Interests of ENVI’s Directors and Officers in the Business Combination
Sources and Uses of Funds for the Business Combination
The following table summarizes the sources and uses for funding the Business Combination. Where actual amounts are not known or knowable, the figures below represent ENVI’s good faith estimate of such amounts.
No Redemption (1) | Maximum Redemption (2) | |||||||
( in millions) | ||||||||
Sources | ||||||||
Cash Held in Trust Account(3) | $ | 207.0 | $ | — | ||||
PIPE Financing(4) | 124.3 | 124.3 | ||||||
Seller Rollover Equity | 1,200.0 | 1,200.0 | ||||||
Total Sources | $ | 1,531.3 | $ | 1,324.3 | ||||
Uses | ||||||||
Seller Rollover Equity | $ | 1,200.0 | $ | 1,200.0 | ||||
Net Cash to Balance Sheet | 301.3 | 97.9 | ||||||
Estimated Transaction Costs | 30.0 | 26.4 | ||||||
Total Uses | $ | 1,531.3 | $ | 1,324.3 | ||||
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| (1) | Assumes that none of the holders of Class A Common Stock exercise their redemption rights. |
| (2) | Assumes that holders of 20,375,179 shares of Class A Common Stock exercise their redemption rights (representing the maximum amount of public shares that can be redeemed to satisfy the Aggregate Transaction Proceeds Condition). |
| (3) | Represents the expected amount of the cash held in ENVI’s trust account prior to the Closing (and prior to any redemption by ENVI stockholders), excluding any interest earned on the funds. |
| (4) | Represents the proceeds from the PIPE Financing as of the consummation of the Business Combination. |
Material U.S. Federal Income Tax Consequences
For a discussion summarizing material U.S. federal income tax consequences in connection with the Merger and of the exercise of redemption rights, please see “.”
Material U.S. Federal Income Tax Consequences
Expected Accounting Treatment
The Business Combination will be accounted for as a reverse recapitalization in conformity with accounting principles generally accepted in the United States of America, or GAAP. Under this method of accounting, ENVI will be treated as the “acquired” company for financial reporting purposes. The determination is primarily based on the evaluation of the following facts and circumstances, taking into consideration both the
no-redemption
and the maximum-redemption scenario:| • | The pre-combination equityholders of GreenLight will hold the majority of voting rights in New GreenLight; |
| • | The pre-combination equityholders of GreenLight will have the right to appoint six of the seven directors on the New GreenLight Board; |
| • | Senior management of GreenLight will comprise the senior management of New GreenLight; and |
| • | Operations of GreenLight will comprise the ongoing operations of New GreenLight. |
Accordingly, for accounting purposes, the financial statements of the combined entity will represent a continuation of the financial statements of GreenLight, with the Business Combination being treated as the equivalent of GreenLight issuing stock for the net assets of ENVI, accompanied by a recapitalization. The net assets of ENVI will be stated at historical costs, with no goodwill or other intangible assets recorded.
Regulatory Matters
Under the HSR Act and the rules that have been promulgated thereunder by the U.S. Federal Trade Commission (“
FTC
”), certain transactions may not be consummated unless information has been furnished to the Antitrust Division of the Department of Justice (“Antitrust Division
”) and the FTC and certain waiting period requirements have been satisfied. The Business Combination is subject to these requirements and may not be completed until the expiration of a30-day
waiting period following the filing of the required Notification and Report Forms with the Antitrust Division and the FTC or until early termination is granted. On August 23, 2021 ENVI and GreenLight filed the required forms under the HSR Act with the Antitrust Division and the FTC and on September 22, 2021, the applicable30-day
waiting period expired.At any time, notwithstanding the expiration or termination of the waiting period under the HSR Act, the applicable competition authorities in the United States or any other applicable jurisdiction could take such action under applicable antitrust laws as such authority deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Business Combination, conditionally approving the Business Combination upon divestiture of New GreenLight’s assets, subjecting the completion of the Business Combination to regulatory conditions or seeking other remedies. Private parties may also seek to take legal
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action under the antitrust laws under certain circumstances. ENVI cannot assure you that the Antitrust Division, the FTC, any state attorney general, or any other government authority will not attempt to challenge the Business Combination on antitrust grounds, and, if such a challenge is made, ENVI cannot assure you as to its result.
Neither of ENVI and GreenLight is aware of any material regulatory approvals or actions that are required for completion of the Business Combination other than the expiration or early termination of the waiting period under the HSR Act. It is presently contemplated that if any such additional regulatory approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained.
Emerging Growth Company
ENVI is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved.
JOBS Act
”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of theSarbanes-Oxley
Act of 2002 (the “Sarbanes
-Oxley
ActFurther, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective, have not filed and not withdrawn a Securities Act registration statement that has not become effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to
non-emerging
growth companies but any such election to opt out is irrevocable. ENVI has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, ENVI, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of ENVI’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.We will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of ENVI’s initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by
non-affiliates
exceeds $700 million as of the last business day of its most recently completed second fiscal quarter; and (ii) the date on which we have issued more than $1.00 billion innon-convertible
debt securities during the priorthree-year
period. References herein to “emerging growth company” have the meaning associated with it in the JOBS Act.Smaller Reporting Company
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation
S-K.
Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our common stock held bynon-affiliates
exceeds $250 million as of the prior June 30, or (ii) our annual revenue exceeded $100 million during such completed fiscal year and the market value of our common stock held bynon-affiliates
exceeds $700 million as of the prior June 30.19
Summary Risk Factors
You should consider all the information contained in this proxy statement/prospectus in deciding how to vote for the proposals presented in this proxy statement/prospectus. In particular, you should consider the risk factors described under “Risk Factors” beginning on page 24. Some of the risks relating to GreenLight include, but are not limited to:
| • | GreenLight may not be successful in its efforts to develop or bring products or services to market, to introduce new products, or to achieve market acceptance; |
| • | GreenLight has a limited operating history and funding, which may make it difficult to evaluate its product development, product prospects and overall likelihood of success; |
| • | GreenLight may fail to obtain regulatory approval for some or all of its products; |
| • | GreenLight will require substantial additional funds to complete its research and development activities and fund its other operations. Its current available funds are not sufficient for all of these activities and, as a result, there is substantial doubt about its ability to continue as a going concern; |
| • | GreenLight has identified material weaknesses in its internal controls of financial reporting, which may result in material misstatements or restatements of its consolidated financial statements or cause it to fail to meet New GreenLight’s periodic reporting obligations; |
| • | GreenLight’s product candidates may be more complex and more difficult to manufacture than initially anticipated, and GreenLight may encounter difficulties in manufacturing, product release, shelf life, testing, storage, supply chain management or shipping of any of its product candidates; |
| • | GreenLight depends on relationships with third parties for revenues, and for the development, regulatory approval, commercialization and marketing of certain of its products and product candidates, which are outside of its full control; |
| • | GreenLight’s product candidates are extremely temperature sensitive, may have other attributes that lead to limited shelf life, and may pose other risks to supply, inventory and waste management and increased cost of goods; |
| • | Even if any product candidates developed by GreenLight receives regulatory approval, GreenLight may nonetheless fail to achieve the degree of market acceptance by physicians, patients, healthcare payors, and others in the medical community necessary for commercial success; |
| • | GreenLight faces significant competition, and its competitors may develop and market technologies or products more rapidly than it does or that are more effective, safer or less expensive; |
| • | GreenLight’s preclinical studies may not succeed or achieve positive results, and, even if such preclinical studies are successful, the resulting clinical trials of GreenLight’s human health product candidates may nevertheless reveal significant adverse events, including negative immune system responses, and may result in a safety profile that could prevent or delay regulatory approval, licensure or market acceptance; |
| • | The time and expense required to obtain regulatory approvals for preclinical and clinical trials could be significantly greater than for more conventional therapeutic technologies or products. If preclinical studies or clinical trials of any product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, GreenLight may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of such product candidates; |
| • | GreenLight, its service providers or any third-party manufacturers may fail to comply with regulatory requirements which could subject GreenLight to enforcement actions; |
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| • | If field trials are unsuccessful, GreenLight may fail to obtain regulatory approval of, or commercialize, its products on a timely basis; |
| • | U.S. agricultural production could decline; |
| • | GreenLight’s plant health program is susceptible to risks relating to weather conditions, seasonal variations and other factors; |
| • | Crop protection products must be extensively tested for safety, efficacy and environmental impact before they can be registered for production, use, sale or commercialization in a given market, and there can be no guaranty that such testing will be successful; |
| • | The agricultural products may fail to meet the criteria for desirable certifications such as “non-GMO” or “organic” and may cause the plants or products to which they are applied also to lose these certifications, reducing the addressable market for and value of our products; |
| • | The honeybee ecosystem is complex and it is difficult to measure the overall efficacy of GreenLight’s product candidate since there are multiple factors other than Varroa mites contributing to the decline in honeybee populations; |
| • | At the dose safety factor typically required by the EPA for approval, our Varroa mite control product causes significant bee mortality, and our dose control system may not convince the EPA to waive its customary dose safety factor requirement; |
| • | GreenLight’s product will need to be evaluated by the EPA without a precedent product, the process of which may incur additional time needed for further field trials; |
| • | The intellectual property related to GreenLight’s RNA honeybee product was purchased from Bayer Crop Science, a subsidiary of Bayer, which now owns Monsanto which has had significant pushback from environmental groups regarding its technology and practices, which may affect GreenLight’s ability to market its products; |
| • | The research and development process for our Varroa mite control product is expensive with little immediate return, and the field trials associated with honeybees in general are susceptible to circumstances outside of GreenLight’s control; |
| • | If our Varroa mite control product is used inappropriately and is consumed by invertebrates other than the Varroa destructor mite, it could be harmful to those invertebrates; |
| • | The raw materials used in GreenLight’s manufacturing process may become difficult to obtain in the quality or quantity required for its business plans or at prices that are currently projected; |
| • | Single or limited sources for some materials may impact GreenLight’s ability to secure supply; |
| • | Any disruption to the supply chain for, or any malfunction of, the highly specialized equipment and consumables on which GreenLight relies may adversely impact GreenLight’s operations; |
| • | GreenLight may be unable to protect and maintain sufficient intellectual property protection for its products, platform, methods, trademarks, and technology, or the scope of the intellectual property protection obtained may not be sufficiently broad, and as a result, competitors could develop and commercialize similar or identical products; |
| • | GreenLight may lose its existing licenses, or may be unable to obtain licenses to patent rights it may need in the future, or if they are able to obtain such licenses, such third-party owners may not properly maintain or enforce the patents underlying such licenses; and |
| • | GreenLight may become involved in lawsuits to enforce its intellectual property or defend against third-party claims of infringement, misappropriation or other violations of intellectual property in the U.S. or internationally. |
21
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING
STATEMENTSCertain statements in this proxy statement/prospectus may constitute
“forward-looking
statements” for purposes of the federal securities laws. Ourforward-looking
statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future, including those relating to the Business Combination. The information included in this proxy statement/prospectus in relation to GreenLight has been provided by GreenLight and its management, andforward-looking
statements include statements relating to our and its management team’s expectations, hopes, beliefs, intentions or strategies regarding the future, including those relating to the Business Combination. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, areforward-looking
statements. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identifyforward-looking
statements, but the absence of these words does not mean that a statement is notforward-looking.
The forward-looking statements contained in this proxy statement/prospectus are based on current expectations and beliefs concerning future developments and their potential effects on us and/or GreenLight. There can be no assurance that future developments affecting us and/or GreenLight will be those that we and/or GreenLight have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control or the control of GreenLight) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the following risks, uncertainties (some of which are beyond our control) or other factors:
| • | the risk that the transaction may not be completed in a timely manner or at all, which may adversely affect the price of ENVI’s securities; |
| • | the failure to satisfy the conditions to the consummation of the transaction, including the approval of the business combination agreement by the stockholders of ENVI, the satisfaction of the Aggregate Transaction Proceeds Condition by ENVI following any redemptions by its public stockholders and the receipt of certain governmental and regulatory approvals; |
| • | potential changes to the proposed structure of the business combination that may be required or appropriate to achieve the intended tax treatment or to satisfy other legal or regulatory requirements; |
| • | the potential inability to complete the PIPE Financing; |
| • | the occurrence of any event, change or other circumstance that could give rise to the termination of the business combination agreement; |
| • | the potential inability to maintain the listing of ENVI’s securities with Nasdaq; |
| • | the outcome of any legal proceedings that may be instituted against GreenLight or ENVI related to the business combination agreement or the proposed transaction; |
| • | unanticipated costs related to the transaction and the potential failure to realize anticipated benefits of the transaction or to realize estimated pro forma results and underlying assumptions, including with respect to estimated shareholder redemptions; |
| • | potential exercise of appraisal rights by some GreenLight stockholders, which may reduce available cash; |
| • | the effect of the announcement or pendency of the transaction on GreenLight’s business relationships, operating results, and business generally; |
| • | risks that the proposed transaction disrupts current plans and operations of GreenLight; |
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| • | the need to obtain regulatory approval for GreenLight’s product candidates; |
| • | the risk that preclinical studies and any ensuing clinical trials will not demonstrate that GreenLight’s product candidates are safe and effective; |
| • | the risk that GreenLight’s product candidates will have adverse side effects or other unintended consequences, which could impair their marketability; |
| • | the risk that GreenLight’s product candidates do not satisfy other legal and regulatory requirements for marketability in one or more jurisdictions; |
| • | the risks of enhanced regulatory scrutiny of solutions utilizing messenger ribonucleic acid (“ mRNA ”) as a basis; |
| • | the potential inability to achieve GreenLight’s goals regarding scalability, affordability and speed of commercialization of its product candidates; |
| • | the anticipated need for additional capital to achieve GreenLight’s business goals; |
| • | changes in the industries in which GreenLight operates; |
| • | changes in laws and regulations affecting the business of GreenLight; |
| • | the potential inability to implement or achieve business plans, forecasts, and other expectations after the completion of the proposed transaction; and |
| • | other factors detailed under the section titled “ Risk Factors |
Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these
forward-looking
statements. Some of these risks and uncertainties may in the future be amplified by theCOVID-19
outbreak and there may be additional risks that we consider immaterial or which are unknown. It is not possible to predict or identify all such risks. Neither we nor GreenLight undertake any obligation to update or revise anyforward-looking
statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.Before any stockholder grants its proxy, instructs how its vote should be cast or votes on the proposals to be put to the special meeting, such stockholder should be aware that the occurrence of the events described in the “” section and elsewhere in this proxy statement/prospectus may adversely affect us.
Risk Factors
23
RISK FACTORS
ENVI stockholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus, before they decide whether to vote or instruct their vote to be cast to approve the relevant proposals described in this proxy statement/prospectus.
Unless the context otherwise requires, any reference in the below sections of this proxy statement/prospectus to the “we,” “us” or “our” refers to ENVI and its consolidated subsidiaries prior to the consummation of the Business Combination and to New GreenLight and its consolidated subsidiaries following the Business Combination. The references to GreenLight in this “Risk Factors” section will apply to New GreenLight upon Closing. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and accompanying notes, and other financial information included elsewhere within this proxy statement/prospectus. This discussion includes
forward-looking
information regarding our business, results of operations and cash flows and contractual obligations and arrangements that involves risks, uncertainties and assumptions. Our actual results may differ materially from any future results expressed or implied by suchforward-looking
statements as a result of various factors, including, but not limited to, those discussed in the sections of this proxy statement/prospectus entitled “Cautionary Note RegardingForward-Looking
Statements,” “GreenLight Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “ENVI’s Management’s Discussion and Analysis of Financial Condition and Results of Operations.”Risks Relating to Our Business and Industry
We are an early-stage biotechnology company without any products or services currently available for sale and we may not be able to successfully develop or bring products or services to market.
In our human health program, we have five pre-IND product candidates, while in our plant health program, we have seven product candidates we hope to bring to market by 2027; however, there is no assurance that our future operations will generate any revenue. If we cannot develop a marketable product or generate sufficient revenues, we may be required to suspend or cease operations.
We have not generated any product revenues to date and expect to incur losses and negative cash flow for the foreseeable future.
We have generated substantial accumulated losses since inception. Our net losses were $28.7 million and $53.3 million for the years ended December 31, 2019, and 2020, respectively, and were $35.8 million and $77.6 million for the nine months ended September 30, 2020, and 2021, respectively. As of December 31, 2020, and September 30, 2021, we had an accumulated deficit of $141.3 million and $218.9 million, respectively. We will need to generate significant revenues to achieve profitability, and we may not be able to achieve and maintain profitability in the near future. We have derived substantially all of our revenues through grants and research partnerships with third parties and we are unable to accurately predict whether these sources of revenue will be available to us in the future. Our future success will depend on our ability to bring products to market for the first time and grow consistent revenue associated with those products. The research, testing and regulatory pathways for each of the products in our product pipeline are complex and we can offer no assurance that we will bring the products in our pipeline to market, that any of those products will be profitable or that we will generate overall profit or positive cash flow in the future. The net losses we incur may fluctuate significantly fromandsuch that acomparison of our results of operations may not be a good indication of our future performance. These fluctuations may cause our stock to be volatile compared to other stocks in the market.
year-to-year
quarter-to-quarter,
period-to-period
We will require substantial additional funds to complete our research and development activities, and, if additional funds are not available, we may need to significantly scale back or cease our business.
Between our founding and September 30, 2021, we have raised approximately $235.4 million, through the sale of equity and convertible notes, which we have dedicated to the development of our RNA platform, human
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health product pipelines and plant health product pipelines. We have invested and will continue to invest in property, plant and equipment, and human capital and will require substantial funds to bring the current products in our product pipeline to market and to grow our business by researching, developing, and protecting products not currently in our product pipeline. As of September 30, 2021, we held approximately $34.8 million in cash and cash equivalents. Our current available funds are not sufficient for all of these activities and as a result, there is substantial doubt about our ability to continue as a going concern.
Based on our history of losses, we do not expect that we will be able to fund our longer-term capital and liquidity needs through our cash balances and operating cash flow alone. To fund our longer-term capital and liquidity needs, we expect to use the proceeds of the Business Combination and will need to secure additional capital. The amount of capital we will need will be subject to change depending on, among other things, the success of our efforts to grow revenue and our efforts to continue to effectively manage expenses.
When we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Any debt financing that we may secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges and opportunities could be significantly impaired, and our business may be adversely affected.
Our financing needs may also increase substantially depending on the results of our research, trials and development for products and costs arising from additional regulatory approvals. We may not succeed in raising additional funds in a timely manner. The timing of our need for additional funds will depend on a number of factors, which are difficult to predict or may be outside of our control, including:
| • | the resources, time and costs required to initiate and complete our research and development and to initiate and complete studies and trials and to obtain regulatory approvals for additions to our product pipeline; |
| • | progress in our research and development programs; |
| • | the timing and amount of milestone, royalty and other payments; and |
| • | costs necessary to protect any intellectual property rights. |
If our estimates and predictions relating to any of these factors are incorrect, we may need to modify our business plans.
Our ability to raise funds will depend upon many factors, including conditions in the debt and equity capital markets, as well as investor perception of our creditworthiness and prospects. If we are unable to raise funds on acceptable terms, we may not be able to execute our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated requirements. This may seriously harm our business, financial condition and results of operations. If we are not able to continue operations, investors may suffer a complete loss of their investments in our securities.
Our strategy assumes that we will collaborate with larger companies to develop and commercialize the products in our pipeline and if those collaborations are not successful or available to us at all, we may not be able to successfully commercialize our products.
We are seeking and will continue to seek collaboration arrangements with third parties for the development or commercialization of our products. These arrangements are complex and time-consuming to negotiate, document, implement and maintain and, as a small company, we may not have the same bargaining power as the
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larger companies we seek to collaborate with and the terms of any collaborations or other arrangements that we may establish may not be favorable to us.
Due to our limited resources and access to capital, we must make decisions on the allocation of resources to certain programs and product candidates; these decisions may prove to be wrong and may adversely affect our business.
We have limited financial and human resources and intend to initially focus on research programs and product candidates for a limited set of indications. As a result, we may forgo or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential or a greater likelihood of success.
It is difficult to predict the time and cost of development of our pipeline products, which are produced by or based on a relatively novel and complex technology and are subject to many risks, any of which could prevent or delay revenue growth and adversely impact our market acceptance, business and results of operations. We may also determine not to pursue, or change the timing or order of, our product candidates.
Our company has product candidates with very complex and different sales and marketing channels, the development of which will put significant burdens on us and which we may not be able to develop as effectively as competitors.
We will have very different sales and marketing channels if the products in our pipeline are to reach customers in their respective markets, requiring us to develop distinct sales, marketing, and distribution methods. In particular, the human, agricultural and plant health markets have different customers and distribution channels. Building, managing and maintaining such a sales and marketing infrastructure will require us to hire experts in the field, implement complex systems, establish collaborations with third parties effectively across various geographies and understand disparate regulatory regimes. Our ability to effectively engage in these steps is untested, making it impossible for us to accurately predict the level of success we will achieve.
We have a limited operating history and funding, which may make it difficult to evaluate our product development, product prospects and overall likelihood of success.
We were incorporated in 2008. We have a limited operating history as a company, which makes it difficult to predict future operations. The product candidates and the markets we hope to serve have shifted since we were incorporated and as such, our operational experience with our current product pipeline and target markets is shorter than the period of our incorporation. We have been operating our plant health product pipelines since 2016 and our human health product pipelines since 2019. Our approach to the discovery and development of product candidates had not been validated by the commercial introduction of products and we cannot guarantee that the products currently in our product pipeline, or any other products or services, will have future commercial value. Our programs will require substantial additional development and research, both in time and resources, before we are in a position to receive regulatory approvals and begin generating revenue in connection with the sale of product candidates. We have not yet demonstrated the ability to successfully manufacture RNA at commercial scale, complete a large-scale, pivotal clinical trial, obtain regulatory approval for any product, manufacture a product at commercial scale, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. Consequently, predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing and commercializing products.
All of our products require rigorous, time-consuming and expensive regulatory examination and approval before they can be commercialized and some or all of our products may not receive this approval.
Any products that we are currently developing or may develop in the future will be subject to extensive governmental regulations relating to development, trials, manufacturing and commercialization. Rigorous studies, clinical trials and extensive regulatory licensure and approval processes are required to be successfully
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completed in the United States and in many foreign jurisdictions, such as the European Union and Japan, before a new product may be offered and sold in any of these countries or regions. Satisfaction of these and other regulatory requirements is costly, time-consuming, uncertain and subject to unanticipated delays.
Studies and trials for regulatory licensure and approval are expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. Because any product that we develop in the future will be based on new technologies, we expect that it will require extensive research and development and necessitate substantial manufacturing and processing costs. In addition, costs to treat potential side effects that may result from a product we develop may be significant.
Please refer to risk factor sections on our human health and animal health products for more regulatory risk information.
We have yet to establish sales, marketing or distribution capabilities, and if we are unable to establish these capabilities, we may not be successful in commercializing our product candidates if they are approved.
We have not yet established a sales, marketing or product distribution infrastructure for our product candidates, which are still in various stages of development. To achieve commercial success for any product for which we obtain marketing approval, we will need to establish a sales and marketing organization within the United States and develop a strategy for sales outside of the United States. In addition, as we begin to commercialize our products, we will need to hire, develop, train personnel with expertise in marketing and selling products in each of those markets.
Our growth strategy requires us to introduce new products, in addition to those in our current pipeline, that achieve market acceptance.
In order to reach our growth objectives, we must introduce new products in addition to our current pipeline of product candidates, and future new products. Research, development and regulatory approval for our products involve risks of failure inherent in the development of novel and complex products. These risks include the possibility that:
| • | our products may not perform as expected; |
| • | we may be unable to capitalize on successful innovation because we may choose not to incur the expense of patenting our discoveries in all jurisdictions or may be unable to obtain patents in the jurisdictions in which we wish to obtain patents; |
| • | any strategy of discovering additional vertical markets beyond plant, animal and human health for the use of RNA may be infeasible, limiting our growth; |
| • | our products may not receive necessary regulatory permits and governmental clearances in the markets in which we intend to sell them; |
| • | our competitors may develop new products or improve existing products that may make our products uncompetitive; |
| • | the lower cost of RNA produced by us may not translate equally or at all into lower prices for the products that use it; |
| • | our products may be difficult to produce on a large scale; |
| • | intellectual property and other proprietary rights of third parties may prevent us or our collaborators from making, marketing or selling our products; |
| • | we or our collaborators may be unable to fully develop or commercialize products in a timely manner or at all; and |
| • | third parties may develop superior or equivalent products. |
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Accordingly, if we experience any significant delays in the development or introduction of new products or if our new products do not achieve market acceptance, our business, operating results and financial condition would be adversely affected.
We will need to expand our organization, and we may experience difficulties in managing this growth, which could disrupt operations.
As of September 30, 2021, we had 280 full-time employees, an increase in headcount of over 250% since December 31, 2019. We expect we will continue to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of product candidate development, regulatory affairs and manufacturing. We draw our talent from geographic and subject matter markets where the demand for the skills we seek are in the highest demand of any global labor market and we may have difficulty identifying, hiring and integrating and retaining new personnel. Future growth would impose significant additional responsibilities on our management, including the need to identify, recruit, maintain, motivate, integrate and retain additional employees, consultants and contractors. Also, our management may need to divert a disproportionate amount of our attention away from ouractivities and devote a substantial amount of time to managing these growth activities. We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. Our expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of product candidates. If our management is unable to effectively manage our growth, our expenses may increase more than expected, our ability to generate and/or grow revenues could be reduced, and we may not be able to implement our business strategy. Our future financial performance and our ability to commercialize our product candidates and compete effectively will depend, in part, on our ability to effectively manage any future growth.
day-to-day
Many of the companies that we compete against for qualified personnel and consultants have greater financial and other resources, different risk profiles, more established brands and a longer history in the industry than we do. If we are unable to continue to attract and retain high-quality personnel and consultants, the rate and success at which we can discover and develop product candidates and operate our business will be limited.
We use
RNA-based
molecular biology triggers for many of the products in our product pipeline and the successful commercialization of these products will depend on public perceptions ofRNA-based
products.The successful commercialization of our product candidates depends, in part, on public acceptance of modern biotechnology techniques and the use of RNA to regulate the expression of genes and production of proteins in human health and agricultural products. Negative public perceptions about RNA and molecular regulation of gene expression can also affect the regulatory environment in the jurisdictions in which we are targeting the sale of our products and the commercialization of our product candidates. Any increase in such negative perceptions or any restrictive government regulations in response to
RNA-based
products could have a negative effect on our business and may delay or impair the sale of our products or the development or commercialization of our product candidates. Public pressure may lead to increased regulation and legislation for products produced using biotechnology and this could adversely affect our ability to sell our product or commercialize our product candidates.GreenLight has identified material weaknesses in its internal controls of financial reporting. If it is unable to remediate the material weakness, or if it identifies additional material weaknesses in the future or otherwise fails to maintain an effective system of internal control over financial reporting, this may result in material misstatements or restatements of our consolidated financial statements or cause us to fail to meet New GreenLight’s periodic reporting obligations.
As a public company, New GreenLight will be required to provide management’s attestation on internal control over financial reporting. Management may not be able to effectively and timely implement controls and
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procedures that adequately respond to the increased regulatory compliance and reporting requirements that will be applicable after the Business Combination. If we are not able to implement the additional requirements of Section 404(a) of the Sarbanes-Oxley Act in a timely manner or with adequate compliance, we may not be able to assess whether our internal control over financial reporting is effective, which may subject us to adverse regulatory consequences and could harm investor confidence.
In connection with the preparation and audit of our consolidated financial statements as of December 31, 2020, two material weaknesses were identified in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The two material weaknesses identified in our internal controls result from:
| • | The failure to maintain a sufficient complement of personnel in our accounting and reporting department to ensure adequate segregation of duties such that appropriate review and monitoring of our financial records is executed. |
| • | The failure to design and implemented adequate information systems controls, including access and change management controls |
We have begun implementation of a plan to remediate these material weaknesses. These remediation measures are ongoing and include hiring additional accounting and financial reporting personnel and selecting and implementing new systems for our financial and enterprise resource planning. In order to maintain and improve the effectiveness of our internal control over financial reporting, we have expended, and anticipate we will continue to expend, significant resources, including accounting-related costs and significant management oversight.
Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company” as defined in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed, or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could adversely affect the business and operating results after the Business Combination and could cause a decline in the price of our common stock.
Under applicable employment laws, we may not be able to enforce covenants not to compete.
Our employment agreements generally include covenants not to compete. These agreements prohibit our employees, if they cease working for us, from competing directly with us or working for our competitors for a limited period. We may be unable to enforce these agreements under the laws of the jurisdictions in which our employees work.
Our business may be affected by litigation and government investigations.
We may from time to time receive inquiries and subpoenas and other types of information requests from government authorities and others and we may become subject to claims and other actions related to our business activities. While the ultimate outcome of investigations, inquiries, information requests and legal proceedings is difficult to predict, defense of litigation claims can be expensive, time-consuming and distracting, and adverse resolutions or settlements of those matters may result in, among other things, modification of our business practices, costs and significant payments, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
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We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.
Many of our employees, including our senior management, were previously employed at other biotechnology or pharmaceutical companies, including our potential competitors. Some of these employees may have executed proprietary rights,
non-disclosure
andnon-competition
agreements in connection with such previous employment. Although we try to ensure that our employees do not use the proprietary information orknow-how
of others in their work for us, we may be subject to claims that we or these employees have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. We are not aware of any threatened or pending claims related to these matters or concerning the agreements with our senior management, but future litigation may be necessary to defend against such claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.We are exposed to a risk of substantial loss due to claims that may be filed against us in the future because our insurance policies may not fully cover the risk of loss associated with our operations.
We are exposed to the risk of having claims seeking monetary damages being filed against us for loss or harm suffered by participants of our preclinical and clinical studies or for loss or harm suffered by users of any products that may receive approval for commercialization in the future, or in connection with loss or harm from any other product, for example, agricultural products, that may be tested or receive approval for commercialization in the future. In either event, the FDA, EPA or the regulatory authorities of other countries or regions may commence investigations of the safety and effectiveness of any such trial or commercialized product, the manufacturing processes and facilities or marketing programs utilized in respect of any such trial or products, which may result in mandatory or voluntary recalls of any commercialized product or other significant enforcement action such as limiting the indications for which any such product may be used, or suspension or withdrawal of approval for any such product. Similar risks exist in connection with the testing, use, or sale of any product we may develop or commercialize. If our products are used for an application they are not intended for, become adulterated or mislabeled we may need to recall such products. A widespread product recall could result in significant losses due to the costs of a recall, the destruction of product inventory, and lost sales due to the unavailability of product for a period of time. We could also suffer losses from a significant product liability judgment against us. A significant product recall or product liability case could also result in adverse publicity, damage to our reputation, and a loss of confidence in our products, which could have an adverse effect on our business,
Significant disruptions of information technology systems or security breaches could adversely affect our operations.
We are increasingly dependent upon information technology systems, infrastructure and data to operate our business ourselves and on vendors who operate aspects of our technology infrastructure for us. In the ordinary course of business, we collect, store and transmit large amounts of confidential information (including, among other things, trade secrets or other intellectual property, proprietary business information and personal information). It is critical that we do so in a secure manner to maintain the confidentiality and integrity of such confidential information.
Attacks on information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and they are being conducted by increasingly sophisticated and organized groups that include state actors, criminal organizations and individuals who can bring significant resources and expertise to bear. Public reports indicate that state actors have specifically targeted companies developing
COVID-19
vaccines with the intent of stealing trade secrets or disabling information technology systems associated with vaccine development and we may be unable to defend against these state actors who have significantly more resources at their disposal than we do.30
Our information technology systems, and those of third-party vendors with whom we contract are also vulnerable to service interruptions, security breaches from inadvertent or intentional actions by our employees, third-party vendors, and/or business partners, or from cyber-attacks by malicious third parties. Cyber-attacks could include the deployment of harmful malware, ransomware,attacks, social engineering and other means to affect service reliability, and could threaten the confidentiality, integrity, and availability of information. For example, we recently experienced a ransomware attack that briefly interrupted access to two of our servers. Although in this instance we were able to rely our backup systems to restore access promptly, without making a ransom payment and without loss of data, our defenses against future cyber-attacks may not be successful.
denial-of-service
Significant disruptions of our information technology systems, or those of our third-party vendors, or security breaches could adversely affect our business operations and/or result in the loss, adulteration, misappropriation and/or unauthorized access, use or disclosure of, or the prevention of access to, confidential information, including, among other things, trade secrets or other intellectual property, proprietary business information and personal information, and could result in financial, legal, business, and reputational harm to us.
Any failure or perceived failure by us or any third-party collaborators, service providers, contractors or consultants to comply with our privacy, confidentiality, data security or similar obligations to third parties, or any data security incidents or other security breaches that result in the unauthorized access, release or transfer of sensitive information, including personally identifiable information, may result in governmental investigations, enforcement actions, regulatory fines, litigation or public statements against us, could cause third parties to lose trust in us or could result in claims by third parties asserting that we have breached our privacy, confidentiality, data security, or similar obligations, any of which could have a material adverse effect on our reputation, business, financial condition, or results of operations. Moreover, data security incidents and other security breaches can be difficult to detect, and any delay in identifying them may lead to increased harm. While we have implemented data security measures intended to protect our information technology systems and infrastructure, there can be no assurance that such measures will successfully prevent service interruptions or data security incidents.
We are subject to anti-corruption, anti-bribery and anti-money laundering laws and regulations in various jurisdictions around the world which are subject to rigorous enforcement, and we can face serious consequences for violations.
We expect our
non-U.S.
activities to increase over time and to include countries that have more prevalent corruption than found in the U.S., increasing our exposure to anti-corruption, anti-bribery and anti-money laundering laws and regulations. These include the U.S. Foreign Corrupt Practices Act of 1977, and as amended, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the U.K. Bribery Act and possibly other anti-corruption, anti-bribery and anti-money laundering laws and regulations in the jurisdictions in which we do business, both domestic and abroad. The FCPA and other anti-corruption laws generally prohibit companies, their employees, agents, representatives, business partners and third-party intermediaries from corruptly promising, authorizing, offering, or providing, directly or indirectly, anything of value to government officials, political parties, or candidates for public office for the purpose of obtaining or retaining business or securing an improper business advantage. The UK Bribery Act and other anti-corruption laws also prohibit commercial bribery not involving government officials, and requesting or accepting bribes; and anti-money laundering laws prohibit engaging in certain transactions involving criminally-derived property or the proceeds of criminal activity.We and third parties we do business with, as well as our representatives and agents, will have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated universities or other entities (for example, to obtain necessary permits, licenses, patent registrations and other regulatory approvals), which increases our risks under the FCPA and other anti-corruption laws. We also engage contractors, consultants and other third parties from time to time to conduct business development activities
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abroad. We may be held liable for the corrupt or other illegal activities of our employees or third parties even if we do not explicitly authorize such activities.
The FCPA also requires that we keep accurate books and records and maintain a system of adequate internal controls. We have recognized two material weaknesses in our internal control over financial reporting, which may compromise our ability to detect inappropriate payments (see the risk factor associated with “material weaknesses in its internal control over financial reporting”). Furthermore, we cannot assure you that our employees, agents, representatives, business partners or third-party intermediaries will always comply with our policies and applicable law, for which we may be ultimately held responsible.
Any allegations or violation of the FCPA or other applicable anti-bribery, anti-corruption laws and anti-money laundering laws may result in whistleblower complaints, sanctions, settlements, investigations, prosecution, enforcement actions, substantial criminal fines and civil penalties, disgorgement of profits, imprisonment, debarment, tax reassessments, breach of contract and fraud litigation, loss of export privileges, suspension or debarment from U.S. government contracts, adverse media coverage, reputational harm and other consequences, all of which may have an adverse effect on our reputation, business, financial condition, results of operations and prospects. Responding to an investigation or action can also result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.
Risks Related to GreenLight’s Manufacturing Platform
GreenLight is designing its mRNA commercial manufacturing process in parallel with its product and process development. GreenLight currently intends to use contract development and manufacturing organizations (“CDMOs”), such as Samsung Biologics Co., Ltd., to produce material for its COVID-19 product candidate for late-stage clinical trials and commercial launch. There is risk that the final manufacturing process and facility could be incompatible with the CDMO facility, requiring modification and resulting in delays and inefficient deployment of capital.
In an effort to bring GreenLight’s mRNA-related product candidates, particularly its pre-clinical COVID-19 vaccine candidate, to market more quickly, GreenLight is designing some aspects of its manufacturing process in parallel with selecting the exact manufacturing equipment and CDMO for that process. Steps to build the infrastructure include design, engineering, site selection and equipment procurement.
As GreenLight seeks to increase its the manufacturing output for commercial production and particular programs from the smaller quantities needed for IND-enabling studies to the larger quantities needed for commercial production, it intends to seek to continuously improve the manufacturability of its product candidates. Accordingly, GreenLight may change its manufacturing processes for a particular program during the course of development. However, any change in the manufacturing process may require resupplying clinical material to trial sites, which could increase our expenses, delay completion of clinical trials or otherwise adversely affect commercialization of the product.
GreenLight plans to acquire additional laboratory, manufacturing and other space to accommodate its expected growth. If GreenLight is not able to access appropriate or sufficient space at reasonable cost, its business and results of operations could be adversely affected.
GreenLight’s business and results of operations are dependent on locating and successfully negotiating leases for adequate access to laboratory and office space and suitable physical infrastructure, including electrical, plumbing, HVAC and network infrastructure, to conduct its operations and accommodate its growth. These resources are constrained and expensive in the areas in which GreenLight operates. If GreenLight is unable to access enough space or it experiences failures of its physical infrastructure, its business and results of operations could be adversely affected.
In order to properly conduct its business, GreenLight needs access to sufficient laboratory space and equipment to perform the activities necessary to advance and complete its programs. Additionally, GreenLight
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needs to ensure that its laboratories and corporate offices remain operational at all times, which includes maintaining suitable physical infrastructure, including electrical, plumbing and HVAC, logistics and transportation systems and network infrastructure. GreenLight lease its laboratories and office spaces and GreenLight relies on the landlords for basic maintenance of its leased laboratories and office buildings. If one of GreenLight’s landlords has not maintained a leased property sufficiently, it may be forced into an early exit from the facility, which could be disruptive to GreenLight’s business.
GreenLight’s dsRNA and mRNA product candidates are based on innovative technologies and any product candidates GreenLight develops may be more complex and more difficult to manufacture than initially anticipated. GreenLight may encounter difficulties with manufacturing processes, manufacturing at higher volumes, product releases, product shelf life and storage, supply chain management, or shipping for any of its medicines, for both its agricultural or human health product candidates, including its COVID-19 vaccine. If GreenLight or any of its third-party vendors encounters such difficulties, its ability to supply commercial product or material for clinical trials could be delayed or stopped.
The manufacturing processes for GreenLight’s product candidates using its dsRNA and mRNA platforms are innovative and complex. There are no mRNA medicines currently manufactured at commercial scale utilizing GreenLight’s manufacturing process. Due to the nature of this technology and GreenLight’s limited experience at commercial scale production, we could encounter difficulties with manufacturing processes, manufacturing at higher volumes, product releases, product shelf life and storage, supply chain management, or shipping.
These difficulties could be due to any number of reasons including, but not limited to, complexities of producing batches at any volume, equipment failure, choice and quality of raw materials and excipients, analytical testing technology, and product instability. In an effort to optimize product features, GreenLight may make changes to a product candidate in its manufacturing and stability formulation and conditions, which may result in GreenLight having to resupply batches for pre-clinical or clinical activities when there is insufficient product stability during storage and insufficient supply. Insufficient stability or shelf life of its product candidates could materially delay GreenLight’s or its strategic collaborators’ ability to continue the clinical trial for that product candidate or require us to begin a new clinical trial with a newly formulated drug product, due to the need to manufacture additional pre-clinical or clinical supply.
Due to the nature of GreenLight’s products and manufacturing platform, there may also be a high degree of technological change that can negatively impact product comparability during and after clinical development. Furthermore, technology changes may drive the need for changes in, modification to, or the sourcing of new manufacturing infrastructure or may adversely affect third-party relationships.
The process to generate dsRNA or mRNA product candidates encapsulated in LNPs is complex and, if not developed and manufactured under well-controlled conditions, can adversely impact pharmacological activity and may result in one or more of GreenLight’s product candidates’ failure.
GreenLight has limited experience in manufacturing or commercializing proposed product candidates and may encounter difficulties, delays or other unanticipated hurdles before GreenLight is able to begin manufacturing its product candidates in the quantities needed to achieve its business plans.
GreenLight has limited experience in manufacturing or commercializing its proposed product candidates. As it increases manufacturing volume, it may encounter unexpected difficulties and delays that require adjustments or changes to its manufacturing process. Changes in GreenLight’s manufacturing processes may lead to failure of batches, which could lead to a substantial delay in pre-clinical studies and clinical trials or the delivery of commercial product. Any such changes could adversely affect clinical or commercial supply of GreenLight’s products. Such changes might also cause delays in or increase the cost of commissioning GreenLight’s facility and adversely affect its commercialization plans.
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GreenLight has increased the batch size for its mRNA production to accommodate the supply requirements of some of its current and anticipated pre-clinical and clinical programs. However, in some cases, GreenLight may have to utilize multiple batches of substance and product to meet the clinical supply requirement of a single clinical trial. If GreenLight or its contract manufacturers fail to successfully and consistently produce mRNA at larger batch sizes, it could lead to a substantial delay in its clinical trials or in the commercialization of any products that may receive regulatory approval.
If GreenLight’s cell-free manufacturing platform does not perform as expected, or if GreenLight’s competitors develop and market technologies or products more rapidly than GreenLight or that are more effective, outperform, safer or less expensive than GreenLight’s manufacturing platform technology, its commercial opportunities will be negatively impacted.
It is anticipated that GreenLight will face increased competition in the future as new companies enter the markets and as scientific developments progress. If GreenLight is unable to compete effectively, its opportunity to discover new products or generate revenue from the sale of such new products or its existing product candidates could be adversely affected.
GreenLight has established laboratory, clean room, and manufacturing facilities in Massachusetts, North Carolina and New York to support its activities, which is resulting in the incurrence of significant investment with no assurance that such investment will be recouped.
In order to support its future growth and its agriculture and human health product pipeline, GreenLight has invested in facilities to develop products or produce materials. This investment has significantly increased GreenLight’s capital and operating expenses. Moreover, based on its current business plan, GreenLight anticipates that in the future it will need to expand its facilities for research and development and production capacity, which it currently expects to accomplish by expanding the capacity of existing facilities. GreenLight may need to, or decide to, build additional commercial mRNA manufacturing facilities using its platform technology in the U.S. and in countries outside of the U.S. There can be no assurance that any additional manufacturing capacity that GreenLight may acquire will be necessary or that this investment will be recouped.
If GreenLight is unable to adequately and timely manufacture and supply its products and product candidates or if GreenLight does not fully utilize its manufacturing facilities, its business may be adversely affected. Charges resulting from excess capacity would have a negative effect on GreenLight’s financial condition and results of operations.
GreenLight will depend on relationships with third parties for revenues, and for the development, regulatory approval, commercialization and marketing of certain of its products and product candidates, which are outside of its full control.
GreenLight relies on a number of third-party relationships for the development, regulatory approval and commercialization of certain of its product candidates, including, but not limited to, the Azzur Group for its cleanroom. Certain aspects of GreenLight’s regulatory affairs and clinical development relating to its products and product candidates are also outsourced to third parties. Reliance on third parties subjects GreenLight to a number of risks, including:
| • | the inability to control the resources such third parties devote to GreenLight’s programs, products or product candidates; |
| • | disputes may arise under an agreement and the underlying agreement may fail to provide us with significant protection or may fail to be effectively enforced if such third parties fail to perform; |
| • | the interests of such third parties may not always be aligned with the interests of GreenLight, and such parties may not pursue regulatory approvals or market a product in the same manner or to the same extent as GreenLight, which could adversely affect revenues, or may adopt tax strategies that could have an adverse effect on GreenLight’s business, results of operations or financial condition; |
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| • | third-party relationships require the parties to cooperate, and failure to do so effectively could adversely affect product development or the clinical development or regulatory approvals of product candidates under collaborative control, could result in termination of the research, development or commercialization of product candidates or could result in litigation or arbitration; |
| • | any failure on the part of such third parties to comply with applicable laws, including tax laws, regulatory requirements and/or applicable contractual obligations or to fulfill any responsibilities they may have to protect and enforce any intellectual property rights underlying product candidates could have an adverse effect on revenues as well as give rise to possible legal proceedings; and |
| • | any improper conduct or actions on the part of such third parties could subject us to civil or criminal investigations and monetary and injunctive penalties, impact the accuracy and timing of financial reporting and/or adversely impact GreenLight’s ability to conduct business, operating results and reputation. |
Given these risks, there is considerable uncertainty regarding the success of current and future collaborative efforts. If these efforts fail, GreenLight’s product development or commercialization of product candidates could be delayed, revenues from products could decline and/or the anticipated benefits of these arrangements may not be realized.
Manufacturing issues could substantially increase costs, limit supply of products and/or reduce revenues.
The process of manufacturing GreenLight’s products is complex, highly regulated and subject to numerous risks, including:
| • | Risks of Reliance on Third Parties and Single Source Providers. COVID-19 pandemic and intellectual property protection. These third parties may not perform their obligations in a timely and cost-effective manner or in compliance with applicable regulations, and they may be unable or unwilling to increase production capacity commensurate with demand for existing or future products. Finding alternative providers could take a significant amount of time and involve significant expense due to the specialized nature of the services and the need to obtain regulatory approval of any significant changes to suppliers or manufacturing methods. GreenLight cannot be certain that it could reach an agreement with alternative providers or that the FDA or other regulatory authorities would approve the use of such alternatives. |
| • | Risks Relating to Compliance with cGMP. |
| • | Global Supply Risks. |
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expected timelines or that there will not be any direct or indirect delays resulting from the COVID-19 pandemic. GreenLight has had delays, and if there are additional delays, in bringing its current and planned facilities online and it may not have sufficient manufacturing capacity to meet its long-term manufacturing requirements. |
| • | Risk of Product Loss. |
Any adverse developments affecting manufacturing operations or the operations of third-party suppliers and manufacturers may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls or other interruptions in the commercial supply of GreenLight’s products. Additionally, GreenLight may also have to take inventory write-offs and incur other charges and expenses for products that fail to meet specifications, undertake costly remediation efforts or seek more costly manufacturing alternatives. Such developments could increase manufacturing costs, cause revenue loss or market share as patients and physicians turn to competing therapeutics, diminish profitability or damage GreenLight’s reputation.
In addition, although GreenLight has business continuity plans to reduce the potential for manufacturing disruptions or delays and reduce the severity of a disruptive event, there is no guarantee that these plans will be adequate, which could adversely affect its business and operations.
Risks Related to the Production of dsRNA and mRNA
GreenLight’s proposed products are temperature sensitive and may have other attributes that lead to limited shelf life. These attributes may pose risks to supply, inventory and waste management and increased cost of goods.
GreenLight’s mRNA and dsRNA product candidates may prove to have a stability profile that leads to a lower than desired shelf life of the final approved mRNA medicine. This poses risk in supply requirements, wasted stock, and higher cost of goods.
GreenLight’s products and product candidates are temperature sensitive, and it may learn that any or all of its product candidates are less stable than desired. It is also possible that GreenLight may find that transportation conditions negatively impact product quality. This may require changes to the formulation or manufacturing process for one or more of GreenLight’s product candidates and result in delays or interruptions to clinical or commercial supply. In addition, the cost associated with such transportation services and the limited pool of vendors may also add additional risks of supply disruptions.
GreenLight has established a number of analytical assays, and may have to establish several more, to assess the quality of its dsRNA and mRNA product candidates. GreenLight may identify gaps in its analytical testing strategy that might prevent release of product or could require product withdrawal or recall. For example, new impurities that have an impact on product safety, efficacy, or stability may be discovered. This may lead to an inability to release mRNA product candidates until the manufacturing or testing process is rectified.
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Risks Related to Raw Materials and Reliance on Third Parties
The materials used in the processes by which GreenLight manufactures RNA and its derivative products, such as dsRNA or mRNA, may become difficult to obtain in the quality or quantity required for GreenLight’s business plans or at the prices that are currently projected.
Many of GreenLight’s processes and products rely on materials purchased from third parties and should these materials increase in prices, have supply constraints, or become unavailable, it could impact GreenLight’s ability to develop products or bring them to market either on time, at competitive prices or at all. For example, GreenLight’s dsRNA processes uses specific yeast microbial RNA, the most effective forms of which are sourced from suppliers in China. Should that particular yeast become unavailable, it could impair the effectiveness, yield or availability of the dsRNA produced for the agricultural markets.
Moreover, some enzymes that are used in GreenLight’s RNA platform and its down-stream products are specific in nature and sourced from third parties some of whom have proprietary processes which give them an advantage in cost or effectiveness that they pass on to us. Some materials come from single sources, such as LNPs which is licensed from a third party and which is used to produce mRNA. GreenLight may need to license other materials from third parties, and if it is unable to do so on reasonable terms, or at all, it could have a material adverse effect on GreenLight’s business.
Some of the raw materials are being employed in an innovative manner and may not have been scaled to a level to support commercial supply and could experience unexpected manufacturing or testing failures, or supply shortages. Such issues with raw materials and excipients could cause delays or interruptions to clinical and commercial supply of products or product candidates.
Single or limited sources for some materials may impact GreenLight’s ability to secure supply.
GreenLight’s dependence on single-source, limited-source or preferred suppliers exposes it to certain risks, such as:
| • | a disruption to suppliers’ operations which could leave GreenLight with no other means of continuing the research, development, or manufacturing operations for which the supplier provides inputs; |
| • | the inability to locate a suitable replacement on acceptable terms or on a timely basis, if at all; |
| • | existing suppliers may cease or reduce production or deliveries, raise prices, or renegotiate terms; |
| • | delays caused by supply issues may harm GreenLight’s reputation, frustrate customers, and cause them to turn to GreenLight’s competitors; and |
| • | GreenLight’s ability to progress the development of existing programs and the expansion of capacity to begin future programs could be materially and adversely impacted if the single-source, limited-source or preferred suppliers upon which GreenLight relies were to experience a significant business challenge, disruption, or failure due to issues such as financial difficulties or bankruptcy, issues relating to other customers such as regulatory or quality compliance issues, or other financial, legal, regulatory, or reputational issues. |
Should any of the above risks, or should any consequences of unpredictable risks, come to fruition, such events could have a material adverse effect on operations.
GreenLight relies on highly specialized equipment and consumables for the production of RNA and its derivative products, dsRNA and mRNA, and any disruption to the supply chain or any malfunction of that equipment may adversely impact GreenLight’s operations.
The equipment and consumables used to produce RNA and its derivative products, dsRNA and mRNA are currently supply constrained across all suppliers which may cause delays in development, testing or marketing of GreenLight’s human health products and may require it to ultimately increases prices should GreenLight’s products become available to consumers.
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Additionally, GreenLight will be dependent on a number of equipment providers and CMOs who are also implementing innovative technology. If such equipment malfunctions or if GreenLight encounters unexpected performance issues, it could encounter delays or interruptions to clinical and commercial supply. Due to the number of different programs, GreenLight may have cross contamination of product candidates inside of its factories, CROs, suppliers, or in the clinic that affect the integrity of GreenLight’s product candidates.
Delay or unavailability of products, services, or equipment provided by suppliers could require GreenLight to change the design of its research, development, and manufacturing processes based on the functions, limitations, features, and specifications of the replacement items or seek out a new supplier to provide these items. Additionally, as GreenLight grows, its existing suppliers may not be able to meet its increasing demand, and additional suppliers may need to be found. GreenLight may not be able to secure suppliers who provide lab supplies at, or equipment and services to, the specification, quantity, and quality levels that it demands (or at all) or be able to negotiate acceptable fees and terms of services with such suppliers.
Risks Related to Market Acceptance
Even if any product candidates developed by GreenLight receives regulatory approval, GreenLight may nonetheless fail to achieve the degree of market acceptance by physicians, patients, healthcare payors, and others in the medical community necessary for commercial success.
The commercial success of any of GreenLight’s product candidates will depend upon its degree of market acceptance by physicians, patients, third party payors, and others in the medical community. Even if any product candidates developed by GreenLight receives regulatory approval, they may nonetheless fail to gain sufficient market acceptance by physicians, patients, healthcare payors, and others in the medical community. The degree of market acceptance of any product candidates GreenLight may develop, if approved for commercial sale, will depend on a number of factors, including:
| • | the wider acceptance by patients of products derived from RNA manufacturing processes; |
| • | the efficacy and safety of such product candidates as demonstrated in pivotal clinical trials published in peer-reviewed journals; |
| • | the potential and perceived advantages compared to alternative treatments; |
| • | the ability to offer GreenLight’s products for sale at competitive prices; |
| • | the ability to offer appropriate patient access programs, such as co-pay assistance; |
| • | the extent to which physicians recommend GreenLight’s products to their patients; |
| • | convenience and ease of dosing and administration compared to alternative treatments; |
| • | the clinical indications for which the product candidate is approved by the FDA, EMA or other comparable foreign regulatory agencies; |
| • | product labeling or product insert requirements of the FDA, EMA or other comparable foreign regulatory authorities, including any limitations, contraindications or warnings contained in a product’s approved labeling; |
| • | restrictions on how the product is distributed; |
| • | the timing of market introduction of competitive products; |
| • | publicity concerning GreenLight’s products or competing products and treatments; |
| • | the effectiveness of marketing and distribution efforts by us and other licenses and distributors; |
| • | sufficient governmental third party coverage or reimbursement; and |
| • | the prevalence and severity of any side effects. |
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If any product candidates developed by GreenLight does not achieve an adequate level of acceptance by physicians, healthcare payors, patients and the medical community, GreenLight will not be able to generate significant revenue, and may not become or remain profitable. The failure of any product candidates to find market acceptance could harm GreenLight’s business prospects.
Legal requirements as well as ethical and social concerns about synthetic biology and genetic engineering could limit or prevent the use of GreenLight’s technologies and limit revenues.
GreenLight’s platform technology, including how dsRNA and mRNA is extracted, includes the use of synthetic biology and genetic engineering. In some countries, drugs made using genetically modified organisms may be subject to a more stringent legal regime, which could prove to be complex and very challenging. For example, in the European Union, the rules on genetically modified organisms could apply in addition to the general rules on medicinal products or cosmetic products. The rules on advanced therapy medicinal products may also apply.
Additionally, public perception about the safety and environmental hazards of, and ethical concerns over, synthetic biology and genetic engineering could influence public acceptance of GreenLight’s technologies, product candidates and processes, particularly in the case of human medicines such as GreenLight’s COVID-19 vaccine product candidate. If GreenLight and its collaborators or other third parties are not able to overcome the legal challenges as well as the social concerns relating to synthetic biology and genetic engineering, GreenLight’s technologies, product candidates and processes may not be accepted. These challenges and concerns could result in increased expenses, regulatory scrutiny and increased regulation, trade restrictions on imports of GreenLight’s product candidates, delays or other impediments to GreenLight’s programs or the public acceptance and commercialization of its products. GreenLight designs and produces product candidates with characteristics comparable or superior to those found in naturally occurring organisms or enzymes in a controlled laboratory; however, the release of such organisms into uncontrolled environments could have unintended consequences. Any adverse effect resulting from such a release could have a material adverse effect on GreenLight’s business, financial condition or results of operations, and may expose GreenLight to liability for any resulting harm.
Risks Related to Global Expansion
GreenLight’s planned manufacturing, sales and operations are subject to the risks of doing business internationally.
In the future, GreenLight intends to expand the reach of its platform technology into international markets, including certain countries in Africa, Asia and Latin America where the need for locally produced vaccines is high, subjecting GreenLight to many risks that could adversely affect its business and revenues. There is no guarantee that GreenLight’s efforts and strategies to expand manufacturing and sales in international markets will succeed. Emerging market countries may be especially vulnerable to periods of global and local political, legal, regulatory and financial instability and may have a higher incidence of corruption and fraudulent business practices. Certain countries may require local clinical trial data as part of the drug registration process in addition to global clinical trials, which can add to overall drug development and registration timelines. GreenLight may also be required to increase our reliance on third-party agents and unfamiliar operations and arrangements previously utilized by companies it collaborates with or acquire in emerging markets.
GreenLight’s manufacturing, sales and operations are subject to the risks of doing business internationally, including:
| • | difficulties and challenges relating to the building, commissioning and complying with regulatory requirements related to manufacturing facilities in foreign countries; |
| • | the inability to obtain necessary foreign regulatory or pricing approvals of products in a timely manner; |
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| • | limitations and additional pressures on GreenLight’s ability to obtain and maintain product pricing or receive price increases, including those resulting from governmental or regulatory requirements; |
| • | the inability to successfully complete preclinical studies or subsequent or confirmatory clinical trials in countries where GreenLight’s experience is limited; |
| • | longer payment and reimbursement cycles and uncertainties regarding the collectability of accounts receivable; |
| • | fluctuations in foreign currency exchange rates that may adversely impact GreenLight’s revenues, net income and value of certain of its investments; |
| • | the imposition of governmental controls; |
| • | diverse data privacy and protection requirements; |
| • | increasingly complex standards for complying with foreign laws and regulations that may differ substantially from country to country and may conflict with corresponding U.S. laws and regulations; |
| • | the far-reaching anti-bribery and anti-corruption legislation in the U.K., including the Bribery Act, and elsewhere and escalation of investigations and prosecutions pursuant to such laws; |
| • | compliance with complex import and export control laws; |
| • | changes in tax laws; |
| • | the imposition of tariffs or embargoes and other trade restrictions; |
| • | the impact of public health epidemics, such as the COVID-19 pandemic, on the global economy and the delivery of healthcare treatments; |
| • | less favorable intellectual property or other applicable laws; and |
| • | known and unknown risks related to local and geopolitical unrest; |
In addition, GreenLight’s future potential international operations are subject to regulation under U.S. law, and
non-compliance
with those laws may subject it to severe criminal and civil penalties. For example, the FCPA prohibits U.S. companies and their representatives from paying, offering to pay, promising to pay or authorizing the payment of anything of value to any foreign government official, government staff member, political party or political candidate for the purpose of obtaining or retaining business or to otherwise obtain favorable treatment or influence a person working in an official capacity. In many countries, the health care professionals with whom GreenLight may regularly interact may meet the FCPA’s definition of a foreign government official. Failure to comply with domestic or foreign laws could result in various adverse consequences, including possible delay in approval or refusal to approve a product, recalls, seizures or withdrawal of an approved product from the market, disruption in the supply or availability of GreenLight’s products or suspension of export or import privileges, the imposition of civil or criminal sanctions, the prosecution of executives overseeing GreenLight’s international operations and damage to GreenLight’s reputation. Any significant impairment of GreenLight’s ability to sell products outside of the U.S. could adversely impact its business and financial results.GreenLight’s goal of expanding outside the U.S. will depend on its ability to successfully manage the complexity of multiple global supply chains in countries with poor infrastructure, in which GreenLight has limited experience.
Logistics, regulatory environments, business customs, local and geopolitical concerns and end user markets differ country by country. As GreenLight expands globally to enable the production of its dsRNA and mRNA products in countries outside the U.S., GreenLight will face material risks that could cause it to expend significant resources. There can be no guarantee when such efforts will be successful, if at all. As GreenLight expands its platform globally, it will have to familiarize itself with the regulatory environment in that country, which could significantly diverge from the regulatory regimes in the U.S. and which may not necessarily approve GreenLight’s product candidates, even if such product candidates achieve regulatory approval in the U.S.
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In each country in which GreenLight intends to utilize its manufacturing platform it may also be necessary to create partnerships with local enterprises which come with inherent risks, including corruption, violation of U.S. laws and regulations relating to anti-corruption laws, intellectual property theft, divergence from GreenLight’s quality and health standards and a number of unknown risks that could delay or cause its international expansion to fail entirely.
GreenLight will have to become familiar with these and other factors in order to be effective; however, its ability to do so is untested as is its ability to obtain and retain experts in these areas to implement an international supply chain serving any facility other than those in the United states. Moreover, any of GreenLight’s suppliers could go out of business, lose operating licenses, be subject to regulatory actions and be unable to supply GreenLight, which could result in production delays or stoppages.
Risks Related to Competition
GreenLight faces significant competition, and if its competitors develop and market technologies or products more rapidly than it does or that are more effective, safer or less expensive than the product candidates developed by GreenLight, its commercial opportunities will be negatively impacted.
GreenLight believes one of its key competitive advantages is the cost and quality at which it can make RNA and recover dsRNA from it for use in agricultural products or mRNA for use in human health products. Should other processes match or beat that cost or quality, GreenLight could lose a key competitive advantage as an RNA producer which could in turn have negative effects on the products in GreenLight’s pipeline which depend on the quality and cost of the RNA produced by GreenLight to be competitive. Fermentation is currently the most popular method competing with GreenLight’s process for the production of RNA. While GreenLight believes fermentation is currently more expensive and tends to produce more down-stream impurities than its proprietary process, innovation or scale in the fermentation process could cause these drawbacks to be overcome to produce a product that is cost competitive with GreenLight’s. Conventional cell-free processes, such as
in-vitro
transcription are cost prohibitive for agricultural applications and require special inputs. New innovations in cell-free processes could outperform GreenLight’s cell-free processes and make GreenLight’s technology obsolete.Rapidly changing technology and emerging competition in the synthetic biology industry could make the platform, programs, and products GreenLight is developing obsolete or
non-competitive
unless development of its platform and pursuit of new market opportunities continues.The synthetic biology industry is still emerging and is characterized by rapid and significant technological changes, frequent new product introductions and enhancements, and evolving industry demands and standards. GreenLight’s future success will depend on its ability to develop, manufacture and commercialize its product candidates on a timely and cost-effective basis.
GreenLight’s competitors, either alone or together with collaborators, may have significantly greater financial, manufacturing, marketing, drug development, technical and human resources and commercial expertise than GreenLight does. GreenLight’s competitors may also have more experience:
| • | developing drug candidates; |
| • | conducting preclinical and clinical trials; |
| • | obtaining regulatory approvals; and |
| • | commercializing product candidates. |
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Risks Related to our Human Health Program
Even if we successfully design and complete our preclinical studies, our preclinical human health product candidates, and similar products in the future, must still go through clinical studies, which may reveal significant adverse events, including negative immune system responses, and may result in a safety profile that could prevent or delay regulatory approval or licensure or market acceptance of candidate products.
There is typically an extremely high rate of attrition for product candidates across categories of medicines proceeding through clinical trials. These product candidates may fail to show the desired safety and efficacy profile in later stages of clinical trials despite having progressed through nonclinical studies and initial clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in later stage clinical trials due to lack of efficacy or unacceptable safety profiles, notwithstanding promising results in earlier trials. Most investigational medicines that commence clinical trials are never approved as products and there can be no assurance that any of our current or future clinical trials will ultimately be successful or support further clinical development of any of our investigational medicines. Certain aspects of our investigational medicines may induce immune reactions from either the mRNA or the lipid as well as adverse reactions within liver pathways or degradation of the mRNA or the lipid nanoparticle LNP, any of which could lead to significant adverse events in one or more of our clinical trials. Many of these types of side effects have been seen for previously developed LNPs. There may be resulting uncertainty as to the underlying cause of any such adverse event, which would make it difficult to accurately predict side effects in future clinical trials and would result in significant delays in our programs.
If unacceptable side effects, including materialized risks of immunogenicity, arise in the development of our product candidates, the FDA or the Institutional Review Boards (IRBs) at the institutions in which its studies are conducted, or the Data Safety Monitoring Board, if constituted for its clinical studies could recommend a suspension or termination of our clinical studies, or the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny licensure or approval of a product candidate. In addition, side effects could affect patient recruitment or the ability of enrolled patients to complete a trial or result in potential product liability claims. In addition, these side effects may not be appropriately recognized or managed by the treating medical staff. We expect to have to train medical personnel using our product candidates to understand the side effect profiles for our clinical studies and upon any commercialization of any of our product candidates. Inadequate training in recognizing or managing the potential side effects of our product candidates could result in patient injury or death.
Even if such side effects do not preclude the drug from obtaining or maintaining marketing approval, any such approval may be for a more narrow indication than we seek or an unfavorable benefit risk ratio may inhibit market acceptance of the approved product due to its tolerability versus other therapies. In addition, regulatory authorities may not approve the labeling claims that are necessary or desirable for the successful commercialization of any product candidates we develop. Consequently, the commercial prospects of such product candidates may be harmed, and our ability to generate product revenues from any of these product candidates may be delayed or eliminated. Any of these occurrences may harm our business, financial condition and prospects significantly.
Additionally, if one or more of our product candidates receives marketing licensure and/or approval, and we or others later identify undesirable side effects caused by such products, a number of potentially significant negative consequences could result, including:
| • | regulatory authorities may withdraw licensures and/or approvals of such product; |
| • | regulatory authorities may require additional warnings on the label, such as a “black box” warning or contraindication; |
| • | additional restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product or any product component; |
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| • | we may be required to restrict the conductions under which the product may be distributed, including through implementation a Risk Evaluation and Mitigation Strategy, or REMS; |
| • | we may be required to change the way a product candidate is administered or conduct additional clinical trials; |
| • | we could be sued and held liable for harm caused to patients; |
| • | the product may become less competitive; and |
| • | our reputation may suffer. |
Any of these events could prevent us from achieving or maintaining market acceptance of a product candidate, if approved, and could significantly harm our business, results of operations and prospects.
Our human health markets are highly competitive. If we are unable to compete effectively with existing products, new treatment methods and new technologies, we may be unable to commercialize any products that we may develop in the future.
The biotechnology market is highly competitive, is subject to rapid technological change and is significantly affected by existing rival products and medical procedures, new product introductions and the market activities of other participants. Pharmaceutical and biotechnology companies, academic institutions, governmental agencies and other public and private research organizations may pursue the research and development of technologies, products or other therapeutic products for the treatment of some or all of the diseases that we are target. We also may face competition from products that have already been approved or licensed and accepted by the medical community for the treatment of these same indications. Our competitors may develop products more rapidly or more effectively than us. Many of our competitors have:
| • | much greater experience, financial, technical and human resources than we have at every stage of the discovery, development, manufacture and commercialization process; |
| • | more extensive experience in preclinical studies, conducting clinical trials, obtaining and maintaining regulatory approvals or licensures and manufacturing and marketing products; |
| • | products that have been approved or licensed or are in late stages of development; |
| • | established distribution networks; |
| • | collaborative arrangements with leading companies and research institutions; and |
| • | entrenched and established relationships with healthcare providers and payors. |
In addition, many of these companies, in contrast to us, are well-capitalized. As a result of any of the foregoing factors, our competitors may develop or commercialize products with significant advantages over any product that we may develop in the future. If our competitors are more successful in commercializing their products than us, their success could adversely affect our competitive position and harm our business prospects.
If we encounter difficulties enrolling patients in our clinical studies, including due to
COVID-19,
our clinical development activities could be delayed or otherwise adversely affected.We may experience difficulties in patient enrollment in our clinical studies for a variety of reasons. The timely completion of clinical studies in accordance with its protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain in the trial until its conclusion. The enrollment of patients depends on many factors, including:
| • | the patient eligibility and exclusion criteria defined in the protocol; |
| • | the severity of the disease under investigation; |
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| • | the size of the patient population required for analysis of the trial’s primary endpoints and the process for identifying patients; |
| • | the proximity of patients to trial sites; |
| • | the design of the trial; |
| • | our ability to recruit clinical study investigators with the appropriate competencies and experience; |
| • | clinicians’ and patients’ perceptions as to the potential advantages and risks of the product candidate being studied with respect to other available therapies, including any new products that may be approved for the indications we are investigating; |
| • | the availability of competing commercially available therapies and other competing product candidates’ clinical studies; |
| • | the ability to monitor patients adequately during and after treatment; |
| • | efforts to facilitate timely enrollment in clinical trials; |
| • | our ability to obtain and maintain patient informed consents; and |
| • | the risk that patients enrolled in clinical studies will drop out of the trials before completion. |
Further, timely enrollment in clinical studies is reliant on clinical study sites, which may be delayed or otherwise adversely affected by disruptions due to global health matters, including
COVID-19
and other pandemics.If successfully released for sale, our
COVID-19
vaccine candidate may fail to gain market acceptance.Even if our mRNA vaccine for
COVID-19
successfully completes clinical trials and is approved for commercial marketing, it may fail to meet the same high level of efficacy demonstrated by competitors and our ability to obtain revenues from the vaccine may be diminished or eliminated altogether. Moreover, the addressable market for ourCOVID-19
candidate may be limited if competing products have saturated some or all markets, particularly the most profitable markets.We may incur additional costs or experience delays in completing the development and commercialization product candidates.
Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to timing and outcome. A failure of one or more clinical studies can occur at any stage in the process. We may experience delays in initiating or completing clinical studies. We may also experience numerous unforeseen events during, or as a result of, any future clinical studies that could delay or prevent our ability to receive marketing licensure and approval to commercialize our product candidates, including:
| • | regulators or IRBs, or ethics committees may not authorize us or our investigators to commence a clinical study or conduct a clinical study at a prospective trial site; |
| • | the FDA or other comparable regulatory authorities may disagree with our clinical study design, including with respect to dosing levels administered in its planned clinical studies, which may delay or prevent us from initiating its clinical studies with its originally intended trial design; |
| • | we may experience delays in reaching, or fail to reach, agreement on acceptable terms with prospective trial sites and prospective Contract Research Organizations (CROs), which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; |
| • | the number of subjects required for clinical studies of any product candidates may be larger than we anticipate or subjects may drop out of these clinical studies or fail to return for post-treatment follow-up at a higher rate than it anticipates; |
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| • | our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, or may deviate from the clinical study protocol or drop out of the trial, which may require that we add new clinical study sites or investigators; |
| • | we may experience delays and interruptions to clinical studies, we may experience delays or interruptions to our manufacturing supply chain, or we could suffer delays in reaching, or we may fail to reach, agreement on acceptable terms with third-party service providers on whom we rely; |
| • | additional delays and interruptions to our clinical studies could extend the duration of the trials and increase the overall costs to finish the trials as its fixed costs are not substantially reduced during delays; |
| • | we may elect to, or regulators, IRBs, Data Safety Monitoring Boards or ethics committees may require that it or its investigators, suspend or terminate clinical research or trials for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; |
| • | we may need to amend or submit new clinical protocols because of changes in regulatory requirements and guidance; |
| • | we may not have the financial resources available to begin and complete the planned trials, or the cost of clinical studies of any product candidates may be greater than it anticipates; and |
| • | the supply or quality of our product candidates or other materials necessary to conduct clinical studies of our product candidates may be insufficient or inadequate to initiate or complete a given clinical study. |
Our product development costs will increase if we experience additional delays in clinical testing or in obtaining marketing approvals or licensure. We do not know whether any of its clinical studies will begin as planned, will need to be restructured or will be completed on schedule, or at all. If we do not achieve our product development goals in the time-frames we announce and expect, the approval, licensure, and commercialization of our product candidates may be delayed or prevented entirely. Significant clinical study delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates and may allow our competitors to bring products to market before we do, potentially impairing our ability to successfully commercialize our product candidates and harming our business and results of operations. Any delays in our clinical development programs may harm our business, financial condition and results of operations significantly.
The time and expense required to obtain regulatory approvals for our preclinical and clinical trials could be significantly greater than for more conventional therapeutic technologies or products. If clinical trials of any product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of such product candidates.
In the United States, the products that we intend to develop and market are regulated by the FDA under its drug and biologic development and review processes. The time required to obtain FDA and other approvals or licensures for any product that we develop in the future is inherently unpredictable. Before such products can be marketed, we must obtain multiple authorizations and licensures from the FDA, first through submission and authorization of an investigational new drug application, or IND, then through successful completion of human testing under three phases of clinical trials and finally through submission of a biologics license application, or BLA. Even after successful completion of clinical testing, there is a risk that the FDA may request further information from us, disagree with our findings or otherwise undertake a lengthy review of our BLA submissions.
The time required to obtain approval or licensure by the FDA and other comparable regulatory authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon
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numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval and licensure policies, regulations or the type and amount of clinical data necessary to gain approval or licensure may change during the course of a product candidate’s clinical development and may vary among jurisdictions. We have not obtained marketing approval or licensure for any product candidate and it is possible that none of our existing product candidates, or any product candidates we may seek to develop in the future, will ever obtain marketing approval or licensure.
Our product candidates could fail to receive BLA licensure in the United States for many reasons, including the following:
| • | the FDA may disagree with the design or implementation of our clinical trials; |
| • | we may be unable to demonstrate to the satisfaction of the FDA that a product candidate is safe, pure, and potent; |
| • | results of clinical trials may not meet the level of statistical significance required by the FDA for licensure; |
| • | we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; |
| • | the FDA may disagree with our interpretation of data from preclinical studies or clinical trials; |
| • | data collected from clinical trials of our product candidates may not be sufficient to support the submission of a BLA to the FDA or other submission or to obtain marketing licensure in the United States; |
| • | the FDA may find deficiencies with or fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and |
| • | the licensure policies or regulations of the FDA may significantly change in a manner rendering our clinical data insufficient for licensure. |
This lengthy licensure process as well as the unpredictability of future clinical trial results may result in our failing to obtain BLA licensure to market any of our product candidates, which would significantly harm our business, results of operations, financial condition and prospects. The FDA has substantial discretion in the licensure process and determining when or whether regulatory licensure will be obtained for any of our product candidates. Even if we believe the data collected from clinical trials of our product candidates are promising, such data may not be sufficient to support licensure by the FDA.
In addition, even if we were to obtain licensure, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request, may not approve the price we intend to charge for our products, may grant a license contingent on the performance of costly post marketing clinical trials, or may approve or license a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.
If we decide to market any product that we develop in jurisdictions in addition to the United States, we may incur the same costs or more in satisfying foreign regulatory requirements governing the conduct of preclinical and clinical trials, manufacturing and marketing and commercialization of any product that we develop in the future. Approval or licensure by the FDA by itself does not assure approval by regulatory authorities outside the United States. Each of these foreign regulatory approval processes includes all of the risks associated with the FDA approval or licensing process, as well as risks attributable to having to satisfy local regulations within each of these foreign jurisdictions. Our inability to obtain regulatory approval outside the United States may also adversely compromise our business prospects.
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We may have difficulties convincing the medical community and third-party payors to accept and use any product that we are able to develop in the future even following our receipt of regulatory approval or licensure for commercialization. Key participants in pharmaceutical marketplaces, such as physicians, third-party payors and consumers, may not accept a product that we develop. Even if such a product is accepted by these participants, the medical community may not consider effectiveness and safety alone as a sufficient basis for prescribing such as product in lieu of other alternative treatment methods and medications that are available.
We may not be successful in our efforts to identify, develop, or commercialize potential product candidates.
The success of our business depends primarily upon our ability to identify, develop, and commercialize products based on our mRNA platform. Research programs to identify new product candidates require substantial technical, financial, and human resources. We may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful. As our development candidates and investigational medicines progress, we or others may determine that: certain of our risk allocation decisions were incorrect or insufficient; we made platform level technology mistakes; individual programs or our mRNA science in general has technology or biology risks that were unknown or under-appreciated; our choices on how to develop our infrastructure to support our needs will result in an inability to manufacture our investigational medicines for clinical trials or otherwise impair our manufacturing; or we have allocated resources in such a way that large investments are not recovered and capital allocation is not subject to rapid
re-direction.
All of these risks may relate to our current and future programs sharing similar science (including mRNA science) and infrastructure, and in the event material decisions in any of these areas turn out to have been incorrect or under-optimized, we may experience a material adverse impact on our business and ability to fund our operations and we may never realize what we believe is the potential of mRNA. If any of these events occur, we may be forced to abandon our development efforts for a program or programs, which would have a material adverse effect on our business, financial condition, results of operations, and prospects.The successful commercialization of our human health product candidates will depend in part on the extent to which third-party insurers and payors establish adequate coverage, reimbursement levels and pricing policies. Failure to obtain or maintain coverage and adequate reimbursement for our product candidates, if approved, could limit our ability to market those products and decrease our ability to generate revenue.
The availability and extent of coverage and adequate reimbursement by third-party payors, including government health administration authorities, private health coverage insurers, managed care organizations and other third-party payors is essential for most patients to be able to afford expensive treatments. Sales of any of our product candidates that receive marketing approval will depend substantially, both in the United States and internationally, on the extent to which the costs of such product candidates will be covered and reimbursed by third-party payors. If reimbursement is not available, or is available only to limited levels, we may not be able to successfully commercialize our product candidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize an adequate return on our investment. Coverage and reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing approval. If coverage and reimbursement are not available or reimbursement is available only to limited levels, we may not successfully commercialize any product candidate for which we obtain marketing approval.
There is significant uncertainty related to third-party payor coverage and reimbursement of newly approved products. In the United States, for example, principal decisions about reimbursement for new products are typically made by the Centers for Medicare & Medicaid Services, or CMS, an agency within the U.S. Department of Health and Human Services. CMS decides whether and to what extent a new product will be covered and reimbursed under Medicare, and private third-party payors often follow CMS’s decisions regarding coverage and reimbursement to a substantial degree. However, one third-party payor’s determination to provide coverage for a product candidate does not assure that other payors will also provide coverage for the product candidate. Further, no uniform policy for coverage and reimbursement exists in the United States, and coverage
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and reimbursement can differ significantly from payor to payor. As a result, the coverage determination process is often time-consuming and costly. This process will require us to provide scientific and clinical support for the use of our products to each third-party payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.
Moreover, increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, they may not cover or provide adequate payment for our product candidates. We expect to experience pricing pressures in connection with the sale of our product candidates due to the trend toward managed health care, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and biologics and surgical procedures and other treatments, has become intense. As a result, increasingly high barriers are being erected to the entry of new products.
We cannot predict the likelihood, nature, or extent of health reform initiatives that may arise from future legislation or administrative action, particularly as a result of the recent presidential election.
As product candidates proceed through preclinical studies to late-stage clinical trials towards potential approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods and formulation, are altered along the way in an effort to optimize processes and results. Such changes carry the risk that they will not achieve these intended objectives. Any of these changes could cause our product candidates to perform differently and affect the results of planned clinical trials or other future clinical trials conducted with the materials manufactured using altered processes. Such changes may also require additional testing, FDA notification or FDA approval. This could delay or prevent completion of clinical trials, require conducting bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, delay or prevent approval of our product candidates and jeopardize its ability to commence sales and generate revenue.
We are and will be dependent on third parties for strategically important tasks and our ability to develop our products, obtain regulatory approval or bring products to market may fail if these third parties do not perform as we expect.
We are subject to risks related to our reliance on third parties in that we will:
| • | seek to enter into collaboration arrangements to fund development and commercialization of our products; |
| • | rely on CROs to conduct key elements of research by which our products are developed; |
| • | rely on Contract Development Organizations (“ CDOs ”) to develop key components of our products; |
| • | retain individual contractors or contracting organizations to perform critical functions in our company, including functions associated with senior management positions. |
| • | seek to enter into joint development agreements for the manufacture of both our RNA materials and human health products with partners outside the U.S.; |
The activities performed by these third parties may be delayed or suspended in light of the ongoing
COVID-19
pandemic, which may impact our ability to successfully develop and test our product candidates and research programs in a timely manner.Our reliance on these third parties for research and development activities will reduce our control over these activities but will not relieve us of our responsibilities. For example, we will remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the
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trial. Moreover, the FDA requires us to comply with standards, commonly referred to as Good Clinical Practices, for conducting, recording, and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity, and confidentiality of trial participants are protected. We also are required to register ongoing clinical trials and post the results of completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within certain timeframes. Failure to do so can result in fines, adverse publicity, and civil and criminal sanctions.
The FDA enforces GCP regulations through periodic inspections of clinical trial sponsors, principal investigators, and trial sites. If we or our CROs fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that, upon inspection, the FDA will determine that any of our future clinical trials will comply with GCPs. In addition, our clinical trials must be conducted with investigational medicines produced in accordance with the requirements in cGMP regulations. Our failure or the failure of our CROs to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process and could also subject us to enforcement action.
Communicating with outside parties can also potentially lead to mistakes as well as difficulties in coordinating activities. Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors.
If any of these third parties, or others we have business relationships with, fail to meet their obligations to us it will increase our expenses, damage our reputation and could result in the delay or shutdown of the projects they support and result in our inability to bring some or all of our products to market.
Our collaboration arrangements may restrict or prevent our future business activity in certain markets or industries, which could harm our ability to grow our business.
We will seek to enter into collaborations by which, in exchange for funding of infrastructure, development or marketing of our products, we will grant to other parties exclusive rights to the development, production, marketing or distribution of selected products in specific geographies. These rights may keep us from entering into alternative collaborations which may keep us from using capital effectively and limit our ability to grow our business.
If we bring our human health products to market as planned, our relationships with customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, program exclusion, contractual damages, reputational harm and diminished profits and future earnings.
Healthcare providers, physicians and third-party payors play a primary role in the recommendation of any product for which we obtain marketing licensure or approval. Our future arrangements with third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute products for which we obtain marketing approval. Efforts to ensure that our business arrangements with third parties comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines and exclusion from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. If any of the physicians or other providers or entities with whom we expect to do business are found not to be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government-funded healthcare programs.
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We are subject to significant regulation with respect to manufacturing our products. The manufacturing facilities on which we will rely may not continue to meet regulatory requirements and have limited capacity.
All entities involved in the preparation of vaccines and products for clinical studies or commercial sale, including Azzar Group or any other contract manufacturers we may use, are subject to extensive regulation. Components of a finished therapeutic product approved or licensed for commercial sale or used in late-stage clinical studies must be manufactured in accordance with applicable good manufacturing practice requirements, or GMP. These regulations govern manufacturing processes and procedures (including record keeping) and the implementation and operation of quality systems to control and assure the quality of investigational products and products approved or licensed for sale. Poor control of production processes can lead to the introduction of adventitious agents or other contaminants, or to inadvertent changes in the properties or stability of our product candidates that may not be detectable in final product testing. We or our contract manufacturers must supply all necessary documentation in support of a BLA on a timely basis and must adhere to the FDA’s good laboratory practices, or GLP, and GMP regulations enforced by the FDA through its facilities inspection program. Our facilities and quality systems and the facilities and quality systems of some or all our third-party contractors must pass a
pre-approval
inspection for compliance with the applicable regulations as a condition of regulatory licensure and approval of our product candidates. In addition, the regulatory authorities may, at any time, audit or inspect a manufacturing facility involved with the preparation of our product candidates or the associated quality systems for compliance with GMP and other regulations applicable to the activities being conducted. If these facilities do not pass apre-approval
plant inspection or do not have a GMP compliance status acceptable for the FDA, FDA approval or licensure of the products will not be granted.The regulatory authorities also may, at any time following licensure or approval of a product for sale, audit our manufacturing facilities or those of our third- party contractors. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of our product specifications or applicable regulations occurs independent of such an inspection or audit, we or the relevant regulatory authority may require remedial measures that may be costly and/or time-consuming for us or a third-party to implement and that may include the temporary or permanent suspension of a clinical study or commercial sales or the temporary or permanent closure of a facility. Any such remedial measures imposed upon us or third parties with whom we contract could materially harm our business.
If we or any of our third-party manufacturers fail to maintain regulatory compliance with applicable GMP requirements, the FDA can impose regulatory sanctions including, among other things, refusal to approve a pending application for a new product or biologic product, or revocation of a
pre-existing
approval. As a result, our business, financial condition and results of operations may be materially harmed.Additionally, if supply from one approved manufacturer is interrupted, there could be a significant disruption in commercial supply. An alternative manufacturer would need to be qualified through a BLA supplement which could result in further delay. The regulatory agencies may also require additional studies if a new manufacturer is relied upon for commercial production. Switching manufacturers may involve substantial costs and is likely to result in a delay in our desired clinical and commercial timelines.
These factors could cause the delay of clinical studies, regulatory submissions, required approvals or commercialization of our product candidates, cause us to incur higher costs and prevent us from commercializing our products successfully. Furthermore, if our suppliers fail to meet contractual requirements, and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, our clinical studies may be delayed, or we could lose potential revenue.
If we, or if our service providers or any third-party manufacturers, fail to comply with regulatory requirements, we or they could be subject to enforcement actions, which could adversely affect our ability to market and sell a product we develop in the future.
We have a limited ability to manufacture materials for our research programs and preclinical studies and we do not operate any significant manufacturing facilities. We primarily rely on third-party contract manufacturing
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organizations (“
CMOs
”) for the manufacture of our materials for preclinical and clinical studies and expect to continue to do so and for commercial supply of any product candidates that we develop and for which we or our collaborators obtain marketing approval. Additionally, the activities performed by our CMOs may be delayed or suspended in light of the ongoingCOVID-19
pandemic, which may impact our ability to successfully develop and test our product candidates, including in clinical trials, and research programs in a timely manner.Reliance on third-party manufacturers entails additional risks, including: the possible breach of the manufacturing agreement by the third party; the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us; and reliance on the third party for regulatory compliance, quality assurance, safety, and pharmacovigilance and related reporting. Third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside the United States.
If we, or if our service providers or any third-party manufacturers, fail to comply with applicable federal, state or foreign laws or regulations, we could be subject to enforcement actions, which could adversely affect our ability to successfully develop, market and sell a product we develop in the future and could harm our reputation. These enforcement actions may include:
| • | restrictions on, or prohibitions against, marketing; |
| • | restrictions on importation; |
| • | suspension of review or refusal to approve new or pending applications; |
| • | suspension or withdrawal of product approvals; |
| • | product seizures or recalls; |
| • | operating restrictions; |
| • | injunctions; and |
| • | civil and criminal penalties and fines. |
Risks related to creating a new class of mRNA products
Relatively few mRNA-based therapeutic product candidates have been tested in animals or humans, and the data underlying the feasibility of developing mRNA-based therapeutic products is both preliminary and limited. We have not yet succeeded and may not succeed in demonstrating the efficacy and safety of any of our product candidates in clinical trials or in obtaining marketing approval thereafter. We have not yet completed a clinical trial of any product candidate and we have not yet assessed safety of any product candidate in humans. As such, there may be adverse effects from treatment with any of our current or future product candidates that we cannot predict at this time.
Other than the recent approval of the
Pfizer-BioNTech
COVID-19
Vaccine and the Emergency Use Authorizations for otherCOVID-19
vaccines, no mRNA medicines have been granted EUA or have been granted full approval or licensure to date by the FDA or other regulatory agencies. Moreover, it is possible that FDA will decline to accept new EUA submissions for COVID-19 vaccine candidates if it determines that the underlying health emergency no longer exists or warrants such authorization. Successful discovery and development of other mRNA medicines by us or our strategic collaborators is highly uncertain and depends on numerous factors, many of which are beyond our or their control. We have made and will continue to make a series of business decisions and take calculated risks to advance our development efforts and pipeline, including those related to mRNA technology, delivery technology, and manufacturing processes, which may be shown to be incorrect based on further work by us, our strategic collaborators, or others. Our products that appear promising in the early phases of development may fail to advance, experience delays in the clinic, experience clinical holds, or fail to reach the market for many reasons, including:| • | discovery efforts at identifying potential mRNA medicines may not be successful; |
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| • | nonclinical or preclinical study results may show potential mRNA medicines to be less effective than desired or to have harmful or problematic side effects; |
| • | clinical trial results may show potential mRNA medicines to be less effective than expected (e.g., a clinical trial could fail to meet one or more endpoint(s)) or to have unacceptable side effects or toxicities; |
| • | adverse effects in any one of our clinical programs or adverse effects relating to our mRNA, or our lipid nanoparticles (“ LNPs ”), may lead to delays in or termination of one or more of our programs; |
| • | the insufficient ability of translational models to reduce risk or predict outcomes in humans, particularly given that each component of investigational medicines and development candidates may have a dependent or independent effect on safety, tolerability, and efficacy, which may, among other things, be species-dependent; |
| • | manufacturing failures or insufficient supply of cGMP materials for clinical trials, or higher than expected cost could delay or set back clinical trials, or make mRNA-based medicines commercially unattractive; |
| • | our improvements in the manufacturing processes for this new class of medicines and potential medicines may not be sufficient to satisfy the clinical or commercial demand of our investigational medicines or regulatory requirements for clinical trials; |
| • | changes that we make to optimize our manufacturing, testing or formulating of cGMP (current good manufacturing process regulations as enforced by the FDA) materials could impact the safety, tolerability, and efficacy of our investigational medicines and development candidates; |
| • | pricing or reimbursement issues or other factors may delay clinical trials or make any mRNA medicine uneconomical or noncompetitive with other therapies; |
| • | failure to timely advance our programs or receive the necessary regulatory approvals or a delay in receiving such approvals, due to, among other reasons, slow or failure to complete enrollment in clinical trials, withdrawal by trial participants from trials, failure to achieve trial endpoints, additional time requirements for data analysis, data integrity issues, preparation of a BLA, or the equivalent application, discussions with the FDA or EMA, a regulatory request for additional nonclinical or clinical data, or safety formulation or manufacturing issues may lead to our inability to obtain sufficient funding; and |
| • | the proprietary rights of others and their competing products and technologies that may prevent our mRNA medicines from being commercialized. |
Currently, mRNA is considered a gene therapy product by the FDA. Unlike certain gene therapies that irreversibly alter cell DNA and could act as a source of side effects, mRNA-based medicines are designed to not irreversibly change cell DNA; however, side effects observed in gene therapy could negatively impact the perception of mRNA medicines despite the differences in mechanism. In addition, because no product in which mRNA is the primary active ingredient has been approved without first being authorized for emergency use, the regulatory pathway for approval is uncertain. The number and design of the clinical trials and preclinical studies required for the approval of these types of medicines have not been established, may be different from those required for gene therapy products, or may require safety testing like gene therapy products. Moreover, the length of time necessary to complete clinical trials and to submit an application for marketing approval for a final decision by a regulatory authority varies significantly from one pharmaceutical product to the next, and may be difficult to predict.
Adverse events in clinical trials of our investigational medicines or in clinical trials of others developing similar products and the resulting publicity, as well as any other adverse events in the field of mRNA medicine, or other products that are perceived to be similar to mRNA medicines, such as those related to gene therapy or
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gene editing, could result in a decrease in the perceived benefit of one or more of our programs, increased regulatory scrutiny, decreased confidence by patients and clinical trial collaborators in our investigational medicines, and less demand for any product that we may develop. In addition, responses by U.S., state, or foreign governments to negative public perception may result in new legislation or regulations that could limit our ability to develop any investigational medicines or commercialize any approved products, obtain or maintain regulatory approval, or otherwise achieve profitability. More restrictive statutory regimes, government regulations, or negative public opinion would have an adverse effect on our business, financial condition, results of operations, and prospects and may delay or impair the development of our investigational medicines and commercialization of any approved products or demand for any products we may develop.
Risks Related to Our Plant Health Program
Our inability to obtain regulatory approvals, or to comply with ongoing and changing regulatory requirements, could delay or prevent sales of the products we are developing and commercializing.
The field testing, manufacture, sale and use of crop protection, plant health and plant nutrition products are extensively regulated by the EPA and other state, local and foreign governmental authorities. These regulations substantially increase the time and cost associated with bringing our products to market. If we do not receive the necessary governmental approvals to test, manufacture and market our products, or if regulatory authorities revoke our approvals, do not grant approvals in a timely manner or grant approvals subject to restrictions on their use, we may be unable to sell our products in the United States or other jurisdictions, which could result in a reduction in our future revenues.
As we introduce new formulations of and applications for our products, we may need to seek EPA approval prior to commercial sale. For any such approval, the EPA may require us to fulfill certain conditions within a specified period of time following initial approval. We will also be required to obtain regulatory approval from other state and foreign regulatory authorities before we market our products in their jurisdictions, some of which have taken, and may take, longer than anticipated.
Some of these states and foreign countries may apply different criteria than the EPA in their approval processes. Although federal pesticide law preempts separate state and local pesticide registration requirements to some extent, state and local governments retain authority to control pesticide use within their borders.
There can be no assurance that we will be able to obtain regulatory approval for marketing our additional products or new product formulations and applications we are developing. Although the EPA has in place a registration procedure for biopesticides there can be no assurance that all of our products or product extensions will be eligible for this streamlined procedure or that additional requirements will not be mandated by the EPA that could make the procedure more time consuming and costly for our future products.
Additionally, for certain state registration and registration in jurisdictions outside of the United States, all products need to be proven efficacious for each proposed crop-pest combination, which can require costly field trial testing, and a favorable result is not assured. Because many of the products that may be sold by us must be registered with one or more government agencies, the registration process can be time consuming and expensive, and there is no guarantee that the product will obtain all required registrations. We may seek registration in some jurisdictions and not in others. California is one of the largest and most important producers of agricultural products in the world. As such, we view California as one of the most natural and attractive markets for our products, but it is also very stringent in its regulations, generally requiring more time and effort, and lacking legally mandated deadlines for its reviews of reduced-risk biopesticides. Therefore, gaining concurrent approvals with the EPA, other states and other countries may not always be achievable. Even if we obtain all necessary regulatory approvals to market and sell our products, they will be subject to continuing review and extensive regulatory requirements, including periodic
re-registrations.
The EPA, as well as state and foreign regulatory authorities, could withdraw a previously approved product from the market upon receipt of newly discovered information, including an inability to comply with their regulatory requirements or the occurrence of unanticipated problems with our products, or for other reasons.53
If our field trials are unsuccessful, we may be unable to obtain regulatory approval of, or commercialize, our products on a timely basis.
The successful completion of multiple field trials in domestic and foreign locations on various crops is critical to the success of our product development and marketing efforts. If our ongoing or future field trials are unsuccessful or produce inconsistent results or unanticipated adverse side effects on crops or on
non-target
organisms, or if we are unable to collect reliable data, regulatory approval of our products could be delayed, or we may be unable to commercialize our products. In addition, more than one growing or treatment season may be required to collect sufficient data and we may need to collect data from different geographies to prove performance for customer adoption. Although we have conducted many successful field trials we cannot be certain that additional field trials conducted on a greater number of acres, or on crops for which we have not yet conducted field trials, will be successful. Moreover, the results of our ongoing and future field trials are subject to a number of conditions beyond our control, including weather-related events such as drought or floods, severe heat or frost, hail, tornadoes and hurricanes, or low or no natural occurrence of the pests intended for testing. Generally, we pay third parties, such as growers, consultants and universities to conduct field tests on our behalf. Incompatible crop treatment practices or misapplication of our products by these third parties or lack of sufficient occurrence of the identified pests in nature for a particular trial could impair the success of our field trials.Crop protection products must be extensively tested for safety, efficacy and environmental impact before they can be registered for production, use, sale or commercialization in a given market.
The regulatory approvals process is lengthy, costly, complex and in some markets unpredictable, with requirements that can vary by product, technology, industry and country. The regulatory approvals process for products that incorporate novel modes of action or new technologies can be particularly unpredictable and uncertain due to the then-current state of regulatory guidelines and objectives, as well as governmental policy considerations and
non-governmental
organization and other stakeholder considerations. In certain jurisdictions, we will need to periodically renew any regulatory approvals which may require us to demonstrate compliance with shifting or more stringent requirements as time passes.The markets for biological agricultural products are intensely competitive, rapidly changing and undergoing consolidation. We may be unable to compete successfully against our current and future competitors, which may result in price reductions, reduced margins and the inability to achieve market acceptance for our products.
Many entities with significantly greater resources than us are engaged in developing biological agricultural products, including BASF SE, Valent BioSciences Corporation, Corteva Agriscience, UPL Limited, and FMC Corporation. Each of these competitors is a major multinational agrichemical company with longer operating histories, significantly greater resources, greater brand recognition, established global sales channels and a larger base of customers than we have. As a result, they may be able to devote greater resources to the manufacture, promotion or sale of their products, receive greater resources and support from independent distributors, initiate or withstand substantial price competition, offer full-line discounts we cannot match, or more readily take advantage of acquisition or other opportunities. Further, many of the large agrichemical companies have a more diversified product offering, which may give these companies an advantage in meeting customers’ needs by enabling them to offer a broader range of crop protection, plant nutrition and plant health products. In addition, we could face competition in the future from new, well-financed
start-up
companies.Customers in the agricultural sector tend to be loyal to major brands and distributors and are generally cautious in adopting new products and technologies, making the barriers to entry high in this market. If new products or technologies fail to achieve immediate results, they may never achieve significant customer adoption and, even if immediate and positive results are achieved, adoption may take several growing seasons as multi-year purchasing agreements expire and product-specific equipment is replaced.
Products incorporating biotechnology-derived traits and crop protection products must be extensively tested for safety, efficacy and environmental impact before they can be registered for production, use, sale or
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commercialization in a given market. In certain jurisdictions, we must periodically renew our approvals for both biotechnology and crop protection products, which typically require us to demonstrate compliance with then-current standards which generally are more stringent since the prior registration. The regulatory approvals process is lengthy, costly, complex and in some markets unpredictable, with requirements that can vary by product, technology, industry and country. The regulatory approvals process for products that incorporate novel modes of action or new technologies can be particularly unpredictable and uncertain due to the then-current state of regulatory guidelines and objectives, as well as governmental policy considerations and
non-governmental
organization and other stakeholder considerations.Changes in the regulatory environment could adversely impact our ability to produce and/or sell certain products in domestic and foreign markets or could increase the cost of doing so.
Changes in the regulatory environment, particularly in the U.S., Brazil, China, India, Argentina and the European Union, could adversely impact our ability to produce and/or sell certain products in domestic and foreign markets or could increase the cost of doing so. Additionally, changes to the regulatory environment may be influenced by
non-government
public pressure as a result of negative perception regarding the use of our crop protection products. We are sensitive to this regulatory risk given the need to obtain and maintain pesticide registrations in every country in which we sell our products. Many countries requirere-registration
of pesticides to meet new and more challenging requirements; while we defend our products vigorously, thesere-registration
processes may result in significant additional data costs, reduced number of permitted product uses, or potential product cancellation. Compliance with changing laws and regulations may involve significant costs or capital expenditures or require changes in business practice that could result in reduced profitability. In the European Union, the regulatory risk specifically includes the chemicals regulation known as REACH (Registration, Evaluation, and Authorization of Chemicals), which requires manufacturers to verify through a special registration system that their chemicals can be marketed safely, as well as Regulation (EC) No 1107/2009, governing plant protection products, which sets forth rules for the authorization, sale, use, and control of plant protection products.Customers have historically perceived biological agricultural products as more expensive and less effective than conventional products. To succeed, we will need to continue to change that perception. To the extent that the market for biological agricultural products does not further develop or customers elect to continue to purchase and rely on conventional chemical products, our market opportunity will be limited.
Any decline in U.S. agricultural production could have a material adverse effect on the market for biopesticides and on our results of operations and financial position.
Conditions in the U.S. agricultural industry will significantly impact demand for our products. The U.S. agricultural industry has contracted in recent periods, and can be affected by a number of factors, including weather patterns and field conditions, current and projected grain inventories and prices, domestic and international demand for U.S. agricultural products and U.S. and foreign policies regarding trade in agricultural products. State and federal governmental policies, including farm subsidies and commodity support programs, as well as the prices of fertilizer products and the prices at which produce may be sold, may also directly or indirectly influence the number of acres planted, the mix of crops planted and the use of pesticides for particular agricultural applications.
Sales of our plant health products will depend upon weather conditions, seasonal variation and other factors
We expect to commercially launch our RNAi Colorado potato beetle product in 2022 following EPA approval, assuming we are able to obtain EPA and state approvals according to our current plans. If and when we do begin selling our product to farmers, our sales will be subject to weather conditions and other factors beyond our control, which may cause our operating results to fluctuate significantly quarterly and annually.
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Weather conditions, natural disasters and other factors affect planting and growing seasons and incidence of pests and plant disease, and accordingly affect decisions by our distributors, direct customers and end users about the types and amounts of pest management and plant health products to purchase and the timing of use of such products. In addition, disruptions that cause delays by growers in harvesting or planting can result in the movement of orders to a future quarter, which would negatively affect the quarter and cause fluctuations in our operating results. Customers also may purchase large quantities of our products in a particular quarter to store and use over long periods of time or time their purchases to manage their inventories, which may cause significant fluctuations in our operating results for a particular quarter or year.
Our activities are subject to extensive federal, state, local and foreign governmental regulations. These regulations may prevent us or our collaborators from developing or commercializing products in a timely manner or under technically or commercially feasible conditions and may impose expenses, delays and other impediments to our product development and registration efforts.
In the United States, the EPA regulates our bio-based pest management products under the Federal Food, Drug and Cosmetics Act (“FFDCA”), the Food Quality Protection Act (“FQPA”) and the Federal Insecticide, Fungicide and Rodenticide Act (“FIFRA”). In addition, some of our plant health products are regulated as fertilizers, auxiliary plant substances, soil amendments, beneficial substances and/or biostimulants in each of the fifty states.
In general, FIFRA prohibits the sale or distribution of any pesticide, a product category that includes the insecticides, fungicides, and acaricides we are developing, unless that pesticide is registered with the EPA. To register a pesticide with the EPA, the applicant must demonstrate that the product will not cause unreasonable adverse effects on human health or the environment. These adverse effects include any unreasonable risk to man or the environment, taking into account the economic, social, and environmental costs and benefits of the use of the pesticide, as well as any human dietary risk from residues that result from use of the pesticide in or on any food consistent with the FFDCA. In the course of its evaluation of a pesticide, EPA assesses the impact that a pesticide may have on endangered species and non-target organisms.
In order to commercialize a product for the U.S. agricultural market, we must complete specified toxicology studies, submit a registration dossier to the EPA demonstrating that the product does not pose unreasonable risks to human health or the environment, respond adequately to any deficiencies identified by the EPA through its risk assessment process and obtain the EPA’s approval of our labeling. The EPA must also establish a tolerance level for the product or issue a tolerance exemption. We must separately obtain any applicable state or foreign regulatory approvals. Moreover, because our products contain novel RNA-based active ingredients, there will generally be no previously registered pesticide product containing that active ingredient and, as a result, the use of each of our products will require a new registration under FIFRA and the establishment of a tolerance under Section 408 of the FFDCA or the issuance of a tolerance exemption.
We have not previously obtained any EPA approvals for our biopesticides, and it is uncertain whether the EPA will approve any of our products or whether it will place conditions of approval that adversely impact our ability to sell them. Although the EPA has evaluated and approved other companies’ RNA products before, our products may differ materially from the products that have previously received approval, and the lack of precedent makes it more difficult to predict whether or when the EPA will grant approval or the conditions that it might impose on approval.
Even if our biopesticide product candidates are approved by the EPA, as with any pesticide, they would continue to be subject to review by the EPA and state regulatory agencies. The EPA has the authority to revoke the registration or impose limitations on the use of any of our pest management products if we do not comply with the regulatory requirements, if unexpected problems occur with a product or if the EPA receives other newly discovered adverse information. Our inability to obtain regulatory approvals, or to comply with ongoing and changing regulatory requirements, could delay or prevent sales of the products we are developing and commercializing.
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Inadequate funding, staffing or shutdowns of the government agencies that regulate us could prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.
Our research and development activities are also subject to federal, state and local worker safety, air pollution, water pollution and solid and hazardous waste regulatory programs, ongoing compliance requirements, permitting requirements, and periodic inspection. Any significant noncompliance could impact our ability to operate. In addition, any future expansion of our manufacturing capabilities may require additional or expanded permitting, and such permitting requirements may impede or prevent our ability to operate.
Our agricultural products may fail to meet the criteria for desirable certifications such as
“non-GMO”
or “organic” and may cause the plants or products to which they are applied also to lose these certifications, reducing the addressable market for and value of our products.The use of products created through synthetic biology processes is generally prohibited in organic food supply chains and the U.S. Department of Agriculture and similar regulators outside the U.S. will not permit an “organic” certification unless the supply chain from field to table is free of such products. We do not currently expect any of our agricultural products to qualify for “organic” certifications, which will keep us from selling into a market with potentially higher returns and which will limit the size of the addressable market for which our products can be used. In addition, the standards associated with certifications such as
“non-GMO”
and “organic” can differ significantly between countries and jurisdictions within countries (such as states and cities) and, even when these standards are clearly established, the application of the standards for certification may differ depending on the third-party organizations conducting verification.Genetically modified products are currently subject to public debate and heightened regulatory scrutiny, either of which could prevent or delay the adoption of our products. Claims that genetically modified products are unsafe or pose a danger to the environment may influence public attitudes and lead to our product not gaining public acceptance. The subject of genetically modified organisms has received negative publicity in the United States and particularly in Europe, and such publicity has aroused public debate. The adverse publicity in Europe could lead to greater regulation and trade restrictions.
We may have product liability claims if our agricultural products damage individuals or property and may need to recall items which do or could cause such damage.
Our agricultural products are intended to be used to improve yield in the human food supply chain. If our products are used for an application they are not intended for, become adulterated or mislabeled we may need to recall such products. A widespread product recall could result in significant losses due to the costs of a recall, the destruction of product inventory, and lost sales due to the unavailability of product for a period of time. We could also suffer losses from a significant product liability judgment against us. A significant product recall or product liability case could also result in adverse publicity, damage to our reputation, and a loss of confidence in our products, which could have an adverse effect on our business, results of operations and financial condition and the value of our brands.
Risks Related to our Animal Health Program
We currently have one animal health product which is intended to control the Varroa destructor mite, a honeybee parasite; however, the honeybee ecosystem is complex and it difficult to measure the overall efficacy of this product since there are multiple factors other than Varroa mites contributing to the decline in honeybee populations.
The one animal health product in our product pipeline, which we call GS15, is intended to support the health of honeybees by using dsRNA to discourage the spread of the Varroa destructor mite, a honeybee parasite. A
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multitude of stressors can contribute to declines in honeybee health, making it difficult to determine whether or the degree to which GS15 benefits honeybees and, by implication, beekeepers. Other factors that impact honeybee health include pesticides, environmental stressors, inadequate nutrition, parasites, pathogens, and poor management practices. No one factor has been identified as the primary cause of honeybee health decline or “bee colony collapse,” including the Varroa destructor mite parasite which GS15 is designed to control. Determining dominating stressors to honeybee health is challenging to characterize and pinpoint. To complicate matters, many of the factors contributing to honeybee health decline interact, making it difficult in some circumstances to identify dominant factors. Unless we are able to develop clear correlations between GS15 use and specific successful outcomes in beehives, GS15 (assuming it obtains regularly approval) may not have strong or any commercial prospects.
Delivering the active ingredient in our bee health product effectively to Varroa mites is challenging.
Until we complete our field trials, it is unclear whether we will be able to deliver our product first to bees and, through bees, to Varroa mites, in a manner that will effectively impede mite function. Challenges in active ingredient delivery may interfere with the effectiveness of our product.
When testing our Varroa mite product under the high-dose conditions commonly required by the EPA for pesticide approval, we have observed a dose response in bees and an increase in bee mortality.
Although our product is intended to impact Varroa mites and not bees, it may have unanticipated impacts on bee health. The EPA typically seeks a 10x dose safety factor in order to approve a product for commercial use. We tested our product at this concentration and observed significant bee mortality. At the concentrations we would expect under normal conditions, however, our recent field trials demonstrated no negative effects. Our most recent data indicates that bee mortality at the 10x dose safety factor likely results from the extremely high viscosity of RNA when administered at that concentration, which prevents bees from feeding. If there is a significant relationship between our product and bee mortality, that relationship may undercut our product’s intended function of protecting bees and may impair our ability to obtain regulatory approval of our product.
The EPA will evaluate our Varroa mite product without a precedent product, which may result in the need to conduct additional field trials and lengthen the regulatory review period, and the EPA likely will not approve our product if we cannot reduce bee mortality experienced in high-dose safety factor testing.
Our Varroa mite product is subject to EPA approval under FIFRA. Although the EPA has evaluated and approved RNA products before, our product may differ materially from previously approved products. After we perform our planned field trials and studies, the EPA may request further studies and data to effectively evaluate and approve our product. We anticipate that this process will require additional time to complete and may delay regulatory approval and commercialization. Moreover, other markets, such as those in the European Union, may require additional data or information prior to granting approval, and they may impose more stringent conditions on any approval.
One challenge we face in securing EPA approval for our Varroa mite product is that EPA typically seeks to ensure that a product does not cause adverse effects even when administered at a dose equal to ten times the dose that bees and other organisms would likely receive in typical use. Ordinarily, pesticides are applied at high doses in the field to account for anticipated losses to the environment resulting from degradation, runoff and other factors, and these losses are anticipated to reach as high as 95%. As a result, in a conventional field application scenario, organisms are generally expected to receive the actual field use rate, even when the product is applied at ten times that rate. When we tested our Varroa mite product in the laboratory at ten times the field use rate, the higher concentration of the product caused the treated bee food to become highly viscous, which limited consumption and resulted in bee starvation. We did not observe these adverse effects when our product was administered at the field use rate. Because our product is delivered in a ready-to-use formulation through a pre-measured pouch delivery system, rather than through conventional spraying, we do not believe that our product
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presents a material risk that bees will be exposed to concentrations greater than the field use rate. We are negotiating with the EPA to modify its customary 10x safety factor requirement to account for differences between the delivery system for our product and traditional field application methods. We may not be successful in these negotiations. If the EPA does not modify its safety factor requirement for our Varroa mite product, we may be unable to obtain regulatory approval to commercialize the product in the United States, which would limit our growth opportunities.
We purchased some of the intellectual property related to our RNA honeybee product from Bayer Crop Science, a subsidiary of Bayer, which now owns Monsanto. It is well known that Monsanto has had significant pushback from environmental groups regarding its technology and practices, and our product may be hard to market since it was purchased from Bayer.
Despite rigorous testing during the
pre-commercialization
phase, if GS15 comes to market, there may be opponents of our RNA technology or synthetic biology generally who raise concerns about the potential for adverse effects of our products on human or animal health, plants and the environment. Because GS15 in part originated with Monsanto, the many negative public perceptions associated with Monsanto could impair our ability to bring GS15 to market and can affect the timing of, and whether we are able to obtain, government approvals for our products.Even after approvals are granted for GS15, public concern may lead to increased regulation or legislation or litigation against government regulators concerning prior regulatory approvals, which could affect our sales and results of operations, and which may adversely affect sales of GS15 to beekeepers, including due to their concerns about available markets for the sale of crops or other products including those derived from biotechnology. Genetically modified products are currently subject to public debate and heightened regulatory scrutiny, either of which could prevent or delay the adoption of GS15. Claims that genetically modified products are unsafe or pose a danger to the environment may influence public attitudes and lead to our product not gaining public acceptance. The subject of genetically modified organisms has received negative publicity in the United States and particularly in Europe, and such publicity has aroused public debate. The adverse publicity in Europe could lead to greater regulation and trade restrictions.
In addition, opponents of agricultural synthetic biology have attacked facilities used by agricultural biotechnology companies, and may launch future attacks against beekeepers’ hives and our field testing sites and research, production, or other facilities, which could affect our sales and our costs.
The research and development process for GS15 is expensive with little immediate return, and the field trials associated with honeybees in general are susceptible to circumstances outside of our control.
Although our field trial operators are under agreement not to extract honey from their hives during field trials, there is the risk that honey could be extracted impermissibly and find their way into the commercial market thereby impairing our ability to meet regulatory requirements or obtain regulatory approval.
Furthermore, beekeepers tend to be migratory as they serve the needs of seasonal crops and the environments in which the hives are placed can vary. These variables introduce the risk that hives could be damaged or otherwise compromised so as to require their removal from the field trials or field trial results which make it difficult for us to accurately measure the effects of GS15.
Beekeeping practices and results also vary and are subject to factors outside of our control. For example, the overall health and productivity of a beehive is dependent on the queen, how she is mated, how well the nurse bees are taking care of her and larvae, and how well forager bees are able to bring back food to the hive. One hive may have bees that go north and a hive right next to it may have bees that go south to look for food, which causes variability in food sources and potentially in test results. This variability in testing can make it difficult or impossible for us to accurately isolate the effects of GS15 which may in turn increase the cost of field testing, the length and likelihood of regulatory approval and the commercial viability of the GS15 product.
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Our GS15 product is intended to be used in commercial beehives and used in a fashion which will expose the product only to bees and the Varroa destructor mite. If GS15 is used inappropriately and is consumed by invertebrates other than the Varroa destructor mite, it could be harmful to those invertebrates.
According to a September 2020 report published by the Environmental Directorate of the Organization for Economic Cooperation and Development (“OECD”) entitled, there is a long-established view that dietary intake of nucleic acids, including dsRNAs from plant viruses, does not present a health risk to humans and other vertebrates, and, as a result, the adoption of RNAi technology in agriculture is likely to present a lower human health risk than the use of conventional pesticides. Notwithstanding this history of safe consumption in vertebrates like humans, our GS15 product negatively impacts ladybugs and could also negatively impact other invertebrates if our use instructions are ignored and the invertebrates gain access to and consume the GS15 product. Moreover the honey from hives using GS15 may have trace elements of GS15 which could have the potential to be harmful to invertebrates consuming that honey in extreme circumstances.
Considerations
for the Environmental Risk Assessment of the Application of Sprayed or Externally Applied ds-RNA-Based Pesticides
It may be difficult to convince beekeepers to adopt our product, and to use it in the way prescribed for maximum effect.
Although we foresee that our product will be effective in controlling mites that impact bees, beekeepers may ultimately perceive shortcomings in treatment efficacy. This may result in reduced demand for our product or the selection of other treatment options.
Additionally, we will not be able to control how beekeepers will ultimately use our product, and misuse may result in reduced product efficacy, and thus reduced demand. For example, if beekeepers were to dilute our product formulation before application, the diluted product might leave hives subject to microbial contamination and allow microbes to consume our product, impeding its ability to affect mite function.
GS15 is susceptible to purity risks associated with scaling up manufacturing and we are also developing our own process for manufacturing our product at scale.
Commercial production of our product candidates will involve quantities several orders of magnitude higher than our current level of production. We may face challenges producing a product that meets applicable purity specifications at that scale, and may encounter other issues related to scaled up manufacturing.
While Bayer Crop Science (from which we obtained some intellectual property for the product) had its own proprietary methods for manufacturing, we did not license these methods, and we are developing our own methods of manufacturing GS15. We are currently developing a way to make this product with our cell-free platform so that it is economical to produce. Uncertainties related to this platform may ultimately limit our ability to produce the product.
Our product may require approval from other federal and state regulatory bodies.
As discussed above, state regulatory approvals may also be required for our product, which may delay commercialization. In addition, the EPA may not be the only federal agency with jurisdiction over products designed to eliminate honeybee pests. In 2017, the FDA, EPA, and USDA released a document entitled “Modernizing the Regulatory System for Biotechnology Products: Final Version of the 2017 Update to the Coordinated Framework for the Regulation of Biotechnology.” That document outlines the role that the three agencies have in biotechnology approvals. While it is clear that EPA has jurisdiction over pesticide and insecticide products pursuant to FIFRA, USDA also asserts jurisdiction over honeybees in some circumstances. As a result, we may need USDA evaluation and approval of our product, in addition to other unanticipated regulatory approvals. These additional approvals may delay commercialization.
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Risks Related to Intellectual Property
If we are unable to obtain and maintain sufficient intellectual property protection for our products, platform, methods, and technology, or if the scope of the intellectual property protection obtained is not sufficiently broad, competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our products may be impaired.
Our commercial success depends in part on our ability to protect our intellectual property and proprietary technologies. We rely on a combination of patent, trade secret and trademark laws, and nondisclosure, confidentiality and other contractual restrictions to protect our intellectual property and proprietary technology. However, these legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage. If we fail to obtain, maintain and protect our intellectual property, third parties may be able to compete more effectively against us and our competitive position could be adversely affected, as could our business, financial condition, results of operations and prospects. In addition, we may incur substantial costs related to litigation or other patent proceedings in our attempts to recover or restrict use of our intellectual property.
To the extent that our intellectual property offers inadequate protection, or is found to be invalid or unenforceable, we would be exposed to a greater risk of direct competition. If our intellectual property does not provide adequate coverage of our competitors’ products and methods, our competitive position could be adversely affected, as could our business, financial condition, results of operations and prospects. Both the patent application process and the process of managing patent and other intellectual property disputes are generally unpredictable, time-consuming and expensive.
Our success depends in large part on our own and any future licensor’s ability to obtain and maintain protection of the intellectual property we may own or license, whether solely or jointly, particularly patents, in the United States and other countries with respect to our products, platform, methods, and technologies. We apply for patents to protect our products, platform, methods, technologies and commercial activities, as we deem appropriate. However, obtaining and enforcing patents is costly, time-consuming and complex, and we may fail to apply for patents on important products, methods, and technologies in a timely fashion or at all, or we may fail to apply for patents in potentially relevant jurisdictions. Moreover, we may fail to obtain issuance of any of the patent applications that we do file. Publications of discoveries in scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our patents or pending patent applications, or whether we were the first to file for patent protection of such inventions.
We may not be able to file and prosecute all necessary or desirable patent applications, or maintain, enforce and license any patents that may issue from such patent applications, at a reasonable cost or in a timely manner or in all jurisdictions. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. Moreover, we may not develop additional proprietary products, methods and technologies that are patentable. Even if we believe an innovation to be patentable and file patent applications, the United States Patent Office (“
USPTO
”) and other patent offices may not find our innovations to be patentable and may refuse to grant patent rights. We may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the rights to patents which may be licensed from or to third parties or held jointly with third parties. In connection with any future licensing arrangements with third parties, these patents and applications may not be prosecuted and enforced by such third parties in a manner consistent with the best interests of our business. We currently own and may in the future own patents, patent applications, and other intellectual property jointly with third parties. In certain jurisdictions, including in the United States, joint owners of a patent are free to license rights under the patent to third parties without any compensation to or permission fromco-owners.
If we are unable to negotiate licenses on commercially reasonable terms withco-owners
of patents, in order to exclusively control commercial licensing or commercial use of ourco-owned
patents or if agreements allowing us such control are found unenforceable,61
then
co-owners
may be able to license to our competitors and other third parties without our permission and without compensation to us. Failure to control exclusive rights under intellectual property as discussed above may have an adverse effect on our competitive position, business, financial condition, and results of operations.We may become involved in lawsuits to enforce our intellectual property or defend against third-party claims of infringement, misappropriation, or other violations of intellectual property which could be expensive, time consuming, and unsuccessful and may prevent or delay development and commercialization efforts, and could harm our competitive position and business prospects.
Litigation may be necessary for us to enforce our patent and proprietary rights, defend against intellectual property claims brought by third parties and/or determine the scope, coverage and validity of third parties’ intellectual property rights. Litigation on these matters has been prevalent in our industries and we expect that this will continue. To determine the priority of inventions, we may have to initiate and participate in interference proceedings declared by the U.S. Patent and Trademark Office that could result in substantial legal fees and could substantially affect the scope of our patent protection. Also, our intellectual property may be subject to significant litigation and administrative proceedings such as invalidity, unenforceability, IPR,
re-examination,
opposition, or other post-grant proceedings against our patents. The outcome of any litigation or other proceeding is inherently uncertain and might not be favorable to us and we might not be able to obtain licenses to technology that we require or a competitor may have already obtained an exclusive license to such technology in the relevant fields. Even if such licenses are obtainable, they may not be available at a reasonable cost. We could therefore incur substantial costs related to royalty payments for licenses obtained from third parties, which could negatively affect our competitive position, business, financial condition, or results of operations and/or make it unfeasible to commercialize a given product. In some cases, the outcome of litigation may be to enjoin us from commercializing or using a technology protected by third-party intellectual property. We could encounter delays in product introductions, or interruptions in product sales, as we develop alternative methods or products or we may need to cease sales of a product altogether if we are unable to develop alternatives that avoid the relevant third-party intellectual property.If we resort to legal proceedings to enforce our intellectual property rights or to determine the validity, scope and coverage of the intellectual property or other proprietary rights of others, the proceedings could be burdensome, time-consuming, and expensive, even if we were to prevail. Moreover, it may not be possible for us to enforce jointly owned patents in the U.S. or other jurisdictions without the cooperation of other owners.
Our commercial success may depend in part on our
non-infringement
of the patents or proprietary rights of third parties and/or the invalidity or unenforceability of such patent or proprietary rights of others. Numerous significant intellectual property issues have been litigated, and will likely continue to be litigated, between or among existing and new participants in our relevant markets and competitors may assert that our products or methods infringe their intellectual property rights as part of a business strategy to impede the successful entry into or continued presence in those markets. Third parties may assert that we are employing their proprietary technology without authorization. For example, numerous third-party patents exist in fields relevant to the company’s business and planned products, such as biologics, mRNA vaccines and therapies, and RNA interference (“RNAi
”) for crop protection. Our competitors and others have patents and may in the future obtain patents and may claim that use, manufacture, sale, or importation of our products infringe these patents. Moreover, as we move into new markets and applications for our technologies, incumbent participants in such markets may assert their patents and other proprietary rights against us as a means of slowing or preventing our entry into such markets, or as a means to extract substantial license and royalty payments from us.We have received notice in the past that our proposed products or methods may require an intellectual property license from others in order to be developed, produced, used, or sold. In each instance, we have reviewed the underlying intellectual property and either negotiated for a license or determined that no license was necessary. For future notices, if we are unable to successfully negotiate licenses or determine that no license is necessary, we may be unable to bring impacted products to market. Moreover, allegations that we violate third-party intellectual property could lead to disputes, including litigation.
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The outcome of litigation is uncertain and even if we believe that we do not violate asserted third-party intellectual property or that such intellectual property is invalid or unenforceable or otherwise not legally protectible, our defense may be unsuccessful. If a court were to find that we have violated the intellectual property rights of a third party, an injunction and/or an award of damages may have an adverse effect on our business, financial condition, and results of operations. Remedies for intellectual property infringement or misappropriation may include an injunction against future sales of products or use of methods, statutory damages, enhanced damages, punitive damages, attorney’s fees, an award of lost profits and/or a reasonable royalty and prejudgment interest. Damages may in some cases exceed our own profits on sales found to be infringing. Even if we are successful in defending claims, defending intellectual property litigation, particularly patent or trade secret litigation, can be prohibitively burdensome and expensive.
We may be required in the future to license patent rights from third-party owners in order to develop or continue to sell or use a product or method. If we cannot obtain such licenses, or if such owners do not properly maintain or enforce the patents underlying such licenses, our competitive position and business prospects will be harmed.
We develop products, platform, and methods in technological areas and industries that are critical to public health and agriculture—areas in which there is considerable competition. A third-party may hold intellectual property rights, including patent rights and trade secrets that are important or necessary to the development, manufacture, or commercialization of our current or future product candidates. It may be necessary for us to use the patented or proprietary technology of one or more third parties to manufacture or commercialize our product candidates, in which case we would be required to obtain a license from these third parties on commercially reasonable terms, or our business could be harmed. If any such patents were to be asserted against us, there is no assurance that a court would find in our favor or that, if we choose to or are required to seek a license, that a license to any of these patents would be available to us on acceptable terms or at all.
To the extent that we enter into any patent licenses with third parties, if such third parties fail to properly maintain the licensed patents or if those patents are found to be invalid or unenforceable, then we could be subject to additional competition due to the loss of exclusive or
non-exclusive
rights.Defending and protecting intellectual property rights in foreign jurisdictions is costly and sometimes prohibitively expensive.
Obtaining patent protection in every country is prohibitively expensive and, as we attempt to choose jurisdictions for intellectual property protection, we may fail to protect our intellectual property in relevant jurisdictions where we do business, and thereby cause a loss of revenue and profits or other impacts on our ability to manufacture and export our products.
Competitors may use our proprietary technologies in jurisdictions where we have not obtained patent protection to manufacture or develop their own products. Such competitors may export otherwise infringing products, or products made through otherwise infringing methods, to territories where we may have or obtain patent protection, but where patent enforcement is not as strong as in the United States or where no protection is available for products made abroad through methods that infringe a local patent. These products may also compete with our products in jurisdictions where we do not have any issued or licensed patents and any future patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of some countries do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents or trademarks or the misappropriation of our trade secrets generally. Proceedings to enforce our intellectual property rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from
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other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful.
Many countries, including India, Japan, China, and some European nations have compulsory licensing laws under which a patent owner may be compelled under specified circumstances (including a matter of public policy) to grant licenses to third parties. In those countries, we may have limited remedies if patents are infringed or if we are compelled to grant a license to a third-party, which could diminish the value of those patents. This could limit our potential revenue opportunities. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
The United States has the absolute right to manufacture and use patented inventions and to allow others to manufacture and use patent inventions for the United States, for reasonable compensation.
Pursuant to 28 U.S.C. § 1498, the United States government has the absolute right to use or manufacture any patented inventions for reasonable compensation. No injunction of patent infringement is available against the United States and damages are limited to reasonable compensation only. Moreover, a patent owner may not obtain damages or an injunction against a private entity for its infringing use or manufacture for the United States. Such suits may only be brought against the United States and only for reasonable compensation. In the past the United States has relied on such rights to use or manufacture inventions from third parties other than the patentee. In the future, the United States may rely on its rights to infringe our current and future patents or to allow others to make or use our inventions on behalf of the United States. If the United States were to use, or allow others to use for the United States, our patented technology, platform, methods, or products, then we would only be entitled to reasonable compensation and would not be entitled to an injunction to prevent infringement. As with all intellectual property litigation, proceedings against the United States for patent infringement could be burdensome, time-consuming, and expensive. Even if we were to prevail on a patent infringement action against the United States, any remedy would not likely compensate us for the full extent of the financial harm from such infringement due to the limited remedies available against the United States under the law. Such infringement could adversely affect our competitive position, business, financial condition, results of operations, and prospects.
When inventions are developed with government funding, the United States retains a
paid-up
license to such inventions and may compel us to grant licenses to third parties for little or no compensation.Under 35 U.S.C. § 200, when inventions arise, even in part, through use of public funds, the United States may retain an irrevocable,. In such cases, the United States would have the right to use, or allow others to use on its behalf, our inventions, whether protected by patent or trade secret, without any compensation to us.
et seq.
paid-up
license to practice or have practiced on its behalf, such inventions, whether protected by patent or trade secret. That is, the United States has the absolute right to use, and allow others to use on its behalf, such intellectual property without any compensation to the holder of the intellectual property. We have acquired and developed and may in the future acquire or develop trade secrets or obtain patents on inventions developed, in full or in part, with funding from the United States government. A court could also find that one or more of our current patents or applications are covered by 35 U.S.C. § 200et seq
For inventions subject to 35 U.S.C. § 200, the United States also retains
et seq.
march-in
rights. Thesemarch-in
rights apply in certain situations, including, for example, when action is necessary to alleviate public health or safety needs or when an inventor is not taking reasonable steps to make its technology useful to the public. In such situations, the United States has the right to compel the innovator to grant licenses to third parties. If such a finding were made with respect to our current or future patents or trade secrets, then we may not be able to prevent competitors from practicing our patented inventions and/or may be compelled to license our64
competitors to practice our inventions for little or no monetary compensation. Any of the foregoing events could have an adverse effect on our business, financial condition and results of operations.
Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information.
We currently rely, and intend to rely in the future, on trade secrets,
know-how
and technology that are not protected by patents to maintain our competitive position. In order to protect our proprietary technology and processes, we also rely in part on confidentiality agreements with our collaborators, employees, consultants, and sponsored researchers and other advisors. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. These agreements may be found by a court to be unenforceable or invalid. We may fail to enforce our agreements in Court if we are compelled to present them as evidence but are unable to locate and provide copies. Moreover, when employees with knowledge of our trade secrets and confidential information leave us and join new employers, it may be difficult or impossible for us to detect or prove misappropriation of our confidential information and trade secrets by the former employee and/or the former employee’s new employer. In addition, others may independently discover trade secrets and proprietary information, and in such cases, we could not assert any trade secret rights against such party. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive position, business, financial condition and results of operations.Changes in patent laws or patent jurisprudence could diminish the value of patents in general, thereby impairing our ability to protect our products and platforms.
The patent position of biotechnology, life sciences, and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. For example, European patent law restricts the patentability of methods of treatment of the human body more than United States law does. In another example, some jurisdictions prevent the patenting of certain biotechnology inventions outside of narrow coverage for exact nucleotide sequences.
As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued which protect our technology, platform, methods, or products, in whole or in part, or which effectively prevent others from commercializing competitive products. Our issued patents may be found to be invalid or unenforceable in a post grant proceeding before patent offices or in patent litigation before courts in the United States or other countries. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents, narrow the scope of our patent protection, or result in the invalidity or unenforceability of our patents.
Various courts, including the U.S. Supreme Court, have recently rendered decisions that impact the scope of patentability of certain inventions or discoveries relating to our technology and commercial goals. Specifically, these decisions have substantially increased the probability that patent claims will be ruled patent ineligible for reciting a natural phenomenon, law of nature or abstract idea. Furthermore, in view of these decisions, the USPTO has published and continues to publish revised guidelines for patent examiners to apply when examining claims for patent eligibility. Patent claims relating to software algorithms, biologically-derived compositions, methods for analyzing biological systems and other subject matters that underlie our technology and commercial goals are impacted by these changes.
On September 16, 2011, the Leahy-Smith America Invents Act (the “
Leahy-Smith Act
”) was signed into law. The Leahy-Smith Act made a number of significant changes to United States patent laws. These include65
provisions that affect the way patent applications are prosecuted and challenged at the U.S. Patent and Trademark Office (“
USPTO
”) and may also affect patent litigation. The USPTO has developed and continues to develop regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act, subsequent rulemaking, and judicial interpretation of the Leahy-Smith Act and regulations will have on the operation of our business in the future. The Leahy-Smith Act and its continued implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement and/or defense of our issued patents, all of which could have an adverse effect on our business and financial condition.Actions taken by the U.S. Congress, federal courts and USPTO have from time to time narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. Similar changes have been made by authorities in other jurisdictions. In addition to increasing uncertainty with regard to the ability to obtain patents in the future, such changes create uncertainty with respect to the value of patents, once obtained. Depending on decisions by authorities in various jurisdictions, the laws and regulations governing patents could change in unpredictable ways that may have an adverse effect on our ability to obtain new patents and to defend and enforce our existing patents and patents that we might obtain in the future, harming our business, competitive position, financial condition, results of operations, and prospects.
Patent reform legislation could increase uncertainties and costs surrounding the prosecution of our patent applications and the enforcement, validity, or defense of our issued patents. There has been recent public discussion around loosening of patent protection for inventions important to addressing thepandemic. Such reforms or similar changes in connection with future pandemics or other public health emergencies, could have an adverse effect on any patent protection on our products and methods.
SARS-CoV-2
We cannot assure you that our patent portfolio will not be negatively impacted by the current uncertain state of the law, new court rulings or changes in guidance or procedures issued by governments or patent offices around the world. From time to time, the U.S. Supreme Court, other federal courts, the U.S. Congress or the USPTO may change the standards of patentability, scope and validity of patents within the biotechnology, life sciences, and other relevant technologies and any such changes, or any similar adverse changes in the patent laws of other jurisdictions, could have a negative impact on the our business, financial condition, prospects and results of operations.
Moreover, we may be subject to a third-party
pre-issuance
submission of prior art to the USPTO, or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products or use our proprietary methods and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights.Our current or future issued patents could be found invalid or unenforceable if challenged or could be construed narrowly such that they do not cover our products or methods or those used by our competitors.
It is possible that none of our current or future pending patent applications will result in issued patents in a timely fashion or at all. Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Moreover, we cannot predict the breadth of claims that may be allowed or enforced in our patents. Our issued patents may not be construed to cover our own or our competitors’ products or methods. Our competitors may be able to circumvent or design around our patents by developing similar or alternative technologies or products in a
non-infringing
manner. In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates.66
The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity, in patent claims being narrowed or invalidated, or in patents being held unenforceable which could limit our ability to stop others from using or commercializing similar or identical technology, methods, and products, or limit the duration of the patent protection of our technology, methods, and products.
The inventorship and/or ownership rights for our patents and patent applications may be challenged by third parties. Such challenges could result in invalidation of such patents, the loss of ownership of such patents, or loss of exclusive rights to such patents, which could result in increased competition and could limit or eliminate our ability to stop others from using or commercializing similar or identical technology, methods, and products or require us to obtain a license from third parties on commercially reasonable terms to secure exclusive rights, or our business could be harmed. If any such challenges to inventorship and/or ownership were asserted, there is no assurance that a court would find in our favor or that, if we choose to seek a license, such license would be available to us on acceptable terms or at all.
Patent terms may be inadequate to protect our competitive position for an adequate amount of time.
Patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after the first
non-provisional
filing date. In the United States, a patent’s term may, in certain cases, be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the USPTO in examining and granting a patent, or in certain cases, by patent term extension for patents covering certain pharmaceutical products requiring regulatory approval. In the United States a patent’s term also may be shortened if a patent is terminally disclaimed over a commonly owned patent or a patent naming a common inventor and having an earlier expiration date. The life of a patent, and the protection it affords, is limited. Therefore, even if patents covering our products and methods are obtained, once the patent life has expired, for our current or future platform, products, methods or technologies, we may be open to competition, including, for example, from biosimilar or generic versions of our products. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for
non-compliance
with these requirements.The USPTO and European and other patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. In addition, periodic maintenance, renewal and annuity fees on any issued patent are due to be paid to the USPTO and European and other patent agencies over the lifetime of a patent. While an inadvertent failure to make payment of such fees or to comply with such provisions can in many cases be cured by additional payment of a late fee or by other means in accordance with the applicable rules, there are situations in which such noncompliance will result in the abandonment or lapse of the patent or patent application, and the partial or complete loss of patent rights in the relevant jurisdiction.
Non-compliance
events that could result in abandonment or lapse of a patent or patent application include failure to respond to official actions within prescribed time limits,non-payment
of fees and failure to properly legalize and submit formal documents within prescribed time limits. If we or our licensors fail to maintain the patents and patent applications covering our platform, technology, methods, or products or if we or our licensors otherwise allow patents or patent applications to be abandoned or lapse, our competitors might be able to enter the market, which would hurt our competitive position and could impair our ability to successfully commercialize our product candidates, which could have an adverse effect on our business and financial condition.67
We may become subject to claims for ownership of intellectual property, payment, or royalties for assigned invention rights by our employees, contractors, and collaborators, which could result in litigation and adversely affect our business.
We may be subject to claims that former employees, collaborators or other third parties have an interest in, or right to compensation, with respect to our current patent and patent applications, future patents and patent applications, or other intellectual property as an inventor or
co-inventor.
For example, we may have inventorship or ownership disputes from consultants, former employees, or others who are involved in developing a product for us. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership or claiming the right to compensation. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as ownership of, exclusive ownership of, or the right to use and/or exclude others from using, valuable intellectual property. Such an outcome could have an adverse effect on our business, financial condition, results of operations, and prospects. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.We generally enter intoagreements with our employees pursuant to which such individuals assign to us all rights to any inventions created in the scope of their employment or engagement with us. If compelled to provide copies of relevant agreements as evidence of such arrangements, we may not be able to locate and provide copies of such agreements and may therefore be unable to assert such agreements. Moreover, such agreements could be found to be invalid or unenforceable. Although our employees have agreed to assign to us invention rights and have specifically waived their right to receive any special remuneration for such assignment beyond their regular salary and benefits, we may face claims demanding ownership of inventions or remuneration in consideration for assigned inventions.
assignment-of-invention
We may not be able to protect and enforce our trademarks and trade names, or build name recognition in our markets of interest or may be subject to claims of trademark infringement thereby harming our competitive position.
We have filed, and may continue in the future to file trademark applications to protect certain of our intellectual property; however, we cannot guarantee that we will be successful in registering our trademarks. Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented, declared generic, lapsed or determined to be infringing on or dilutive of other marks. We may not be able to protect our rights in these trademarks and trade names, which we need in order to build name recognition. In addition, third parties have filed, and may in the future file, for registration of trademarks that may impede our ability to build brand identity and possibly leading to market confusion. Third parties have identified potential conflicts between their marks and our marks that may arise in the future. In addition, there could be potential trade name or trademark infringement claims brought by owners of trademarks or trademarks that incorporate variations of our trademarks or trade names. Such claims may require us to cease use of our trademarks or change our company or product names. Further, we may in the future enter into agreements with owners of such third-party trade names or trademarks to avoid potential trademark litigation which may limit our ability to use our trade names or trademarks in certain fields or territories. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively, and our business, financial condition, results of operations and prospects may be adversely affected. Our efforts to enforce or protect our proprietary rights related to trademarks, domain names, or other intellectual property may be ineffective and could result in substantial costs and diversion of resources. Any of the foregoing events could have an adverse effect on our business, financial condition and results of operations.
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Intellectual property rights do not necessarily address all potential threats to our competitive advantage.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage. The following examples are illustrative:
| • | Others may be able to develop or make products , platform, methods or technology that are similar to products, platform, methods or technology we have developed or will develop, but that are not covered by the claims of the patents that we own or have licensed and are not protectable through trade secret law. |
| • | We or our licensors or strategic partners might not have been the first to make the inventions covered by the issued patent or pending patent application that we own or have exclusively licensed, and therefore our patents may be found to be invalid or our patent applications may be rejected. |
| • | We or our licensors or strategic partners might not have been the first to file patent applications covering certain of our inventions, and therefore our patents may be found to be invalid or our patent applications may be rejected. |
| • | Others may independently develop or make similar or alternative products, platform, methods or technology or duplicate any of our products, platform, methods or technology without infringing our intellectual property rights. For example, independent development of such products, platform, methods or technology would make it impossible for us to assert trade secret rights against such third parties. If such third parties publish the details of such independently developed products, platform, methods or technology, then we could lose any trade secret protection even as against others. |
| • | It is possible that our pending patent applications will not lead to issued patents. |
| • | Issued patents that we own or have exclusively licensed may not provide us with any competitive advantages, or may be held invalid or unenforceable, as a result of legal challenges by our competitors. |
| • | Our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets. |
| • | Our competitors may use our manufacturing methods to produce products in jurisdictions in which we do not have patent protection on our manufacturing methods and may export such products for sale other jurisdictions, including our major commercial markets for us. Patents on such methods in our major commercial markets may not protect against such product sales. |
| • | We may not develop additional proprietary technologies that are patentable or protectible through other intellectual property rights. |
| • | The intellectual property rights of others may have an adverse effect on our business. |
Should any of these events occur, they could significantly harm our business, competitive position, financial condition, results of operations and prospects.
Risks Related to Ownership of New GreenLight’s Common Stock
An active trading market for New GreenLight’s common stock may never develop or be sustained.
We cannot assure you that an active trading market for New GreenLight’s common stock will develop on the Nasdaq or elsewhere. If an active trading market does not develop, or develops but is not maintained, you may have difficulty selling any of New GreenLight’s common stock due to the limited public float. Accordingly, we cannot assure you of your ability to sell your shares of New GreenLight’s common stock when desired or the prices that you may obtain for your shares.
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Upon consummation of the Business Combination, the market price of New GreenLight’s common stock may be volatile, which could result in substantial losses for investors.
Upon consummation of the Business Combination, the price of New GreenLight’s common stock may fluctuate due to a variety of factors, including:
| • | the need to obtain regulatory approval for New GreenLight’s product candidates; |
| • | the risk that clinical trials will not demonstrate that New GreenLight’s therapeutic product candidates are safe and effective; |
| • | the risk that New GreenLight’s product candidates will have adverse side effects or other unintended consequences, which could impair their marketability; |
| • | the risk that New GreenLight’s product candidates do not satisfy other legal and regulatory requirements for marketability in one or more jurisdictions; |
| • | the risks of enhanced regulatory scrutiny of RNA-based products, including mRNA and dsRNA; |
| • | the potential inability to achieve New GreenLight’s goals regarding scalability, affordability and speed of commercialization of its product candidates; |
| • | the anticipated need for additional capital to achieve New GreenLight’s business goals; |
| • | changes in the industries in which New GreenLight operates; changes in laws and regulations affecting the business of New GreenLight; |
| • | the potential inability to implement or achieve business plans, forecasts, and other expectations after the completion of the proposed transaction; |
| • | actual or anticipated fluctuations in New GreenLight’s operating results, including fluctuations in its quarterly and annual results; |
| • | operating expenses being more than anticipated; |
| • | the failure or discontinuation of any of New GreenLight’s product development and research programs; |
| • | the success of existing or new competitive businesses or technologies; |
| • | announcements about new research programs or products of New GreenLight’s competitors; |
| • | developments or disputes concerning patent applications, issued patents or other proprietary rights; |
| • | the recruitment or departure of key personnel; |
| • | litigation and governmental investigations involving New GreenLight, its industry or both; |
| • | investor perceptions of New GreenLight or its industry; |
| • | negative perceptions of publicly traded companies that have gone public through business combinations with publicly traded special purpose acquisition companies; |
| • | sales of New GreenLight’s common stock by New GreenLight or by its insiders or other stockholders; |
| • | the expiration of market standoff or lock-up agreements; |
| • | general economic, industry and market conditions; and |
| • | the COVID-19 pandemic, natural disasters or major catastrophic events. |
Recently, stock markets in general, and the market for life sciences technology companies in particular, have experienced significant price and volume fluctuations that have often been unrelated or disproportionate to changes in the operating performance of the companies whose stock is experiencing those price and volume fluctuations, particularly in light of the current
COVID-19
pandemic. Broad market and industry factors may70
seriously affect the market price of New GreenLight’s common stock, regardless of New GreenLight’s actual operating performance. These fluctuations may be even more pronounced in the trading market for New GreenLight’s common stock. Following periods of such volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. Because of the potential volatility of New GreenLight’s common stock price, it may become the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management’s attention and resources from its business.
There can be no assurance that New GreenLight Common Stock will be approved for listing on Nasdaq or that New GreenLight will be able to comply with the continued listing standards of Nasdaq.
In connection with the closing of the Business Combination, we intend to list New GreenLight Common Stock on Nasdaq under the symbol “ ”. New GreenLight’s continued eligibility for listing may depend on the number of shares of ENVI Class A Common Stock that are redeemed, the number of round lot holders and the number of market makers. If, after the Business Combination, Nasdaq delists New GreenLight Common Stock from trading on its exchange for failure to meet the listing standards, New GreenLight and its stockholders could face significant material adverse consequences, including:
| • | reduced liquidity; |
| • | a limited availability of market quotations for New GreenLight Common Stock; |
| • | a potential determination that New GreenLight Common Stock is a “penny stock,” which will require brokers trading in New GreenLight Common Stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for shares of New GreenLight Common Stock; |
| • | a limited amount of analyst coverage; and |
| • | a decreased ability to issue additional securities or obtain additional financing in the future. |
The future exercise of registration rights may adversely affect the market price of New GreenLight Common Stock.
Certain of New GreenLight’s stockholders will have registration rights for certain securities. Pursuant to the Subscription Agreements for the PIPE Financing and the Investor Rights Agreement, we are obligated to register a substantial number of shares of New GreenLight Common Stock within specified periods shortly after the Closing. We are obligated to file one or more resale “shelf” registration statements to register such securities, use commercially reasonable efforts to cause such registration statements to be declared effective by the SEC within specified periods, and keep such registration statements effective for up to three years thereafter. We are also obligated to file other registration statements, including for underwritten offerings of New GreenLight Common Stock, in specified circumstances. Sales of a substantial number of shares of New GreenLight Common Stock pursuant to these registration statements in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of New GreenLight Common Stock. For more information relating to the registration rights under the Subscription Agreements and the Investor Rights Agreements, see the “
Business Combination Proposal—Related Agreements—Investor Rights Agreement” and “— PIPE Financing” in this proxy statement/prospectus.
If, following the Business Combination, securities or industry analysts do not publish or cease publishing research or reports about New GreenLight, its business, or its market, or if they change their recommendations regarding New GreenLight’s securities adversely, the price and trading volume of New GreenLight’s securities could decline.
The trading market for New GreenLight’s securities will be influenced by the research and reports that industry or securities analysts may publish about New GreenLight, its business, market or competitors. Securities
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and industry analysts do not currently, and may never, publish research on New GreenLight. If no securities or industry analysts commence coverage of New GreenLight, New GreenLight’s share price and trading volume would likely be negatively impacted.
As a former shell company, New GreenLight will face certain disadvantages relative to companies that pursue a traditional initial public offering, including ineligibility for certain forms and rules for extended periods.
ENVI is a special purpose acquisition company, or SPAC, a form of shell company under the rules of the SEC. Shell companies are more highly regulated than non-shell operating companies and face significant additional restrictions on their activities under federal securities laws. As a result of the Business Combination, New GreenLight will cease to be a shell company. However, companies that were formerly shell companies continue to face disadvantages under SEC rules, including (a) the inability to use Form S-3 until at least one year after the filing of information equivalent to that required by Form 10 after ceasing to be a shell company, (b) the inability to qualify as a “well-known seasoned issuer” and file automatically effective registration statements for three years after ceasing to be a shell company, (c) the inability to “incorporate by reference” information in certain registration statements filed under the Securities Act for a period of three years after ceasing to be a shell company, (d) the inability to use most free writing prospectuses until at least three years after a qualifying business combination, (e) the inability to use Form S-8 to register shares issuable in connection with certain compensatory plans and arrangements until 60 days after the filing of information equivalent to that required by Form 10, (f) the inability of stockholders to rely on Rule 144 for resales of securities until at least one year after the filing of information equivalent to that required by Form 10 and the provision of current public information, and (g) exclusion from certain safe harbors for offering-related communications under the Securities Act for three years after ceasing to be a shell company, including for research reports and certain communications in connection with business combinations. For more information about Rule 144 and its potential impact on New GreenLight stockholders, please see the section titled “Securities Act Restrictions on Resale of New GreenLight Common Stock” in this proxy statement/prospectus. We expect that these disadvantages will make it more challenging and expensive, and create greater risks and delays, for both New GreenLight and its stockholders to offer securities. These challenges may make our securities less attractive than those of companies that are not former shell companies and may raise our relative cost of capital.
Reports published by analysts, including projections in those reports that differ from New GreenLight’s actual results, could adversely affect the price and trading volume of New GreenLight Common Stock.
Securities research analysts may establish and publish their own periodic projections for New GreenLight following consummation of the Business Combination. These projections may vary widely and may not accurately predict the results we actually achieve. The share price of New GreenLight’s common stock may decline if New GreenLight’s actual results do not match the projections of these securities research analysts. If any of the analysts who may cover New GreenLight issue an adverse or misleading opinion regarding New GreenLight, its business model, its intellectual property or its stock performance, change their recommendation regarding shares of New GreenLight’s Common Stock adversely, provide more favorable relative recommendations about New GreenLight’s competitors or if the clinical trials and operating results fail to meet the expectations of analysts, the price of shares of New GreenLight Common Stock would likely decline. If one or more of these analysts ceases coverage of New GreenLight or fails to publish reports on it regularly, the share price or trading volume of New GreenLight’s common stock could decline. While New GreenLight expects research analyst coverage following consummation of the Business Combination, if no analysts commence coverage of New GreenLight, the market price and volume for New GreenLight’s common shares could be adversely affected.
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A significant portion of New GreenLight’s total outstanding shares will be restricted from immediate resale upon the closing of the Business Combination but may be sold into the market in the near future. This could cause the market price of New GreenLight’s common stock to drop significantly, even if New GreenLight’s business is doing well.
Sales of a substantial number of shares of New GreenLight’s common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of New GreenLight’s common stock.
It is anticipated that, upon completion of the Business Combination, (i) the GreenLight stockholders will own, in respect of their existing GreenLight shares, approximately 73% of the outstanding shares of New GreenLight Common Stock, (ii) ENVI’s existing public stockholders prior to the closing (not including founder shares) will own approximately 14% of such outstanding shares, (iii) the initial stockholders prior to the Closing will own approximately 4% of such outstanding shares and (iv) the PIPE Investors will own approximately 9% of such outstanding shares. These percentages assume that none of ENVI’s outstanding shares of public common stock are redeemed in connection with the Business Combination. In the 50% Redemption Scenario, which assumes that 10,512,411 shares of ENVI’s public common stock are redeemed in connection with the Business Combination, these percentages would be approximately 79%, 8%, 4% and 9%, respectively. In the Maximum Redemption Scenario, which assumes that 20,375,179 shares of ENVI’s public common stock are redeemed in connection with the Business Combination, these percentages would be approximately 85%, less than 1%, 4% and 10%, respectively. These percentages assume that 103,470,217 shares of New GreenLight Common Stock will be issued to the holders of shares of common stock and preferred stock of GreenLight in respect of their existing GreenLight shares (including certain convertible notes and warrants) at Closing, which would be the number of shares issued to these holders if Closing were to occur on September 30, 2021. The number of shares issued to the holders of shares of common stock and preferred stock of GreenLight at Closing will fluctuate based on the number of shares underlying GreenLight options and warrants, whether vested or unvested (and the exercise price of such options), outstanding at Closing. GreenLight options and warrants (whether vested or unvested) are taken into account for purposes of allocating the implied $1.2 billion equity value of GreenLight among the holders of shares and other equity securities of GreenLight, with the value allocable to such options and warrants being determined on a
net-exercise
basis. In addition, these percentages do not take into account any shares underlying vested and unvested options that will be held by equityholders of New GreenLight immediately following Closing. Based on these assumptions, and assuming that none of ENVI’s outstanding shares of public common stock are redeemed in connection with the Business Combination, there would be approximately 141,770,217 shares of New GreenLight Common Stock outstanding immediately following the consummation of the Business Combination. If the actual facts are different than these assumptions, the ownership percentages in New GreenLight will be different.Pursuant to the Investor Rights Agreement and the Proposed Bylaws, after the consummation of the Business Combination and subject to certain exceptions, the initial stockholders and the GreenLight stockholders will be restricted from selling or transferring any shares of New GreenLight Common Stock. However, these shares may be sold after the expiration of the respective applicable
lock-up
under the Investor Rights Agreement and the Proposed Bylaws, as applicable. Pursuant to the Investor Rights Agreement and the Subscription Agreements, New GreenLight will be required to file one or more registration statements shortly after the closing of the Business Combination to provide for the resale of the shares issued in the PIPE Financing and the shares of New GreenLight Common Stock held by the parties to the Investor Rights Agreement. As restrictions on resale end and the registration statements are available for use, the market price of New GreenLight Common Stock could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.73
New GreenLight has broad discretion in the use of the net proceeds from the Business Combination and the PIPE Financing and may not use them effectively.
New GreenLight cannot specify with certainty the particular uses of the net proceeds it will receive from the Business Combination and the PIPE Financing. New GreenLight’s management will have broad discretion in the application of the net proceeds. New GreenLight’s management may spend a portion or all of the net proceeds in ways that its stockholders may not desire or that may not yield a favorable return. The failure by New GreenLight’s management to apply these funds effectively could harm its business, financial condition, results of operations and prospects. Pending their use, New GreenLight may invest the net proceeds from the Business Combination and the PIPE Financing in a manner that does not produce income or that loses value.
New GreenLight does not expect to pay any dividends for the foreseeable future. Investors may never obtain a return on their investment.
You should not rely on an investment in New GreenLight Common Stock to provide dividend income. New GreenLight does not anticipate that it will pay any dividends to holders of its common stock in the foreseeable future. Instead, New GreenLight plans to retain any earnings to maintain and expand its existing operations, fund its research and development programs and continue to invest in its commercial infrastructure. In addition, any future credit facility or financing New GreenLight obtains may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on New GreenLight Common Stock. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not purchase New GreenLight Common Stock.
The Proposed Charter designates the Delaware Court of Chancery as the exclusive forum for specified disputes between New GreenLight and its stockholders and also provide that the federal district courts will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, each of which could limit the ability of New GreenLight’s stockholders to choose the judicial forum for disputes with New GreenLight or its directors, officers or employees.
Similarly to the Existing Charter, the Proposed Charter provides that, unless New GreenLight consents in writing to the selection of an alternative forum (an “
Alternative Forum Consent
”), to the fullest extent permitted by the applicable law, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of New GreenLight, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of New GreenLight to New GreenLight or its stockholders, (iii) any action asserting a claim against New GreenLight, its directors, officers or employees arising pursuant to any provision of the DGCL, the Proposed Charter or New GreenLight’s bylaws, or (iv) any action asserting a claim against New GreenLight, its directors, officers or employees governed by the internal affairs doctrine, subject to specified exceptions. This provision will not apply to suits brought to enforce a duty or liability created by the Securities Exchange Act of 1934, as amended, for which claims may be brought in any U.S. federal court, or any other claim for which the federal courts have exclusive jurisdiction.To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, the Proposed Charter also provides that, unless New GreenLight gives an Alternative Forum Consent, the federal district courts of the United States will, to the fullest extent permitted by law, be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act or the rules and regulations promulgated thereunder. However, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims, and there is uncertainty whether a court would enforce the Proposed Charter’s choice of forum provision applicable to Securities Act claims.
Any person or entity purchasing or otherwise acquiring any interest in any of New GreenLight’s securities shall be deemed to have notice of and consented to the foregoing charter provisions. Although New GreenLight
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believes these exclusive forum provisions benefit it by providing increased consistency in the application of Delaware law and federal securities laws in the types of lawsuits to which each applies, the exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with New GreenLight or any of its directors, officers, or other employees, which may discourage lawsuits with respect to such claims against New GreenLight and its current and former directors, officers, or other employees. In addition, a stockholder that is unable to bring a claim in the judicial forum of its choosing may be required to incur additional costs in the pursuit of actions which are subject to the exclusive forum provisions described above. New GreenLight’s stockholders will not be deemed to have waived New GreenLight’s compliance with the federal securities laws and the rules and regulations thereunder as a result of New GreenLight’s exclusive forum provisions. Further, in the event a court finds either exclusive forum provision contained in New GreenLight’s charter to be unenforceable or inapplicable in an action, New GreenLight may incur additional costs associated with resolving such action in other jurisdictions, which could harm its results of operations.
Delaware law and provisions in the Proposed Organizational Documents that will be in effect as of the closing of the Business Combination might discourage, delay or prevent a change in control of New GreenLight’s company or changes in its management and, therefore, depress the trading price of New GreenLight’s common stock.
New GreenLight’s status as a Delaware corporation and the
anti-takeover
provisions of the Delaware General Corporation Law may discourage, delay or prevent a change in control by prohibiting New GreenLight from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder without the approval of holders of 662
/3
% of the voting power of New GreenLight’s stockholders other than the interested stockholder, even if a change of control would be beneficial to New GreenLight’s existing stockholders. In addition, New GreenLight’s certificate of incorporation and bylaws contain provisions that may make the acquisition of New GreenLight’s company more difficult, including the following:| • | New GreenLight’s board of directors will be classified into three classes of directors with staggered three-year terms, and directors will only be able to be removed from office for cause by the affirmative vote of holders of a majority of the voting power of New GreenLight’s then-outstanding capital stock; |
| • | certain amendments to New GreenLight’s certificate of incorporation will require the approval of stockholders holding three-fourths of the voting power of its then-outstanding capital stock; |
| • | any stockholder-proposed amendment to the Proposed Bylaws that is not recommended by the New GreenLight Board will require the approval of stockholders holding three-fourths of the voting power of itsthen-outstanding capital stock; |
| • | New GreenLight’s stockholders will only be able to take action at a meeting of stockholders and will not be able to take action by written consent for any matter; |
| • | vacancies on New GreenLight’s board of directors will be able to be filled only by New GreenLight’s board of directors and not by stockholders; |
| • | only the New GreenLight Board, pursuant to a written resolution adopted by a majority of the New GreenLight Board is authorized to call a special meeting of stockholders; |
| • | certain litigation against New GreenLight can only be brought in Delaware; |
| • | the Proposed Charter authorizes undesignated preferred stock, the terms of which may be established by the New GreenLight Board, which shares may be issued without the approval of the holders of New GreenLight’s capital stock; and |
| • | advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders. |
These
anti-takeover
defenses could discourage, delay, or prevent a transaction involving a change in control of New GreenLight. These provisions could also discourage proxy contests and make it more difficult for75
stockholders to elect directors of their choosing or to cause us to take other corporate actions they desire, any of which, under certain circumstances, could limit the opportunity for New GreenLight’s stockholders to receive a premium for their shares of New GreenLight’s capital stock.
The ability to use GreenLight’s net operating losses to offset future taxable income may be subject to numerous limitations.
As of December 31, 2020, GreenLight had U.S. federal and state net operating loss carryforwards, or NOLs, of $126.0 million and $103.5 million, respectively. If not utilized, the federal NOLs generated before 2018 of approximately $27.1 million will expire at various dates through 2037 and the state NOLs will expire at various dates through 2040. The federal NOLs generated after 2017 of approximately $98.9 million have an indefinite carryforward period. GreenLight or New GreenLight may potentially use these U.S. federal and state NOLs to offset against taxable income for U.S. federal and state income tax purposes. However, the use of these NOLs may be subject to numerous limitations under the U.S. Internal Revenue Code of 1986, as amended, or the Code, and under state tax laws. Among such limitations, Section 382 of the Code may limit the use of these NOLs in any year for U.S. federal income tax purposes in the event of certain past or future changes in ownership of GreenLight or New GreenLight. An ownership change under Section 382 of the Code, referred to in this discussion as an ownership change, generally occurs if one or more stockholders or groups of stockholders who own at least 5% of a company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. An ownership change in respect of New GreenLight also could be deemed to be an ownership change in respect of GreenLight. GreenLight has not conducted a Section 382 study to determine whether the use of its NOLs is impaired under Section 382 of the Code as a result of any prior ownership change. GreenLight may have previously undergone one or more ownership changes. In addition, the Business Combination and PIPE Financing, or future issuances or sales of New GreenLight’s stock, including certain transactions involving New GreenLight’s stock that are outside of its control, could result in future ownership changes. Ownership changes that have occurred in the past or that may occur in the future, including in connection with the Business Combination and PIPE Financing, could result in the imposition of an annual limit under Section 382 of the Code on the amount of pre ownership change NOLs and other tax attributes that GreenLight or New GreenLight can use to reduce its taxable income, potentially increasing or accelerating its liability for income taxes, and also potentially causing those tax attributes to expire unused. States may impose similar limitations on the use of applicable NOLs. Any limitation on using NOLs, whether under Section 382 of the Code or otherwise under U.S. federal or state tax laws, could, depending on the extent of such limitation and the NOLs previously used, result in GreenLight or New GreenLight retaining less cash after payment of U.S. federal and state income taxes in respect of any year in which GreenLight or New GreenLight has taxable income, rather than losses, than GreenLight or New GreenLight would be entitled to retain if such NOLs were available as an offset against such income for U.S. federal and state income tax reporting purposes, which could adversely impact GreenLight or New GreenLight’s operating results.
New GreenLight will continue to be an “emerging growth company” and a “smaller reporting company” as of the closing of the Business Combination and the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies may make New GreenLight’s common stock less attractive to investors.
ENVI is an “emerging growth company,” as defined in the JOBS Act. For so long as New GreenLight remains an emerging growth company following the closing of the Business Combination, it is permitted by SEC rules to, and plans to, rely on exemptions from certain disclosure requirements that are applicable to other SEC registered public companies that are not emerging growth companies. These exemptions include not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes Oxley Act, not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding a nonbinding advisory vote on executive
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compensation and any golden parachute payments not previously approved. As a result, the information New GreenLight provides stockholders will be different than the information that is available with respect to other public companies that are not emerging growth companies. In this proxy statement/prospectus, not all of the executive compensation-related information that would be required if ENVI was not an emerging growth company has been included. If New GreenLight were to qualify as a “smaller reporting company,” as such term is defined in Rule
12b-2
under the Securities Exchange Act of 1934, after New GreenLight ceases to qualify as an emerging growth company, New GreenLight would continue to be permitted to make certain reduced disclosures in New GreenLight’s periodic reports and other documents that it files with the SEC. New GreenLight expects to cease to qualify as a smaller reporting company before it ceases to qualify as an emerging growth company. New GreenLight cannot predict whether investors will find its common stock less attractive if it relies on these exemptions. If some investors find New GreenLight’s common stock less attractive as a result, there may be a less active trading market for New GreenLight’s common stock and its stock price may be more volatile.In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. New GreenLight has elected to avail itself of this exemption from new or revised accounting standards and, therefore, it will not be subject to the same new or revised accounting standards as other public companies that have not made or cannot make a similar election. As a result, New GreenLight’s financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
New GreenLight will incur significant increased costs and management resources as a result of operating as a public company.
As a public company, New GreenLight will incur significant legal, accounting, compliance and other expenses that GreenLight did not incur as a private company and that do not appear in GreenLight’s historical consolidated financial statements. These expenses may increase even more after it is no longer an “emerging growth company.” New GreenLight’s management and other personnel will need to devote a substantial amount of time and incur significant expense in connection with compliance initiatives. For example, New GreenLight will need to implement additional internal controls, both generally and to address the material weaknesses discussed in “Risks Relating to Our Business and Industry”, and disclosure controls and procedures, retain a transfer agent and adopt an insider trading policy. As a public company, New GreenLight will bear all of the internal and external costs of preparing and distributing periodic public reports in compliance with New GreenLight’s obligations under the securities laws.
In addition, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act, and the related rules and regulations implemented by the SEC and the Nasdaq Stock Market, LLC (“
Nasdaq
”), have increased legal and financial compliance costs and will make some compliance activities moretime-consuming.
For example, Nasdaq imposes requirements to obtain stockholder approval for the issuance of equity securities in a variety of circumstances, and this requirement can limit the financing alternatives available to New GreenLight and thereby increase the cost of capital, which could reduce shareholder returns. New GreenLight intends to invest resources to comply with evolving laws, regulations and standards, and this investment will result in increased general and administrative expenses and may divert management’s time and attention from New GreenLight’s other business activities. If New GreenLight’s efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against New GreenLight, and its business may be harmed. In the future, it may be more expensive or more difficult for New GreenLight to obtain director and officer liability insurance, and New GreenLight may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for New GreenLight to attract and retain qualified members of its board of directors, particularly to serve on its audit committee and compensation committee, and qualified executive officers.77
Risks Related to the Business Combination and ENVI
ENVI’s initial stockholders have agreed to vote certain shares in favor of the Business Combination, regardless of how our public stockholders vote.
ENVI’s initial stockholders have agreed to vote their founder shares and in the case of the Sponsor and ENVI’s officers and directors, any public shares purchased during or after the initial public offering (including in open market and privately negotiated transactions), in favor of the Business Combination. As a result, in addition to our initial stockholders’ founder shares, we would need only 7,762,501 shares of ENVI Class A Common Stock, or approximately 37.5%, of the total outstanding shares of ENVI Class A Common Stock to be voted in favor of the Business Combination Proposal (assuming all outstanding shares are voted) in order for the Business Combination Proposal to be approved. Other Condition Precedent Proposals require the affirmative vote of a minimum of 10,350,001 shares of ENVI Class A Common Stock, which our initial stockholders do not control. Our initial stockholders own founder shares representing 20.0% of our outstanding shares of common stock. Accordingly, the agreement by our initial stockholders to vote in favor of the Business Combination will increase the likelihood that we will receive the requisite stockholder approval for the Business Combination.
If the Condition Precedent Proposals are not approved by the ENVI stockholders the Business Combination may not be consummated, and as a result, ENVI may not be obligated to offer to redeem any of the ENVI Class A Common Stock.
A condition to consummating the Business Combination requires that the Condition Precedent Proposals be approved by the requisite ENVI stockholder vote. If the Condition Precedent Proposals are not approved by the requisite number of ENVI stockholders the Business Combination may not be consummated and the transactions contemplated thereby may not be closed. As a result, should ENVI be unable to obtain the requisite number of votes approving the Condition Precedent Proposals, ENVI may not offer to redeem any of the ENVI Class A Common Stock that otherwise would have been redeemable.
Since the initial stockholders, including ENVI’s directors and executive officers, have interests that are different from, or in addition to (and which may conflict with), the interests of our stockholders, a conflict of interest may have existed in determining whether the Business Combination with GreenLight is appropriate as our initial business combination. Such interests include that the Sponsor, as well as our executive officers and directors, will lose their entire investment in us if our business combination is not completed.
When you consider the recommendation of the ENVI Board to vote in favor of approval of the Business Combination Proposal, you should keep in mind that the initial stockholders, including ENVI’s directors and executive officers, have interests in such proposal that are different from, or in addition to (and which may conflict with), those of ENVI stockholders generally. You should be aware that the interests set forth in more detail below present a risk that the Sponsor, HB Strategies and each of their affiliates will benefit from the completion of a business combination, including in a manner that may not be aligned with public stockholders—as such, the Sponsor and HB Strategies may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to public stockholders rather than liquidate.
These interests include, among other things, the interests listed below:
| • | the fact that our initial stockholders, and in the case of HB Strategies, solely with respect to their founder shares, have agreed not to redeem any founder shares or any shares of ENVI Class A Common Stock held by them in connection with a stockholder vote to approve the Business Combination, including all 5,175,000 shares of ENVI Class B Common Stock held by them as of the date of this proxy statement/prospectus; |
| • | the fact that our initial stockholders and their affiliates would receive approximately $8.3 million in aggregate proceeds comprised of (i) fees to Canaccord, an affiliate of the Sponsor, who will receive a fee of $7.8 million in connection with the closing of the proposed business combination and (ii) the repayment of a promissory note issued to HB Strategies in an aggregate principal amount of $500,000, the entire amount of which remains outstanding as of the date of this prospectus; |
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| • | the fact that the initial stockholders paid an aggregate of $25,000 for the 5,175,000 shares of ENVI Class B Common Stock currently owned by them, or approximately $0.005 per share, and such securities will have a significantly higher value at the time of the Business Combination; |
| • | As a result of the lower price paid by our initial stockholders for their shares of ENVI Class B Common Stock as compared to, for example, the price per share of our public shares of $10.00 at our initial public offering (which price is $9.995 above the price per share paid by our initial stockholders), the initial stockholders may generate a profit on their shares even at prices that would generate a significant loss for the public stockholders on their shares of public common stock; |
| • | the fact that HB Strategies paid $2,000,000 for its private placement warrants, and that ENVI issued the 750,000 Insider Warrants, and that these private placement warrants will be worthless if a business combination is not consummated by July 19, 2022 (or by January 19, 2023 if we, by resolution of our board, extend the period of time by an additional six months); |
| • | the fact that the initial stockholders and ENVI’s other current officers and directors have agreed to waive their rights to liquidating distributions from the trust account with respect to any common stock (other than public common stock) held by them if ENVI fails to complete an initial business combination by July 19, 2022 (or by January 19, 2023 if we elect to extend); |
| • | the fact that the Investor Rights Agreement has been entered into by the initial stockholders; |
| • | the fact that, at the option of the Sponsor, any amounts outstanding under any loan made by the Sponsor or any of its affiliates to ENVI in an aggregate amount of up to $1,500,000 may be converted into ENVI’s warrants in connection with the consummation of the Business Combination; |
| • | the fact that HB Strategies has made a $500,000 working capital loan to ENVI; |
| • | the continued indemnification of ENVI’s directors and officers and the continuation of ENVI’s directors’ and officers’ liability insurance after the Business Combination (i.e., a “tail policy”); |
| • | the fact that the Sponsor and ENVI’s officers and directors will lose their entire investment in ENVI and will not be reimbursed for any out-of-pocket |
| • | the fact that if the trust account is liquidated, including in the event ENVI is unable to complete an initial business combination by July 19, 2022 (or by January 19, 2023 if we elect to extend), the Sponsor has agreed to indemnify ENVI to ensure that the proceeds in the trust account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the trust account on the liquidation date, by the claims of prospective target businesses with which ENVI has entered into an acquisition agreement or claims of any third party for services rendered or products sold to ENVI, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the trust account; and |
| • | the fact that ENVI may be entitled to distribute or pay over funds held by ENVI outside the Trust Account to the Sponsor or any of its Affiliates prior to the Closing. |
See “Combination” for additional information on the interests of ENVI’s directors and officers.
Business Combination Proposal
—
Interests of ENVI’s Directors and Officers in the Business
The personal and financial interests of the initial stockholders as well as ENVI’s directors and executive officers may have influenced their motivation in identifying and selecting GreenLight as for the Business Combination and may influence the operation of the business following the Business Combination. In considering the recommendations of the ENVI Board to vote for the proposals, its stockholders should consider these interests.
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The exercise of ENVI’s directors’ and executive officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict of interest when determining whether such changes to the terms of the Business Combination or waivers of conditions are appropriate and in ENVI’s stockholders’ best interest.
In the period leading up to the closing of the Business Combination, events may occur that, pursuant to the Business Combination Agreement, would require ENVI to agree to amend the Business Combination Agreement, to consent to certain actions taken by GreenLight or to waive rights that ENVI has under the Business Combination Agreement. Such events could arise because of changes in the course of GreenLight’s business, a request by GreenLight to undertake actions that would otherwise be prohibited by the terms of the Business Combination Agreement or the occurrence of other events that would have a material adverse effect on GreenLight’s business and would entitle ENVI to terminate the Business Combination Agreement. In any of such circumstances, it would be at ENVI’s discretion, acting through its board of directors, to grant its consent or waive those rights. The existence of financial and personal interests of one or more of the directors described in the preceding risk factors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is best for ENVI and its stockholders and what he, she or they may believe is best for himself, herself or themselves in determining whether or not to take the requested action. As of the date of this proxy statement/prospectus, ENVI does not believe there will be any changes or waivers that ENVI’s directors and executive officers would be likely to make after stockholder approval of the Business Combination Proposal has been obtained. While certain changes could be made without further stockholder approval, ENVI will circulate a new or amended proxy statement/prospectus and resolicit ENVI’s stockholders if changes to the terms of the transaction that would have a material impact on its stockholders are required prior to the vote on the Business Combination Proposal.
ENVI and GreenLight may waive one or more of the conditions to the Business Combination.
Certain conditions to ENVI’s or GreenLight’s obligations to complete the Business Combination may be waived, in whole or in part, to the extent permitted by the Existing Organizational Documents and applicable laws, either unilaterally or by agreement of ENVI and GreenLight. For example, it is a condition to ENVI’s obligations to close the Business Combination that certain of GreenLight’s representations and warranties are true and correct in all respects as of the Closing Date, except where the failure of such representations and warranties to be true and correct, taken as a whole, does not result in a material adverse effect. However, if the ENVI Board determines that it is in our stockholders’ best interest to waive any such breach, then the ENVI Board may elect to waive that condition and consummate the Business Combination. Notwithstanding the foregoing, certain closing conditions may not be waived due to the parties’ charters or organizational documents, applicable law, or otherwise. The following closing conditions may not be waived to complete the Business Combination: the approval by our stockholders of the Business Combination Proposal, the Charter Amendment Proposal and the Nasdaq Proposal being obtained; approval of the Business Combination Agreement and the Merger by the GreenLight stockholders; each applicable waiting period under the HSR Act relating to the Business Combination Agreement having expired or been terminated; the absence of any law or order that would prohibit the consummation of the Business Combination; ENVI having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) after giving effect to the transactions contemplated by the Business Combination Agreement (including the PIPE Financing and any redemptions); the approval by Nasdaq of our initial listing application in connection with the Business Combination; and the effectiveness of the registration statement of which this proxy statement/prospectus forms a part.
The GreenLight stockholders will have significant influence over us after completion of the Business Combination.
Based on the assumptions discussed in “” upon the completion of the Business Combination, the GreenLight stockholders, will own, collectively, approximately 73% of the outstanding New GreenLight Common Stock, assuming that none of ENVI’s
Business Combination Proposal—Ownership of New GreenLight,
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outstanding shares of public common stock are redeemed in connection with the Business Combination, approximately 79% of the outstanding New GreenLight Common Stock, assuming that 10,187,589 shares of ENVI’s outstanding public common stock are redeemed in connection with the Business Combination pursuant to the 50% Redemption Scenario and approximately 85% of the outstanding New GreenLight Common Stock, assuming that 20,375,179 shares of ENVI’s outstanding public common stock are redeemed in connection with the Business Combination pursuant to the Maximum Redemption Scenario. Some of these persons or entities may have interests different than yours. For example, because many of these stockholders purchased their shares at prices substantially below the agreed-upon valuation of the consideration issuable in the Business Combination and have held their shares for a longer period, they may be more interested in selling New GreenLight to an acquirer than other investors or they may want New GreenLight to pursue strategies that deviate from the interests of other stockholders.
After the completion of the Business Combination, we may be required to record write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment.
Even though we have conducted extensive due diligence on GreenLight, we cannot assure you that this diligence will surface all material issues that may be present inside GreenLight, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of GreenLight and outside of our control will not later arise. As a result of these factors, we may be forced to write-down or
write-off
assets, restructure our operations, or incur impairment or other charges that could result in reporting losses. Even if our due diligence successfully identified certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may benon-cash
items and may not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assumingpre-existing
debt held by GreenLight. Accordingly, our stockholders could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation materials relating to the Business Combination contained an actionable material misstatement or omission.Because GreenLight will become a publicly traded company through a merger as opposed to an underwritten public offering, no underwriter has conducted due diligence in connection with the transaction.
In an underwritten public offering, underwriters typically conduct due diligence on the issuer in order to establish a due diligence defense against liability claims under federal securities laws. Because ENVI is already a publicly traded company, no underwriter has conducted due diligence in connection with the business combination transaction. While sponsors, private investors and management in a business combination undertake a certain level of due diligence, it is not necessarily the same level of due diligence undertaken by an underwriter in an underwritten public offering and, therefore, there could be a heightened risk of an incorrect valuation of the business or material misstatements or omissions in this proxy statement/prospectus.
Investors in New GreenLight will not have the same benefits as an investor in an underwritten public offering.
Upon the completion of the Business Combination, the directors, officers and stockholders of GreenLight, a private company, will control New GreenLight, a public company, and the business of GreenLight will become the business of New GreenLight. In this respect, the Business Combination is an indirect path for GreenLight to obtain the benefits of becoming a publicly listed company. However, the Business Combination is not an
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underwritten initial public offering of GreenLight’s securities and differs from an underwritten initial public offering in several significant ways, which include, but are not limited to, the following:
Like other business combinations and spin-offs, in connection with the Business Combination, investors will not receive the benefits of the diligence performed by the underwriters in an underwritten public offering. Investors in an underwritten public offering may benefit from the role of the underwriters in such an offering. In an underwritten public offering, an issuer initially sells its securities to the public market via one or more underwriters, who distribute or resell such securities to the public. Underwriters have liability under the U.S. securities laws for material misstatements or omissions in a registration statement pursuant to which an issuer sells securities. Because the underwriters have a “due diligence” defense to any such liability by, among other things, conducting a reasonable investigation, the underwriters and their counsel customarily conduct a due diligence investigation of the issuer. Due diligence entails engaging legal, financial and/or other professionals to investigate the accuracy of an issuer’s disclosure regarding, among other things, its business and financial results. In making their investment decision, investors have the benefit of such diligence in underwritten public offerings. New GreenLight investors must rely on the information in this proxy statement/prospectus and will not have the benefit of an independent review and investigation of the type normally performed by an underwriter in a public securities offering.
While sponsors, private investors and management in a business combination undertake a certain level of due diligence, it is not necessarily the same level of due diligence undertaken by an underwriter in a public securities offering and, therefore, there is a heightened risk of an incorrect valuation of GreenLight’s business or material misstatements or omissions in this proxy statement/prospectus.
In addition, because no underwriters have been engaged in connection with the Business Combination, there will be no traditional “roadshow” or book-building process before the closing of the Business Combination, and no underwriters will set any initial public offering price to facilitate price discovery with respect to New GreenLight securities after the closing of the Business Combination. Therefore, buy and sell orders submitted prior to and at the opening of initial post-closing trading of New GreenLight securities will not have the benefit of being informed by a published price range or a price at which the underwriters initially sold shares to the public, as would be the case in an underwritten initial public offering. There will be no underwriters assuming risk in connection with an initial resale of New GreenLight securities or helping to stabilize, maintain or affect the public price of New GreenLight securities following the closing. Moreover, New GreenLight will not engage in, and has not requested and will not request, directly or indirectly, financial advisors to engage in, any special selling efforts or stabilization or price support activities in connection with the New GreenLight securities that will be outstanding immediately following the closing. In addition, since the Business Combination is a merger, securities analysts of major brokerage firms may not provide coverage of New GreenLight since there is no incentive for brokerage firms to recommend the purchase of New GreenLight’s securities. No assurance can be given that brokerage firms will, in the future, want to conduct any offerings on New GreenLight’s behalf. All of these differences from an underwritten public offering of GreenLight’s securities could result in a more volatile price for New GreenLight’s securities.
In addition, the Sponsor, certain members of ENVI’s board of directors and its officers, as well as their respective affiliates and permitted transferees, have interests in the Business Combination that are different from or are in addition to those of holders of New GreenLight’s securities following completion of the Business Combination, and that would not be present in an underwritten public offering of GreenLight’s securities. Such interests may have influenced the board of directors of ENVI in making its recommendation that ENVI stockholders vote in favor of the approval of the Business Combination Proposal and the other proposals described in this proxy statement/prospectus.
These differences from an underwritten public offering may present material risks to unaffiliated investors that would not exist if GreenLight became a publicly listed company through an underwritten initial public offering instead of upon completion of the Business Combination.
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New GreenLight’s future depends on the continued contributions of GreenLight’s senior management team and its ability to attract and retain other highly qualified personnel; in particular, Andrey Zarur, GreenLight’s
Co-Founder,
President, Chief Executive Officer and Director is critical to GreenLight’s and New GreenLight’s future vision and strategic direction.New GreenLight’s success depends in large part on New GreenLight’s ability to attract and retain high-quality management in sales, market access, product development, software engineering, marketing, operations, finance and support functions, especially in the Boston and Rochester areas. New GreenLight competes for qualified technical personnel with other life sciences and biotechnology companies. Competition for qualified employees is intense in these industries, and the loss of even a few qualified employees, or an inability to attract, train, retain and motivate additional highly skilled employees required for the planned expansion of GreenLight’s business could harm its operating results and impair its ability to grow. The loss of one or more of GreenLight’s key employees, and any failure to have in place and execute an effective succession plan for key executives, could seriously harm our business.
As GreenLight continue to grow, it may be unable to continue to attract or retain the personnel needed to maintain its competitive position. To attract, train and retain key personnel, GreenLight uses, and New GreenLight will continue to use, various measures, including competitive compensation and benefit packages (including an equity incentive program), which may require significant investment. These measures may not be enough to attract and retain the personnel required to operate GreenLight’s business effectively and efficiently.
Moreover, if the perceived value of New GreenLight’s equity awards declines, it may materially and adversely affect its ability to attract and retain key employees. If New GreenLight does not maintain the necessary personnel to accomplish its business objectives, it may experience staffing constraints that materially and adversely affect its ability to support programs and operations.
Many of GreenLight’s employees may receive proceeds from sales of its equity in the public markets, which may reduce their motivation to continue to work for us.
In addition, New GreenLight’s future also depends on the continued contributions of its senior management team and other key personnel, each of whom would be difficult to replace. In particular, Andrey Zarur, GreenLight’s
Co-Founder,
President, Chief Executive Officer and Director is critical to our future vision and strategic direction. We rely on our executive team in the areas of operations, research and development, commercial, and general and administrative functions. We also do not maintain key person life insurance for our key employees.In addition, from time to time, there may be changes in New GreenLight’s senior management team that may be disruptive to its business. If New GreenLight’s senior management team, including any new hires that we may make, fails to work together effectively and to execute its plans and strategies on a timely basis, New GreenLight’s business, results of operations and financial condition could be harmed.
The unaudited pro forma combined financial information included elsewhere in this proxy statement/prospectus may not be indicative of what New GreenLight’s actual financial position or results of operations would have been.
The unaudited pro forma combined financial information in this proxy statement/prospectus is presented for illustrative purposes only and has been prepared based on a number of assumptions including, but not limited to, GreenLight being considered the accounting acquirer in the Business Combination, the amount of cash and cash equivalents of GreenLight at the Closing and the number of shares of public common stock that may be redeemed in connection with the Business Combination. Accordingly, such pro forma combined financial information may not be indicative of the operating or financial performance we would have achieved during the periods presented in the pro forma financial information had we completed the Business Combination on the date
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specified therein, and we expect that our future financial condition and results of operations will vary materially from our pro forma results of operations and balance sheet contained elsewhere in this proxy statement/prospectus, including as a result of such assumptions not being accurate. See the section titled “.”
Unaudited Pro Forma Combined Financial Information
The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the Business Combination or optimize the capital structure of New GreenLight.
At the time we entered into the Business Combination Agreement, we did not know how many stockholders may exercise their redemption rights, and therefore needed to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. The Business Combination Agreement requires us to use a portion of the cash in the trust account to pay the purchase price, and requires us to have a minimum amount of cash at closing. As a result, we will need to reserve a portion of the cash in the trust account to meet such requirements, or arrange for third party financing. In addition, if a larger number of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange for third party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the Business Combination or optimize the capital structure of New GreenLight. The amount of the fee payable to Canaccord pursuant to the terms of the Business Combination Marketing Agreement will not be adjusted for any shares that are redeemed in connection with the Business Combination.
The Sponsor, directors, officers, advisors and their affiliates may elect to purchase shares or warrants from public stockholders, which may influence a vote on the Business Combination and reduce the public “float” of ENVI Class A Common Stock or warrants.
The Sponsor, directors, officers, advisors or their affiliates may purchase shares or public warrants or a combination thereof in privately negotiated transactions or in the open market either prior to or following the completion of the Business Combination, although they are under no obligation to do so. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase shares or public warrants in such transactions.
Such a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that the Sponsor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. The purpose of any such purchases of such shares could be to vote such shares in favor of the Business Combination and thereby increase the likelihood of obtaining stockholder approval of the Business Combination, or to satisfy the closing conditions in the Business Combination Agreement that requires us to have a minimum net worth or a certain amount of cash at the closing of the Business Combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrantholders for approval in connection with the Business Combination. Any such purchases of our securities may result in the completion of the Business Combination that may not otherwise have been possible. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements.
In addition, if such purchases are made, the public “float” of ENVI Class A Common Stock or public warrants and the number of beneficial holders of our securities may be reduced, making it more difficult to obtain or maintain the quotation, listing or trading of our securities on the Nasdaq Capital Market.
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The public stockholders will experience immediate dilution as a consequence of the issuance of ENVI Class A Common Stock as consideration in the Business Combination and in the PIPE Financing.
In accordance with the terms and subject to the conditions of the Business Combination Agreement, at the Effective Time, (i) each outstanding share of GreenLight (other than treasury shares and shares with respect to which appraisal rights under the DGCL are properly exercised and not withdrawn) shall be automatically cancelled and extinguished and converted into a number of shares of New GreenLight Common Stock and (ii) each outstanding GreenLight option and warrant to purchase shares of GreenLight capital stock (whether vested or unvested) will be converted into an option to purchase New GreenLight Common Stock, in each case, based on an implied GreenLight equity value of $1.2 billion.
The issuance of additional common stock will significantly dilute the equity interests of existing holders of ENVI securities, and may adversely affect prevailing market prices for the ENVI Class A Common Stock.
We are subject to changing laws and regulations regarding regulatory matters, corporate governance and public disclosure that have increased and will continue to increase costs and the risk of noncompliance.
After the Business Combination, we will continue to be subject to rules and regulations by various governing bodies, including, for example, the SEC, which is charged with the protection of investors and the oversight of companies whose securities are publicly traded, and to new and evolving regulatory measures under applicable law. Our efforts to comply with new and changing laws and regulations have resulted, and will likely continue to result, in increased general and administrative expenses and a diversion of management time and attention from business operations.
Moreover, because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to New GreenLight’s disclosure and governance practices. If we fail to address and comply with these regulations and any subsequent changes, we may be subject to penalty and our business may be harmed.
We identified a material weakness in our internal control over financial reporting as of March 31, 2021 and June 30, 2021, and a significant deficiency in our internal control over financial reporting as of June 30, 2021. If we are unable to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner and we may be unable to maintain compliance with applicable stock exchange listing requirements, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies” (the “SEC Staff Statement”). Following the issuance of the SEC Staff Statement, our management concluded that, in light of the SEC Staff Statement, our audited balance sheet as of January 19, 2021 (“IPO Balance Sheet”) should be revised to present our warrants as liabilities. In connection with the foregoing development and solely as a result of such revision, we identified a material weakness in our internal control over financial reporting.
Additionally, we previously recorded a portion of our ENVI Class A Common Stock subject to possible redemption, issued in connection with our IPO, in permanent equity. In accordance with SEC Staff guidance on redeemable equity instruments, ASC 480-10-S99, “Distinguishing Liabilities from Equity”, and EITF Topic D-98, “Classification and Measurement of Redeemable Securities”, redemption provisions not solely within the control of the issuing company require common stock subject to redemption to be classified outside of permanent equity and, according to recent SEC Staff communications with certain independent auditors, notwithstanding the
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presence of maximum redemption thresholds or charter provisions common in SPACs that provide a limitation on redemptions that would cause a SPAC’s net tangible assets to be less than $5,000,001. Although we did not specify a maximum redemption threshold, our Existing Charter provides that ENVI will not redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001. In light of the recent SEC Staff communications with certain independent auditors, our management re-evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2021. Based upon that evaluation, we concluded that the misclassification of the ENVI Class A Common Stock was quantitatively material to individual line items within the balance sheet but is not material to our reported financial position and is qualitatively immaterial to our financial statements. We further concluded that the misstatement was not indicative of a pervasive issue in our internal control, had no impact to our statement of cash flows, did not impact any other balance sheet line items other than total stockholders’ equity and ENVI Class A Common Stock subject to redemption, and was not disclosed in any other Exchange Act filings other than our IPO Balance Sheet and Form 10-Qs for the periods ending March 31, 2021, and June 30, 2021. Based upon the foregoing, and due to the industry-wide issues and related insufficient risk assessment of the underlying accounting for certain instruments, we concluded that the misclassification of our ENVI Class A Common Stock represents a significant deficiency.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of a company’s financial reporting.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness and significant deficiency. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.
If we identify any new material weaknesses or significant deficiencies in the future, any such newly identified material weakness or significant deficiency could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such cases, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses or significant deficiencies.
We have identified a material weakness in our internal control over financial reporting as of September 30, 2021. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner and we may be unable to maintain compliance with the applicable stock exchange listing requirements, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
We have identified, in light of the prior reclassification of warrants from equity to liability, as well as the reclassification of our redeemable Class A common stock as temporary equity, a material weakness in our internal controls over financial reporting relating to our accounting for complex financial instruments. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. Measures to remediate material weaknesses may
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be time-consuming and costly and there is no assurance that such initiatives will ultimately have the intended effects. If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and adversely affect our business and operating results. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
Risks Related to Redemptions
Public stockholders who wish to redeem their public common stock for a pro rata portion of the trust account must comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline. If stockholders fail to comply with the redemption requirements specified in this proxy statement/prospectus, they will not be entitled to redeem their public common stock for a pro rata portion of the funds held in the trust account.
A public stockholder will be entitled to receive cash for any shares of public common stock to be redeemed only if such public stockholder: (i) holds public common stock; (ii) submits a written request to Continental, ENVI’s transfer agent, in which it (a) requests that New GreenLight redeem all or a specified portion of its shares of public common stock for cash, and (b) identifies itself as a beneficial holder of such shares of public common stock and provides its legal name, phone number and address; and (iii) delivers its shares of public common stock to Continental, ENVI’s transfer agent, physically or electronically through DTC. Holders must complete the procedures for electing to redeem their shares of public common stock in the manner described above prior to 5:00 p.m., Eastern Time, on , 2021 (two business days before the special meeting) in order for their shares to be redeemed. In order to obtain a physical share certificate, a stockholder’s broker and/or clearing broker, DTC and Continental, ENVI’s transfer agent, will need to act to facilitate this request. It is ENVI’s understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because ENVI does not have any control over this process or over DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. If it takes longer than anticipated to obtain a physical certificate, public stockholders who wish to redeem their shares of public common stock may be unable to obtain physical certificates by the deadline for exercising their redemption rights and thus will be unable to redeem their shares.
If the Business Combination is consummated, and if a public stockholder properly exercises its right to redeem all or a portion of the shares of public common stock that it holds and timely delivers its shares to Continental, ENVI’s transfer agent, New GreenLight will redeem such shares of public common stock for a” for additional information on how to exercise your redemption rights.
per-share
price, payable in cash, equal to the pro rata portion of the trust account established at the consummation of our initial public offering, calculated as of two business days prior to the consummation of the Business Combination. Please see the section titled “Special Meeting of ENVI
—
Redemption Rights
ENVI does not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete the Business Combination even if a substantial majority of our stockholders do not agree.
Our Existing Charter does not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. As a result, we may be able to complete the Business Combination even though a substantial majority of our public stockholders do not agree with the transaction and have redeemed their shares or have entered into privately negotiated agreements to sell their shares to the Sponsor, our officers, directors, advisors or their affiliates. In the event the aggregate cash consideration we would be required to pay for all shares of ENVI
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Class A Common Stock that are validly submitted for redemption plus the amount required to satisfy cash conditions pursuant to the terms of the Business Combination exceed the aggregate amount of cash available to us, we will not complete the Business Combination or redeem any shares, all shares of ENVI Class A Common Stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
If you or a “group” of stockholders are deemed to hold in excess of 20% of ENVI Class A Common Stock, you will lose the ability to redeem all such shares in excess of 20% of ENVI Class A Common Stock.
The Existing Charter provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 20% of the shares of ENVI Class A Common Stock without our prior consent, which we refer to as the “Excess Shares.” However, ENVI stockholders are not restricted from voting all of their shares (including Excess Shares) for or against the Business Combination. If you have Excess Shares, your inability to redeem the Excess Shares will reduce your influence over our ability to complete the Business Combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete the Business Combination. As a result, you will continue to hold your Excess Shares and, in order to dispose of them, would be required to sell them in open market transactions, potentially at a loss.
There is no guarantee that a stockholder’s decision whether to redeem its shares for a pro rata portion of the trust account will put the stockholder in a better future economic position.
ENVI can give no assurance as to the price at which a stockholder may be able to sell its public common stock in the future following the completion of the Business Combination or any alternative business combination. Certain events following the consummation of any initial business combination, including the Business Combination, may cause an increase in ENVI share price, and may result in a lower value realized now than a stockholder of ENVI might realize in the future had the stockholder not redeemed its shares. Similarly, if a stockholder does not redeem its shares, the stockholder will bear the risk of ownership of the public common stock after the consummation of any initial business combination, including the Business Combination, and there can be no assurance that a stockholder can sell its shares in the future for a greater amount than the redemption price set forth in this proxy statement/prospectus. A stockholder should consult the stockholder’s own financial advisor for assistance on how this may affect his, her or its individual situation.
Whether a redemption of ENVI Class A Common Stock will be treated as a sale of such ENVI Class A Common Stock for U.S. federal income tax purposes will depend on a holder’s specific facts.
The U.S. federal income tax treatment of a redemption of shares of ENVI Class A Common Stock will depend on whether the redemption qualifies as a sale of such shares of ENVI Class A Common Stock under Section 302(a) of the Code, which will depend largely on the total number of shares of ENVI stock treated as held by the shareholder electing to redeem its shares of ENVI Class A Common Stock (including any shares of stock constructively owned by the holder as a result of owning warrants or otherwise) relative to all of the shares of ENVI stock outstanding both before and after the redemption. If such redemption is not treated as a sale of shares of ENVI Class A Common Stock for U.S. federal income tax purposes, the redemption will instead generally be treated as a corporate distribution of cash from ENVI. For more information about the U.S. federal income tax treatment of the redemption of ENVI Class A Common Stock, see “.”
Material U.S. Federal Income Tax Consequences
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If a stockholder fails to receive notice of ENVI’s offer to redeem our public shares in connection with the Business Combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We will comply with the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with the Business Combination. Despite our compliance with these rules, if a stockholder fails to receive our proxy materials or tender offer documents, as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents, as applicable, that we will furnish to holders of our public shares in connection with the Business Combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares. For example, we may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents mailed to such holders, or up to two business days prior to the vote on the proposal to approve the Business Combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically. In addition, if we conduct redemptions in connection with a stockholder vote, a public stockholder seeking redemption of its public shares must also submit a written request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial owner of such shares is included. In the event that a stockholder fails to comply with these or any other procedures, its shares may not be redeemed. See the section entitled “” for additional information on how to exercise your redemption rights.”
Special Meeting of ENVI Redemption Rights
If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board may be exposed to claims of punitive damages.
If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We and our directors may not have sufficient resources to satisfy any such claims in full, or at all.
If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the
per-share
amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the
per-share
amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.If third parties bring claims against us, the proceeds held in the trust account could be reduced and the
per-share
redemption amount received by stockholders may be less than $10.00 per share.Our placing of funds in the trust account may not protect those funds from third-party claims against us. Although we seek to have all vendors, service providers (other than our independent registered public accounting firm, as set forth below), GreenLight and other entities with which we do business execute agreements with us
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waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements, they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. WithumSmith+Brown, PC, our independent registered public accounting firm (“
Withum
”), and the underwriters of our initial public offering will not and did not execute agreements with us waiving such claims to the monies held in the trust account.Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a
third-party
consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon the exercise of a redemption right in connection with the Business Combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, theper-share
redemption amount received by public stockholders could be less than the $10.00 per share initially held in the trust account, due to claims of such creditors. The Sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. However, we have not asked the Sponsor to reserve for such indemnification obligations, we have not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and we believe that the Sponsor’s only assets are securities of ENVI. Therefore, we cannot assure you that the Sponsor would be able to satisfy those obligations. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within 18 months from the closing of this offering (or up to 24 months from the closing of this offering if we, by resolution of our board, extend the period of time by an additional six months) may be considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a
60-day
notice period during which any third-party claims can be brought against the corporation, a90-day
period during which the corporation may reject any claims brought, and an additional150-day
waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount90
distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible following the 18th month from the closing of this offering in the event we do not complete our initial business combination and, therefore, we do not intend to comply with the foregoing procedures.
Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, accountants, investment bankers, etc.), prospective target businesses or our stockholders. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within 18 months from the closing of this offering (or up to 24 months from the closing of this offering if we, by resolution of our board, extend the period of time by an additional six months) is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
Risks if the Adjournment Proposal is Not Approved
If the Adjournment Proposal is not approved, and an insufficient number of votes have been obtained to authorize the consummation of the Business Combination, the ENVI Board will not have the ability to adjourn the special meeting to a later date in order to solicit further votes, and, therefore, the Business Combination will not be approved, and, therefore, the Business Combination may not be consummated.
The ENVI Board is seeking approval to adjourn the special meeting to a later date or dates, if necessary, (A) to ensure that any required supplement or amendment to this proxy statement/prospectus is provided to ENVI stockholders, (B) if as of the time for which the special meeting is scheduled, there are insufficient shares of ENVI Class A Common Stock and ENVI Class B Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the special meeting, (C) in order to solicit additional proxies from ENVI stockholders in favor of one or more of the proposals at the special meeting or (D) if ENVI stockholders redeem an amount of public common stock such that the Aggregate Transaction Proceeds Condition would not be satisfied. If the Adjournment Proposal is not approved, the ENVI Board will not have the ability to adjourn the special meeting to a later date and, therefore, will not have more time to, among other things, solicit votes to approve the Condition Precedent Proposals or otherwise satisfy such conditions. In such events, the Business Combination would not be completed. See the section entitled “The Adjournment Proposal.”
ENVI Risks if the Business Combination is not Consummated
If we are not able to complete the Business Combination with GreenLight nor able to complete another business combination by July 19, 2022, in each case, as such date may be extended pursuant to our Existing Organizational Documents, we would cease all operations except for the purpose of winding up and we would redeem the ENVI Class A Common Stock and liquidate the trust account, in which case our public stockholders may receive less than $10.00 per share.
If we are not able to complete the Business Combination with GreenLight nor able to complete another business combination by July 19, 2022 (or by January 19, 2023 if we, by resolution of our board, extend the
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period of time by an additional six months), in each case, as such date may be extended pursuant to our Existing Organizational Documents, we will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public common stock, at a
per-share
price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest will be net of taxes payable, and less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding shares of public common stock, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case to our obligations to provide for claims of creditors and the requirements of other applicable law. In such case, our public stockholders may receive less than $10.00 per share.You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public common stock, potentially at a loss.
Our public stockholders will be entitled to receive funds from the trust account only upon the earliest to occur of: (i) the completion of a business combination (including the closing of the Business Combination), and then only in connection with those shares of ENVI Class A Common Stock that such stockholder properly elected to redeem, subject to the limitations described herein, (ii) the redemption of any public common stock properly tendered in connection with a stockholder vote to amend the Existing Organizational Documents (A) to modify the substance or timing of our obligation to provide holders of ENVI Class A Common Stock the right to have their shares redeemed in connection with a business combination or to redeem 100% of our public common stock if we do not complete our initial business combination by July 19, 2022 (or by January 19, 2023 if we, by resolution of our board, extend the period of time by an additional six months) or (B) with respect to any other provision relating to the rights of holders of ENVI Class A Common Stock, and (iii) the redemption of our public common stock if we have not consummated an initial business by July 19, 2022 (or by January 19, 2023 if we elect to extend), subject to applicable law and as further described herein. Public stockholders who redeem their public common stock in connection with a stockholder vote described in clause (ii) in the preceding sentence will not be entitled to funds from the trust account upon the subsequent completion of an initial business combination or liquidation if we have not consummated an initial business combination by July 19, 2022 (or by January 19, 2023 if we elect to extend), with respect to such public common stock so redeemed. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account. Accordingly, to liquidate your investment, you may be forced to sell your public common stock, potentially at a loss.
If we do not consummate an initial business combination by July 19, 2022, our public stockholders may be forced to wait until after July 19, 2022 before redemption from the trust account.
If we are unable to consummate our initial business combination by July 19, 2022 (or by January 19, 2023 if we, by resolution of our board, extend the period of time by an additional six months), we will distribute 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 income taxes, if any (less up to $100,000 of the net interest earned thereon to pay dissolution expenses), pro rata to our public stockholders by way of redemption and cease all operations except for the purposes of winding up of our affairs, as further described in this proxy statement/prospectus. Any redemption of public stockholders from the trust account shall be effected automatically by operation of the Existing Organizational Documents prior to any voluntary winding up. If we are required to
wind-up,
liquidate the trust account and distribute such amount therein, pro rata, to our public stockholders, as part of any liquidation process, such winding up, liquidation and distribution must comply with Delaware law. In that case, investors may be forced to wait beyond July 19, 2022 (or beyond January 19, 2023 if we elect to extend), before the redemption proceeds of the trust account become available to them, and they receive the return of their pro rata portion of the proceeds from the trust account. We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless, prior thereto, we consummate our initial business combination or amend certain provisions of our Existing Organizational Documents, and only then in92
cases where investors have properly redeemed their shares of public common stock. Only upon our redemption or any liquidation will public stockholders be entitled to distributions if we do not complete our initial business combination and do not amend our Existing Organizational Documents. Our Existing Organizational Documents provide that, if we wind up for any other reason prior to the consummation of our initial business combination, we will follow the foregoing procedures with respect to the liquidation of the trust account as promptly as reasonably possible but not more than ten business days thereafter, subject to applicable Delaware law.
If our assets not being held in the trust account are insufficient to allow us to operate through July 19, 2022, and we are unable to obtain additional capital, we may be unable to complete our initial business combination, in which case our public stockholders may receive less than $10.00 per share.
As of September 30, 2021, ENVI had only $856,646 in cash and prepaid expenses held outside the trust account to fund our working capital requirements, and ENVI had current liabilities of $3,636,358. Additionally, in August 2021 ENVI entered into a loan agreement with HB Strategies in the amount of $500,000 for working capital purposes. The note is non-interest bearing and is due and payable in cash on the earlier of January 19, 2022 or the Closing Date. As of the date of this proxy statement / prospectus, $500,000 remains outstanding. Accordingly, ENVI had a working capital deficit, which has increased since September 30, 2021 and which ENVI expects will continue to increase as ENVI incurs additional legal, accounting and other expenses to pursue and consummate the Business Combination. ENVI does not expect that the funds currently available to us outside of the trust account will be sufficient to allow us to operate until July 19, 2022 (or by January 19, 2023 if we, by resolution of our board, extend the period of time by an additional six months). If the Business Combination is not completed, ENVI could use a portion of the funds that are or may become available to us to pay fees to consultants to assist us with our search for another target business. ENVI could also use a portion of the funds as a down payment or to fund a
“no-shop”
provision (a provision in letters of intent designed to keep target businesses from “shopping” around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If the Business Combination is not completed and ENVI subsequently enter into a letter of intent where ENVI pays for the right to receive exclusivity from a target business and are subsequently required to forfeit such funds (whether as a result of our breach or otherwise), ENVI might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.If ENVI are required to seek additional capital, ENVI would need to borrow funds from the Sponsor, members of our management team or other third parties to operate or may be forced to liquidate. Any such advances would be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial business combination. If ENVI is unable to obtain additional financing, we may be unable to complete our initial business combination. If ENVI is unable to complete our initial business combination because ENVI does not have sufficient funds available, ENVI will be forced to cease operations and liquidate the trust account. Consequently, our public stockholders may receive less than $10.00 per share on our redemption of the public common stock.
Risks Relating to Becoming a Public Benefit Corporation
Following the Closing, if the Public Benefit Corporation Proposal is approved by the stockholders, we will operate as a Delaware public benefit corporation. As a public benefit corporation, we will not be able to provide any assurance that we will achieve our PBC Purpose.
If approved by the stockholders of ENVI, New GreenLight will become a public benefit corporation under Delaware law by amending and restating our certificate of incorporation, which amended and restated charter will set forth New GreenLight’s public benefit. As a public benefit corporation, New GreenLight will be required to operate in a responsible and sustainable manner, balancing our stockholders’ pecuniary interests, the best interests of those materially affected by our conduct and our public benefit purpose. When we use the term ‘sustainable,’ we refer to our efforts to align economic development with environmental protection and human well-being as well as our anticipated obligations as a Public Benefit Corporation under § 362(a) of the Delaware
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General Corporation Law. There is no assurance that we will be able to achieve our public benefit purpose or that the expected positive impact from being a public benefit corporation will be realized, which could have a material adverse effect on our reputation, which in turn may have a material adverse effect on our business, results of operations and financial condition.
If we become a public benefit corporation, our focus on a specific public benefit purpose and producing a positive effect for society may negatively impact our financial performance.
Unlike traditional corporations, which have a fiduciary duty to focus exclusively on maximizing stockholder value, our directors will have a fiduciary duty to balance (i) the pecuniary interests of our stockholders, (ii) the best interests of those materially affected by our conduct and (iii) our public benefit purpose, as set forth in our charter. Therefore, we may take actions that we believe will be in the best interests of those stakeholders materially affected by our public benefit purpose even if those actions do not maximize our financial results. While we intend for this public benefit designation and obligation to provide an overall net benefit to us and our stakeholders, it could instead cause us to make decisions and take actions without seeking to maximize the income generated from our business, and hence available for distribution to our stockholders. Our pursuit of longer-term or
non-pecuniary
benefits may not materialize within the timeframe we expect or at all, yet may have an immediate negative effect on any amounts available for distribution to our stockholders. Accordingly, being a public benefit corporation could have a material adverse effect on our business, results of operations and financial condition, which in turn could cause our stock price to decline.Also, as a public benefit corporation, because our board of directors would be required by the DGCL to manage or direct our business and affairs in a manner that balances the pecuniary interests of our stockholders, the best interests of those materially affected by our conduct, and our public benefit purpose, we believe that our public benefit corporation status could make it more difficult for another party to obtain control of us without maintaining our public benefit corporation status and purpose. While Delaware common law, as stated in Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986), and related cases, may impose upon directors of a traditional corporation a duty to maximize short-term stockholder value in certain ‘sale of the company’ transactions, a public benefit corporation board’s decision-making would not be subject to those same constraints. Any of the foregoing provisions could limit the price that investors might be willing to pay in the future for shares of our capital stock, and they could deter potential acquirers of our company, thereby reducing the likelihood that you would receive a premium for your shares of our common stock in an acquisition.
Further, public benefit corporations may not be attractive targets for activists or hedge fund investors because new directors would still have to consider and give appropriate weight to the public benefit along with shareholder value, and shareholders committed to the public benefit can enforce this through derivative suits. By requiring that board of directors of public benefit corporations to consider additional constituencies other than maximizing shareholder value, Delaware public benefit corporation law could potentially make it easier for a board to reject a hostile bid, even where the takeover would provide the greatest short-term financial yield to investors.
Our directors will have a fiduciary duty to consider not only our stockholders’ interests, but also our specific public benefit and the interests of other stakeholders affected by our actions. If a conflict between such interests arises, there is no guarantee such a conflict would be resolved in favor of our stockholders.
While directors of traditional corporations are required to make decisions they believe to be in the best interests of their stockholders, directors of a public benefit corporation have a fiduciary duty to consider not only the stockholders’ interests, but also the company’s specific public benefit and the interests of other stakeholders affected by the company’s actions. Under Delaware law, directors are shielded from liability for breach of these obligations if they make informed and disinterested decisions that serve a rational purpose. Thus, unlike traditional corporations which must focus exclusively on stockholder value, our directors are not merely permitted, but obligated, to consider our specific public benefit and the interests of other stakeholders. In the event of a conflict between the interests of our stockholders and the interests of our specific public benefit or our other stakeholders, our directors must only make informed and disinterested decisions that serve a rational
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purpose; thus, there is no guarantee such a conflict would be resolved in favor of our stockholders, which could have a material adverse effect on our business, results of operations and financial condition, which in turn could cause our stock price to decline.
As a public benefit corporation, we would be required to comply with various new reporting requirements, which, even if complied with, could result in harm to our reputation.
As a public benefit corporation, we will be required to publicly disclose a report at least biennially on our overall public benefit performance and on our assessment of our success in achieving our specific public benefit purpose. If we are not timely or are unable to provide this report, or if the report is not viewed favorably by parties doing business with us or regulators or others reviewing our credentials, our reputation and status as a public benefit corporation may be harmed and the value of our stock could decrease as a result.
While not required by Delaware law or the terms of our second amended and restated certificate of incorporation, we may elect to have our environmental, social and governance (“ESG”) performance assessed against ESG standards, including proprietary criteria established by independent
non-profit
organizations. For example, we may seek a Certified B Corporation certification. The requirements for these certifications may change over time. These standards may not be appropriately tailored to the legal requirements of publicly traded companies or to the operational requirements of larger companies. Additionally, our management team might have to spend significant time considering and meeting such certifications or such standards (including preparation of relevant applications and reports) and therefore will be spending less time on operating our business. Further, our reputation could be harmed if we obtain then lose ESG certifications, whether by our choice or by our failure to meet certification requirements, if that change in status were to create a perception that we are more focused on financial performance and are no longer as committed to the values shared by certifying organizations. Likewise, our reputation could be harmed if scores given to us by certifying organizations decline since this might create a perception that we have slipped in our satisfaction of such standards. Similarly, our reputation could be harmed if we take actions that are perceived to be misaligned with our values.As a public benefit corporation, we may be subject to increased derivative litigation concerning our duty to balance stockholder and public benefit interests, the occurrence of which may have an adverse impact on our financial condition and results of operations.
Stockholders of a Delaware public benefit corporation (if they, individually or collectively, own at least 2% of its outstanding capital stock shares or at least $2.0 million in market value) are entitled to file a derivative lawsuit claiming that its directors failed to balance stockholder and public benefit interests. This potential liability does not exist for traditional corporations. Therefore, we may be subject to the possibility of increased derivative litigation, which would require the attention of management and, as a result, may adversely impact management’s ability to effectively execute our strategy. Any such derivative litigation may be costly and have an adverse impact on our financial condition and results of operations.
Our status as a public benefit corporation could make an acquisition of our company, which may be beneficial to our stockholders, more difficult.
While Delaware common law, as stated in, and related cases, may impose upon directors of a traditional corporation a duty to maximize short-term stockholder value in certain ‘sale of the company’ transactions, a public benefit corporation board’s decision-making would not be subject to those same constraints. Our board could reject a bid to acquire New GreenLight in favor of pursuing other stakeholder interests or the specified public benefit, to the detriment of stockholders. Consideration of these competing interests would not preclude our board from accepting a bid that maximizes short-term stockholder value. Rather, our board could weigh the merits of accepting the short-term value offered by a bid against other options that may generate greater long-term value or have other meaningful effects on those materially affected by our conduct or public benefit purpose and, if appropriate, could accept a bid that does not maximize short-term value.
Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc.
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SPECIAL MEETING OF ENVI
General
ENVI is furnishing this proxy statement/prospectus to ENVI’s stockholders as part of the solicitation of proxies by the ENVI Board for use at the special meeting of ENVI to be held on , 2021, and at any adjournment thereof. This proxy statement/prospectus is first being furnished to ENVI’s stockholders on or about , 2021 in connection with the vote on the proposals described in this proxy statement/prospectus. This proxy statement/prospectus provides ENVI’s stockholders with information they need to know to be able to vote or instruct their vote to be cast at the special meeting.
Date, Time and Place
The special meeting will be held at 9:00 a.m., Eastern Time, on , 2021 virtually via live webcast at the following address: , or at such other time, on such other date and at such other place to which the meeting may be adjourned.
Purpose of the ENVI Special Meeting
At the special meeting, ENVI is asking holders of ENVI common stock to consider and vote upon:
| • | a proposal to approve and adopt the Business Combination Agreement, including the Merger, and the transactions contemplated thereby; |
| • | a proposal to adopt and approve the PBC Proposed Charter; |
| • | a proposal to adopt and approve the Proposed Charter; |
| • | the following governance proposals to approve, on a non-binding advisory basis, the following material differences between the Existing Charter and the Proposed Charter: |
| • | to change the authorized capital stock of ENVI from 121,000,000 shares, par value $0.0001 per share, consisting of (a) 100,000,000 shares of ENVI Class A Common Stock, 20,000,000 shares of ENVI Class B Common Stock, and 1,000,000 shares of undesignated preferred stock, to (b) 510,000,000 shares, par value $0.0001 per share, consisting of 500,000,000 shares of common stock of New GreenLight and 10,000,000 shares of undesignated preferred stock of New GreenLight; |
| • | to provide that, in addition to any vote required by applicable law or the certificate of incorporation or bylaws of New GreenLight, the affirmative vote of the holders of at least seventy-five percent (75%) of the voting power of all then-outstanding shares of capital stock of New GreenLight entitled to vote generally in the election of directors, voting together as a single class, will be required for the stockholders to reduce the total number of shares of New GreenLight Preferred Stock authorized to be issued by New GreenLight or to amend, alter, change or repeal, or adopt any provision of the charter of New GreenLight inconsistent with, specified provisions of the charter of New GreenLight; and |
| • | to provide that the bylaws of New GreenLight may be adopted, amended, altered or repealed with the approval of a majority of the New GreenLight Board or by the affirmative vote of the holders of at least 75% of the voting power of all then-outstanding shares of capital stock of New GreenLight entitled to vote generally in the election of directors, voting together as a single class, provided that the voting requirement is reduced to a majority if the New GreenLight Board recommends that stockholders approve the adoption, amendment, alteration or repeal; |
| • | a proposal to approve the issuance of shares of New GreenLight Common Stock in connection with the Business Combination in compliance with the Nasdaq listing rules; |
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| • | a proposal to approve and adopt the New GreenLight Equity Plan; |
| • | a proposal to approve and adopt the New GreenLight ESPP; |
| • | to elect seven directors to serve on the New GreenLight Board, effective upon the closing of the Business Combination; and |
| • | a proposal to approve the adjournment of the special meeting to a later date or dates, if necessary, to, among other things, permit further solicitation and voting of proxies in the event that there are insufficient votes for the approval of one or more proposals at the special meeting. |
Each of the Business Combination Proposal, the Charter Amendment Proposal, the Nasdaq Proposal, the Incentive Award Plan Proposal, the Employee Stock Purchase Plan Proposal and the Director Election Proposal is conditioned on the approval and adoption of each of the other Condition Precedent Proposals. The Public Benefit Corporation Proposal and the Advisory Charter Amendment Proposals are conditioned on the approval of the Condition Precedent Proposals. The Adjournment Proposal is not conditioned on any other proposal.
Recommendation of the ENVI Board
The ENVI Board believes that the Business Combination Proposal and the other proposals to be presented at the special meeting are in the best interest of ENVI and its stockholders and unanimously recommends that its stockholders vote “FOR” the Business Combination Proposal, “FOR” the Public Benefit Corporation Proposal, “FOR” the Charter Amendment Proposal, “FOR” each of the separate Advisory Charter Amendment Proposals, “FOR” the Nasdaq Proposal, “FOR” the Incentive Award Plan Proposal, “FOR” the Employee Stock Purchase Plan Proposal, “FOR” the Director Election Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the special meeting.
The existence of financial and personal interests of one or more of ENVI’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of ENVI and its stockholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that stockholders vote for the proposals.
In addition, ENVI’s officers have interests in the Business Combination that may conflict with your interests as a stockholder. See the section titled “” for a further discussion of these considerations.
Business Combination Proposal
—
Interests of ENVI’s Directors and Officers in the Business Combination
Record Date; Who is Entitled to Vote
ENVI stockholders will be entitled to vote or direct votes to be cast at the special meeting if they owned ENVI common stock at the close of business on December 10, 2021, which is the “record date” for the special meeting. ENVI stockholders will have one vote for each share of ENVI common stock owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. As of the close of business on the record date, there were 20,700,000 shares of ENVI Class A Common Stock and 5,175,000 shares of ENVI Class B Common Stock issued and outstanding.
Quorum
A quorum of ENVI stockholders is necessary to hold a valid meeting. For each proposal a, quorum will be present at the special meeting if one or more stockholders who together hold not less than a majority of the voting power of the outstanding shares of each class (on or group of classes voting as a single class) of ENVI common stock entitled to vote on such proposal at the special meeting are represented in person or by proxy at the special meeting.
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Abstentions and Broker
Non-Votes
Proxies that are marked “abstain” and proxies relating to “street name” shares that are returned to ENVI but marked by brokers as “not voted” will be treated as shares present for purposes of determining the presence of a quorum on all matters. Abstentions and broker
non-votes
will not count as votes cast at the special meeting and will have no effect on the outcome of a proposal, other than the Charter Amendment Proposal and the Public Benefit Corporation Proposal. For the Charter Amendment Proposal and the Public Benefit Corporation Proposal, abstentions and brokernon-votes
will have the same effect as votes “AGAINST” such proposal. If a stockholder who holds shares in street name does not give his, her or its broker voting instructions, under applicableself-regulatory
organization rules, the broker may not vote his, her or its shares on“non-routine”
proposals. It is expected that all proposals to be voted on at the special meeting are“non-routine”
matters.Vote Required for Approval
The approval of the Business Combination Proposal requires the affirmative vote (in person or by proxy) of the holders of at least a majority of the shares of ENVI Class A Common Stock and ENVI Class B Common Stock entitled to vote and actually cast thereon at the special meeting, voting as a single class.
The approval of the Public Benefit Corporation Proposal requires (i) the affirmative vote (in person or by proxy) of the holders of a majority of the shares of ENVI Class A Common Stock and ENVI Class B Common Stock issued and outstanding on the record date for the special meeting, voting as a single class, (ii) the affirmative vote of the holders of a majority of the ENVI Class A Common Stock issued and outstanding on the record date for the special meeting, voting as a separate class, and (iii) the affirmative vote of the holders of a majority of the ENVI Class B Common Stock issued and outstanding on the record date for the special meeting, voting as a separate class.
The approval of the Charter Amendment Proposal requires (i) the affirmative vote (in person or by proxy) of the holders of a majority of the shares of ENVI Class A Common Stock and ENVI Class B Common Stock issued and outstanding on the record date for the special meeting, voting as a single class, (ii) the affirmative vote of the holders of a majority of the ENVI Class A Common Stock issued and outstanding on the record date for the special meeting, voting as a separate class, and (iii) the affirmative vote of the holders of a majority of the ENVI Class B Common Stock issued and outstanding on the record date for the special meeting, voting as a separate class.
The approval, on a
non-binding
advisory basis, of each of the Advisory Charter Amendment Proposals the affirmative vote (in person or by proxy) of the holders of at least a majority of the shares of ENVI Class A Common Stock and ENVI Class B Common Stock entitled to vote and actually cast thereon at the special meeting, voting as a single class.The approval of the Nasdaq Proposal requires the affirmative vote (in person or by proxy) of the holders of at least a majority of the shares of ENVI Class A Common Stock and ENVI Class B Common Stock entitled to vote and actually cast thereon at the special meeting, voting as a single class.
The approval of the Incentive Award Plan Proposal requires the affirmative vote (in person or by proxy) of the holders of at least a majority of the shares of ENVI Class A Common Stock and ENVI Class B Common Stock entitled to vote and actually cast thereon at the special meeting, voting as a single class.
The approval of the Employee Stock Purchase Plan Proposal requires the affirmative vote (in person or by proxy) of the holders of at least a majority of the shares of ENVI Class A Common Stock and ENVI Class B Common Stock entitled to vote and actually cast thereon at the special meeting, voting as a single class.
The election of the director nominees pursuant to the Director Election Proposal requires the affirmative vote (in person or by proxy) of a plurality of the outstanding shares of ENVI Class B Common Stock entitled to
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vote and actually cast thereon at the special meeting. As the holder of a majority of the outstanding shares of ENVI Class B Common Stock, HB Strategies controls the outcome of the Director Election Proposal. See the section “.”.
The Director Election Proposal
The approval of the Adjournment Proposal requires the affirmative vote (in person or by proxy) of the holders of at least a majority of the shares of ENVI Class A Common Stock and ENVI Class B Common Stock entitled to vote and actually cast thereon at the special meeting, voting as a single class.
Each of the Business Combination Proposal, the Charter Amendment Proposal, the Nasdaq Proposal, the Incentive Award Plan Proposal, the Employee Stock Purchase Plan Proposal and the Director Election Proposal is conditioned on the approval and adoption of each of the other Condition Precedent Proposals. The Public Benefit Corporation Proposal and the Advisory Charter Amendment Proposals are conditioned on the approval of the Condition Precedent Proposals. The Adjournment Proposal is not conditioned on any other proposal.
The initial stockholders have, pursuant to the Sponsor Letter Agreement, agreed to, among other things, vote all of their founder shares in favor of the proposals being presented at the special meeting. As of the date of this proxy statement/prospectus, the founder shares owned by the initial stockholders represents approximately 20% of the issued and outstanding common stock. See “” in this proxy statement/prospectus for more information related to the Sponsor Letter Agreement.
Business Combination Proposal
-Related
Agreements-Sponsor
Letter AgreementVoting Your Shares
Each share of ENVI common stock that you own in your name entitles you to one vote. Your proxy card shows the number of shares of ENVI common stock that you own. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker, bank or other nominee to ensure that votes related to the shares you beneficially own are properly counted.
There are two ways to vote your common stock at the special meeting:
| • | You can vote by signing and returning the enclosed proxy card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by the ENVI Board “FOR” the Business Combination Proposal, “FOR” the Charter Amendment Proposal, “FOR” each of the separate Advisory Charter Amendment Proposals, “FOR” the Nasdaq Proposal, “FOR” the Incentive Award Plan Proposal, “FOR” the Employee Stock Purchase Plan Proposal, “FOR” the Director Election Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the special meeting. Votes received after a matter has been voted upon at the special meeting will not be counted. |
| • | You can attend the special meeting and vote in person. You will receive a ballot when you arrive. However, if your shares are held in the name of your broker, bank or another nominee, you must get a valid legal proxy from the broker, bank or other nominee. That is the only way ENVI can be sure that the broker, bank or nominee has not already voted your shares. |
Revoking Your Proxy
If you are an ENVI stockholder and you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:
| • | you may send another proxy card with a later date; |
| • | you may notify ENVI’s Secretary in writing before the special meeting that you have revoked your proxy; or |
| • | you may attend the special meeting, revoke your proxy, and vote at the meeting, as indicated above. |
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Who Can Answer Your Questions About Voting Your Shares
If you are a stockholder and have any questions about how to vote or direct a vote in respect of your common stock, you may call D.F. King, our proxy solicitor, by calling (866) 620-2535, or for banks and brokers call collect (212) 269-5550, or by emailing envl@dfking.com.
Redemption Rights
Pursuant to the Existing Organizational Documents, a public stockholder may request of ENVI that New GreenLight redeem all or a portion of its shares of public common stock for cash, out of funds legally available therefor, if the Business Combination is consummated. As a holder of shares of public common stock, you will be entitled to receive cash for any shares of public common stock to be redeemed only if you:
| (i) | hold shares of public common stock; |
| (ii) | submit a written request to Continental, ENVI’s transfer agent, in which you (i) request that New GreenLight redeem all or a specified portion of your shares of public common stock for cash, and (ii) identify yourself as the beneficial holder of the shares of public common stock and provide your legal name, phone number and address; and |
| (iii) | deliver your shares of public common stock to be redeemed to Continental, ENVI’s transfer agent, physically or electronically through DTC. |
Holders must complete the procedures for electing to redeem their shares of public common stock in the manner described above prior to 5:00 p.m., Eastern Time, on , 2021 (two business days before the special meeting) in order for their shares to be redeemed.
The redemption rights include the requirement that a holder must identify itself in writing as a beneficial holder and provide its legal name, phone number and address to Continental in order to validly redeem its shares. Public stockholders may elect to redeem all or a portion of the shares of
public common stock held by them regardless of whether or how they vote in respect of the Business Combination Proposal.
If the Business Combination is not consummated, the shares of public common stock will be returned to the respective holder, broker or bank. If the Business Combination is consummated, and if a public stockholder properly exercises its right to redeem all or a portion of the shares of public common stock that it holds and timely delivers its shares to Continental, ENVI’s transfer agent, New GreenLight will redeem such shares of public common stock for a
per-share
price, payable in cash, equal to the pro rata portion of the trust account, calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as of , 2021, this would have amounted to approximately $10.00 per issued and outstanding public share. If a public stockholder exercises its redemption rights in full, then it will be electing to exchange its shares of public common stock for cash and will no longer own public common stock.If you hold shares in “street name,” you will have to coordinate with your broker to have your shares certificated or delivered electronically. Shares of ENVI Class A Common Stock that have not been tendered (either physically or electronically) in accordance with these procedures will not be redeemed for cash. There is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through DTC’s DWAC system. The transfer agent will typically charge the tendering broker $80 and it would be up to the broker whether or not to pass this cost on to the redeeming stockholder. In the event the proposed Business Combination is not consummated, this may result in an additional cost to stockholders for the return of their shares.
Any request for redemption, once made by a holder of shares of public common stock, may be withdrawn at any time up to the time the vote is taken with respect to the Business Combination Proposal at the special meeting. If you deliver your shares for redemption to Continental, our transfer agent, and later decide prior to the
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special meeting not to elect redemption, you may request that our transfer agent return the shares (physically or electronically) to you. You may make such request by contacting Continental, our transfer agent, at the phone number or address listed in the section above titled “”.
Questions and Answers for Stockholders of ENVI
Any corrected or changed written exercise of redemption rights must be received by Continental, our transfer agent, prior to the vote on the Business Combination Proposal at the special meeting. No request for redemption will be honored unless the holder’s shares of public common stock have been delivered (either physically or electronically) to Continental, our agent, at least two business days prior to the vote at the special meeting.
Notwithstanding the foregoing, a public stockholder, together with any affiliate of such public stockholder or any other person with whom such public stockholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its shares of public common stock with respect to more than an aggregate of 20% of the outstanding shares of public common stock. Accordingly, if a public stockholder, alone or acting in concert or as a group, seeks to redeem more than 20% of the outstanding shares of public common stock, then any such shares in excess of that 20% limit would not be redeemed for cash.
The initial stockholders have, pursuant to the Sponsor Letter Agreement, agreed to, among other things, vote all of their common stock in favor of the proposals being presented at the special meeting and waive their redemption rights with respect to certain common stock in connection with the consummation of the Business Combination. No consideration was received by the initial stockholders for their waiver of redemption rights. As of the date of this proxy statement/prospectus, the founder shares owned by the initial stockholders represents approximately 20% of the issued and outstanding common stock. See “” in this proxy statement/prospectus for more information related to the Sponsor Letter Agreement.
Business Combination Proposal
—Related Agreements
—Sponsor Letter Agreement
The closing price of public common stock on , 2021, the most recent practicable date prior to the date of this proxy statement/prospectus, was $ . For illustrative purposes, as of September 30, 2021, funds in the trust account plus accrued interest thereon totaled approximately $207.0 million or $10.00 per issued and outstanding public share.
Prior to exercising redemption rights, public stockholders should verify the market price of the public common stock because they may receive higher proceeds from the sale of their shares of public common stock in the public market than from exercising their redemption rights if the market price per share is higher than the redemption price. ENVI cannot assure its stockholders that they will be able to sell their shares of public common stock in the open market, even if the market price per share is higher than the redemption price stated above, because there may not be sufficient liquidity in the public common stock when its stockholders wish to sell their shares.
Appraisal Rights
Our stockholders have no appraisal rights in connection with the Business Combination under the DGCL.
Proxy Solicitation Costs
ENVI is soliciting proxies on behalf of its board of directors. This solicitation is being made by mail but also may be made by telephone or in person. ENVI and its directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means. ENVI will bear the cost of the solicitation.
ENVI has hired D.F. King to assist in the proxy solicitation process. ENVI will pay that firm a fee of plus disbursements. Such fee will be paid with
non-trust
account funds.101
ENVI will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. ENVI will reimburse them for their reasonable expenses.
ENVI Initial Stockholders’ Agreements
As of the date of this proxy statement/prospectus, there are 25,875,000 shares of ENVI common stock issued and outstanding, which includes an aggregate of 20,700,000 shares of ENVI Class A Common stock and 5,175,000 shares of ENVI Class B Common Stock, and excludes 10,350,000 public warrants and 2,750,000 private placement warrants (including the Insider Warrants).
At any time at or prior to the Business Combination, during a period when they are not then aware of any material nonpublic information regarding us or our securities, our initial stockholders, GreenLight and/or their directors, officers, advisors or respective affiliates may purchase public common stock from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent Proposals, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire public common stock or vote their public common stock in favor of the Condition Precedent Proposals. Such a purchase may include a contractual acknowledgement that such stockholder, although still the record or beneficial holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our initial stockholders, GreenLight and/or their directors, officers, advisors or respective affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholder would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to (i) increase the likelihood of satisfaction of the requirements that each of the Business Combination Proposal, the Charter Amendment Proposal, the Advisory Charter Amendment Proposals, the Nasdaq Proposal, the Incentive Award Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal are approved by the requisite vote at the special meeting, (ii) otherwise limit the number of shares of public common stock to be redeemed and (iii) ensure that New GreenLight’s net tangible assets (as determined in accordance with Rule
3a51-1(g)(1)
of the Exchange Act) are at least $5,000,001 after giving effect to the transactions contemplated by the Business Combination Agreement and the PIPE Financing.Entering into any such arrangements may have a depressive effect on the common stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he, she or they own, either at or prior to the Business Combination.
If such transactions are effected, the consequence could be to cause the Business Combination to be consummated in circumstances where such consummation could not otherwise occur. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the special meeting and would likely increase the chances that such proposals would be approved. We will file or submit a Current Report on Form
8-K
to disclose any material arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be put to the special meeting. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.102
BUSINESS COMBINATION PROPOSAL
Overview
We are asking our stockholders to adopt and approve the Business Combination Agreement, certain related agreements and the transactions contemplated thereby (including the Business Combination). ENVI stockholders should read carefully this proxy statement/prospectus in its entirety for more detailed information concerning the Business Combination Agreement, which is attached as Annex A to this proxy statement/prospectus, and the transactions contemplated thereby. Please see “” below for additional information and a summary of certain terms of the Business Combination Agreement. You are urged to read carefully the Business Combination Agreement in its entirety before voting on this proposal.
—
The Business Combination Agreement
In accordance with Delaware law, we are holding a stockholder vote on the Business Combination, and we may consummate the Business Combination only if it is approved by the affirmative vote of a majority of ENVI’s stock entitled to vote and cast at the special meeting.
The Business Combination Agreement
This subsection of the proxy statement/prospectus describes the material provisions of the Business Combination Agreement, but does not purport to describe all of the terms of the Business Combination Agreement. The following summary is qualified in its entirety by reference to the complete text of the Business Combination Agreement, which is attached as Annex A to this proxy statement/prospectus. You are urged to read the Business Combination Agreement in its entirety because it is the primary legal document that governs the Business Combination.
The Business Combination Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of the Business Combination Agreement or other specific dates set forth therein. The assertions embodied in those representations, warranties and covenants were made for purposes of the Business Combination Agreement among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Business Combination Agreement. The representations, warranties and covenants in the Business Combination Agreement are also modified in part by the underlying disclosure schedules (the “
disclosure schedules
”), which are not filed publicly and which are subject to a contractual standard of materiality different from that generally applicable to stockholders and were used for the purpose of allocating risk among the parties rather than establishing matters as facts. We do not believe that the disclosure schedules contain additional information material to an investment decision. The representations and warranties of the parties to the Business Combination Agreement will not survive the closing of the Merger. Additionally, the representations and warranties of the parties to the Business Combination Agreement may or may not have been accurate as of any specific date and do not purport to be accurate as of the date of this proxy statement/prospectus. Accordingly, no person should rely on the representations and warranties in the Business Combination Agreement or the summaries thereof in this proxy statement/prospectus as characterizations of the actual state of facts about ENVI, Merger Sub, Sponsor, GreenLight or any other matter.On August 9, 2021, ENVI, Merger Sub and GreenLight entered into the Business Combination Agreement, which provides for, among other things, the following transactions, in each case in accordance with the terms of the Business Combination Agreement:
| (a) | on the Closing Date, the parties to the Business Combination Agreement will cause a certificate of merger to be executed and filed with the Secretary of State of the State of Delaware, pursuant to which Merger Sub will merge with and into GreenLight, with GreenLight being the surviving company in the Merger and, after giving effect to such merger, GreenLight will be a wholly owned subsidiary of New GreenLight; |
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| (b) | at the Effective Time, each outstanding share of capital stock of GreenLight (other than treasury shares and shares with respect to which appraisal rights under the DGCL are properly exercised and not withdrawn) (each, a “ Company Share ”) shall be automatically cancelled and extinguished and converted into a number of shares of New GreenLight Common Stock equal to the product of (x) the conversion ratio applicable to such Company Share, if any, multiplied by (y) the quotient obtained by dividing (a) 120,000,000 by (b) the number of Fully-Diluted Shares (as defined in the Business Combination Agreement) (such quotient, the “Exchange Ratio ”); |
| (c) | each option to purchase shares of capital stock of GreenLight (each, a “ GreenLight Option ”) that is outstanding and unexercised immediately prior to the Effective Time shall be converted into an option issued under the New GreenLight Equity Plan to purchase a number of shares of New GreenLight Common Stock (each, a “Rollover Option ”) equal to the product (rounded down to the nearest whole number) of (x) the number of Company Shares subject to such GreenLight Option immediately prior to the Effective Time, multiplied by (y) the Exchange Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to the quotient of (i) the exercise price per share of such GreenLight Option immediately prior to the Effective Time divided by (ii) the Exchange Ratio. Each Rollover Option shall be subject to the same terms and conditions (including applicable vesting, expiration and forfeiture provisions) that applied to the corresponding GreenLight Option immediately prior to the Effective Time, except (I) as specifically provided above, or (II) as to (1) terms rendered inoperative by reason of the transactions contemplated by the Business Combination Agreement (including any anti-dilution or other similar provisions that may have adjusted or may adjust the number of underlying shares that are subject to any such option until the effective time of the Merger), or (2) such other immaterial administrative or ministerial changes as the ENVI Board (or the compensation committee of the ENVI Board) may determine in good faith are appropriate to effectuate the administration of the Rollover Options; |
| (d) | shares of New GreenLight Common Stock issued in respect of shares of GreenLight common stock that are subject to vesting or forfeiture (the “ GreenLight Restricted Shares ”), shall be subject to the same terms and conditions (including applicable vesting, expiration and forfeiture provisions) that applied to the corresponding GreenLight Restricted Share immediately prior to the Effective Time; |
| (e) | each warrant of GreenLight (“ GreenLight Warrant ”), to the extent outstanding and unexercised, shall automatically, without any action of any party or any other person (including the holder thereof), be assumed by New GreenLight and converted into a warrant to acquire shares of New GreenLight Common Stock (such warrants, the “New GreenLight Warrants ”) equal to the product (rounded down to the nearest whole number) of (x) the number of GreenLight Shares (on anas-converted basis) subject to such GreenLight Warrant immediately prior to the Effective Time, multiplied by (y) the Exchange Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to the quotient of (i) the exercise price per share of such GreenLight Warrant immediately prior to the Effective Time, divided by (ii) the Exchange Ratio. Each New GreenLight Warrant will be subject to the same terms and conditions as were applicable to the GreenLight Warrant other than for terms rendered inoperative by reason of the transactions contemplated by the Business Combination Agreement, including any anti-dilution or other similar adjustment provisions; |
| (f) | at the Effective Time, each of the treasury shares of GreenLight will be cancelled and extinguished for no additional consideration; |
| (g) | at the Effective Time, each ENVI Class A Share and ENVI Class B Share that is issued and outstanding immediately prior to the Merger shall become one share of New GreenLight Common Stock; |
| (h) | at the Effective Time, each share of capital stock of the Merger Sub shall be converted into one share of common stock, par value $0.0001 per share of Honey Bee Merger Sub, Inc.; and |
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| (i) | at the Effective Time, ENVI will change its name to “GreenLight Biosciences, Inc.” (or if the Public Benefit Corporation Proposal is also approved, ENVI will instead change its name to “GreenLight Biosciences, PBC”.) |
In connection with the foregoing and concurrently with the execution of the Business Combination Agreement, ENVI entered into Subscription Agreements with each of the PIPE Investors, pursuant to which, among other things, the PIPE Investors have agreed to subscribe for and purchase, and ENVI has agreed to issue and sell to the PIPE Investors, on the Closing Date immediately prior to the Effective Time, an aggregate of 12,425,000 shares of New GreenLight Common Stock at a price of $10.00 per share, for aggregate gross proceeds of $124,525,000. The shares of New GreenLight Common Stock to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act and will be issued in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act. The PIPE Financing is contingent upon, among other things, the substantially concurrent closing of the Business Combination.
The Subscription Agreements grant the PIPE Investors certain resale registration rights in connection with the PIPE Financing. ENVI agreed to file a registration statement with the SEC within 30 calendar days after the Closing to register the resale of the shares acquired in the PIPE Financing. ENVI agreed to use its commercially reasonable efforts to have the registration statement declared effective as soon as practicable after filing but no later than the earlier of (i) the 60th calendar day (or 90th calendar day if the SEC notifies ENVI that it will “review” the registration statement) following the Closing Date and (ii) the 10th business day after the date ENVI is notified (orally or in writing, whichever is earlier) by the SEC that the registration statement will not be “reviewed” or will not be subject to further review.
In connection with the Business Combination, certain related agreements have been, or will be entered into on or prior to Closing, including the Subscription Agreements, the Transaction Support Agreements, the Sponsor Letter Agreement and the Investor Rights Agreement (each as defined in this proxy statement/prospectus). See” for more information.
“
—
Related Agreements
Consideration to GreenLight Equityholders in the Business Combination
In accordance with the terms and subject to the conditions of the Business Combination Agreement, at the Effective Time, the aggregate consideration to be delivered to the GreenLight equityholders in connection with the transaction contemplated under the Business Combination Agreement will be 120,000,000 shares of New GreenLight Common Stock, including any shares issuable upon exercise of the Rollover Options and the warrants of GreenLight that will become warrants to purchase shares of New GreenLight Common Stock (the “
Assumed Warrants
”), and excluding treasury shares of GreenLight and shares with respect to which appraisal rights under the DGCL are properly exercised and not withdrawn.Aggregate Transaction Proceeds
The Aggregate Transaction Proceeds will be used for general corporate purposes after the Business Combination.
Closing and Effective Time of the Business Combination
The Closing of the transactions contemplated by the Business Combination Agreement is required to take place electronically by exchange of the closing deliverables as promptly as reasonably practicable, but in no event later than the third (3rd) business day, following the satisfaction (or, to the extent permitted by applicable law, waiver) of the conditions described below under the section titled,” (other than those conditions that by their nature are to be satisfied at the Closing, but subject to satisfaction or waiver of such conditions) or at such other place, date and/or time as ENVI and GreenLight may mutually agree in writing.
“
—
Conditions to Closing of the Business Combination
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Conditions to Closing of the Business Combination
Conditions to Each Party’s Obligations
The respective obligations of each party to the Business Combination Agreement to consummate the transactions contemplated by the Business Combination are subject to the satisfaction or, if permitted by applicable law, written waiver by all of the parties to the Business Combination Agreement of the following conditions:
| • | each applicable waiting period under the HSR Act relating to the Business Combination having expired or been terminated; |
| • | no order or law issued or enacted by any court of competent jurisdiction or other governmental entity of competent jurisdiction enjoining or prohibiting the Merger shall be in effect; |
| • | the Registration Statement becoming effective in accordance with the provisions of the Securities Act, no stop order being issued by the SEC and remaining in effect with respect to the Registration Statement, of which this proxy statement/prospectus forms a part, and no proceeding seeking such a stop order being threatened or initiated by the SEC and remaining pending; |
| • | the approval of the Business Combination Agreement and the transactions contemplated thereby (including the Merger) being obtained by (a) a majority of the voting power of the outstanding shares of capital stock of GreenLight, voting together on an as-converted to common stock basis, (b) a majority of the outstanding commons stock of GreenLight, (c) a majority of the outstanding shares of preferred stock of GreenLight, voting together on anas-converted to common stock basis, (d) a majority of the outstanding shares of GreenLight Series C Preferred Stock, voting as a separate class, and (e) a majority of the outstanding shares of GreenLight Series D Preferred, voting as a separate class (clauses (a)-(e), the “GreenLight Required Shareholder Approval ”); |
| • | the approval of each Condition Precedent Proposal by the affirmative vote of the requisite percentage of holders of common stock of ENVI entitled to vote thereon being obtained, under and in accordance with the DGCL and the Existing Organizational Documents; |
| • | New GreenLight’s initial listing application with Nasdaq in connection with the transactions contemplated by the Business Combination Agreement being approved and, immediately following the Effective Time and after giving effect to any redemption of shares of ENVI Class A Common Stock in accordance with the Existing Organizational Documents, ENVI satisfying any applicable initial and continuing listing requirements of Nasdaq, and ENVI not having received any notice of non-compliance in connection therewith (and there is no basis for Nasdaq to provide such a notice ofnon-compliance) that has not been cured or would not be cured at or immediately following the Effective Time, and the shares of New GreenLight Common Stock (including the shares of New GreenLight Common Stock to be issued in connection with the Merger), being approved for listing on Nasdaq; and |
| • | after giving effect to the transactions contemplated by the Business Combination Agreement (including the PIPE Financing and any redemptions of shares of ENVI Class A Common Stock in accordance with the Existing Organizational Documents), ENVI having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) immediately after the Effective Time of the Merger. |
Other Conditions to the Obligations of the ENVI Parties
The obligations of the ENVI Parties to consummate the transactions contemplated by the Business Combination Agreement are subject to the satisfaction or, if permitted by applicable law, written waiver by ENVI (on behalf of itself and the other ENVI Parties) of the following further conditions:
| • | the representations and warranties of GreenLight regarding its organization and qualification, certain representations and warranties regarding its capitalization, the absence of change in control payments |
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or declaration of dividends or other distributions, the authority of GreenLight to execute and deliver the Business Combination Agreement and each of the ancillary documents thereto to which it is or will be a party and to consummate the transactions contemplated thereby and GreenLight brokers’ fees being true and correct (without giving effect to any limitation of “materiality” or “GreenLight Material Adverse Effect” (as defined below) or any similar limitation set forth in the Business Combination Agreement) in all material respects as of the date of the Business Combination Agreement and the Closing Date as though made on and as of the Closing Date (or, if given as of an earlier date, as of such earlier date); |
| • | the representation and warranty regarding the absence of a “GreenLight Material Adverse Effect” since January 1, 2021 being true and correct in all respects as of the date of the Business Combination Agreement and the Closing Date, as though made on and as of the Closing Date (or, if given as of an earlier date, as of such earlier date), provided that this condition will be deemed satisfied if there is no GreenLight Material Adverse Effect that is continuing; |
| • | the other representations and warranties of GreenLight being true and correct (without giving effect to any limitation as to “materiality” or “GreenLight Material Adverse Effect” or any similar limitation set forth in the Business Combination Agreement) in all respects as of the date of the Business Combination Agreement and the Closing Date, as though made on and as of the Closing Date (or, if given as of an earlier date, as of such earlier date), except where the failure of such representations and warranties to be true and correct, taken as a whole, does not cause a GreenLight Material Adverse Effect; |
| • | GreenLight having performed and complied in all material respects with the covenants and agreements required to be performed or complied with by it under the Business Combination Agreement at or prior to the Closing; |
| • | since the date of the Business Combination Agreement, no GreenLight Material Adverse Effect has occurred that is continuing; |
| • | GreenLight having secured the requisite written consent and approval of note holders necessary to cause the promissory notes issued pursuant to that certain Convertible Note Purchase Agreement, dated as of April 9, 2020 by and between a subsidiary of GreenLight and the other parties thereto, as amended to date, to convert concurrently with (or immediately prior to) the Closing into shares of GreenLight Series D Preferred Stock; |
| • | ENVI must have received a certificate executed by an authorized officer of GreenLight confirming that the conditions set forth in the first five bullet points in this section have been satisfied. |
| • | ENVI must have received the Investor Rights Agreement, duly executed by certain stockholders of GreenLight. |
Other Conditions to the Obligations of GreenLight
The obligations of GreenLight to consummate the transactions contemplated by the Business Combination Agreement are subject to the satisfaction or, if permitted by applicable law, written waiver by GreenLight of the following further conditions:
| • | the representations and warranties regarding the organization and qualification of the ENVI Parties, the authority of each ENVI Party to execute and deliver the Business Combination Agreement and each of the ancillary documents thereto to which it is or will be a party and to consummate the transactions contemplated thereby, certain representations and warranties regarding the capitalization of the ENVI Parties, the absence of change in control payments and ENVI brokers’ fees being true and correct (without giving effect to any limitation of “materiality” or “ENVI Material Adverse Effect” (as defined below) or any similar limitation set forth in the Business Combination Agreement) in all material respects as of the date of the Business Combination Agreement and the Closing Date, as though made on and as of the Closing Date (or, if given as of an earlier date, as of such earlier date); |
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| • | certain other representations and warranties regarding the absence of an ENVI Material Adverse Effect since December 31, 2020 being true and correct in all respects, as of the date of the Business Combination Agreement and the Closing Date, as though made on and as of the Closing Date (or, if given as of an earlier date, as of such earlier date), provided that this condition will be deemed satisfied if there is no ENVI Material Adverse Effect that is continuing; |
| • | the other representations and warranties of the ENVI Parties being true and correct (without giving effect to any limitation of “materiality” or “ENVI Material Adverse Effect” or any similar limitation set forth in the Business Combination Agreement) in all respects as of the date of the Business Combination Agreement and the Closing Date, as though made on and as of the Closing Date (or, if given as of an earlier date, as of such earlier date), except where the failure of such representations and warranties to be true and correct, taken as a whole, does not cause an ENVI Material Adverse Effect; |
| • | the ENVI Parties having performed and complied in all material respects with the covenants and agreements required to be performed or complied with by them under the Business Combination Agreement at or prior to the Closing; |
| • | since the date of the Business Combination Agreement, no ENVI Material Adverse Effect has occurred that is continuing; |
| • | the Aggregate Transaction Proceeds being equal to or greater than $105,000,000; |
| • | the New GreenLight Board consisting of the number of directors, and comprising the individuals, determined pursuant to Section 5.18(a)(i) and (ii) of the Business Combination Agreement; |
| • | (i) the Proposed Charter having been filed with the Secretary of State of the State of Delaware and becoming effective or providing that the Proposed Certificate of Incorporation will become effective no later than the Effective Time and (ii) the Proposed Bylaws having become effective or providing that the Proposed Bylaws will become effective no later than the Effective Time; |
| • | the initial stockholders having complied in all material respects with their respective covenants and agreements to be performed or complied with by them under the Sponsor Letter Agreement at or prior to Closing; |
| • | ENVI must maintain its Nasdaq listing in good standing; |
| • | GreenLight must have received a certificate executed by an authorized officer of ENVI confirming that the conditions set forth in the first five bullet points of this section have been satisfied; and |
| • | GreenLight must have received the Investor Rights Agreement, duly executed by ENVI and the initial stockholders. |
Certain conditions to ENVI’s or GreenLight’s obligations to complete the Business Combination may be waived, in whole or in part, to the extent permitted by the Existing Organizational Documents and applicable laws, either unilaterally or by agreement of ENVI and GreenLight. For example, it is a condition to our obligations to close the Business Combination that certain of GreenLight’s representations and warranties are true and correct in all respects as of the Closing Date, except where the failure of such representations and warranties to be true and correct, taken as a whole, does not result in a material adverse effect. However, if the ENVI Board determines that it is in our stockholders’ best interest to waive any such breach, then the ENVI Board may elect to waive that condition and consummate the Business Combination. Notwithstanding the foregoing, certain closing conditions may not be waived due to the parties’ charters or organizational documents, applicable law, or otherwise. The following closing conditions may not be waived to complete the Business Combination: the approval by our stockholders of the Business Combination Proposal, the Charter Amendment Proposal and the Nasdaq Proposal being obtained; approval of the Business Combination Agreement and the Merger by the GreenLight stockholders; each applicable waiting period under the HSR Act relating to the Business Combination Agreement having expired or been terminated; the absence of any law or order that would prohibit the consummation of the Business Combination; ENVI having at least $5,000,001 of net tangible assets
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(as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) after giving effect to the transactions contemplated by the Business Combination Agreement (including the PIPE Financing and any redemptions); the approval by Nasdaq of our initial listing application in connection with the Business Combination; and the effectiveness of the registration statement of which this proxy statement/prospectus forms a part.
Representations and Warranties
Under the Business Combination Agreement, GreenLight made customary representations and warranties to ENVI relating to, among other things: organization and qualification; capitalization of GreenLight and its subsidiaries; authorization; financial statements and absence of undisclosed liabilities, consents, requisite governmental approvals; and absence of violations; permits; material contracts; absence of certain changes; litigation; compliance with applicable law; employee plans; environmental matters; intellectual property; labor matters; insurance; tax matters; brokers; real and personal property; transactions with affiliates; data privacy and security; compliance with international trade and
anti-corruption
laws; information supplied; regulatory compliance; suppliers; investigation; and no other representations and exclusivity of representations and warranties. The representations and warranties made under the Business Combination Agreement will not survive the closing of the Merger.Under the Business Combination Agreement, the ENVI Parties made customary representations and warranties to GreenLight relating to, among other things: organization and qualification; authorization; consents, requisite governmental approvals and absence of violations; brokers; information supplied; capitalization of ENVI and Merger Sub; SEC filings; absence of certain changes; contracts; no defaults; investment company status; the trust account; financial ability; transactions with affiliates; litigation; compliance with applicable law; business activities; internal controls; listing; financial statements; absence of undisclosed liabilities; employees; tax matters; CFIUS foreign person status; compliance with international trade and
anti-corruption
laws; change of control payments; the PIPE financing; investigation; and no other representations and exclusivity of representations and warranties. The representations and warranties made under the Business Combination Agreement will not survive the closing of the Merger.Material Adverse Effect
Under the Business Combination Agreement, certain representations and warranties of GreenLight and ENVI are qualified in whole or in part by materiality thresholds. In addition, certain representations and warranties of GreenLight and ENVI are qualified in whole or in part by a material adverse effect standard for purposes of determining whether a breach of such representations and warranties has occurred.
Pursuant to the Business Combination Agreement, a “GreenLight Material Adverse Effect” means any change, event, effect or occurrence that, individually or in the aggregate with any other change, event, effect or occurrence, has had or would reasonably be expected to have a material adverse effect on (a) the business, results of operations or financial condition of GreenLight and its subsidiaries, taken as a whole, or (b) the ability of GreenLight to consummate the Merger, in each case, in accordance with the terms of the Business Combination Agreement; provided, however, that, in the case of clause (a), none of the following shall be taken into account in determining whether a GreenLight Material Adverse Effect has occurred or would reasonably be expected to occur: any adverse change, event, effect or occurrence arising after the date of the Business Combination Agreement from or related to (i) general business or economic conditions in or affecting the United States, or changes therein, or the global economy generally, (ii) any national or international political or social conditions in the United States or any other country, including the engagement by the United States or any other country in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence in any place of any military or terrorist attack, sabotage or cyberterrorism, (iii) changes in conditions of the financial, banking, capital or securities markets generally in the United States or any other country or region in the world, or changes therein, including changes in interest rates in the United States or any other country and changes in exchange rates for the currencies of any countries, (iv) changes in any applicable laws or accounting standards
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(including legally binding interpretations thereof), (v) any change, event, effect or occurrence that is generally applicable to the industries or markets in which GreenLight or any of its subsidiaries operate, (vi) the execution or public announcement of the Business Combination Agreement or the pendency or consummation of the transactions contemplated by the Business Combination Agreement, including the impact thereof on the relationships, contractual or otherwise, of GreenLight or any of its subsidiaries with employees, customers, investors, contractors, lenders, suppliers, vendors, partners, licensors, licensees, payors or other third parties related thereto (provided that the exception in this clause (vi) shall not apply to the representations and warranties set forth in Section 3.5(b) of the Business Combination Agreement to the extent that its purpose is to address the consequences resulting from the execution or public announcement of the Business Combination Agreement or the pendency or the consummation of the transactions contemplated by the Business Combination Agreement or the condition set forth in Section 6.2(a) of the Business Combination Agreement to the extent it relates to such representations and warranties), (vii) any failure by GreenLight or any of its subsidiaries to meet, or changes to, any internal or published budgets, projections, forecasts, estimates or predictions (although the underlying facts and circumstances resulting in such failure may be taken into account to the extent not otherwise excluded from this definition pursuant to clauses (i) through (vi) or (viii)), or (viii) any hurricane, tornado, flood, earthquake, tsunami, natural disaster, mudslides, wild fires, epidemics, pandemics (including
COVID-19)
or quarantines, acts of God or other natural disasters or comparable events in the United States or any other country or region in the world, or any escalation of the foregoing; provided, however, that any change, event, effect or occurrence resulting from a matter described in any of the foregoing clauses (i) through (v) or clause (viii) may be taken into account in determining whether a GreenLight Material Adverse Effect has occurred or would reasonably be expected to occur to the extent such change, event, effect or occurrence has or has had a disproportionate adverse effect on GreenLight or any of its subsidiaries, taken as a whole, relative to other participants operating in the industries or markets in which GreenLight or any of its subsidiaries operate.Under the Business Combination Agreement, certain representations and warranties of the ENVI Parties are qualified in whole or in part by a material adverse effect standard for purposes of determining whether a breach of such representations and warranties has occurred. Pursuant to the Business Combination Agreement, an “ENVI Material Adverse Effect” means any change, event, effect or occurrence that, individually or in the aggregate with any other change, event, effect or occurrence, has had or would reasonably be expected to have a material adverse effect on (a) the business of ENVI, results of operations or financial condition of the ENVI Parties, taken as a whole, or (b) the ability of any ENVI Party to consummate the Merger, in each case, in accordance with the terms of the Business Combination Agreement; provided, however, that, in the case of clause (a), none of the following shall be taken into account in determining whether an ENVI Material Adverse Effect has occurred or would reasonably be expected to occur: any adverse change, event, effect or occurrence arising after the date of the Business Combination Agreement from or related to (i) general business or economic conditions in or affecting the United States, or changes therein, or the global economy generally, (ii) any national or international political or social conditions in the United States or any other country, including the engagement by the United States or any other country in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence in any place of any military or terrorist attack, sabotage or cyberterrorism, (iii) changes in conditions of the financial, banking, capital or securities markets generally in the United States or any other country or region in the world, or changes therein, including changes in interest rates in the United States or any other country and changes in exchange rates for the currencies of any countries, (iv) changes in any applicable laws or accounting standards (including legally binding interpretations thereof), (v) any change, event, effect or occurrence that is generally applicable to the industries or markets in which any ENVI Party operates, (vi) the execution or public announcement of the Business Combination Agreement or the pendency or consummation of the transactions contemplated by the Business Combination Agreement, including the impact thereof on the relationships, contractual or otherwise, of any ENVI Party with investors, contractors, lenders, suppliers, vendors, partners, licensors, licensees, payors or other third parties related thereto (provided that the exception in this clause (vi) shall not apply to the representations and warranties set forth in Section 4.3(b) of the Business Combination Agreement to the extent that its purpose is to address the consequences resulting from the public announcement or pendency or the consummation of the transactions contemplated by the Business Combination Agreement or the condition set forth in Section 6.3(a) of the Business Combination Agreement to
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the extent it relates to such representations and warranties), (vii) any failure by any ENVI Party to meet, or changes to, any internal or published budgets, projections, forecasts, estimates or predictions (although the underlying facts and circumstances resulting in such failure may be taken into account to the extent not otherwise excluded from this definition pursuant to clauses (i) through (vi) or (viii)), or (viii) any hurricane, tornado, flood, earthquake, tsunami, natural disaster, mudslides, wild fires, epidemics, pandemics (including
COVID-19)
or quarantines, acts of God or other natural disasters or comparable events in the United States or any other country or region in the world, or any escalation of the foregoing; provided, however, that any change, event, effect or occurrence resulting from a matter described in any of the foregoing clauses (i) through (v), or (viii) may be taken into account in determining whether an ENVI Material Adverse Effect has occurred or would reasonably be expected to occur to the extent such change, event, effect or occurrence has or has had a disproportionate adverse effect on the ENVI Parties, taken as a whole, relative to other Special Purpose Acquisition Companies operating in the industries in which the ENVI Parties operate.Covenants of the Parties
Covenants of GreenLight
GreenLight made certain covenants under the Business Combination Agreement, including, among others, the following:
| • | subject to certain exceptions or as consented to in writing by ENVI (such consent not to be unreasonably withheld, conditioned or delayed), prior to the Closing, GreenLight will and will cause its subsidiaries to, use commercially reasonable efforts to operate the business of GreenLight and its subsidiaries in the ordinary course in all material respects and use commercially reasonable efforts to maintain and preserve intact in all material respects the business organization, assets, properties and material business relations of GreenLight and its subsidiaries, taken as a whole. |
| • | subject to certain exceptions, prior to the Closing, GreenLight will and will cause its subsidiaries to, except as expressly contemplated in the Business Combination Agreement or the ancillary documents, as required by applicable law, as set forth on Section 5.1(b) of the GreenLight disclosure schedules or as consented to by ENVI (such consent not to be unreasonably withheld, conditioned or delayed except in the case of the first, second, fourth, twelfth, fifteenth and sixteenth sub-bullets below), not do any of the following: |
| • | declare, set aside, make or pay any dividends or distribution or payment in respect of, any equity securities of GreenLight and its subsidiaries or repurchase or redeem any outstanding equity securities of GreenLight and its subsidiaries, other than dividends or distributions, declared, set aside or paid by any of GreenLight’s subsidiaries to GreenLight or any subsidiary that is, directly or indirectly, wholly owned by GreenLight; |
| • | merge, consolidate, combine or amalgamate GreenLight or any of its subsidiaries with any person or purchase or otherwise acquire any corporation, partnership, association or other business entity or organization or division thereof; |
| • | adopt any amendments, supplements, restatements or modifications to GreenLight or its subsidiaries’ governing documents or the GreenLight stockholders agreement; |
| • | subject to certain exceptions, sell, assign, exclusively license or otherwise dispose of any material assets or properties of GreenLight or its subsidiaries; |
| • | subject any material assets or properties of GreenLight to any lien (other than any permitted liens); |
| • | transfer, issue, sell, grant, or otherwise dispose of, or subject to a lien, (i) any equity interests of GreenLight or its subsidiaries or (ii) any options warrants, rights of conversion or other rights, agreements, arrangements or commitments obligating GreenLight or its subsidiaries to issue, deliver or sell any equity securities of GreenLight or its subsidiaries, other than, in each case, (x) the issuance of |
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shares of common stock of GreenLight upon the exercise of any options outstanding in accordance with the terms of the GreenLight 2012 Equity Plan and each other plan that provides for the award to any current or former director, manager, officer, employee, individual, independent contractor or other service provider of GreenLight and the underlying grant, award or similar agreement, (y) the issuance of shares of GreenLight Series A Preferred Stock or GreenLight Series D Preferred Stock upon the exercise of any warrants outstanding in accordance with the terms of the applicable agreement governing the terms of such warrants and (z) the issuance of shares of common stock of GreenLight upon conversion of shares of preferred stock of GreenLight in accordance with the governing documents of GreenLight; |
| • | incur, create or assume any indebtedness other than ordinary course trade payables or guarantee any liability of any person; |
| • | amend or modify, in either case in a manner materially adverse to GreenLight, or terminate certain material contracts of GreenLight, waive any material benefit or right under any such material contracts or enter into, amend or modify any contract that would have been a certain type of material contract had such contract been entered into, amended or modified prior to the date of the Business Combination Agreement; |
| • | subject to certain exceptions, make any loans, advances or capital contributions to, or guarantees for the benefit of, or any investments in, any person; |
| • | subject to certain exceptions, amend or modify in any material respect, or adopt or enter into any collective bargaining agreement, benefit or compensation plan, policy, program or contract that would have been an employee benefit plan had such plan been entered into as of the date of the Business Combination Agreement or materially increase the compensation or benefits payable to any current or former director, manager, officer, employee, individual, independent contractor or other service provider or take any action to accelerate any payments or benefit payable to any such person; |
| • | waive or release any noncompetition, non-solicitation, no-hire, nondisclosure or other restrictive covenant obligation of any current or former director, manager, officer, employee, individual independent contractor or other service provider; |
| • | make, change or revoke any material tax election other than in the ordinary course of business consistent with past practice, change any annual tax accounting period, surrender any right to claim a material tax refund, materially amend any filed material tax return, file any material tax return inconsistent with past practice in any material respect, enter into any tax allocation, tax sharing, tax indemnity or similar agreement (other than one that is in a contract entered into in the ordinary course of business that is not primarily related to taxes), enter into any tax closing agreement, settle any material tax claim or assessment, or consent to any extension or waiver of the limitation period applicable to or relating to any material tax claim or assessment, other than any such extension of waiver that is obtained in the ordinary course of business; |
| • | enter into any settlements, conciliation or similar contracts which would involve the payment by GreenLight or any of its subsidiaries in excess of a certain threshold or that impose any material non-monetary obligations on GreenLight or any of its subsidiaries; |
| • | subject to certain exceptions, authorize, recommend, propose or announce an intention to adopt a plan, or otherwise effect, a plan of complete or partial liquidation, dissolution, restructuring, recapitalization, reorganization or similar transaction; |
| • | make any material changes to the methods of accounting of GreenLight or any of its subsidiaries, other changes that are made in accordance with Public Company Accounting Oversight Board standard; |
| • | enter into any contract with any broker, finder, investment banker or other person providing for the payment of any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by the Business Combination Agreement or ancillary documents; |
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| • | make any change of control payment that is not disclosed to ENVI on the GreenLight disclosure schedules or make any material payments with respect to a GreenLight affiliated party arrangement that is not disclosed to ENVI on the GreenLight disclosure schedules; or |
| • | enter into any contract to do, or cause to be taken, any of the above actions prohibited under the Business Combination Agreement. |
| • | GreenLight shall terminate certain affiliate contracts as set forth on the GreenLight disclosure schedules effective as of the Closing. |
| • | as promptly as reasonably practicable (and in any event within five (5) business days) following the time at which this registration statement of which this proxy statement/prospectus forms a part, is declared effective under the Securities Act, GreenLight is required to obtain and deliver to ENVI a true and correct copy of a written consent of the GreenLight stockholders adopting and approving the Business Combination Agreement and the transactions contemplated thereby (including the Merger), duly executed by (i) the requisite number of stockholders of GreenLight in accordance with the DGCL and (ii) at least that number of shares equal to the GreenLight Required Shareholder Approval (the “ GreenLight Stockholder Written Consent ”). |
| • | at least two (2) business days prior to the Closing Date, GreenLight is required to deliver an allocation schedule setting forth certain capitalization information of GreenLight for purposes of allocating New GreenLight Common Stock, options to purchase New GreenLight Common Stock or the number of New GreenLight Common Stock subject to the Assumed Warrants, as applicable, among the GreenLight equityholders. |
| • | subject to certain exceptions, prior to the Closing, each of ENVI and GreenLight will purchase a “tail” policy providing liability insurance coverage for directors and officers of ENVI and GreenLight, respectively, with respect to matters occurring on or prior to the Closing, with such “tail” policies to be maintained by New GreenLight following the Closing. |
Prior to the earlier of the Closing or termination of the Business Combination Agreement in accordance with its terms, GreenLight shall not, and shall cause its subsidiaries and its and their respective officers and directors to not and shall use its commercially reasonable efforts to cause its other representatives to not, directly or indirectly: (i) solicit, initiate, knowingly induce, knowingly encourage, facilitate, discuss or negotiate, directly or indirectly, any inquiry, proposal or offer that constitutes, or could reasonably be expected to lead to, a GreenLight Acquisition Proposal (as defined below); (ii) furnish or disclose any
non-public
information to any Person in connection with, or that could reasonably be expected to lead to, a GreenLight Acquisition Proposal; (iii) enter into any contract or other arrangement or understanding regarding a GreenLight Acquisition Proposal; (iv) make any filings or submissions to the SEC connection with a public offering of any equity securities or other securities, of GreenLight or its subsidiaries; or (v) otherwise cooperate in any way with, or assist or participate in, any negotiations or discussions with any person in connection with any GreenLight Acquisition Proposal or a transaction of the type in clause (iv). A “GreenLight Acquisition Proposal
” is defined as (a) any direct or indirect acquisition (or other business combination), in one or a series of related transactions, (i) of the Equity Securities of GreenLight, in each case, that, if consummated, would result in a person acquiring beneficial ownership of 15% or more of any class of outstanding voting Equity Securities of GreenLight or 15% or more of the outstanding voting Equity Securities of GreenLight (regardless of class) or (ii) of all or a portion of assets or businesses of the GreenLight Group Companies which constitute 15% or more of the fair market value of the GreenLight Group Companies, taken as a whole (in the case of each of clause (i) and (ii), whether by merger, consolidation, recapitalization, purchase or issuance of Equity Securities, tender offer or otherwise), or (b) any direct or indirect acquisition, in one or a series of related transactions, of 15% or more of any class of outstanding voting Equity Securities of GreenLight or 15% or more of the outstanding voting Equity Securities of GreenLight (regardless of class) (in each case of clauses (a) and (b) other than pursuant to the exercise or conversion of GreenLight Options or GreenLight Warrants in accordance with the terms of the New GreenLight Equity Plan, the underlying grant, award or similar agreement (as applicable)). Notwithstanding the foregoing or anything to113
the contrary herein, neither the Business Combination Agreement, the ancillary documents nor the transactions contemplated thereby or any transaction with any ENVI Party shall constitute (in whole or in part) a GreenLight Acquisition Proposal. GreenLight shall give ENVI prompt notice of any demands for appraisal of any share of GreenLight, attempted withdrawals of such demands and any other documents or instruments served pursuant to the DGCL relating to GreenLight’s stockholders’ rights of appraisal in accordance with the provisions of Section 262 of the DGCL, and ENVI shall, at its sole cost and expense, have the opportunity to participate in, but not control, all negotiations and proceedings with respect to all such demands. The Company will not, except with the prior written consent of ENVI (which consent shall not be unreasonably withheld, conditioned, or delayed), settle, or make any payment, or deliver any consideration, with respect to, any such demand.
As promptly as reasonably practicable following the date of the Business Combination Agreement, GreenLight shall deliver to ENVI the GreenLight audited consolidated financial statements for the years ended December 31, 2019 and December 31, 2020 and unaudited consolidated financial statements as of and for the six (6) month period ended June 30, 2021.
Covenants of ENVI
ENVI made certain covenants under the Business Combination Agreement, including, among others, the following:
| • | subject to certain exceptions, prior to the Closing, ENVI will and will cause its subsidiaries to, except as expressly contemplated in the Business Combination Agreement or the ancillary documents, as required by applicable law, as set forth on Section 5.11 of the ENVI disclosure schedules or as consented to in writing by GreenLight (such consent not to be unreasonably withheld, conditioned or delayed except in the case of the first, second, third, fourth, fifth, ninth, and eleventh sub-bullets below), not do any of the following: |
| • | adopt any amendments, supplements, restatements or modifications to the ENVI trust agreement or the governing documents of any ENVI Party; |
| • | create or form a subsidiary; |
| • | acquire (including by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or enter into any strategic joint ventures, partnerships or alliances with any other person, or make any loans, advances or capital contributions to, or guarantees for the benefit of, or any investments in, any person; |
| • | declare, set aside, make or pay any dividends or distribution or payment in respect of, any equity securities of ENVI and its subsidiaries or repurchase or redeem or otherwise acquire any outstanding equity securities of ENVI and its subsidiaries; |
| • | authorize, recommend, propose or announce an intention to adopt, or otherwise effect, a plan of complete or partial liquidation, dissolution, restructuring, recapitalization, reorganization or similar transaction involving ENVI or its subsidiaries; |
| • | split, combine or reclassify any ENVI’s or its subsidiaries capital stock or other equity securities or issue any other security in respect of, in lieu of or in substitution for shares of ENVI’s or its subsidiaries capital stock; |
| • | incur, create or assume any indebtedness or guarantee liability of any person; |
| • | make any loans or advances to, or capital contributions in, any other person, other than to, or in, ENVI or any of its subsidiaries; |
| • | issue any equity securities of ENVI or grant any additional options, warrants or stock appreciation rights with respect to its equity securities; |
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| • | subject to certain exceptions, amend, modify or renew any ENVI related party transaction or make any material payment to any ENVI related party or enter into any contract that would constitute an ENVI related party transaction; |
| • | engage in any activities or business, or incur any liabilities, other than activities or business or liabilities (i) in connection with or incidental or related to Merger Sub’s organization, incorporation or formation, as applicable, or ENVI’s or its subsidiaries continuing corporate (or similar) existence, (ii) expressly permitted pursuant to or in accordance with Section 5.11 of the Business Combination Agreement (including those actions expressly contemplated by the Business Combination Agreement, any ancillary document thereto, the performance of covenants or agreements thereunder or the consummation of the transactions contemplated thereby) or (iii) those that are administrative or ministerial in nature and less than $100,000 individually, or in the aggregate; |
| • | enter into, or amend or modify any material term of (in a manner adverse to ENVI or its subsidiaries), terminate (excluding any expiration in accordance with its terms), or waive or release any material rights, claims or benefits under, any contract of a type required to be listed on Section 4.9 of the ENVI disclosure schedules (or any contract, that if existing on the date hereof, would have been required to be listed on Section 4.9 of the ENVI disclosure schedules); |
| • | adopt or amend any benefit plan, enter into any employment contract or collective bargaining agreement or hire any person as an employee of ENVI or Merger Sub; |
| • | make, change or revoke any material tax election other than in the ordinary course of business consistent with past practice, change any annual tax accounting period, surrender any right to claim a material tax refund, materially amend any filed material tax return, file any material tax return inconsistent with past practice in any material respect, enter into any tax allocation, tax sharing, tax indemnity or similar agreement (other than one that is in a contract entered into in the ordinary course of business that is not primarily related to taxes), enter into any tax closing agreement, settle any material tax claim or assessment, or consent to any extension or waiver of the limitation period applicable to or relating to any material tax claim or assessment, other than any such extension of waiver that is obtained in the ordinary course of business; |
| • | change the methods of accounting of ENVI or any of its subsidiaries in any material respect, other changes that are made in accordance with Public Company Accounting Oversight Board standard; |
| • | authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution; |
| • | enter into any contract with any broker, finder, investment banker or other person providing for the payment of any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by the Business Combination Agreement; |
| • | make any change of control payment that is not disclosed to GreenLight on the ENVI disclosure schedules; |
| • | amend, modify, alter, change or waive any of the terms, conditions and other provisions of any warrants, including any reduction, adjustment or other alteration of the warrant price; or |
| • | enter into any contract to do, or cause to be taken, any of the above actions prohibited under the Business Combination Agreement. |
| • | As promptly as reasonably practicable (and in any event within one business day) following the date of the Business Combination Agreement, ENVI, as the sole stockholder of Merger Sub, will approve and adopt the Business Combination Agreement, the ancillary documents to which Merger Sub is or will be a party and the transactions contemplated hereby and thereby (including the Merger). |
| • | As promptly as reasonably practicable following the effectiveness of this registration statement of which this proxy statement/prospectus forms a part, ENVI will, among other things, (i) duly give notice |
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of and duly convene a meeting of its stockholders for purposes of obtaining the approval of the ENVI stockholders of the Condition Precedent Proposals and the Advisory Charter Amendment Proposals, (ii) cause the registration statement of which this proxy statement/prospectus forms a part to be mailed to the ENVI stockholders, use commercially reasonable efforts to solicit proxies from the holders of ENVI’s outstanding shares to vote in favor of the Condition Precedent Proposals, the Advisory Charter Amendment Proposals and the Adjournment Proposal, and (iii) provide ENVI stockholders with the opportunity to elect to effect an ENVI Stockholder redemption in accordance with the Existing Organizational Documents. |
| • | the ENVI Board shall (i) unanimously approve and recommend to the ENVI Stockholders each of the Condition Precedent Proposals, and (ii) include such recommendation by the ENVI Board in this proxy statement/prospectus. |
| • | none of the ENVI Board, ENVI or any committee of the ENVI Board shall, except as otherwise determined by the ENVI Board in good faith, based on written advice from outside counsel, that, in response to an ENVI Intervening Event (as defined in the Business Combination Agreement), a failure to change, withdraw, withhold, qualify, amend or modify its recommendation would violate the ENVI Board’s fiduciary duties under applicable Law, effect an ENVI Change in Recommendation (as defined in the Business Combination Agreement). |
| • | ENVI shall use its commercially reasonable efforts to cause: (i) New GreenLight’s initial listing application with Nasdaq to have been approved; (ii) New GreenLight Common Stock issuable in accordance with the Business Combination Agreement, including the Merger, to be approved for listing on Nasdaq; and ENVI to satisfy all applicable initial and continuing listing requirements of Nasdaq. |
| • | Prior to the special meeting of the ENVI stockholders, the ENVI Board will approve and adopt the New GreenLight Equity Plan with any changes or modifications thereto as GreenLight and ENVI may mutually agree (such agreement not to be unreasonably withheld, conditioned or delayed by either GreenLight or ENVI, as applicable), and ENVI will initially reserve 31,750,000 shares of New GreenLight Common Stock for grant thereunder plus such additional New GreenLight Common Stock as may become available for issuance under the terms and subject to the conditions of the New GreenLight Equity Plan. |
| • | Prior to the special meeting of the ENVI stockholders, the ENVI Board will approve and adopt the New GreenLight ESPP with any changes or modifications thereto as GreenLight and ENVI may mutually agree (such agreement not to be unreasonably withheld, conditioned or delayed by either GreenLight or ENVI, as applicable), and ENVI will initially reserve 2,000,000 shares of New GreenLight Common Stock for grant thereunder plus such additional shares of New GreenLight Common Stock that may become available for issuance under the terms and subject to the conditions of the New GreenLight ESPP. |
| • | Prior to the Effective Time, ENVI shall maintain the indemnification, exculpation and advancement of expenses provisions in favor of the current or former directors or officers of ENVI or its subsidiaries for a period of six years after the Closing Date and shall, subject to certain exceptions, prior to the Closing, obtain a “tail” policy providing liability insurance coverage for ENVI directors and officers with respect to matters occurring on or prior to the Closing. Prior to the earlier of the Closing or termination of the Business Combination Agreement in accordance with its terms, ENVI and its subsidiaries shall not, and shall cause its respective officers, and directors not to, and shall cause the Sponsor and its controlled affiliates not to, and shall use their commercially reasonable efforts to cause their other affiliates and representatives of ENVI and its subsidiaries, the Sponsor and their controlled affiliates not to, directly or indirectly: (i) solicit, initiate, knowingly induce, knowingly encourage, knowingly facilitate, discuss or negotiate, directly or indirectly, any inquiry, proposal or offer (written or oral) that constitutes or could reasonably be expected to lead to, an ENVI Acquisition Proposal (as defined below); (ii) furnish or disclose any non-public information to any person in connection with, or that could reasonably be expected to lead to, an ENVI Acquisition Proposal; (iii) enter into any contract |
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or other arrangement or understanding regarding an ENVI Acquisition Proposal; (iv) make any filings or submissions with the SEC in connection with an offering of any securities of ENVI or its subsidiaries, other than such filings or submissions required or otherwise expressly contemplated by the Business Combination Agreement; or (v) otherwise cooperate in any way with, or assist or participate in, any negotiations of discussion with any person in connection with an ENVI Acquisition Proposal or a transaction of the type in clause (iv). An “ ENVI Acquisition Proposal ” is defined as (a) any direct or indirect acquisition (or other business combination), in one or a series of related transactions under which ENVI or any of its controlled Affiliates, directly or indirectly, (i) acquires or otherwise purchases any other person(s), (ii) engages in a business combination with any other person(s) or (iii) acquires or otherwise purchases all or a material portion of the assets, Equity Securities or businesses of any other Persons(s) (in the case of each of clause (i), (ii) and (iii), whether by merger, consolidation, recapitalization, purchase or issuance of Equity Securities, tender offer or otherwise), (b) any equity, debt or similar investment in ENVI or any of its controlled Affiliates or (c) any other “Business Combination” as defined in this proxy statement/prospectus. Notwithstanding the foregoing or anything to the contrary herein, none of the Business Combination Agreement, the ancillary documents or the transactions contemplated thereby shall constitute an ENVI Acquisition Proposal. ENVI shall use its commercially reasonable efforts to obtain the PIPE financing, enforce the obligations of the PIPE investors and satisfy and comply with all the conditions to each Subscription Agreement. |
| • | Subject to certain exceptions, ENVI shall not amend, modify or waive any provision of any Subscription Agreement without prior written consent of GreenLight. |
| • | ENVI shall also promptly notify GreenLight of any material breach or termination under any Subscription Agreement and shall deliver a Closing Notice (as defined in the Subscription Agreements) to the PIPE Investors promptly (and in any event within two (2) business days) following GreenLight’s reasonable request once all the conditions to closing the Business Combination have been satisfied. |
| • | ENVI shall take all such actions as may be necessary or reasonably appropriate such that effective as of the Effective Time the ENVI Board shall consist of seven (7) board members as agreed to in Section 5.18 of the Business Combination Agreement described under the section titled “-Board of Directors.” |
| • | Upon the satisfaction or waiver of the conditions to closing, ENVI shall deliver to the trustee all documents, certificates or other notices required to be delivered to the trustee and shall cause the trustee to (i) pay all amounts (if any) payable to the public stockholders of ENVI pursuant to the redemption, (ii) pay the deferred underwriting expenses as set forth in the Trust Agreement, (iii) deposit all remaining amounts to New GreenLight and (iv) terminate the trust account following the completion of the actions described in clauses (i) through (iii). |
| • | At or prior to the Effective Time, the amended and restated bylaws of ENVI shall have become effective. |
Mutual Covenants of the Parties
The parties mutually made certain covenants under the Business Combination Agreement, including, among others, the following:
| • | using commercially reasonable efforts to consummate the Business Combination and the transactions contemplated thereby; |
| • | notifying the other parties in writing promptly after learning of any event which would reasonably be expected to cause the closing conditions to the Business Combination Agreement to fail or any stockholder demands or other stockholder proceedings relating to the Business Combination Agreement, any ancillary document or any matters relating thereto and reasonably cooperate with one |
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another in connection therewith, including not settling any such proceedings without the consent of the other party; |
| • | keeping certain information confidential in accordance with the existing non-disclosure agreements; |
| • | making public announcements with the written consent of GreenLight and ENVI; |
| • | providing each party reasonable access to the other party’s books, records and management; |
| • | using commercially reasonable efforts to cause the Merger to constitute a transaction treated as a “reorganization” within the meaning of Section 368 of the Code or otherwise use commercially reasonable efforts to restructure the Merger to so qualify; |
| • | cooperating in connection with certain tax matters and filings; and |
| • | making any appropriate filings pursuant to the HSR Act with respect to the transactions contemplated by the Business Combination Agreement promptly (and in any event within ten (10) Business Days) following the date the Business Combination Agreement. |
In addition, ENVI and GreenLight agreed that ENVI and GreenLight will prepare and mutually agree upon and ENVI will file with the SEC, the Registration Statement.
Board of Directors
Following the Closing, it is expected that the current management of GreenLight will become the management New GreenLight, and the board of directors of New GreenLight will consist of seven (7) directors, which will be divided into three classes (Class I, II and III) with Class I and Class II initially consisting of two (2) directors and Class III initially consisting of three (3) directors. Pursuant to the Business Combination Agreement, the New GreenLight Board will consist of seven (7) individuals determined by GreenLight and ENVI in accordance with the Business Combination Agreement prior to the effectiveness of the Registration Statement, including, (i) one individual designated by ENVI (provided the Sponsor may replace such ENVI designee prior to the effectiveness of the Registration Statement), (ii) four directors designated by GreenLight (provided two of such GreenLight designees shall be “independent directors” in accordance with the listing rules of Nasdaq), (iii) GreenLight’s chief executive officer and President, (iv) an individual that qualifies as an “independent director” under the listing rules of Nasdaq and is reasonably acceptable to the Sponsor (provided that if no individual is designated as of such time, then such director seat will be vacant following the Effective Time until an individual is elected or appointed to such directorship in accordance with the Proposed Organizational Documents).
Prior to the time at which this proxy statement/prospectus is declared effective, GreenLight shall designate each director that will serve on the compensation committee, the audit committee and the nominating committee of the New GreenLight Board, subject to applicable listing rules of Nasdaq and applicable Federal Securities Laws.
Survival of Representations, Warranties and Covenants
The representations, warranties, agreements and covenants in the Business Combination Agreement terminate at the Effective Time, except for the covenants and agreements relevant to the Closing, agreements or covenants which by their terms contemplate performance after the Effective Time.
Termination
The Business Combination Agreement may be terminated under certain customary and limited circumstances at any time prior to the Closing, including, among others, the following:
| • | by the mutual written consent of ENVI and GreenLight; |
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| • | by ENVI, subject to certain exceptions, if any of the representations or warranties made by GreenLight are not true and correct or if GreenLight fails to perform any of its respective covenants or agreements under the Business Combination Agreement (including an obligation to consummate the Closing) such that certain conditions to the obligations of ENVI, as described in the section titled “ -Conditions to Closing of the Business Combination”Termination Date ”) unless otherwise extended pursuant to the terms of the Business Combination Agreement; |
| • | by GreenLight, subject to certain exceptions, if any of the representations or warranties made by the ENVI Parties are not true and correct or if any ENVI Party fails to perform any of its covenants or agreements under the Business Combination Agreement (including an obligation to consummate the Closing) such that the condition to the obligations of GreenLight, as described in the section titled “ -Conditions to Closing of the Business Combination” |
| • | by either ENVI or GreenLight, subject to certain exceptions, if the transactions contemplated by the Business Combination Agreement are not consummated on or prior to the Termination Date; |
| • | by either ENVI or GreenLight, |
| • | if any governmental entity of competent jurisdiction shall have issued an order or enacted or promulgated a law permanently enjoining or prohibiting the transactions contemplated by the Business Combination Agreement and, in the case of an order, such order shall have become final and nonappealable; |
| • | if the approval of the Condition Precedent Proposals by ENVI stockholders is not obtained at the special meeting (including any adjournment thereof); and |
| • | by ENVI, if GreenLight does not deliver, or cause to be delivered to ENVI, the GreenLight Stockholder Written Consent when required under the Business Combination Agreement. |
If the Business Combination Agreement is validly terminated, none of the parties to the Business Combination Agreement or their respective representatives will have any liability or any further obligation under the Business Combination Agreement, except (i) in the case of a willful breach of any covenant or agreement under the Business Combination Agreement or fraud, (ii) for customary obligations that survive the termination thereof (such as confidentiality obligations) and (iii) for any person’s liability under any ancillary document, including the Subscription Agreements, with respect to a claim against such person by another person party to such agreement on the terms and subject to the conditions thereunder.
Expenses
The fees and expenses incurred in connection with the Business Combination Agreement and the ancillary documents thereto, and the transactions contemplated thereby, including the fees and disbursements of counsel, financial advisors and accountants, will be paid by the party incurring such fees or expenses. For the avoidance of doubt, if the Business Combination Agreement is terminated in accordance with its terms, GreenLight shall pay, or cause to be paid, all unpaid GreenLight expenses and ENVI shall pay, or cause to be paid, all unpaid ENVI expenses.
Governing Law
The Business Combination Agreement is governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the
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State of Delaware or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of Delaware.
Amendments
The Business Combination Agreement may be amended or modified only by a written agreement executed and delivered by ENVI and GreenLight, provided that, following the Closing, amendments to certain specified provisions will also require the written agreement of the Sponsor if such amendments would be adverse to the Sponsor.
Ownership of New GreenLight Immediately Following the Business Combination
As of September 30, 2021, there were outstanding 25,875,000 shares of ENVI common stock, consisting of 20,700,000 shares of ENVI Class A Common Stock, all of which were issued in ENVI’s initial public offering, and 5,175,000 shares of ENVI Class B Common Stock, all of which were issued to ENVI’s initial stockholders. These amounts do not include 10,350,000 public warrants or 2,750,000 private placement warrants (including the Insider Warrants).
The following table illustrates different ownership levels in New GreenLight Common Stock immediately following the consummation of the Business Combination based on the capitalization of ENVI and GreenLight as of September 30, 2021 and either no redemptions, 50% redemptions or maximum redemptions by the public stockholders, assuming: (i) 103,470,217 shares of New GreenLight Common Stock will be issued to the holders of outstanding shares of capital stock of GreenLight at Closing (including shares issuable upon the conversion of certain notes and the exercise of certain warrants); (ii) 12,425,000 shares of ENVI Class A Common Stock will be issued in the PIPE Financing; and (iii) no outstanding options to purchase New GreenLight Common Stock are exercised. If the actual facts differ from these assumptions, the ownership percentages in New GreenLight will be different.
Assuming No Redemption | Assuming 50% Redemption | Assuming Maximum Redemption | ||||||||||||||||||||||
Shares | % | Shares | % | Shares | % | |||||||||||||||||||
(percentages represent percentages of pro forma outstanding shares) | ||||||||||||||||||||||||
Public shares (a) | 20,700,000 | 14 | % | 10,512,411 | 8 | % | 324,821 | * | ||||||||||||||||
Founder shares | 5,175,000 | 4 | % | 5,175,000 | 4 | % | 5,175,000 | 4 | % | |||||||||||||||
GreenLight stockholders (b)(c) | 103,470,217 | 73 | % | 103,470,217 | 79 | % | 103,470,217 | 85 | % | |||||||||||||||
PIPE shares | 12,425,000 | 9 | % | 12,425,000 | 9 | % | 12,425,000 | 10 | % | |||||||||||||||
Pro forma common stock outstanding as of September 30, 2021 (d) | 141,770,217 | 100 | % | 131,582,628 | 100 | % | 121,395,038 | 100 | % | |||||||||||||||
Potential sources of dilution | ||||||||||||||||||||||||
Public Warrants | 10,350,000 | 7 | % | 10,350,000 | 8 | % | 10,350,000 | 9 | % | |||||||||||||||
Private Placement Warrants | 2,000,000 | 1 | % | 1,500,000 | 1 | % | 1,500,000 | 1 | % | |||||||||||||||
Insider Warrants | 750,000 | * | 600,000 | * | 600,000 | * | ||||||||||||||||||
Rollover Options | 17,555,928 | 12 | % | 17,555,928 | 13 | % | 17,555,928 | 14 | % | |||||||||||||||
| * | Less than 1% |
| (a) | Amount includes 1,000,000 shares of ENVI Class A Common Stock held by HB Strategies, a founder, all of which shares carry the same redemption rights as other shares of ENVI Class A Common Stock. The 50% Redemption Scenario and the Maximum Redemption Scenario assume that HB Strategies will redeem 50% and 100%, respectively, of its shares of ENVI Class A Common Stock. Amount excludes 13,100,000 warrants to purchase ENVI Class A Common Stock, which is made up of 10,350,000 public warrants, 2,000,000 private placement warrants and 750,000 Insider Warrants. Additionally, under each of the 50% Redemption Scenario and the a Maximum Redemption Scenario, an aggregate of 650,000 Warrants |
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| comprised of 500,000 private placement warrants owned by HB Strategies and 150,000 Insider Warrants owned by the Sponsor will be forfeited pursuant to the Sponsor Letter Agreement. |
| (b) | In accordance with the terms and subject to the conditions of the Business Combination Agreement, each outstanding share of capital stock of GreenLight will be exchanged for shares of New GreenLight Common Stock and outstanding GreenLight Options (whether vested or unvested) will be exchanged for comparable options to purchase New GreenLight Common Stock, in each case, based on an implied GreenLight equity value of $1.2 billion. The number of shares of New GreenLight Common Stock issued to the holders of shares of capital stock of GreenLight at Closing will fluctuate based on the number of shares underlying GreenLight Options and GreenLight Warrants, whether vested or unvested (and the exercise prices of such options and warrants), outstanding at Closing. |
| (c) | Amount includes 6,583,549 shares issuable upon conversion of the GreenLight Convertible Notes and 872,667 shares underlying GreenLight Warrants that are assumed to be exercised immediately prior to the consummation of the Business Combination and excludes 17,555,928 shares underlying Rollover Options to be issued to holders of GreenLight Options, assuming such GreenLight Options remain unexercised as of the Closing. |
| (d) | Amount excludes 31,750,000 shares (which amount includes shares underlying Rollover Options) and 2,000,000 shares of New GreenLight Common Stock that are expected to be available for issuance under the New GreenLight Equity Plan and the New GreenLight ESPP, respectively, after the consummation of the Business Combination, assuming approval of the Condition Precedent Proposals. |
Related Agreements
This section describes certain additional agreements entered into or to be entered into pursuant to the Business Combination Agreement, but does not purport to describe all of the terms thereof. The following summary is qualified in its entirety by reference to the complete text of each of the agreements. The Sponsor Letter Agreement, the form of Subscription Agreement, the Investor Rights Agreement, and the form of Transaction Support Agreement are attached hereto as Annex D, Annex E, Annex F, and Annex G, respectively. You are urged to read such agreements in their entirety prior to voting on the proposals presented at the special meeting.
PIPE Financing
Concurrently with the execution of the Business Combination Agreement and in November 2021, ENVI entered into the Subscription Agreements with each of the PIPE Investors, pursuant to which the PIPE Investors have agreed to subscribe for and purchase, and ENVI has agreed to issue and sell to the PIPE Investors, on the Closing Date immediately prior to the Closing, an aggregate of 12,425,000 shares of ENVI Class A Common Stock at a price of $10.00 per share, for aggregate gross proceeds of $124,525,000. The shares of ENVI Class A Common Stock to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act and will be issued in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act. The PIPE Financing is contingent upon, among other things, the substantially concurrent closing of the Business Combination. In connection with the Business Combination, all of the issued and outstanding shares of ENVI Class A Common Stock, including the shares of ENVI Class A Common Stock to be issued in the PIPE Financing, and all of the issued and outstanding ENVI Class B Common Stock will become shares of New GreenLight Common Stock.
The Subscription Agreements grant the PIPE Investors certain resale registration rights in connection with the PIPE Financing. ENVI agreed to file a registration statement with the SEC within 30 days after the Closing to register the resale of the shares acquired in the PIPE Financing. ENVI agreed to use its commercially reasonable efforts to have the registration statement declared effective as soon as practicable after filing but no later than the earlier of (i) the 60th day (or 90th day if the SEC notifies ENVI that it will “review” the registration statement) following the Closing and (ii) the 10th business day after the date ENVI is notified by the SEC that the registration statement will not be “reviewed” or will not be subject to further review.
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Investor Rights Agreement
Concurrently with the execution of the Business Combination Agreement, ENVI, the initial stockholders and certain stockholders of GreenLight entered into the Investor Rights Agreement pursuant to which, among other things, the initial stockholders and such stockholders of GreenLight agreed not to effect any sale or distribution of any equity securities of ENVI during the
lock-up
period described therein and will be granted certain registration rights, in each case subject to, and conditioned upon and effective as of, the effective time of the Merger.Pursuant to the terms of the Investor Rights Agreement, New GreenLight will be obligated to file a registration statement to register the resale of certain shares of New GreenLight Common Stock within 45 days after the Closing and to maintain the effectiveness of such registration statement for a period of up to three years from its date of effectiveness. In addition, pursuant to the terms of the Investor Rights Agreement and subject to certain requirements and conditions, including with regard to the number of demand rights that may be exercised, the stockholders who are parties to the Investor Rights Agreement may demand at any time or from time to time that New GreenLight file a registration statement on Form
S-3
(or on FormS-1
if FormS-3
is not available) to register the resale of the securities of New GreenLight held by such holders, including certain rights to conduct underwritten offerings and registered block trades. The Investor Rights Agreement also provides such holders with certain “piggy-back” registration rights, subject to certain requirements and customary conditions.The Investor Rights Agreement further provides for the securities of New GreenLight held by the stockholders party thereto to be
locked-up,
subject to certain exceptions, until the earlier of (a) a period of 180 days from the Closing Date, (b) the date that the last sale price of New GreenLight Common Stock equals or exceeds $15.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any30-trading
day period commencing at least 120 days after the Effective Time, and (c) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the holders New GreenLight Common Stock having the right to exchange their New GreenLight Common Stock for cash, securities or other property.The Investor Rights Agreement will terminate on the earliest of (i) the fifth anniversary of the Effective Time, (ii) the date on which neither the stockholders party thereto nor any of their permitted assignees holds any securities registrable thereunder, (iii) certain acquisitions of New GreenLight or substantially all of its assets and (iv) its liquidation, dissolution or winding up.
The Investor Rights Agreement amends and restates the existing registration rights agreement by and among ENVI and certain of the initial stockholders in connection with ENVI’s initial public offering.
Transaction Support Agreement
Concurrently with the execution of the Business Combination Agreement, ENVI and certain stockholders of GreenLight (collectively, the “
Supporting Company Shareholders
”) entered into the Transaction Support Agreement, pursuant to which each such holder agreed, subject to the terms and conditions of the Transaction Support Agreement, to (i) vote in favor of and consent to the Business Combination Agreement and the transactions contemplated thereby (including the Merger), (ii) waive his, her or its appraisal rights with respect to the Merger, (iii) effective immediately prior to, and contingent upon, the Effective Time, to terminate (a) the Fifth Amended and Restated Investors’ Rights Agreement, dated as of June 15, 2020, by and among the Company and the investor parties thereto, as amended, (b) the Fifth Amended and Restated Right of First Refusal andCo-Sale
Agreement, dated as of June 15, 2020, by and among the Company, the investor and key holder parties thereto, as amended, (c) the Fifth Amended and Restated Voting Agreement, dated as of June 15, 2020, by and among the Company, the investor and key holder parties thereto, as amended, and (d) any management rights letter, investor side letter or other investor agreement providing for board observer rights, information rights, inspection rights or other rights of investors, in each case between or among the Company and the122
Supporting Company Shareholder (and/or other persons), and all rights and obligations contained therein and (iv) be bound by certain other covenants and agreements related to the Business Combination, including an agreement to be bound by the exclusive dealing provisions of the Business Combination Agreement and restrictions on transfers with respect to his, her or its shares of capital stock of GreenLight prior to the closing of the Business Combination.
The approval of the Business Combination Agreement and the transactions contemplated thereby (including the Merger) by the GreenLight stockholders will require the approval of the holders of (a) a majority of the voting power of the outstanding GreenLight Shares, voting together on an as-converted basis, (b) a majority of the outstanding shares of GreenLight Common Stock, (c) a majority of the outstanding shares of GreenLight Preferred Stock, voting together on an as-converted basis, (d) a majority of the outstanding shares of GreenLight Series C Preferred Stock, voting as a separate class, and (e) a majority of the outstanding shares of GreenLight Series D Preferred Stock, voting as a separate class. The parties to the Transaction Support Agreement hold in the aggregate (a) 92,514,094 GreenLight Shares, or 64% of the total GreenLight Shares, (b) 1,846,446 shares of GreenLight Common Stock, or 54% of the total outstanding shares of GreenLight Common Stock, (c) 90,667,648 shares of GreenLight Preferred Stock on an as-converted basis, representing 64% of the total outstanding shares of GreenLight Preferred Stock on an as-converted basis, (d) 19,362,221 shares of GreenLight Series C Preferred Stock, representing 55% of the total outstanding shares of GreenLight Series C Preferred Stock and (e) 37,021,189 shares of GreenLight Series D Preferred Stock, representing 62% of the total outstanding shares of GreenLight Series D Preferred Stock. Accordingly, it is expected that, as of the relevant record date for the vote, the parties to the Transaction Support Agreement will hold in the aggregate a sufficient number of GreenLight Shares to provide the requisite approval from the GreenLight stockholders of the Business Combination Agreement and the transactions contemplated thereby (including the Merger).
Sponsor Letter Agreement
Concurrently with the execution of the Business Combination Agreement, the initial stockholders and GreenLight entered into the Sponsor Letter Agreement, pursuant to which the initial stockholders have agreed to, among other things, (i) vote all of their founder shares in favor of, and consent to, the Business Combination Agreement and the transactions contemplated thereby (including the Merger), (ii) waive any adjustment to the conversion ratio set forth in the Existing Organizational Documents or any other anti-dilution or similar protection with respect to the Class B Shares, whether resulting from the transactions contemplated by the Business Combination Agreement or otherwise, and (iii) be bound by certain other covenants and agreements related to the Business Combination including an agreement to deal exclusively with GreenLight and restrictions on transfers with respect to his, her or its founder shares prior to the Closing. However, shares of ENVI Class A Common Stock owned by HB Strategies are not subject to certain of the transfer restrictions under the Sponsor Letter Agreement. In addition, HB Strategies and the Sponsor agreed that, if more than 25% of the shares of ENVI Class A Common Stock are redeemed pursuant to the Existing Charter, then they will forfeit 25% of their respective private placement warrants and Insider Warrants immediately before the closing of the Business Combination.
Background to the Business Combination
ENVI is a blank check company incorporated on July 2, 2020, as a Delaware corporation formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The Business Combination was the result of an extensive search for a potential transaction using the network and experience of ENVI’s management team, as well as the ENVI Board and Canaccord, ENVI’s financial advisor and an affiliate of its sponsor. The terms of the Business Combination Agreement were the result of extensive negotiations between ENVI and GreenLight (and their respective affiliates). The following is a brief description of the background of these negotiations, the Business Combination and the related transactions.
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In connection with ENVI’s initial public offering, ENVI entered into the Business Combination Marketing Agreement, dated as of January 13, 2021, with Canaccord (the “
Business Combination Marketing Agreement
”), pursuant to which ENVI engaged Canaccord as an advisor in connection with a business combination to assist ENVI in identifying potential business combination targets, arranging meetings with its stockholders to discuss the potential business combination and the target business’ attributes, introduce ENVI to potential investors that may be interested in purchasing ENVI securities, assist in obtaining stockholder approval for the business combination and assist with the preparation of ENVI press releases and public filings in connection with the business combination. For such services ENVI will pay Canaccord upon the consummation of a business combination, including the Business Combination, a cash fee in an amount equal to 3.76% of the gross proceeds of the initial public offering (or $7,783,200) (exclusive of any applicable finders’ fees which might become payable). Pursuant to the terms of the Business Combination Marketing Agreement, no fee will be due if ENVI does not complete a business combination.On January 19, 2021, ENVI completed its initial public offering of 20,700,000 units, including 2,700,000 units issued pursuant to the exercise of the underwriters’ over-allotment option in full, at a price of $10.00 per unit, generating gross proceeds of $207,000,000 before transaction costs (including deferred underwriting commissions to be paid upon the completion of ENVI’s initial business combination). Each ENVI unit consisted of one share of ENVI Class A Common Stock and
one-half
of one public warrant. Each public warrant entitles the holder thereof to purchase one share of ENVI Class A Common Stock at a price of $11.50 per share, subject to certain adjustments. Simultaneously with the closing of the initial public offering, ENVI completed the private sale of an aggregate of 2,000,000 private placement warrants, at a price of $1.00 per private placement warrant, to HB Strategies, generating gross proceeds of $2,000,000 and also issued the 750,000 Insider Warrants. Canaccord and Roth Capital Partners acted as underwriters.Prior to the consummation of the initial public offering, neither ENVI, nor anyone on its behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination with ENVI.
After the closing of ENVI’s initial public offering, ENVI assessed and analyzed multiple prospective business combination targets and opportunities, based on strength of business model, size, management team and growth prospects, among other factors. Representatives of ENVI were contacted by or initiated contact with multiple companies, both directly and through investment banks and other advisors, with a focus on companies belonging to the sustainability sector. Additionally Canaccord, in its capacity as advisor to ENVI through the Business Combination Marketing Agreement, suggested a variety of potential business combination targets. Since January 19, 2021, ENVI management approached or was approached directly or indirectly by over 250 potential business combination targets and venture capital and private equity firms. ENVI’s initial target exploration focused on certain targets with whom ENVI’s management, directors or Sponsor were already familiar through their networks and investment banking activities, who they felt were unique and attractive and who could satisfy some or all the key criteria for a business combination by ENVI described in the section “.” As the initial exploration progressed, ENVI management, with the help of Canaccord pursuant to the Business Combination Marketing Agreement, continued to cull this list of potential business combination partners based on a set of factors including maturity of the business, size of the business, financial profile, management team, public market readiness, a platform with a suite of solutions, and growth prospects, although no specific weight was attributed to each factor. Following such reviews and discussions, and at various points in time, ENVI discontinued its review of potential business combination partners who did not meet all or most of the key criteria, or who ENVI management believed were unlikely to consider a business combination with a blank-check company, and refined its review to 96 such targets and firms. Discussions with potential targets involved direct engagement with officers of ENVI, advisors from Canaccord pursuant to the Business Combination Marketing Agreement and senior management teams, shareholders or the potential target’s advisors across either formal strategic sell-side processes or opportunities that could lead to a potential business combination. Discussions principally involved a potential target’s value proposition, business model, financial profile,
The Business Combination Proposal—the ENVI Board’s Reasons for the Business Combination
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technology, competitive landscape, actionability and timing. For these potential targets, ENVI assessed preliminary valuations and ENVI’s ability to enhance a potential target’s growth prospects as a public company.
On January 29, 2021, Canaccord, on behalf of ENVI, contacted the CEO, Dr. Andrey Zarur, and CFO, Susan Keefe, of GreenLight to inform them of the closing of the initial public offering for ENVI. Both parties decided to schedule a meeting in February 2021 to discuss further. Prior to Canaccord’s contact on January 29, 2021, Canaccord and GreenLight had met on numerous occasions over many years to discuss the business of GreenLight. Canaccord is a full-service investment bank focused upon serving the capital raising and strategic advisory needs of growth companies. Members of Canaccord interact frequently with companies like GreenLight with the objective to build an understanding of a company’s business and how Canaccord’s services might support companies and their future growth plans. Over the years, GreenLight has also presented at several Canaccord conferences at which meetings with institutional investors occurred.
On February 10, 2021, GreenLight’s CFO, Susan Keefe, reached out to ENVI via email to share an updated overview presentation. Later, on February 12, 2021, ENVI and GreenLight entered into a mutual nondisclosure agreement. After that, on February 16, 2021, members of ENVI’s management team had a virtual meeting with members of GreenLight’s management team during which the GreenLight team gave a presentation concerning its business to ENVI and certain diligence questions were discussed. Representatives of Credit Suisse, financial advisor to GreenLight, were also present at such virtual meeting. At these meetings, GreenLight indicated that it was evaluating opportunities to engage in a potential business combination with a special purpose acquisition company such as ENVI.
ENVI entered into a letter of intent with one potential target on February 17, 2021, and conducted diligence, negotiated agreements and approached investors about a private placement. ENVI engaged Duff & Phelps as financial advisor to provide a fairness opinion in connection with the proposed business combination, and on February 18, 2021 engaged Latham & Watkins LLP (“
Latham
”) as legal advisor in connection with that potential transaction. Based on market feedback and conditions, ENVI and the potential target determined on March 30, 2021 not to move forward with a business combination. ENVI did not incur any fees to Canaccord in connection with that terminated transaction.Beginning on March 31, 2021 through
mid-April
2021, ENVI approached and was approached directly or indirectly by over 30 separate entities that may have been potential targets for a possible business combination, some of which entities comprised targets or firms from ENVI’s earlier discussions with 96 such targets and firms, including GreenLight. As ENVI’s discussions and review progressed, ENVI management, with the help of Canaccord pursuant to the Business Combination Marketing Agreement, continued to cull this list of potential business combination partners based on a set of factors including maturity of the business, size of the business, financial profile, management team, public market readiness, a platform with a suite of solutions, and growth prospects, although no specific weight was attributed to each factor. Following such reviews and discussions, and at various points in time, ENVI discontinued its review of potential business combination partners who did not meet all or most of the key criteria, or who ENVI management believed were unlikely to consider a business combination with a blank-check company. As ENVI’s discussions and review progressed, ENVI believed GreenLight to be one of the most attractive opportunities based on the set of factors described above and that ENVI management believed were most likely to consider a business combination with a blank-check company.On March 31, 2021, ENVI approached GreenLight to begin to discuss the terms of a potential business combination. Latham continued as legal adviser to ENVI pursuant to the February 18, 2021 engagement letter. On April 2, 2021, ENVI received access to GreenLight’s data room.
On April 7, 2021 and April 8, 2021, ENVI’s management had meetings with GreenLight’s management team to discuss the GreenLight business,
follow-up
on certain due diligence matters and negotiate preliminary,non-binding
terms of the potential business combination.On April 9, 2021, ENVI’s management updated the ENVI Board of GreenLight as a potential business combination opportunity.
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On April 14, 2021, ENVI’s management met with Canaccord to discuss the potential business combination. On April 15, 2021, the ENVI Board held a virtual meeting to provide additional background on GreenLight and discuss the terms of a proposed
non-binding
letter of intent to be shared with GreenLight.On April 15, 2021, ENVI’s management sent GreenLight a proposed
non-binding
letter of intent, which included a term sheet to provide the framework for a potential business combination. The term sheet indicated a value of $1.0 billion to $1.2 billion, which was based on ENVI management’s arm’s-length negotiation with GreenLight. In determining the reasonableness for this valuation for GreenLight, the ENVI Board reviewed projected revenue multiples of five early stage plant science companies, which had ranges of revenue multiples of estimated 2025 revenue of 1.1x to 3.8x (with a median of 3.0x) and of estimated 2026 revenue of 0.8x to 3.5x (with a median of 2.5x, which implied a value between $470 million and $750 million for Greenlight’s plant health business. The ENVI Board also reviewed valuations of six pre-clinical biotech platforms at the time of their respective IPOs, which ranged from $223 million to $1,753 million (with a mean of $667 million and a median of $426 million), which, together with the plant health business, implied a combined value between $900 million and $1.4 billion for Greenlight. In connection with its review of a potential business combination with GreenLight, the financial projections prepared by GreenLight was one of the factors relied upon by ENVI management and the ENVI Board, although no specific weight was given to any of the factors. The term sheet also contemplated a PIPE Financing between $100 million and $200 million, a lock-up identical to the lock-up executed by the Sponsor in connection with ENVI’s initial public offering, for GreenLight executives to enter into new employment arrangements with the post-combination company, board of directors designation rights to each of ENVI and GreenLight and a minimum cash condition of $5 million.The GreenLight Board discussed the proposed terms of the business combination, including the valuation of GreenLight, the PIPE Financing, and the relatively short timeline before a definitive business combination agreement could potentially be entered into, in comparison to the IPO alternative with the anticipated need, based on feedback from its advisors, to identify a lead investor for and to complete a interim private capital raise in advance of an IPO financing to facilitate a successful IPO and the associated challenges in doing so, the relatively longer timeline until an IPO could be completed and the increased exposure to market risk during this time, as well as additional risks of each alternative.
On April 19, 2021, GreenLight provided comments on the
non-binding
letter of intent to ENVI management, proposing a $1.2 billion equity valuation of GreenLight. The revised term sheet also proposed a 180-day lock-up term for GreenLight stockholders, rejected the proposal for new employment arrangements in connection with the Business Combination, a minimum cash condition of $275 million and a proposed post-combination board of directors consisting of seven members consisting of GreenLight’s chief executive officer, four members designated by GreenLight, one member designated by ENVI and one member by GreenLight and ENVI by joint designation.On April 20, 2021, ENVI’s management updated the ENVI Board on the status of the negotiation of the
non-binding
letter of intent and also held meetings with GreenLight’s management team to negotiate thenon-binding
letter of intent. Between April 20, 2021, and April 21, 2021, the principal terms negotiated were valuation and transaction consideration,lock-up
period, board of directors, a reduction in the Aggregate Transaction Proceeds Condition and exclusivity period.On April 20, 2021, ENVI sent GreenLight a revised draft of the
non-binding
letter of intent, which included a value of $1.2 billion and generally incorporated the proposed modifications from GreenLight from April 19, 2021. Also, on April 20, 2021, ENVI management updated the ENVI Board on the status of thenon-binding
letter of intent negotiations with GreenLight.On April 21, 2021, Mr. Coyne, on behalf of ENVI, and Dr. Zarur, on behalf of GreenLight, executed the agreed final version of the
non-binding
letter of intent (the “LOI
”) reflecting the parties’ conversations over the prior weeks, regarding a potential business combination transaction (subject to due diligence and negotiation of126
definitive agreements) involving ENVI and GreenLight, which reflected a total equity value for GreenLight of $1.2 billion. Pursuant to the LOI, the total merger consideration provided to or for the benefit of GreenLight or GreenLight equityholders would consist of (a) $374 million of cash contributed to GreenLight and (b) 120.0 million shares of ENVI’s common stock to GreenLight’s equityholders.
The LOI contemplated that the closing of the proposed business combination would be conditioned on customary closing conditions, including (i) the completion of any required stock exchange and regulatory review by the SEC and Nasdaq, receipt of any required regulatory approvals and necessary third party approvals, and expiration of any waiting periods under the HSR Act or other applicable anti-trust laws, (ii) approval by ENVI’s stockholders of the Business Combination and related matters, (iii) all of the outstanding options and warrants, and all other convertible securities of GreenLight, being converted into equity of GreenLight, assumed by ENVI with the use of a comparable equity instrument or cancelled prior to the Business Combination, and any rights to acquire equity of GreenLight will be extinguished as of the Closing, (iv) no material adverse changes in the business, customer relationships, operations, financial condition, regulatory environment or prospects of GreenLight, (v) the execution of all related agreements as contemplated by the Business Combination Agreement, (vi) ENVI having at least $150,000,000 in cash and cash equivalents to deliver to GreenLight to fund GreenLight operations and (vii) ENVI maintaining its Nasdaq listing in good standing.
Pursuant to the LOI, the parties agreed that the ENVI Board at Closing would consist of up to seven members, with one member to be the chief executive officer of GreenLight, four members to be nominated by GreenLight, one member to be nominated by ENVI and one member to be nominated by GreenLight with ENVI’s consent.
Pursuant to the LOI, each of GreenLight and ENVI agreed to be subject to an exclusivity period from the date of the LOI until June 5, 2021 (the “
Exclusivity Period
”). During the Exclusivity Period, each of GreenLight, on the one hand, and ENVI, on the other hand, would not and would direct their respective representatives acting on their behalf not to, directly or indirectly, (i) solicit or initiate any inquiry, indication of interest, proposal or offer from any third party, relating to a competing transaction, (ii) participate in any discussions or negotiations with any third party, regarding, or furnish or make available to such third party, any information relating to GreenLight with respect to, a competing transaction or (iii) enter into any understanding, arrangement, agreement, agreement in principle or other commitment (whether or not legally binding) with any third party, relating to a competing transaction.On April 23, 2021, representatives of ENVI, GreenLight and Canaccord held a
“kick-off”
call to discuss certain process matters regarding completing business due diligence, preparation of definitive transaction documents, legal due diligence, the PIPE Financing, and related work streams, including the anticipated timeline for announcing a business combination.During the week of April 26, 2021, representatives of ENVI, GreenLight and Canaccord held virtual meetings to discuss certain process matters related to due diligence and the PIPE Financing, including process, materials and investor targeting. Over the next several weeks, ENVI held numerous virtual meetings and phone calls with its advisors and with GreenLight and GreenLight’s advisors regarding the PIPE Financing process, timing and terms. These meetings also involved planning for and the scheduling of due diligence sessions between ENVI and GreenLight.
Beginning on April 30, 2021, representatives of ENVI and GreenLight met virtually on a weekly basis to discuss matters related to the proposed transaction, including due diligence and the PIPE Financing.
On May 7, 2021, ENVI management provided the ENVI Board an update on the process with GreenLight.
On May 17, 2021, representatives of GreenLight held a virtual meeting with representatives of ENVI, SVB Leerink, Credit Suisse and Canaccord, to discuss the timeline and process for the PIPE Financing.
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