Private Placement Warrants and Unvested Founder Shares

12 Months Ended

Dec. 31, 2022

Warrants and Rights Note Disclosure [Abstract]

Private Placement Warrants and Unvested Founder Shares

In connection with the execution of the Merger Agreement, Churchill and the Insiders entered into a Sponsor Agreement. Pursuant to the terms of the Sponsor Agreement, 12,404,080 of the founder shares and 4,800,000 Private Placement Warrants were unvested as of October 8, 2020 and will re-vest at such time as, during the period starting on October 8, 2021 and ending on October 8, 2025, the closing price of our Class A common stock exceeds $12.50 per share for any forty (40) trading days in a sixty (60) consecutive day period. Such founder shares and Private Placement Warrants that do not re-vest on or before October 8, 2025 will be forfeited and cancelled.

The 4,800,000 Private Placement Warrants that vest are not transferable, assignable or salable (except to our officers and directors and other persons or entities affiliated with the Sponsor and other permitted transferees, each of whom will be subject to the same transfer restrictions) until they re-vest.

In the event of an "Acquiror Sale" defined by the Sponsor Agreement as (i) a purchase, sale, exchange, business combination or other transaction in which the equity securities of the acquiror, its successor or the surviving entity of such business combination or other transaction are not registered under the Securities Exchange Act of 1934, or listed or quoted for trading on a national securities exchange or (ii) a sale, lease, exchange or other transfer in one transaction or a series of related transactions of all or substantially all of the acquiror's assets to a third party that is not an affiliate of the Sponsor, the founder shares and Private Placement Warrants that re-vest will change based on the Acquiror Price. If the Acquiror Price is less than

$10 per share, no Founder Shares or vesting Private Placement Warrants will vest; if the Acquiror Price exceeds $12.50 per share, all Founder Shares or vesting Private Placement Warrants will vest; and if the Acquiror Price is between $10 per share and $12.50 per share, the number of founder shares or vesting Private Placement warrants that vest will be determined based on linear interpolation between such share price levels. The remaining Founder Shares and vesting Private Placement warrants will be forfeited and cancelled for no consideration.

On August 8, 2022, the Sponsor transferred 9,200,000 Private Placement Warrants, including 5,431,302 to individuals not classified as permitted transferees under the warrant agreement and which are, therefore, now redeemable by the Company and exercisable by the holders on the same basis as the Public Warrants. As a result, these 5,431,302 warrants were reclassified from Private Placement Warrants and Unvested Founder Shares to additional paid-in capital in the consolidated balance sheets on the transfer date for their fair value of $4.5 million.

As of December 31, 2022 and 2021, the fair value of the Private Placement Warrants and the Unvested Founder Shares were:


(in thousands)	December 31, 2022		December 31, 2021
Private Placement Warrants	$	953	$	38,028
Unvested Founder Shares	$	1,489	$	35,972

For the years ended December 31, 2022, 2021 and 2020, the change in fair values was primarily due to the decrease in the stock price of the Company's Class A common stock and the passage of time over that period. The accompanying consolidated statements of (loss) income and comprehensive (loss) income include gains related to the change in fair value of the Private Placement Warrants and Unvested Founder Shares for the years ended December 31, 2022, 2021 and 2020 as follows:


	For the years ended December 31,
(in thousands)	2022		2021		2020
Private Placement Warrants	$	(32,567)	$	(6,423)	$	(11,606)
Unvested Founder Shares	(34,483)		(26,173)		(23,816)
Gain on change in fair value of Private Placement Warrants and Unvested Founder Shares	$	(67,050)	$	(32,596)	$	(35,422)

The following table shows the significant assumptions in the development of the fair value of the Private Placement Warrants and the Unvested Founder Shares:


	Year Ended December 31,
Significant Unobservable Inputs	2022			2021
Stock price	$	1.15		$	4.43
Strike price	$	11.50		$	11.50
Remaining life (in years)	2.75			3.75
Volatility	72.7		%	79.0		%
Risk-free interest rate	4.3		%	1.1		%
Expected dividend yield	—		%	—		%